OSR Health, Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2026 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to OSR HOLDINGS, INC. (Exact name of registrant as specified in its charter) Delaware 001-41390 84-5052822 (State or other jurisdiction of incorporation or organization) (Commission File Number) (I.R.S. Employer Identification Number) 10900 NE 4th Street , Suite 2300 Bellevue , WA 98004 (Address of principal executive offices) (Zip Code) ( 425 ) 635-7700 (Registrant’s telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class: Trading Symbol: Name of Each Exchange on Which Registered: Common stock, par value $0.0001 per share OSRH The Nasdaq Stock Market LLC Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share OSRHW The Nasdaq Stock Market LLC Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No  ☒ As of May 10, 2026, there were 35,104,995 shares of common stock, par value $0.0001 per share issued and outstanding.     TABLE OF CONTENTS PART I Financial Information 1 Item 1. Financial Statements 1 Condensed Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025 1 Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three months ended March 31, 2026 and 2025 2 Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the three months ended March 31, 2026 and 2025 3 Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2026 and 2025 4 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Item 3. Quantitative and Qualitative Disclosures About Market Risk 31 Item 4. Controls and Procedures 31 PART II Other Information 33 Item 1. Legal Proceedings 33 Item 1A. Risk Factors 33 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 33 Item 3. Defaults Upon Senior Securities 34 Item 4. Mine Safety Disclosures 34 Item 5. Other Information 34 Item 6. Exhibits 35 Signatures 36   i   PART I—FINANCIAL INFORMATION Item 1. Financial Statements OSR HOLDINGS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In the United States Dollar, except share data) (Unaudited) (Unaudited) March 31, December 31, 2026 2025 Assets Current assets: Cash and cash equivalents $ 1,566,701 $ 1,700,273 Trade and other receivables, less allowance for credit losses of $ 59,190.83 and $ 62,370.40 as of March 31, 2026 and December 31, 2025, respectively 319,650 392,096 Inventories, net 462,455 196,432 Prepaid income taxes 2,378 1,750 Other current financial assets 259,469 262,722 Other current assets 312,356 263,548 Total current assets 2,923,010 2,816,821 Equipment and vehicles, net 153,508 169,130 Operating lease right-of-use assets, net 46,748 60,425 Intangible assets, net 138,967,817 142,462,634 Goodwill 29,728,552 24,949,806 Other non-current financial assets 178,024 578,917 Deferred tax assets 190,114 200,515 Total assets $ 172,187,773 $ 171,238,247 Liabilities and Stockholders’ Equity Current liabilities: Short-term borrowing $ 2,224,135 $ 2,323,471 Short-term corporate bond 2,212,805 2,019,805 Trade and other payables 8,262,578 7,830,104 Accrued expenses 1,125,221 957,879 Operating lease liabilities-current 37,918 46,961 Other current liabilities 978,215 971,445 Income taxes payable 485,191 485,452 Derivative liabilities 2,374,582 2,530,176 Current portion - LT debt 196,896 - Total current liabilities 17,897,541 17,165,292 Long-term debt 272,914 - Operating lease liabilities- non-current 8,125 12,551 Other non-current liabilities 66,539 1,697 Deferred tax liabilities 26,551,535 27,021,305 Total liabilities 44,796,655 44,200,845 Stockholders’ equity: Common stock, $ 0.0001 par value, Authorized 100,000,000 shares; 33,299,755 shares and 26,597,769 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively 3,330 2,660 Additional paid-in capital 145,618,062 110,966,975 Accumulated deficit ( 40,101,342 ) ( 37,169,881 ) Accumulated other comprehensive income ( 1,660,820 ) 3,835,861 Non-controlling interests 23,531,889 49,401,788 Total stockholders’ equity 127,391,119 127,037,403 Total liabilities and stockholders’ equity $ 172,187,773 $ 171,238,247 The accompanying notes are an integral part of the condensed consolidated financial statements.   