Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

References in this report (the "Quarterly Report") to "we," "us" or the "Company" refer to OSR Holdings, Inc. References to our "management" or our "management team" refer to our officers and directors. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act of 1934, as amended (the "Exchange Act"). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other filings made with the U.S. Securities and Exchange Commission ("SEC").

Recent Developments

VXM01 License Agreement Update

On March 27, 2026, the Company, together with its wholly owned subsidiary Vaximm AG, entered into a binding term sheet with BCM Europe AG relating to a revised global exclusive license arrangement for VXM01. The term sheet supersedes and replaces the prior agreement dated January 13, 2025.

Additional information is set forth in the Company's Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on April 2, 2026, which is incorporated herein by reference.

Subsequently, on April 29, 2026, the Company and Vaximm entered into a definitive Global Exclusive License Agreement with BCME, pursuant to which BCME was granted an exclusive, worldwide, sublicensable license to develop and commercialize VXM01. The agreement provides for potential milestone payments of up to approximately $815 million, as well as additional economic terms, including an equity participation right in the form of a put option held by the Company, pursuant to which the Company may require BCME to purchase shares of its common stock under specified conditions.

In connection with the foregoing transaction, the parties also entered into a Pledge Agreement pursuant to which BCME and its affiliates pledged their OSR Holdings, Inc. common stock to the Company as collateral security for BCME's milestone payment obligations under the Global Exclusive License Agreement.

Additional information regarding the foregoing is set forth in the Company's Current Reports on Form 8-K filed with the U.S. Securities and Exchange Commission on April 2, 2026 and April 29, 2026, respectively, which are incorporated herein by reference.

Amendment No. 2 to Common Stock Purchase Agreement

On April 7, 2026, the Company entered into Amendment No. 2 to its Common Stock Purchase Agreement with White Lion Capital, LLC, d/b/a White Lion GBM Innovation Fund, amending the original agreement dated February 25, 2025.

The amendment enhances the Company's flexibility under its equity line of credit by introducing intraday and fixed purchase notice mechanisms, each subject to specified conditions and based on discounted volume-weighted average price ("VWAP") formulas. The amendment also provides for related settlement procedures, including generally one business day settlement, and includes certain threshold price adjustment provisions applicable to specific purchase notices.

Additional information regarding this amendment is set forth in the Company's Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on April 7, 2026, which is incorporated herein by reference.

Convertible Note Issuance

On April 7, 2026, the Company entered into a Note Purchase Agreement with White Lion Capital, LLC, d/b/a White Lion GBM Innovation Fund ("White Lion"), pursuant to which the Company issued a senior secured convertible promissory note in the principal amount of $1,055,555.55.

In consideration, the Company received $500,000 in cash and a reduction of approximately $2.0 million of outstanding warrant obligations held by White Lion, resulting in the effective cancellation of such warrant.

The note bears interest at 5% per annum, matures nine months from issuance, and is convertible into shares of the Company's common stock at a fixed conversion price of $1.00 per share, subject to adjustment, or, under certain conditions, at a discounted market-based price. Conversion is generally restricted until six months following issuance, subject to certain exceptions, and is further subject to customary beneficial ownership limitations. The note is secured by substantially all of the Company's assets and includes customary covenants and events of default.

Additional information regarding the foregoing transactions is set forth in the Company's Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on April 7, 2026, which is incorporated herein by reference.

Appointment of Chief Operating Officer

On March 26, 2026, the Board of Directors of OSR Holdings, Inc. approved the appointment of Yeiseok Kim as Chief Operating Officer of the Company, effective April 16, 2026. Mr. Kim previously served as a Senior Analyst at OSR Holdings Co., Ltd., where he was involved in cross-border healthcare investments and pharmaceutical licensing activities.

In connection with his appointment, OSR Holdings Co., Ltd. entered into an amended employment agreement with Mr. Kim, pursuant to which he will receive an annual base salary of KRW 240,000,000, eligibility to participate in the Company's equity-based compensation plans, and customary executive benefits.

Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2026

The following tables present OSR Holdings' statements of operations for the three months ended March 31, 2025 and 2026, and percentage change between the two periods:

		Three Months Ended March 31,
		2025				2026				Change $				Change %
Net Sales:			761,272				484,057				-277,215				-36	%
Cost of Sales			592,586				323,776				-268,810				-45	%
Gross Profit			168,686				160,281				-8,405				-5	%
Expenses:
Selling, general and administrative expenses			3,086,512				3,827,465				740,953				24	%
Operating loss			(2,917,826	)			(3,667,184	)			-749,358				26	%
Other income (expense)			(8,474,988	)			(252,305	)			8,222,683				-97	%
Profit (loss) before income taxes			(11,392,814	)			(3,919,488	)			7,473,326				-66	%

Net Sales, Cost of Sales, Gross Profit

OSR Holdings' net sales, cost of sales, and gross profit are primarily derived from RMC, its subsidiary engaged in the distribution of medical devices, and Woori IO, a manufacturer of non-invasive glucose monitoring devices. However, based on revenues for the first quarter of 2026, approximately 96.5% of total revenue was attributable to RMC. In addition, because Woori IO was first consolidated in the first quarter of 2026, changes compared to the prior-year period were primarily attributable to RMC.

For the three months ended March 31, 2026, OSR Holdings' net sales decreased by $277,215, or 36%, compared to the same period in the prior year. However, cost of sales decreased at a higher rate of 45%, or $268,810, resulting in a relatively smaller decrease in gross profit of $8,405, or 5%. Overall, the gross profit margin increased from 22% in the first quarter of 2025 to 33% in the first quarter of 2026.

