OSR Health, Inc. 10-Q

Item 1. Financial Statements OSR HOLDINGS, INC. AND SUBSIDIAIRIES Condensed Consolidated Balance Sheets (In the United States Dollar, except share data) (Unaudited) (Unaudited) Assets March 31, 2025 December 31, 2024 Current assets: Cash and cash equivalents $ 1,595,697 $ 341,543 Trade and other receivables, less allowance for credit losses of $ 66,006.82 and $ 67,579.81 as of March 31, 2025 and December 31, 2024, respectively 799,537 933,824 Inventories, net 736,630 922,107 Prepaid income taxes 4 39 Other current financial assets 54,552 54,422 Other current assets 280,419 74,555 Total current assets 3,466,839 2,326,489 Equipment and vehicles, net 999 2,334 Operating lease right-of-use assets, net 68,595 78,484 Intangible assets, net 146,159,289 148,056,852 Goodwill 24,412,190 24,354,066 Other non-current financial assets 349,964 329,252 Deferred tax assets 92,320 92,101 Total assets $ 174,550,197 $ 175,239,579 Liabilities and Stockholders’ Equity Current liabilities: Short-term borrowing $ 1,649,175 $ 1,799,796 Short-term corporate bond 2,563,000 - Trade and other payables 7,296,793 1,078,760 Accrued expenses 726,325 459,883 Operating lease liabilities-current 42,028 44,741 Other current liabilities 1,002,877 79,777 Income taxes payable 358,588 255 Current portion - LT debt 245,482 - Total current liabilities 13,884,268 3,463,212 Long-term debt 253,042 497,615 Operating lease liabilities- non-current 26,331 33,372 Other non-current liabilities 1,661 1,657 Deferred tax liabilities 28,102,418 28,035,508 Total liabilities 42,267,720 32,031,364 Stockholders’ equity: Common stock, ₩ 5,000 par value, Authorized 100,000,000 shares; 19,276,978 shares and 2,155,000 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively 1,928 216 Additional paid-in capital 106,082,223 162,606,449 Accumulated deficit ( 30,565,877 ) ( 19,173,063 ) Accumulated other comprehensive income 241,690 ( 225,386 ) Non-controlling interests 56,522,514 - Total stockholders’ equity 132,282,477 143,208,215 Total liabilities and stockholders’ equity $ 174,550,197 $ 175,239,579 The accompanying notes are an integral part of the condensed consolidated financial statements. 1 OSR HOLDINGS, INC. AND SUBSIDIAIRIES Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) (In the United States Dollar) Three months ended March 31, 2025 2024 Net sales $ 761,272 $ 910,225 Cost of sales 592,586 670,424 Gross profit 168,686 239,802 Selling, general, and administrative expenses 3,086,512 3,542,330 Operating loss ( 2,917,826 ) ( 3,302,528 ) Other income (expense): Interest income 4,318 5,526 Interest expense ( 16,399 ) ( 13,545 ) Other income 26,494 26,776 Other expenses ( 8,489,401 ) ( 71,591 ) Loss before income taxes ( 11,392,814 ) ( 3,355,362 ) Income tax benefit — ( 4 ) Net loss ( 11,392,814 ) ( 3,355,366 ) Attributable to: OSR Holdings Co., Ltd. and subsidiaries ( 11,392,814 ) ( 3,355,366 ) Non-controlling interests — - Other comprehensive income for the year, net of tax Gain on foreign currency translation 467,076 11,974 Total comprehensive loss for the year $ ( 10,925,738 ) $ ( 3,343,391 ) Attributable to: OSR Holdings Co., Ltd. and subsidiaries ( 10,925,738 ) ( 3,343,391 ) Non-controlling interests — - Loss per share attributable to OSR Holdings Co., Ltd. and subsidiaries Basic loss per ordinary share $ ( 1.04 ) $ ( 0.60 ) The accompanying notes are an integral part of the condensed consolidated financial statements. 2 OSR HOLDINGS, INC. AND SUBSIDIAIRIES Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) (In the United States Dollar, except share data) Common stock Additional Retained Earnings (accumulated Accumulated other comprehensive Non-controlling Total stockholders’ Shares Amounts paid-in capital deficit) Income (loss) interests equity Balance at January 1, 2024 5,622,954 $ 640 $ 162,606,449 $ ( 10,496,810 ) $ 131,022 $ — $ 152,241,301 Net loss — — — ( 3,355,366 ) — — ( 3,355,366 ) Foreign currency translation adjustment — — — — 11,974 — 11,974 Balance at March 31, 2024 5,622,954 $ 640 $ 162,606,449 $ ( 13,852,175 ) $ 142,997 $ — $ 148,897,910 Balance at January 1, 2025 2,155,000 $ 216 $ 162,606,449 $ ( 19,173,063 ) $ ( 225,386 ) $ — $ 143,208,215 Net loss — — — ( 11,392,814 ) — — ( 11,392,814 ) Foreign currency translation adjustment — — — — 467,076 — 467,076 Business Combination 17,121,978 1,712 ( 56,524,226 ) — — 56,522,514 — Balance at March 31, 2025 19,276,978 $ 1,928 $ 106,082,223 $ ( 30,565,877 ) $ 241,690 $ 56,522,514 $ 132,282,477 The accompanying notes are an integral part of the condensed consolidated financial statements. 3 OSR HOLDINGS, INC. AND SUBSIDIAIRIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In the United States Dollar) Three months ended March 31, 2025 2024 Cash flows from operating activities: Net loss $ ( 11,392,814 ) $ ( 3,355,366 ) Adjustments to reconcile net (loss) income to cash used in operating activities: Depreciation 378 16,936 Amortization 2,272,817 2,896,174 Loss on inventory valuation - 2,240 Loss on disposal of tangible assets - 626 Lease expense 13,424 - Gain on disposal of ROU assets - ( 444 ) Bad debts ( 1,751 ) 4,216 Severance pay 152,087 24,477 Interest expense - 64 Merger and acquisiton costs 8,464,579 - Loss on foreign currency translation ( 3,075 ) 34,772 Changes in operating assets and liabilities: (Increase) decrease in trade and other receivables 139,567 15,089 Increase in inventories, net 189,466 210,419 Increase in other current assets ( 11,599 ) ( 37,739 ) (Decrease) increase in trade and other payables 22,356 ( 290,858 ) Increase in accrued expenses 94,922 4,805 Increase (decrease) in lease liabilities ( 13,424 ) ( 16,447 ) Increase in tax payables 35 ( 4,208 ) (Decrease) Increase in other liabilities 8,962 ( 3,532 ) Net cash used in operating activities ( 64,069 ) ( 498,776 ) Cash flows from investing activities: Decrease in deposits - 4,271 Decrease in short-term loan - 225,440 Disposal of equipment and vehicles 1,000 684 Increase in deposits - ( 3,764 ) Increase in long-term loan ( 14,539 ) - Increase in cash and cash equivalents from business combination 1,199,129 - Net cash provided by (used in) investing activities 1,185,591 226,631 Cash flows from financing activities: Proceeds from long-term debt - 121,501 Proceeds from short-term borrowing 149,381 481,460 Repayment of short-term borrowing - ( 336,378 ) Net cash provided by financing activities 149,381 266,582 Net change in cash and cash equivalents 1,270,902 ( 5,562 ) Effects of changes in exchange rate on cash and cash equivalents ( 16,749 ) ( 22,210 ) Cash and cash equivalents at beginning of year 341,543 540,207 Cash and cash equivalents at end of year $ 1,595,697 $ 512,435 Supplemental disclosures of cash flow information: Cash paid for interest $ 16,991 $ 13,481 Cash paid for income taxes (net of refunds received) ( 35 ) 4,212 The accompanying notes are an integral part of the condensed consolidated financial statements. 