1   OSR HOLDINGS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) (In the United States Dollar) Three months ended March 31, 2026 2025 Net sales $ 484,057.41 $ 761,271.53 Cost of sales 323,776.38 592,585.93 Gross profit 160,281.03 168,685.60 Selling, general, and administrative expenses 3,827,464.56 3,086,511.68 Operating loss ( 3,667,183.53 ) ( 2,917,826.08 ) Other income (expense): Interest income 17,475.21 4,317.60 Interest expense ( 31,224.22 ) ( 16,398.73 ) Other income 4,733.70 26,494.26 Other expenses ( 243,289.19 ) ( 8,489,401.10 ) Loss before income taxes ( 3,919,488.03 ) ( 11,392,814.05 ) Income tax benefit 452,313.95 — Net loss ( 3,467,174.08 ) ( 11,392,814.05 ) Attributable to: OSR Holdings Co., Ltd. and subsidiaries ( 2,931,461.08 ) ( 11,392,814.05 ) Non-controlling interests ( 535,713.00 ) — Other comprehensive income for the year, net of tax Gain on foreign currency translation ( 6,501,176.78 ) 467,075.70 Total comprehensive loss for the year $ ( 9,968,350.86 ) $ ( 10,925,738.35 ) Attributable to: OSR Holdings Co., Ltd. and subsidiaries ( 8,428,141.86 ) ( 10,925,738.35 ) Non-controlling interests ( 1,540,209.00 ) — Loss per share attributable to OSR Holdings Co., Ltd. and subsidiaries Basic loss per ordinary share $ ( 0.09 ) $ ( 1.04 ) The accompanying notes are an integral part of the condensed consolidated financial statements.   2   OSR HOLDINGS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) (In the United States Dollar) Common stock Additional paid-in Retained Earnings (accumulated Accumulated other comprehensive Income Non- controlling Total stockholders’ Shares Amounts capital deficit) (loss) interests equity 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 Balance at January 1, 2026 26,597,769 $ 2,660 $ 110,966,975 $ ( 37,169,881 ) $ 3,835,861 $ 49,401,788 $ 127,037,403 Net loss — — — ( 2,931,461 ) — ( 535,713 ) ( 3,467,174 ) Foreign currency translation adjustment — — — — ( 5,496,681 ) ( 593,377 ) ( 6,090,058 ) Business Combination — — 27,804,903 — — 3,916,967 31,721,870 Acquisition of non-controlling shares 5,323,986 532 5,993,946 — — ( 28,657,776 ) ( 22,663,298 ) Common stock issued by ELOC program 1,378,000 138 852,237 — — — 852,375 Balance at March 31, 2026 33,299,755 $ 3,330 $ 145,618,062 $ ( 40,101,342 ) $ ( 1,660,820 ) $ 23,531,889 $ 127,391,119 The accompanying notes are an integral part of the condensed consolidated financial statements.   3   OSR HOLDINGS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In the United States Dollar) Three months ended March 31, 2026 2025 Cash flows from operating activities: Net loss $ ( 3,467,174.08 ) $ ( 11,392,814.05 ) Adjustments to reconcile net (loss) income to cash used in operating activities: Income tax benefit ( 452,313.95 ) - Depreciation 7,898.94 377.68 Amortization 2,417,860.23 2,272,817.11 Lease expense 14,332.91 13,423.65 Bad debts 57.42 ( 1,750.80 ) Severance pay 50,492.30 152,087.03 Commissions and professional fees 13,384.01 - Merger and acquisition costs - 8,464,578.60 Loss on foreign currency translation 212,229.17 ( 3,074.59 ) Changes in operating assets and liabilities: Decrease in trade and other receivables 109,121.67 139,567.38 Decrease(increase) in inventories, net ( 65,535.27 ) 189,465.50 Increase in other current assets ( 6,216.71 ) ( 11,598.99 ) Increase in trade and other payables 11,449.29 22,356.35 Increase in accrued expenses 88,390.30 94,922.04 Decrease in lease liabilities ( 10,579.05 ) ( 13,423.65 ) Increase in tax payables 30,150.26 34.98 Increase in other liabilities 44,495.64 8,962.47 Net cash used in operating activities ( 1,001,956.92 ) ( 64,069.29 ) Cash flows from investing activities: Decrease in deposits 922.77 - Disposal of equipment and vehicles - 1,000.38 Increase in long-term loan - ( 14,538.66 ) Increase in cash and cash equivalents from business combination 10,754.71 1,199,128.80 Net cash provided by investing activities 11,677.48 1,185,590.52 Cash flows from financing activities: Proceeds from short-term borrowing 136,503.86 149,381.14 Repayment of short-term borrowing ( 39,287.71 ) - Proceeds from issuance of common stock 844,885.56 - Net cash provided by financing activities 942,101.71 149,381.14 Net change in cash and cash equivalents ( 48,177.73 ) 1,270,902.37 Effects of changes in exchange rate on cash and cash equivalents ( 85,393.40 ) ( 16,748.58 ) Cash and cash equivalents at beginning of year 1,700,272.51 341,543.11 Cash and cash equivalents at end of year $ 1,566,701.38 $ 1,595,696.90 Supplemental disclosures of cash flow information: Cash paid for interest $ 31,660.11 $ 16,990.64 Cash paid for income taxes (net of refunds received) ( 30,150.26 ) ( 34.98 ) The accompanying notes are an integral part of the condensed consolidated financial statements.   