This improvement in profitability was driven by a change in RMC's contractual arrangement with one of its major suppliers. Specifically, RMC transitioned from a traditional purchase-and-resale model to a consignment-based arrangement under which only commission revenue is recognized. Although the new contract was executed in April 2025, the change began to affect revenue recognition starting in July 2025. Accordingly, management expects this consignment-based model to enhance the stability of gross profit margins in future periods.

Selling, General and Administrative Expenses

For the three months ended March 31, 2026, OSR Holdings' selling, general and administrative (SG&A) expenses increased by $740,953, or 24%, compared to the same period in the prior year.

Following the completion of the Business Combination on February 14, 2025, various costs associated with fulfilling public company obligations began to increase. The increase was primarily attributable to higher personnel-related expenses, including salaries, severance payments, employee benefits, bonuses, and travel costs. Additional SG&A expenses included amortization of intangible assets, research and development expenses, and professional service fees such as legal, audit, investor relations, and press release costs, as well as non-income taxes, insurance premiums, and employee recruiting and training expenses. The increase was primarily attributable to higher personnel-related costs and professional service fees.

Woori IO accounted for approximately 1% of total SG&A expenses, and therefore the overall impact from its initial inclusion as a newly consolidated subsidiary was immaterial.

Research and Development (R&D) Expenses

OSR Holdings' research and development (R&D) expenses consist primarily of development costs associated with product candidates in pre-clinical and clinical trial stages, as well as related salary and outsourced service costs. R&D costs are expensed as incurred. Beginning in the second half of 2026, OSR Holdings expects to incur and report R&D-related expenses primarily from its subsidiaries actively engaged in research and development activities at an estimated amount of approximately $2.5 million to $3.0 million per quarter, which could potentially increase to approximately $5.0 million to $6.0 million per quarter in the future.

Operating Loss

For the three months ended March 31, 2026, OSR Holdings' operating loss increased by $749,358, or 26%, compared to the same period in the prior year.

This increase was at a level generally consistent with the amount and percentage increase in SG&A expenses discussed in the section titled "Selling, General and Administrative Expenses."

Other Income (Expense)

OSR Holdings' other income (expense) consists of interest income, interest expense, foreign exchange-related gains and losses, and other non-operating items.

For the three months ended March 31, 2026, the Company recorded net other expenses of $252,305, representing a decrease of $8,222,683, or 97%, compared to the same period in the prior year. This significant decrease was primarily attributable to the one-time recognition of approximately $8.5 million in merger-related expenses incurred in connection with the Business Combination completed on February 14, 2025, which was recognized only during the first quarter of 2025.

Loss Before Income Taxes

For the three months ended March 31, 2026, OSR Holdings' loss before income taxes decreased by $7,473,326, or 66%, compared to the same period in the prior year. As previously discussed, this decrease was primarily attributable to the one-time recognition of approximately $8.5 million in merger-related expenses incurred in connection with the Business Combination completed on February 14, 2025, which was recognized during the first quarter of 2025.

Liquidity and Capital Resources

Since its inception through March 31, 2026, OSR Holdings has incurred significant operating losses and negative cash flows from operating activities. The Company recorded an operating loss of approximately $18.33 million for the year ended December 31, 2025, compared to an operating loss of approximately $11.69 million for the same period in 2024. In addition, the Company recorded an operating loss of approximately $3.67 million during the first quarter of 2026. As of March 31, 2026, OSR Holdings had an accumulated deficit of approximately $40.10 million.

To date, OSR Holdings has funded its operations primarily through the issuance of common stock and convertible bonds, bank borrowings, loans from affiliates, and, to a lesser extent, product revenue generated by its subsidiary, RMC. As of March 31, 2026, the Company had cash and cash equivalents of approximately $1.57 million, consisting primarily of bank deposits.

The Company incurred significant expenses in connection with the Business Combination and the filing of its Form S-4 registration statement, which, together with other general operating expenses, reduced the funds available for operations and created an urgent need for additional capital. In response, in February 2025, OSR Holdings entered into an equity line of credit ("ELOC") agreement with an investor, providing for up to $80 million in potential capital. As of March 31, 2026, the Company had issued a total of 3,070,500 shares under the ELOC, raising gross proceeds of $2.11 million. In addition, the Company has executed or is exploring various financing initiatives through the issuance of warrants and notes.

OSR Holdings expects to continue utilizing the ELOC until the end of the Commitment Period (December 31, 2026) as set forth in the ELOC Agreement with White Lion. However, the Company intends to exercise a higher level of prudence and control in the execution of the ELOC in order to minimize the dilution and price impact it may have on the market for the Company's equity securities. In addition, the Company plans to implement new equity financing facilities that are generally considered less dilutive and more controllable than ELOC arrangements, such as an At-the-Market ("ATM") offering.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of March 31, 2026. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities, other than an agreement to pay an affiliate of Bellevue Capital Management, LLC ("BCM") a monthly fee of $7,500, for office space, utilities and secretarial and administrative support. We began incurring these fees on March 1, 2023, and they continue following the consummation of our business combination in February 2025.

Chardan Capital Markets, LLC ("Chardan") is entitled to a deferred underwriting commission of $2,070,000, payable as of September 30, 2025. In addition, we incurred deferred legal fees of approximately $1.25 million that were payable upon consummation of our initial business combination.

The holders of the founder shares, equity participation shares, placement units, and units that may be issued upon conversion of working capital loans (and in each case holders of their component securities, as applicable) are entitled to registration rights pursuant to the registration rights agreement. These holders are entitled to make up to two demands, excluding short form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders will have "piggyback" registration rights to include their securities in other registration statements filed by us. We will bear the expenses incurred in connection with the filing of any such registration statements. Chardan may not exercise its demand and "piggyback" registration rights after five and seven years, respectively, after the date of our prospectus issued in connection with our IPO and may not exercise its demand rights on more than one occasion.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting estimates.