4 OSR HOLDINGS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS March 31, 2025 and 2024 (UNAUDITED) (1) Organization and nature of business The condensed consolidated financial statements of OSR Holdings, Inc. (the “Company” or the “Parent”) and its subsidiaries (collectively, the “Group”) for the period ended March 31, 2025 were authorized for issuance in accordance with a resolution of the directors meeting on May 7, 2025. The registered office is located at 37-36 Hoedong-gil, Paju-si, Gyeongi-do, Republic of Korea. The Company is a global life sciences holding company based in South Korea and is actively engaging in drug development, dedicating to advance healthcare outcome and driving social progress. Through open innovation and responsible investment, the Company aims to make a lasting impact across the industry as well as our society. With a strong focus on oncology and immunology, the Company’s mission is to build a robust portfolio of ventures, bringing innovative and transformative therapies to market. Details of shareholders as of March 31, 2025 are as follows: Name of Shareholder Number of ordinary share Percentage of ownership Bellevue Global Life Sciences Investors LLC 1,332,500 6.91 % Bellevue Capital Management Europe AG 8,612,634 44.68 % Bellevue Capital Management LLC 3,123,970 16.21 % Duksung Co.,Ltd. 1,420,215 7.37 % Others 4,787,659 25.68 % Total 19,276,978 100.00 % Details of investments in subsidiaries as of March 31, 2025 are as follows: Name of subsidiary Share capital Percentage of ownership Principal activities Country of incorporation VAXIMM AG (“VAXIMM”) 1,091,203,754 100.00 % Biotech (drug development) Switzerland RMC Co., Ltd. (“RMC”) 35,000,000 100.00 % Medical device distribution Republic of Korea Darnatein Co., Ltd. (“Darnatein”) 6,466,667,000 100.00 % Biotech (drug development) Republic of Korea OSR Holdings, Inc. 2,826,969 100.00 % SPAC The United States Key financial information of the subsidiaries at March 31, 2025 are as follows : Name of subsidiary Asset Liability Equity Sales Net Income (loss) VAXIMM AG $ 910,415 $ 386,254 $ 524,161 $ - $ ( 78,609 ) RMC Co.,Ltd 2,040,181 1,568,695 471,486 761,272 ( 211,541 ) Darnatein Co.,Ltd 110,171 678,651 ( 568,481 ) - ( 141,742 ) OSR Holdings, Inc. 1,687,119 10,071,814 ( 8,384,695 ) - - 5 Summaries of entities, which are newly included in consolidation scope for the periods ended March 31, 2025 and 2024 are as follows: For the year ended March 31, 2025 Name of subsidiary Reason Type of purchase consideration OSR Holdings, Inc. Acquisition (*1) Equity swap with shares of the Parent and OSR inc.’s share (*1) The Parent acquired subsidiary in February 2025 and accounted for the acquisitions at March 31, 2025, which is deemed the acquisition date. (2) Summary of significant accounting policies a. Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to U.S. generally accepted accounting principles (US-GAAP) and reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results of the interim periods presented, under the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). These condensed consolidated financial statements include all adjustments consisting of only normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2024. Certain information and note disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes prepared in accordance with US-GAAP have been condensed in, or omitted from, these interim financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the condensed consolidated financial statements and related notes to the condensed consolidated financial statements for the fiscal year ended December 31, 2023 included in the Company’s Annual Report on Form S-4 filed with the SEC on December 27, 2024. b. Principle of consolidation The condensed consolidated financial statements include the accounts of OSR Holdings, Inc. and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity (VIE) or voting interest model. The Company is required to first apply the VIE model to determine whether it holds a variable interest in an entity, and if so, whether the entity is a VIE. If the Company determines it does not hold a variable interest in a VIE, it then applies the voting interest model. Under the voting interest model, the Company consolidates an entity when it holds a majority voting interest in an entity. The Company accounts for investments in which it has significant influence but not a controlling financial interest using the equity method of accounting. c. Use of estimates The preparation of the condensed consolidated financial statements in conformity with US-GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include allowance for credit losses, valuation of inventories, valuation of deferred tax assets, the useful lives of equipment and vehicles, lease liabilities and right-of-use assets, and other contingencies. d. Cash and cash equivalents The Group considers all highly liquid financial instruments with original maturities of three months or less when purchased to be cash equivalents. 6 e. Allowance for credit losses The Group records an allowance for credit losses (ACL) under Subtopic 326-20 Financial Instruments - Credit Losses – Measured at Amortized Cost for the current expected credit losses inherent in its financial assets measured at amortized cost and contract assets. The ACL is a valuation account deducted from the amortized cost basis to present the net amount expected to be collected. The estimate of expected credit losses includes expected recoveries of amounts previously written off as well as amounts expected to be written off. Accounts receivable The Group uses an aging schedule to estimate the ACL for trade accounts receivable. This method categorizes trade receivables into different groups based on industry and the number of days past due. Past due status is measured based on the number of days since the payment due date. The trade receivables are evaluated individually for expected credit losses if they no longer share similar risk characteristics. The Group determines that the receivables no longer share similar risk characteristic if they are past due balances over 90 days and over a specified amount. The Group evaluates the collectability of trade accounts receivables with payments that are more than 90 days past due on an individual basis to determine if any are deemed uncollectible. Trade accounts receivable balances are deemed uncollectible and written off as a deduction from the allowance after all means of collection have been exhausted. f. Accounts receivable Accounts receivables are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in cash flows from operating activities in the condensed consolidated statements of cash flows. g. Inventories Inventories are stated at the lower of cost or net realizable value and cost is determined by the first-in, first-out method. Cost comprises of direct materials and delivery costs, direct labor, import duties and other taxes, an appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity, and, where applicable, transfers from cash flow hedging reserves in equity. Costs of purchased inventory are determined after deducting rebates and discounts received or receivable. Stock in transit is stated at the lower of cost and net realizable value. Cost comprises of purchase and delivery costs, net of rebates and discounts received or receivable. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. h. Equipment and vehicles Equipment and vehicles are stated at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation of all equipment and vehicles is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives as follows: Estimated useful lives Vehicle 5 years Office equipment 5 years Facility equipment 3 to 13 years The assets’ depreciation method, residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. 7 i. Goodwill and intangible assets Goodwill represents the excess purchase price over the estimated fair value of net assets acquired in a business combination. The Group accounts for intangible assets in accordance with Accounting Standards Codification (ASC) Topic 350, Intangibles – Goodwill and Other (ASC 350). ASC 350 requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives and reviewed for impairment in accordance with accounting standards. When impairment indicators are identified, the Group compares the reporting unit’s fair value to its carrying amount, including goodwill. An impairment loss is recognized as the difference, if any, between the reporting unit’s carrying amount and its fair value, to the extent the difference does not exceed the total amount of goodwill allocated to the reporting unit. Indefinite-lived intangible assets are tested for impairment annually, and more frequently when there is a triggering event. Annually, or when there is a triggering event, the Group first performs a qualitative assessment by evaluating all relevant events and circumstances to determine if it is more likely than not that the indefinite-lived intangible assets are impaired; this includes considering any potential effect on significant inputs to determining the fair value of the indefinite-lived intangible assets. When it is more likely than not that an indefinite-lived intangible asset is impaired, then the Group calculates the fair value of the intangible asset and performs a quantitative impairment test. j. Impairment o f long--lived assets Long-lived assets, such as equipment, vehicles and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Group first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. k. Leases The Group is a lessee in several noncancellable operating leases, primarily for plants and main offices. The Group does not have a finance lease. The Group accounts for leases in accordance with ASC Topic 842, Leases . The Group determines if an arrangement is or contains a lease at contract inception. The Group recognizes a right-of-use (ROU) asset and a lease liability at the lease commencement date. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases and is subsequently measured at amortized cost using the effective-interest method. Key estimates and judgments include how the Group determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term, and (3) lease payments. ● Topic 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Group cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Group generally uses its incremental borrowing rate as the discount rate for the lease. The Group’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because the Group does not generally borrow on a collateralized basis, it uses the interest rate it pays on its noncollateralized borrowings as an input to deriving an appropriate incremental borrowing rate, adjusted for the amount of the lease payments, the lease term, and the effect on that rate of designating specific collateral with a value equal to the unpaid lease payments for that lease. 8 ● The lease term for all of the Group’s leases includes the noncancellable period of the lease plus any additional periods covered by either a Group option to extend (or not to terminate) the lease that the Group is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. ● Lease payments included in the measurement of the lease liability comprise the following: – Fixed payments, including in-substance fixed payments, owed over the lease term (includes termination penalties the Group would owe if the lease term reflects the Group’s exercise of a termination option); – Variable lease payments that depend on an index or rate, initially measured using the index or rate at the lease commencement date; – Amounts expected to be payable under a Group-provided residual value guarantee; and – The exercise price of a Group option to purchase the underlying asset if the Group is reasonably certain to exercise the option. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. ROU assets are periodically reduced by impairment losses. The Group uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall , to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. The Group monitors for events or changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss. Operating lease ROU assets are presented as operating lease right of use assets on the condensed consolidated balance sheets. The current portion of operating lease liabilities are presented separately on the condensed consolidated balance sheets. The Group has elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less. The Group recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term. l. Foreign currency translation The Group has operations in South Korea, Switzerland, and Germany. Accounting records in foreign operations are maintained in local currencies and remeasured to the Korean won during the consolidation. Nonmonetary assets and liabilities are translated at historical rates, and monetary assets and liabilities are translated at exchange rates in effect at the end of the year. Income statement accounts are translated at average rates for the year. Gains or losses from remeasurement of foreign currency financial statements into the Korean won are included in current results of comprehensive income. 9 m. Revenue recognition The Group only has revenue from customers. The Group recognizes revenue when it satisfies performance obligations under the terms of its contracts, and control of its products is transferred to its customers in an amount that reflects the consideration the Group expects to receive from its customers in exchange for those products. This process involves identifying the customer contract, determining the performance obligations in the contract, determining the transaction price, allocating the transaction price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it (a) provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and (b) is separately identified in the contract. The Group considers a performance obligation satisfied once it has transferred control of a good or product to a customer, meaning the customer has the ability to direct the use and obtain the benefit of the good or product. n. Income taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Group recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs . The Group reports income tax-related interest and penalties relating to uncertain tax positions, if applicable, as a component of income tax expense. o. Fair value measurements The Group utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Group determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: – Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. – Level 2 inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. – Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The carrying value of cash and cash equivalents, trade and other receivables, inventories, prepaid expenses and other current and financial assets, trade and other payable, short-term borrowing, current operating lease liabilities, and accrued expenses and other current liabilities approximates their fair value due to the short-term nature of these instruments. The carrying amount reported in the condensed consolidated balance sheets for notes payable to related party may differ from fair value since the interest rate is fixed. 