4   OSR HOLDINGS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS March 31, 2026 and 2025 (UNAUDITED) (1) Organization and nature of business OSR Holdings, Inc. (the Company or OSR Holdings) and its subsidiaries (collectively the Group) are a global healthcare company dedicated to advancing healthcare outcomes and improving the quality of life for people and their families. The Group aims to build and develop a robust portfolio of innovative and potentially transformative therapies and healthcare solutions. The Group’s current operating businesses (through the four wholly owned subsidiaries) include (i) developing oral immunotherapies for the treatment of cancer, (ii) developing design-augmented biologics for age-related and other degenerative diseases and (iii) neurovascular intervention medical device and systems distribution in Korea. The Group’s vision is to acquire and operate a portfolio of innovative health-care related companies globally. The Company (formerly known as Bellevue Life Sciences Acquisition Corp. or BLAC) was incorporated in Delaware on February 25, 2020. The Company was incorporated for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies. On February 14, 2025 (the “Closing Date”), the Company consummated its previously announced business combination (the “Business Combination”) with OSR Holdings Co., Ltd., a corporation organized under the laws of the Republic of Korea (“OSRK” or “the Parent”), pursuant to the Amended and Restated Business Combination Agreement dated May 23, 2024, as amended on December 20, 2024 (the “Business Combination Agreement”). The Business Combination Agreement was entered into among the Company, OSRK, and certain OSRK stockholders that executed joinder agreements thereto. In connection with the consummation of the Business Combination, the Company changed its name from “Bellevue Life Sciences Acquisition Corp. or BLAC” to “OSR Holdings, Inc.” The Business Combination was consummated on February 14, 2025, which, for accounting and reporting purposes under U.S. generally accepted accounting principles (US-GAAP), was treated as the equivalent of OSR Holdings Co., Ltd. exchanging its stock for the net assets of OSR Holdings, Inc., accompanied by an equity recapitalization of OSR Holdings, Inc, which was determined to fall within the scope of Accounting Standards Codification (ASC) 805 Business Combinations. OSR Holdings, Inc. was treated as the acquired company, and its net assets were stated at historical cost, with no goodwill or other intangible assets recorded. The excess of the fair value of shares exchanged to OSR Holdings, Inc. over the fair value of OSR Holdings, Inc’s identifiable net assets acquired represented compensation for the service of a stock exchange listing for its shares and was expensed as incurred. The identifiable net assets were negative $ 9.3 million, which consists of cash and cash equivalents ($ 1.2 million), current financial assets ($ 1.0 million), other assets ($ 0.1 million), accounts and other payable ($ 6.2 million), other current financial liabilities ($ 4.2 million), other liabilities ($ 1.2 million). Details of shareholders as of March 31, 2026 are as follows: Name of Shareholder Number of ordinary share Percentage of ownership Bellevue Global Life Sciences Investors LLC 1,332,500 4.00 % Bellevue Capital Management Europe AG 8,242,636 24.75 % Bellevue Capital Management LLC 3,123,970 9.38 % Joint Protein Central Co., Ltd. 2,603,759 7.82 % Others 17,996,890 54.05 % Total 33,299,755 100.00 %   5   Details of investments in subsidiaries as of March 31, 2026 are as follows: Name of subsidiary Share capital Percentage of ownership Principal activities VAXIMM AG (“VAXIMM”) 1,091,203,754 100.00 % Biotech (drug development) RMC Co., Ltd. (“RMC”) 35,000,000 100.00 % Medical device distribution Darnatein Co., Ltd. (“Darnatein”) 6,466,667,000 100.00 % Biotech (drug development) OSR Holdings, Inc. (“OSRI”) 2,826,969 100.00 % NASDAQ Listed Company Woori-IO Co., Ltd. (“Woori-IO”) 444,455,000 100.00 % Medical device distribution Key financial information of the subsidiaries at March 31, 2026 are as follows : Name of subsidiary Asset Liability Equity Sales Net Income (loss) VAXIMM AG $ 240,494 $ 249,695 $ ( 9,201 ) $ - $ ( 163,830 ) RMC Co.,Ltd 958,220 671,135 287,085 467,110 ( 11,517 ) Darnatein Co.,Ltd 221,377 1,216,024 ( 994,647 ) - ( 60,746 ) OSR Holdings, Inc.(*1) 58,242,095 13,613,299 44,628,795 - ( 682,587 ) Woori-IO 303,869 1,377,317 ( 1,073,448 ) 16,947 ( 57,003 ) (*1) Aforementioned above, the Company is treated as the acquired company under ASC 805 Business Combinations. As such, it is shown as subsidiary for the subsidiary investment details. Summaries of entities, which are newly included in consolidation scope for the periods ended March 31, 2026 and 2025 are as follows: For the three months ended March 31, 2026 Name of subsidiary Reason Type of purchase consideration Woori-IO Co.,Ltd. Acquisition (*1) Equity swap with shares of OSR,Holdings Co.,Ltd. (*1) The Parent acquired subsidiary in January 26, 2026 and accounted for the acquisitions at January 1, 2026, which is deemed the acquisition date. For the three months ended March 31, 2025 Name of subsidiary Reason Type of purchase consideration OSR Holdings, Inc. Acquisition (*2) Equity swap with shares of the Parent and OSR inc.’s share (*2) 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 in accordance with U.S. generally accepted accounting principles (US-GAAP). 