10 p. Accounting pronouncements adopted during 2024 In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which provides an exception to fair value measurement for contract assets and contract liabilities related to revenue contracts acquired in a business combination. The ASU requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The ASU is effective for the Company for annual and interim periods in fiscal years beginning after December 15, 2023. The ASU is applied to business combinations occurring on or after the effective date. The Group adopted this ASU as of January 1, 2024 and there is no impact on the Group’s condensed consolidated financial statements. q. Accounting pronouncements issued, but not adopted as of March 31, 2025 In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements – Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative . The ASU modifies the disclosure or presentation requirements of a variety of Topics in the Codification to align with the SEC’s regulations. The ASU also makes those requirements applicable to entities that were not previously subject to the SEC’s requirements. The ASU is effective for the Company two years after the effective date to remove the related disclosure from Regulation S-X or S-K. As of the date these financial statements have been made available for issuance, the SEC has not yet removed any related disclosure. The Group does not expect the adoption of ASU 2023-06 to have a material effect on its condensed consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires enhanced disclosure of significant segment expenses on an annual and interim basis. This ASU will be effective for the annual periods beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025. Early adoption is permitted. Upon adoption, this ASU should be applied retrospectively to all prior periods presented in the financial statements. The Group does not expect the adoption of ASU 2023-07 to have a material effect on its condensed consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This ASU will be effective for the annual periods beginning the year ended December 31, 2026. Early adoption is permitted. Upon adoption, this ASU can be applied prospectively or retrospectively. The Group is currently evaluating the impact this ASU will have on the Group’s consolidated financial statements. (3) Critical accounting estimates and assumptions The preparation of condensed consolidated financial statements requires the Group to make estimates and assumptions concerning the future. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Income taxes The Group’s taxable income generated from these operations are subject to income taxes based on tax laws and interpretations of tax authorities in numerous jurisdictions. There are many transactions and calculations during the ordinary course of business for which the ultimate tax determination is uncertain. Deferred tax assets are recognized for deductible temporary differences and unused tax losses to the extent that it is probable that taxable profit will be available against which the temporary differences and the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies 11 Business combinations Business combinations are initially accounted for on a provisional basis. The fair value of assets acquired, liabilities and contingent liabilities assumed are initially estimated by the Parent taking into consideration all available information at the reporting date. Fair value adjustments on the finalization of the business combination accounting is retrospective, where applicable, to the period the combination occurred and may have an impact on the assets and liabilities, depreciation and amortization reported. Patent technology Patent technology is recognized in Intangible assets on the condensed consolidated balance sheets. The Group considers both qualitative and quantitative factors when determining whether the patent technology may be impaired. For the purposes of assessing impairment, the Group follows its accounting policy disclosed in Note 2. In assessing whether there is any indication that the patent technology may be impaired, the Group considers, at minimum, the following indications: External sources of information ● there are observable indications that the patent technology’s value has declined during the period significantly more than would be expected as a result of the passage of time or normal use. ● significant changes with an adverse effect on the Group have taken place during the period, or will take place in the near future, in the technological, market, economic or legal environment in which the entity operates or in the market to which an asset is dedicated. ● market interest rates or other market rates of return on investments have increased during the period, and those increases are likely to affect the discount rate used in calculating an asset’s value in use and decrease the asset’s recoverable amount materially. ● the carrying amount of the net assets of the entity is more than its market capitalization. Internal sources of information ● evidence is available of obsolescence or physical damage of the patent technology. ● significant changes with an adverse effect on the entity have taken place during the period, or are expected to take place in the near future, in the extent to which, or manner in which, the patent technology is used or is expected to be used. These changes include the patent technology becoming idle, plans to discontinue or restructure the operation to which the patent technology belongs, and plans to dispose of the patent technology before the previously expected date. ● evidence is available from internal reporting that indicates that the economic performance of the patent technology is, or will be, worse than expected. (4) Financial risk management The Group is exposed to various financial risks such as market risk (exchange risk, interest rate risk), credit risk and liquidity risk due to various activities. The Group’s overall risk management policy focuses on volatility in the financial markets and focuses on minimizing any negative impact on financial performance. Risk management is conducted under the supervision of the finance department according to the policy approved by the Board of Directors. The finance department identifies, evaluates and manages financial risks in close cooperation with the sales departments. The Board of Directors provides written policies on overall risk management principles and specific areas such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments, and investments in excess of liquidity. 12 Market risk management Market risk is the risk of possible losses which arise from the changes of market factors, such as interest rate, stock price, foreign exchange rate, commodity value and other market factors related to the fair value or future cash flows of the financial instruments, such as securities, derivatives and others. a Currency risk The following table sets forth the result of foreign currency translation into Korean won for financial assets and liabilities denominated in foreign currency of the Group as of March 31, 2025 and December 31, 2024: March 31, 2025 USD EUR CHF Assets in foreign currency $ 1,272,464 $ 305,601 $ 591,247 Liabilities in foreign currency 11,334,006 ( 172,887 ) ( 208,705 ) December 31, 2024 USD EUR CHF Assets in foreign currency $ 37,902 $ 278,766 $ 582,222 Liabilities in foreign currency 1,929,368 139,672 160,875 The following table sets forth the impact of strengthening (or weakening) of the Korean won by a hypothetical 10% against each foreign currency on the Group’s after-tax profit (or loss), assuming all other variables remain constant. March 31, 2025 December 31, 2024 Rise Fall Rise Fall USD $ ( 1,006,154 ) $ 1,006,154 $ ( 189,147 ) $ 189,147 EUR 47,849 ( 47,849 ) 13,909 ( 13,909 ) CHF 79,995 ( 79,995 ) 42,135 ( 42,135 ) b Interest rate risk Interest rate risk refers to the risk that interest income and interest expenses arising from deposits or borrowings will fluctuate due to changes in market interest rates in the future, which mainly arises from deposits and borrowings with floating interest rates. The goal of interest rate risk management is to maximize corporate value by minimizing uncertainty caused by interest rate fluctuations. As of the end of the reporting period, there are no financial instruments subject to a variable interest rate. c Price risk Price risk is the risk that the fair value of a financial instrument or future cash flows will change due to changes in market prices other than interest rate or foreign exchange rate. As of the end of the reporting period, the Group is not exposed to commodity price risk. Investments in financial instruments are made on a non-recurring basis according to management’s judgment. 13 Credit risk management Credit risk is the risk of possible losses in an asset portfolio in the events of counterparty’s default, breach of contract and deterioration in the credit quality of the counterparty. For the risk management reporting purposes, the Group manages the credit risk systematically and pursues value maximization and continuous growth of the Group by efficient resource allocation and monitoring non-performing loans. In order to reduce the risks that may occur in transactions with financial institutions, such as cash and cash equivalents and various deposits, the Group conducts transactions only with financial institutions with high creditworthiness. As of March 31, 2025, the Group believes that there are low signs of material default, and the maximum exposure to credit risk as of March 31, 2025 is equal to the book value of financial instruments (excluding cash). Liquidity risk management The Group constantly monitors its liquidity positions to ensure that no borrowing limits or commitments are breached to meet operating capital needs. In estimating liquidity, we also take into account external laws or legal requirements, such as the group’s financing plan, compliance with agreements, internal target financial ratios and currency restrictions. The Group’s liquidity risk analysis details as of March 31, 2025 and December 31, 2024 are as follows: March 31, 2025 Remaining maturity Book Value Cashflow by contract Within a year 1 year to 3 years More than 3 years Financial liabilities $ 4,710,699 $ 4,846,694 $ 4,558,520 $ 288,173 $ Other Payables 8,023,117 8,023,117 8,023,117 - - Lease liabilities 68,359 81,827 46,028 35,800 - Total $ 12,802,176 $ 12,951,639 $ 12,627,666 $ 323,973 $ - December 31, 2024 Remaining maturity Book Value Cashflow by contract Within a year 1 year to 3 years More than 3 years Borrowings $ 2,297,411 $ 2,423,008 $ 1,840,406 $ 35,048 $ 547,555 Other Payables 1,538,643 1,538,643 1,538,643 - - Lease liabilities 80,848 93,537 48,980 44,558 - Total $ 3,916,903 $ 4,055,188 $ 3,428,028 $ 79,605 $ 547,555 Capital risk management Capital includes issued capital, share premium and all other equity reserves attributable to the equity holders of the Group. The primary objective of the Group’s capital management is to maximize the shareholder value. The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group uses the debt ratio as a capital management indicator. This ratio is calculated by dividing total liabilities by total equity, and total liabilities and total equity are calculated based on the amounts in the Group’s consolidated financial statements. 14 The group’s debt ratio as of March 31, 2025 and December 31, 2024 are as follows: March 31, 2025 December 31, 2024 Net borrowings (A) Borrowings $ 4,710,699 $ 2,297,411 Lease liabilities 68,359 78,113 Less: cash and cash equivalents ( 1,595,697 ) ( 341,543 ) 3,183,361 2,033,981 Total equity (B) 132,282,477 143,208,215 Debt ratio (A / B) 2.4 % 1.4 % (5) Fair value measurements Book value and fair value of financial instruments The difference between the carrying amount and fair value of the Group’s financial assets and liabilities as of March 31, 2025 and December 31, 2024 are insignificant. Fair value hierarchy All financial assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: ● Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities ● Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable ● Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable Fair values of the Group’s financial assets and liabilities as of March 31, 2025 and December 31, 2024 , which are accounted as amortized cost, are categorized as Level 3. Recurring transfer between levels of the fair value hierarchy There is no transfer of fair value hierarchy among Level 1, Level 2 and Level 3 for the nine months ended March 31, 2025 and 2024, respectively. 