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.   6   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. 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.   7   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. 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.   8   k. Leases The Group is a lessee in several noncancellable operating leases, primarily for plants and main offices. The Group does not have any 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. ● 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.   9   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 US dollars during the consolidation. 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 US dollars are included in current results of comprehensive income. 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.   10   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. p. Compound Financial Instruments Compound financial instruments are convertible bonds that can be converted into equity instruments at the option of the holder. The liability component of a compound financial instrument is recognized initially at the fair value of a similar liability that does not have an equity conversion right and subsequently measured at amortized cost until extinguished on conversion or maturity of the bonds. The equity component is recognized initially on the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. q. Accounting pronouncements adopted as of March 31, 2026 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 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 adopted this ASU as of January 1, 2025 and there is not impact on the Group’s consolidated financial statements.   11   r. Accounting pronouncements issued, but not adopted as of March 31, 2026 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 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 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.   12   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. 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 functional currency of the foreign subsidiary’s operations is the local currency. Therefore, for purposes of the condensed consolidated financial statements, the results of foreign operations are translated from the local currency into U.S. dollars. Local currency assets and liabilities are translated at the rates of exchange on the balance sheet date, and local currency revenues and expenses are translated at average rates of exchange during the period. Resulting translation gains or losses are included in the accompanying consolidated financial statements as a component of accumulated other comprehensive loss.   13   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. 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, 2026, the Group believes that there are low signs of material default, and the maximum exposure to credit risk as of March 31, 2026 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, 2026 and December 31, 2025 are as follows: March 31, 2026 Remaining maturity Book Value Cashflow by contract Within a year 1 year to 3 years More than 3 years Financial liabilities $ 4,906,750 $ 4,952,627 $ 4,679,714 $ 272,914 $ - Other Payables 9,387,799 9,399,205 9,399,205 - - Lease liabilities 46,043 63,103 48,566 14,537 - Total $ 14,340,592 $ 14,414,936 $ 14,127,485 $ 287,451 $ - December 31, 2025 Remaining maturity Book Value Cashflow by contract Within a year 1 year to 3 years More than 3 years Borrowings $ 4,343,276 $ 4,388,129 $ 4,388,129 $ - $ - Other Payables 8,787,983 8,800,013 8,800,013 - - Lease liabilities 59,512 66,555 51,223 15,332 - Total $ 13,190,771 $ 13,254,697 $ 13,239,365 $ 15,332 $ -   14   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. The group’s debt ratio as of March 31, 2026 and December 31, 2025 are as follows: March 31, 2026 December 31, 2025 Net borrowings (A) Borrowings $ 7,281,332 $ 6,873,451 Lease liabilities 46,043 59,512 Less: cash and cash equivalents ( 1,566,701 ) ( 1,700,273 ) 5,760,674 5,232,690 Total equity (B) 127,391,119 127,037,403 Net borrowings & Total equity (A+B) 133,151,793 132,270,093 Debt ratio (A / (A+B)) 4.3 % 4.0 % (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, 2026 and December 31, 2025 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, 2026 and December 31, 2025 , which are accounted for at amortized cost, are categorized as Level 3. Recurring transfer between levels of the fair value hierarchy Fair value hierarchy classifications of the financial instruments that are measured at fair value level 3 as at March 31, 2026 and December 31, 2025 are as follows: March 31, 2026 Level 1 Level 2 Level 3 Total Recurring fair value measurements Financial liabilities at fair value through profit or loss $ - $ - $ 2,374,582 $ 2,374,582 December 31, 2025 Level 1 Level 2 Level 3 Total Recurring fair value measurements Financial liabilities at fair value through profit or loss $ - $ - $ 2,530,176 $ 2,530,176   15   Valuation Techniques and the Inputs Valuation techniques and inputs used in the recurring and non-recurring fair value measurements categorized within Level 3 of the fair value hierarchy as at March 31, 2026 and December 31, 2025 are as follows: The Group did not change any valuation techniques in determining the fair value, which is categorized within Level 3 of the fair value hierarchy. March 31, 2026 Fair Value Level Valuation Techniques Inputs Financial liabilities at fair value through profit or loss $ 2,374,582 3 Tsiveriotis- Fernandes model Stock Volatility, Risk-free rate December 31, 2025 Fair Value Level Valuation Techniques Inputs Financial liabilities at fair value through profit or loss $ 2,530,176 3 Tsiveriotis- Fernandes model Stock Volatility, Risk-free rate (6) Financial instruments by category The carrying value of financial instruments category as of March 31, 2026 and December 31, 2025 are as follows: March 31, 2026 Financial assets: Financial assets at amortized cost Financial assets at fair value Financial liabilities at amortized cost Total Cash and cash equivalents $ 1,566,701 $ - $ - $ 1,566,701 Trade and other receivables 319,650 - - 319,650 Other current financial assets 259,469 - - 259,469 Other non-current financial assets 178,024 - - 178,024 Financial liabilities: Trade and other payables - - 8,262,578 8,262,578 Accrued expenses - - 1,125,221 1,125,221 Current financial liabilities - - 4,633,836 4,633,836 Non-current financial liabilities - - 272,914 272,914 Derivative liabilities - 2,374,582 - 2,374,582 December 31, 2025 Financial assets: Financial assets at amortized cost Financial assets at fair value Financial liabilities at amortized cost Total Cash and cash equivalents $ 1,700,273 $ - $ - $ 1,700,273 Trade and other receivables 392,096 - - 392,096 Other current financial assets 262,722 - - 262,722 Other non-current financial assets 578,917 - - 578,917 Financial liabilities: Trade and other payables - - 7,830,104 7,830,104 Accrued expenses - - 957,879 957,879 Current financial liabilities - - 4,343,276 4,343,276 Derivative liabilities - 2,530,176 - 2,530,176   16   Net gains or losses by financial instrument category for the three-months ended March 31, 2026 and 2025 are as follows: For the three-month ended March 31, 2026 For the three-month ended March 31, 2025 Amortized cost: Interest income $ 17,475 $ 4,318 Foreign exchange gains 381 491 Gains on foreign currency translation 1,907 18,582 Interest expense ( 31,224 ) ( 16,399 ) Losses on foreign currency transaction ( 2,067 ) ( 9,274 ) Losses on foreign currency translation ( 238,308 ) ( 15,507 ) (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, 2026 December 31, 2025 Cash and cash equivalents $ 1,566,701 $ 1,700,273 (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, 2026 December 31, 2025 Trade receivables $ 320,553 $ 381,674 Less: Allowance for credit losses ( 59,191 ) ( 62,370 ) Net trade receivables 261,362 319,304 Other receivables 50,834 72,792 Accrued revenue 7,455 - Total $ 319,650 $ 392,096   17   (9) Inventories, net Inventories consisted of the following as of March 31, 2026 and December 31, 2025: March 31, 2026 December 31, 2025 Merchandised goods $ 262,413 $ 215,971 Finished goods 168,587 - Raw materials 49,980 - Less inventory reserves ( 18,525 ) ( 19,539 ) $ 462,455 $ 196,432 (10) Other financial assets Details of other financial assets as of March 31, 2026 and December 31, 2025 are as follows: March 31, 2026 December 31, 2025 Current Non-current Current Non-current Leasehold guarantee deposits $ 52,861 $ 44,057 $ 55,753 $ 22,612 Other deposits - 2,685 - 1,115 Loan 206,608 131,282 206,969 555,190 Total $ 259,469 $ 178,024 $ 262,722 $ 578,917 (11) Other assets Details of other assets as of March 31, 2026 and December 31, 2025 are as follows: March 31, 2026 December 31, 2025 Current Non-current Current Non-current Prepayments $ 41,132 $ - $ 35,614 $ - Prepaid expenses 271,224 - 227,935 - Total $ 312,356 $ - $ 263,548 $ - (12) Equity method investment Details of investment under the equity method are as follows: March 31, 2026 December 31, 2025 Location Main business Ownership Book value Ownership Book value Taction Co., LTD Korea Software development 33.3 % $ - 33.3 % $ -   18   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 31,2025 Comprehensive Assets Liabilities Revenue Net loss loss Taction Co., LTD $ 48,123 $ 21,203 $ - $ ( 12,958 ) $ ( 12,958 ) There is no equity method valuation applied on investments in associate for the three-months ended March 31, 2026 or 2025. 