15 (6) Financial instruments by category The carrying value of financial instruments category as of March 31, 2025 and December 31, 2024 are as follows: March 31, 2025 Fianancial assets: Financial assets at amortized cost Financial assets at fair value Financial liabilities at amortized cost Total Cash and cash equivalents $ 1,595,697 $ - $ - $ 1,595,697 Trade and other receivables 799,537 - - 799,537 Other current financial assets 54,552 - - 54,552 Other non-current financial assets 349,964 - - 349,964 Fianancial liabilities: Trade and other payables - - 7,296,793 7,296,793 Accrued expenses - - 726,325 726,325 Current financial liabilities - - 4,457,657 4,457,657 Non-current financial liabilities - - 253,042 253,042 December 31, 2024 Fianancial assets: Financial assets at amortized cost Financial assets at fair value Financial liabilities at amortized cost Total Cash and cash equivalents $ 341,543 $ - $ - $ 341,543 Trade and other receivables 933,824 - - 933,824 Other current financial assets 54,422 - - 54,422 Other non-current financial assets 329,252 - - 329,252 Fianancial liabilities: Trade and other payables - - 1,078,760 1,078,760 Accrued expenses - - 459,883 459,883 Borrowings - - 2,297,411 2,297,411 Net gains or losses by financial instrument category for the three-months ended March 31, 2025 and 2024 are as follows: For the three-month ended March 31, 2025 For the three-month ended March 31, 2024 Amortized cost: Interest income $ 4,318 $ 5,526 Foreign exchange gains 491 11,726 Gains on foreign currency translation 18,582 12,619 Interest expense ( 16,399 ) ( 13,545 ) Losses on foreign currrency transaction ( 9,274 ) ( 20,695 ) Losses on foreign currrency translation ( 15,507 ) ( 47,391 ) (7) Cash and cash equivalents The Group considers all money market funds and highly liquid financial instruments with original maturities of three months or less to be cash equivalents. March 31, 2025 December 31, 2024 Cash and cash equivalents $ 1,595,697 $ 341,543 16 (8) Trade and other receivables, net All trade receivables are recorded at the invoiced amount and do not bear interest. Amounts collected on trade receivables are included in net cash provided by operating activities in the statements of cash flows. The Group does not have any off-balance sheet credit exposure related to its customers. March 31, 2025 December 31, 2024 Trade receivables $ 860,514 $ 972,036 Less: Allowance for credit losses ( 66,007 ) ( 67,580 ) Net trade receivables 794,507 904,456 Other receivables 5,029 29,368 Total $ 799,537 $ 933,824 (9) Inventories, net Inventories consisted of the following as of March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Merchandised goods $ 764,313 $ 949,724 Less inventory reserves ( 27,683 ) ( 27,617 ) $ 736,630 $ 922,107 (10) Other financial assets Details of other financial assets as of March 31, 2025 and December 31, 2024 are as follows: March 31, 2025 December 31, 2024 Current Non-current Current Non-current Leasehold guarantee deposits $ 54,552 $ 22,053 $ 54,422 $ 21,669 Other deposits - 1,091 - 1,088 Loan - 326,820 - 306,494 Total $ 54,552 $ 349,964 $ 54,422 $ 329,252 (11) Other assets Details of other assets as of March 31, 2025 and December 31, 2024 are as follows: March 31, 2025 December 31, 2024 Current Non-current Current Non-current Prepayments $ 71,800 $ - $ 53,908 $ - Prepaid expenses 208,619 - 20,646 - Total $ 280,419 $ - $ 74,555 $ - 17 (12) Equity method investment Details of investment under the equity method are as follows: March 31, 2025 December 31, 2024 Location Main business Ownership Book value Ownership Book value Taction Co., LTD Korea Software development 33.3 % $ - 33.3 % $ - The summarized financial information of investment under the equity method as of the closing date and for the current period is as follows: As of and for the year ended December 31, 2024 Comprehensive Assets Liabilities Revenue Net loss loss Taction Co., LTD $ 97,936 $ 32,785 $ - -₩ 74,740 $ - 74,740 There is no equity method valuation applied on investments in associate for the three-months ended March 31, 2025 or 2024. Taction Co., Ltd. was incorporated to engage in software development and IT consulting. As no practical plan to generate revenue and maintain going-concern basis in the foreseeable future was provided, the Parent recognized impairment loss amounting to acquisition cost. (13) Equipment and vehicles, net Equipment and vehicles consist as of March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Office equipment $ 26,976 $ 26,912 Tools and instruments 22,741 22,687 Machinery and equipment 22,304 22,251 Facilities 197,787 210,613 Vehicles 9,397 9,375 279,206 291,838 Less accumulated depreciation ( 278,207 ) ( 289,504 ) Equipment and vehicles, net $ 999 $ 2,334 (14) Goodwill Changes of goodwill for the for the three-months ended March 31, 2025 and 2024 are as follows: For the three-months ended March 31, 2025 Beginning Business combination Impairment loss Effects of changes in exchange rate Ending Goodwill $ 24,354,066 $ - $ - $ 58,124 $ 24,412,190 For the three-months ended March 31, 2024 Beginning Business combination Impairment loss Effects of changes in exchange rate Ending Goodwill $ 27,765,222 $ - $ - $ ( 1,183,341 ) $ 26,581,881 18 (15) Intangible assets, net The acquired intangible assets, all of which are being amortized, have an average useful life of approximately 20 years. Intangible assets consist of the following as of March 31, 2025 and December 31, 2024. For the year ended March 31, 2025 Average useful life Gross carrying amount Accumulated amortization Net carrying amount Technology license 20 years $ 98,061 $ 78,691 $ 19,371 Customer relationship 20 years 580,489 261,220 319,269 Patent technology 20 years 165,207,671 19,387,021 145,820,650 $ 165,886,221 $ 19,726,932 $ 146,159,289 For the year ended December 31, 2024 Average useful life Gross carrying amount Accumulated amortization Net carrying amount Technology license 20 years $ 97,828 $ 78,439 $ 19,389 Customer relationship 20 years 579,107 231,643 347,464 Patent technology 20 years 164,814,319 17,124,320 147,690,000 $ 165,491,254 $ 17,434,402 $ 148,056,852 Accumulated amortization expense for intangible assets is $ 2,272,817 and $ 2,896,174 for the three-months ended March 31, 2025 and 2024, respectively. (16) Short-term borrowings The Group has a loan agreement with Bellevue Capital Management Europe AG and as of March 31, 2025, the outstanding balance was $ 860,000 ( 3.00 % interest rate at March 31, 2025), which matures in March 2025 . The Group has multiple loan agreements with an individual and as of March 31, 2025, the outstanding balance was $ 1,034,657 ( 0 % interest rate at March 31, 2025), which mature various dates in 2025 . The Group has a loan agreement with Dukseong Co.,Ltd and as of March 31, 2025, the outstanding balance was $ 800,000 ( 7.00 % interest rate at March 31, 2025), which matures in July 2025 . The Group has a loan agreement with BGLSI and as of March 31, 2025, the outstanding balance was $ 1,628,000 ( 0 % interest rate at March 31, 2025), which matures in July 2025 . The Group has multiple loan agreements with an individual and as of March 31, 2025, the outstanding balance was $ 135,000 ( 0 % interest rate at March 31, 2025), which mature various dates in 2025 . The Group has a loan agreement with Bellevue Capital Management Europe AG and as of December 31, 2024, the outstanding balance was $ 600,000 ( 3.00 % interest rate at December 31, 2024), which matures in March 2025 . The Group has a loan agreement with Bellevue Capital Management Europe AG and as of December 31, 2024, the outstanding balance was $ 260,000 ( 3.00 % interest rate at December 31, 2024), which matures in July 2025 . The Group has a loan agreement with Bellevue Life Sciences Acquisition Corp. and as of December 31, 2024, the outstanding balance was $ 300,000 ( 3.96 % interest rate at December 31, 2024), which matures in October 2025 . The Group has a loan agreement with an individual and as of December 31, 2024, the outstanding balance was $ 50,000 ( 7.00 % interest rate at December 31, 2024), which matures in December 2025 . The Group has multiple loan agreements with an individual and as of December 31, 2024, the outstanding balance was $ 408,163 ( 0 % interest rate at December 31, 2024), which mature various dates in 2025 . 