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, 2026 and December 31, 2025: March 31, 2026 December 31, 2025 Office equipment $ 52,328 $ 35,138 Tools and instruments 22,037 23,242 Machinery and equipment 21,613 22,795 Facilities 310,135 369,450 Vehicles 26,402 9,604 432,515 460,229 Less accumulated depreciation ( 279,007 ) ( 291,099 ) Equipment and vehicles, net $ 153,508 $ 169,130   19   (14) Goodwill Changes of goodwill for the three-months ended March 31, 2026 and 2025 are as follows: For the three-months ended March 31, 2026 Beginning Business combination Impairment loss Effects of changes in exchange rate Ending Goodwill $ 24,949,806 $ 6,405,124 $ - $ ( 1,626,379 ) $ 29,728,552 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 (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, 2026 and December 31, 2025. For the three months ended March 31, 2026 Average useful life Gross carrying amount Accumulated amortization Net carrying amount Technology license 20 years $ 98,103 $ 89,998 $ 8,105 Customer relationship 20 years 562,500 365,625 196,875 Patent technology 20 years 166,320,339 27,557,502 138,762,837 $ 166,980,942 $ 28,013,125 $ 138,967,817 For the three months ended December 31, 2025 Average useful life Gross carrying amount Accumulated amortization Net carrying amount Technology license 20 years $ 100,221 $ 94,586 $ 5,635 Customer relationship 20 years 593,273 355,964 237,309 Patent technology 20 years 168,845,947 26,626,257 142,219,690 $ 169,539,441 $ 27,076,807 $ 142,462,634 Accumulated amortization expense for intangible assets is $ 2,417,860 and $ 2,272,817 for the three-months ended March 31, 2026 and 2025, respectively. (16) Short-term borrowings The Group has a loan agreement with BCM Europe AG and as of March 31, 2026, the outstanding balance was $ 860,000 ( 3.00 % interest rate at March 31, 2026), which matures in March 2027 . The Group has multiple loan agreements with an individual and as of March 31, 2026, the outstanding balance was $ 1,327,629 ( 0 % interest rate at March 31, 2026), which mature various dates in 2026 . The Group has a loan agreement with Duksung Co., Ltd and as of March 31, 2026, the outstanding balance was $ 650,000 ( 7.00 % interest rate at March 31, 2026), which matures in October 2026 . The Group has a loan agreement with BGLSI and as of March 31, 2026, the outstanding balance was $ 1,208,000 ( 0 % interest rate at March 31, 2026), which matures in July 2026 .   20   The Group has a loan agreement with Korea Technology Finance Corporation and as of March 31, 2026, the outstanding balance was $ 62,006 ( 3.73 % interest rate at March 31, 2026), which matures in April 2026 . The Group has a loan agreement with Industrial Bank of Korea and as of March 31, 2026, the outstanding balance was $ 66,076 ( 2.60 % interest rate at March 31, 2026), which matures in April 2026 . The Group has a loan agreement with KB Kookmin Bank and as of March 31, 2026, the outstanding balance was $ 73,867 ( 12.82 % interest rate at March 31, 2026), which matures in May 2026 . The Group has a loan agreement with Korea SMEs and Startups Agency and as of March 31, 2026, the outstanding balance was $ 31,452 ( 3.73 % interest rate at March 31, 2026), which matures in March 2027 . The Group has multiple loan agreements with an individual and as of March 31, 2026, the outstanding balance was $ 105,000 ( 0 % interest rate at March 31, 2026), which mature various dates in 2026 . The Group has a loan agreement with BCM Europe AG and as of December 31, 2025, the outstanding balance was $ 1,062,091 ( 3.00 % interest rate at December 31, 2025), which matures in 2026 . The Group has multiple loan agreements with an individual and as of December 31, 2025, the outstanding balance was $ 1,261,380 ( 0 % interest rate at December 31, 2025), which mature various dates in 2026 . The Group has a loan agreement with Duksung Co., Ltd and as of December 31, 2025, the outstanding balance was $ 650,000 ( 7.00 % interest rate at December 31, 2025), which matures in October 2026 . The Group has a loan agreement with BGLSI and as of December 31, 2025, the outstanding balance was $ 1,218,000 ( 0 % interest rate at December 31, 2025), which matures in 2026 . The Group has multiple loan agreements with an individual and as of December 31, 2025, the outstanding balance was $ 105,000 ( 0 % interest rate at December 31, 2025), which mature various dates in 2026 . The