19 (17) Long-term debt The Group has long-term debt agreements with individuals and as of March 31, 2025, the total outstanding balance was $ 253,042 ( 4.6 % interest rate at March 31, 2025), which matures in 2030 . The Group has long-term debt agreements with individuals and as of December 31, 2024, the total outstanding balance was $ 497,615 ( 4.6 % interest rate at December 31, 2024), which matures in 2030 . (18) Post-employment benefits The Group maintains a defined contribution retirement benefit plan for its employees. The Group is obligated to pay fixed contributions to an independent fund, and the amount of future retirement benefits to be paid to employees is determined by the contributions made to the fund, etc., and the investment income generated from those contributions. Plan assets are managed independently from the Group’s assets in a fund managed by a trustee. Danatein’s pension plan has converted from the DB type to the DC type at the end of March 31, 2017, and is obligated to pay severance payment as DB type which incurred before the March 31, 2017. Meanwhile, expenses recognized by the Group in relation to the defined contribution retirement benefit plan for the three-months ended March 31, 2025 and 2024 are $ 194,659 and $ 58,442 , respectively. (19) Related party transactions As of March 31, 2025, the Group’s related parties are as follows: Type Related parties Ultimate parent entity Bellevue Capital Management LLC Major shareholder of the Parent BCM Europe AG Subsidiaries RSM, VAXIMM, Darnatein, OSR Holdings, Inc. Associates Taction Co., Ltd. Other related parties Bellevue Global Life Sciences Investors LLC There are no sales and procurement transactions and treasury transactions with related parties for the three-months ended March 31, 2025 and 2024. The Group acquired Vaximm from BCM Europe AG in December 2022 (Transaction between entities under common control), which is disclosed in detail in Note 27 Business combinations. Details of receivables and payables from related party transactions as at March 31, 2025 and December 31, 2024 are as follows: March 31, 2025 Related parties Short-term borrowings Key management Individuals $ 641,323 Bellevue Global Life Sciences Acquisition Corp Other related parties $ 300,716 Bellevue Capital Management Europe AG Major shareholder of the Parent $ 862,053 December 31, 2024 Related parties Short-term borrowings Key management Individuals $ 340,136 20 Compensations paid or accrued to key management of the Parent for the three months ended March 31, 2025 and 2024 are as follows: For the three-month ended March 31, 2025 March 31, 2024 Salaries $ 80,701 $ 104,344 The Group’s key management includes registered directors who have important authority and responsibility for planning, operation, and control of the Group’s business activities. No collateral or guarantee were provided for related parties and were received from related parties as of March 31, 2025 and December 31, 2024. (20) Administrative expenses Details of administrative expenses for the three months ended March 31, 2025 and 2024 are as follows: For the three months ended March 31, 2025 For the three months ended March 31, 2024 Salary $ 225,182 $ 227,999 Retirement payment 197,325 29,221 Employee benefits 12,970 12,349 Travel expenses 6,226 13,379 Entertainment expenses 5,880 8,218 Communication cost 426 609 Tax and due 5,144 7,135 Depreciation cost 378 16,936 Amortization of intangible assets 2,272,817 2,896,174 Rental cost 28,506 4,633 Repair fee 102 72 Insurance cost 3,164 8,180 Vehicle maintenance fee 6,651 3,363 Allowance for expected credit losses ( 1,751 ) 4,216 Research and development expenses 90,149 46,715 Travel expenses 426 757 Training cost 1,165 - Publishing fee 15 127 Office supplies fee 71 83 Consumable cost 15,689 6,039 Commisions and professional fee 211,662 251,069 Building management fee 4,314 4,569 Advertising expenses - 486 Total $ 3,086,512 $ 3,542,330 (21) Income taxes In assessing the reliability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon these considerations as of March 31, 2025 and December 31, 2024, the Company had a full valuation allowance for the net deferred tax assets on one of its Asian subsidiaries and certain of its European subsidiaries. Also, as of March 31, 2025 and December 31, 2024, the Company had a partial valuation allowance offsetting certain deferred tax assets of another one of its Asian subsidiaries. Management believes that it is more likely than not that the Company will realize the benefits of the remaining deductible differences, net of valuation allowances, at March 31, 2025 and December 31, 2024. 21 The Company did not have any material uncertain tax positions, which should be recognized in the condensed consolidated financial statements as of March 31, 2025. In addition, the Company did not have any unrecognized tax benefits, which, if recognized, would affect the effective tax rate for the nine months then ended. (22) Loss per share Basic loss per share for the three months ended March 31, 2025 and 2024 are calculated as follows: (The United States Dollar in unit and number of shares) For the three months ended March 31 2025 2024 Net loss (A) $ ( 11,392,814 ) $ ( 3,355,366 ) Weighted average number of ordinary shares outstanding (B) 10,906,233 5,622,954 Basic loss per ordinary share (A/B) $ ( 1.04 ) $ ( 0.60 ) Weighted average number of ordinary shares outstanding for the three months ended March 31, 2025 and 2024 are calculated as follows: For the three-months ended March 31 (Number of shares) 2025 2024 Ordinary shares outstanding at the beginning 2,155,000 5,622,954 Changes due to business combination 8,751,233 - Weighted average number of ordinary shares outstanding 10,906,233 5,622,954 The group’s diluted loss per share is the same as basic loss per share because there is no dilution effect. (23) Business combinations The Parent acquired Darnatein (a novel drug development company) (referred as the “Acquiree” herein) as it executes on its business plan to further expand its business by discovering and investing in innovative healthcare companies with cutting-edge technology and creating operating synergies between subsidiaries. As the Parent and the Acquiree former owners exchanged only equity interests in business combination transactions and the acquisition-date fair value of the Parent’s equity interests could not reliably be measured, the Parent determined the amount of goodwill by using the acquisition-date fair value of the Acquiree equity interests instead of the acquisition-date fair value of the shares transferred. Vaximm (2022 acquisition) and Darnatein can be reasonably categorized as “(bio)platform companies” which differ from the