Group has a convertible note agreement with White Lion Capital and as of December 31, 2025, the outstanding balance was $ 46,804 ( 5.00 % interest rate at December 31, 2025), which mature various dates in 2026 . Details of convertible note agreement with White Lion Capital issued on May 6, 2025 and outstanding as of March 31, 2026 are as follows: Classification Details Par value USD 1,110,000 Stated interest rate 5 % Guaranteed yield upon conversion - Exercise price adjustments Issuance of new shares for consideration (paid-in capital increase), stock dividends and capitalization of reserves, mergers, capital reduction, stock split and consolidation, reduction of capital and stock consolidation, etc. Conversion condition Variable Conversion Price. At any time, and from time to time, the Holder may utilize the Variable Conversion Price for conversions of this Note into Common Stock. The Variable Conversion Price shall be a rate per share equal to 95% multiplied by the Market Price (as defined herein) (representing a discount rate of 5%) (the “Variable Conversion Price”). “Market Price” means the lowest daily VWAP of the Common Stock during the fifteen (15) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means the lowest volume-weighted average daily price as reported on the principal securities exchange or trading market where such security is quoted, listed or traded or, if no trading price of such security is available in any of the foregoing manners, the average of the trading prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the NASDAQ stock market or on the principal securities exchange or other securities market on which the Common Stock is then being quoted or traded. The conversion right on the above convertible bonds is classified as other financial liabilities.   21   (17) Long-term debt The Group has long-term debt agreements with Industrial Bank of Korea and as of March 31, 2026, the total outstanding balance was $ 99,115 ( 5.5 % interest rate at March 31, 2026), which matures in 2028 . The Group has long-term debt agreements with individuals and as of March 31, 2026, the total outstanding balance was $ 173,299 ( 0 % interest rate at March 31, 2026), which matures in 2027 . (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, 2026 and 2025 are $ 3,399 and $ 194,659 , respectively. (19) Related party transactions As of March 31, 2026, 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 RMC, VAXIMM, Darnatein, OSR Holdings Co., Ltd. Associates Taction Co., Ltd. Other related parties Bellevue Global Life Sciences Investors LLC Bellevue Global Life Sciences Acquisition Corp There are no sales and procurement transactions and treasury transactions with related parties for the three-months ended March 31, 2026 and 2025. Details of receivables and payables from related party transactions as at March 31, 2026 and December 31, 2025 are as follows: March 31, 2026 Related parties Short-term borrowings BCM Europe AG Major shareholder of the Parent $ 860,000 Bellevue Global Life Sciences Investors LLP Other related parties $ 1,208,000 December 31, 2025 Related parties Short-term borrowings BCM Europe AG Major shareholder of the Parent $ 1,062,091 Key management Individuals 1,261,380 Compensations paid or accrued to key management of the Parent for the three months ended March 31, 2026 and 2025 are as follows: For the three-month ended March 31, 2026 March 31, 2025 Salaries $ 150,837 $ 80,701   22   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, 2026 and December 31, 2025. (20) Administrative expenses Details of administrative expenses for the three months ended March 31, 2026 and 2025 are as follows: For the three months ended March 31, 2026 For the three months ended March 31, 2025 Salary $ 312,886 $ 225,182 Retirement payment 49,110 197,325 Employee benefits 16,818 12,970 Travel expenses 14,597 6,226 Entertainment expenses 11,259 5,880 Communication cost 598 426 Tax and due 8,066 5,144 Depreciation cost 7,899 378 Amortization of intangible assets 2,417,860 2,272,817 Rental cost 26,199 28,506 Repair fee 89 102 Insurance cost 4,281 3,164 Vehicle maintenance fee 6,257 6,651 Allowance for expected credit losses 57 ( 1,751 ) Research and development expenses 113,150 90,149 Travel expenses 613 426 Training cost - 1,165 Publishing fee 17 15 Office supplies fee 919 71 Consumable cost 10,588 15,689 Commissions and professional fee 821,123 211,662 Building management fee 4,984 4,314 Advertising expenses 95 - Total $ 3,827,465 $ 3,086,512 (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, 2026 and December 31, 2025, 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, 2026 and December 31, 2025, 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, 2026 and December 31, 2025.   