companies only with drug development pipelines. Bioplatforms can be defined as biotechnologies that, once created and harnessed, allow for the intentional and repeatable generation of multiple medicines or agricultural and sustainability products. Both Vaximm and Darnatein are biotech companies whose drug R&D pipelines are based on their own in-house platform technologies that are protected by either patents or trade secrets. According to the “hub-and-spoke” business model of OSR Holdings, the Parent has assumed the position to either own or control the technology platforms of Vaximm and Darnatein through the Business Combinations, which means that the Parent will be able to launch new services to external clients or create additional drug candidates by a new start-up or Joint Venture with business partners based on their direct ownership or control over the platform technologies acquired from the Business Combinations. Such quality would support the goodwill recognition. Details of business combinations that occurred for the three months ended March 31, 2025 and 2024 are as follows: For the year ended December 31, 2023 Acquiree Main business Acquisition date Ownership (%) Total consideration Darnatein New drug development, etc. March 31, 2023 100.0 % $ 81,436,889 22 Business combination in 2023 - Darnatein Details of identifiable assets and liabilities and goodwill, which are recognized as the result of the acquisition of Darnatein completed during the year ended December 31, 2023 are set forth in the table below. Darnatein Fair value of total identifiable assets: Current assets: Cash and cash equivalents $ 68,600 Trade and other receivables 4,338 Current tax assets 285 Non-current assets: Equipment and vehicles 7,307 Right-of-use assets 73,114 Intangible assets 73,948,145 Non-current financial assets 1,101 74,102,891 Fair value of total identifiable liabilties: Current liabilities: Trade and other payables 70,240 Lease liabilities 33,612 Current other liabilities 6,497 Non-current liabilities: Severance payment 1,889 Lease liabilities 58,784 Deferred tax liabilities 19,407,543 19,578,565 Fair value of identifiable net assets 54,524,326 Goodwill 26,912,563 Purchase consideraation transferred (*) $ 81,436,889 For the three months ended March 31, 2025, the Group’s condensed consolidated statement of operations included $ 146,757 of operating loss, which included $ 39,177 of wages and salaries, from Darnatein. The following unaudited pro forma consolidated results of operations assume that the acquisition of Darnatein was completed as of January 1, 2023. (Unaudited) three months ended March 31, 2025 2024 Total operating revenues $ - $ - Net loss attributable to OSR Holdings ( 141,742 ) ( 751,979,471 ) Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results. The acquisition-date fair value of Darnatein was measured using the Discount Cash Flow (“DCF”) method and the Risk adjusted Net Present Value (“r-NPV”) method by outside valuation professionals. Key estimations and assumptions used in measuring the fair value of Darnatein are as follows: ● 19.88 % of discount rate (Weighted Average Cost of Capital: WACC) used in discounting operating cashflows ● Patent technology will generate operating revenue for 20 years (*1) OSR ordinary shares issued for purchase consideration of $ 81,436,889 is 590,425 shares at $ 138 per share. The number of OSR ordinary shares to be issued was determined based on negotiation with former owners of Darnatein. 23 Patent technology - Darnatein Details of patent technology recognized from the acquisition of Darnatein that occurred during the year ended December 31, 2023 are set forth in the table below. Amount Patent technology project code: DRT 101 $ 73,513,419 DRT-101 is a synthetic bio-signaling molecule that replaces BMPRII-binding segments of BMP-7, one of the bone-forming proteins, with high affinity ActRII binding segments of Activin A, a member of the transforming growth factor β (TGF-β) superfamily along with BMP-7. In nature, endogenous BMP7 promotes chondrogenesis in damaged cartilage tissue by signaling primarily via the type II receptor BMPRII and to a lesser extent via the activin type II receptor ActRII, which it binds with lower affinity. DRT-101 amplifies intracellular regeneration signaling capacity compared to natural BMP-7 and allows for regeneration and restoration of mechanically depleted cartilage cells to normal levels. Osteoarthritis is the most common joint disorder in the aging population. Although surgical treatment of osteoar-thritis can reduce pain and improve joint mobility and function, the operative management of osteoarthritis is associated with significant cost and morbidity. Unmet medical needs for DRT-101 for Osteoarthritis are enormous specially with aging population. Unique market opportunity of DRT-101 relies on novel Mechanism of Action of DRT-101 that can lead to potential first-in-class DMOAD (Disease-Modifying Osteoarthritis Drug) in the market. Darnatein is pursuing pre-clinical studies of DRT-101 targeting osteoarthritis and plans to file Investigational New Drug Application (IND) to the U.S. Food and Drug Administration by 2025 for Phase 1 clinical trial, with aims of FDA approval by 2032. Darnatein will seek to create cashflow via licensing deals from the preclinical and clinical developments of its pipeline assets. Net cashflow from the acquisitions for the three months ended March 31, 2025 and 2024 are as follows: 2025 Net cash outflow arising from acquisition of Darnatein: Cash consideration $ - Less: cash and cash equivalent balances acquired - $ - 2024 Net cash outflow arising from acquisition of VAXIMM and RMC: Cash consideration $ - Less: cash and cash equivalent balances acquired - $ - (24) Commitment and contingencies The Group has no pending litigation cases arising in the ordinary course of business as of March 31, 2025 and December 31, 2024. The Parent has entered into various contractual commitments related to the acquisition of VAXIMM including a future financial obligation of CHF 7,416 underlying as of March 31, 2025. Meanwhile, both parties have agreed to remove section 6.1.3 of the license agreement that states that in the event of the Parent’s sale to a third party, the Licensor shall reimburse the Licensee for reasonable costs and expenses incurred in the preparation, submission, maintenance, prosecution, and enforcement process. (25) Segment reporting The Group operates in one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assessing performance. The Group’s CODM role is fulfilled by the Executive Leadership Team, who allocates resources and assesses performance based upon consolidated financial information. The geographic segments for the long-lived assets and ROU assets are disclosed below. There are no external customers that account for more than 10% of sales for the reporting period. (26) Subsequent events The Group has evaluated subsequent events from the balance sheet date through May 7, 2025, the date at which the condensed consolidated financial statements were available to be issued and determined that there are no other items to disclose. 24