23   The Company did not have any material uncertain tax positions, which should be recognized in the condensed consolidated financial statements as of March 31, 2026. In addition, the Company did not have any unrecognized tax benefits, which, if recognized, would affect the effective tax rate for the three months then ended. (22) Loss per share Basic loss per share for the three months ended March 31, 2026 and 2025 are calculated as follows: (The United States Dollar in unit and number of shares) For the three months ended March 31 2026 2025 Net loss (A) $ ( 2,931,461 ) $ ( 11,392,814 ) Weighted average number of ordinary shares outstanding (B) 31,212,637 10,906,233 Basic loss per ordinary share (A/B) $ ( 0.09 ) $ ( 1.04 ) Weighted average number of ordinary shares outstanding for the three months ended March 31, 2026 and 2025 are calculated as follows: (Number of shares) For the three months ended March 31 2026 2025 Ordinary shares outstanding at the beginning 26,597,769 2,155,000 Changes due to business combination - 8,751,233 Shares issued due to ELOC 1,006,389 - Acquisition of non-controlling shares 3,608,479 - Weighted average number of ordinary shares outstanding 31,212,637 10,906,233 Diluted loss per share for the three months ended March 31, 2026 and 2025 are calculated as follows: (The United States Dollar in unit and number of shares) For the three months ended March 31 2026 2025 Net loss (A) $ ( 2,573,884 ) $ ( 11,392,814 ) Weighted average number of ordinary shares outstanding (B) 34,268,883 10,906,233 Diluted loss per ordinary share (A/B) $ ( 0.08 ) $ ( 1.04 ) Weighted average number of ordinary shares including diluted effects outstanding for the three months ended March 31, 2026 and 2025 are calculated as follows: (Number of shares) For the three months ended March 31 2026 2025 Weighted average number of ordinary shares outstanding beginning 31,212,637 10,906,233 Diluted effect) Convertible bonds conversion effect 1,794,452 - Diluted effect) Warrant conversion effect 1,261,794 - Weighted average number of ordinary shares outstanding 34,268,883 10,906,233   24   (23) Business combinations The Group acquired Woori-IO (a medical device distribution 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. Woori IO Co., Ltd. (“Woori IO”), acquired in 2026, is considered to be a medical device and digital health platform company, which differs from companies that rely solely on a single product or limited pipeline. Woori IO develops noninvasive biosensing technologies for glucose monitoring and broader health applications, including a proprietary near-infrared spectroscopy (“NIRS”)-based system designed for integration into wearable devices. In line with the “hub-and-spoke” business model of OSR Holdings, Inc., the Parent, through its subsidiary, has obtained control over Woori IO’s biosensing platform, enabling expansion into digital health, wearable technologies, and related applications. The multi-use nature of the platform and expected synergies from integration support the recognition of goodwill in connection with the acquisition. Details of business combinations that occurred for the three months ended March 31, 2026 and 2025 are as follows: For the three months ended March 31, 2026 Ownership Total Acquiree Main business Acquisition date (%) consideration Woori-IO New drug development, etc. January 1, 2026 100.0 % $ 10,453,116 Business combination in 2026 – Woori-IO Details of identifiable assets and liabilities and goodwill, which are recognized as the result of the acquisition of Woori-IO completed during the three months ended March 31, 2026 are set forth in the table below. Woori-IO Fair value of total identifiable assets: Current assets: Cash and cash equivalents $ 10,982 Trade and other receivables 56,497 Inventories 224,406 Other assets 64,810 Non-current assets: Equipment and vehicles 1,829 Right-of-use assets 10,020 Intangible assets 25,604 394,148 Fair value of total identifiable liabilities: Current liabilities: Trade and other payables 371,951 Lease liabilities 506,594 Current other liabilities 14,852 Non-current liabilities: Severance payment 65,986 Deferred tax liabilities 508,733 1,468,116 Fair value of identifiable net assets 6,566,615 Goodwill 6,405,124 Deferred tax liabilities ( 1,444,655 ) Purchase consideration transferred (*) $ 10,453,116   25   For the three months ended March 31, 2026, the Group’s condensed consolidated statement of operations included $ 42,575 of operating loss, which included $ 15,070 of wages and salaries, from Woori-IO. The acquisition-date fair value of Woori-IO 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 Woori-IO are as follows: ● 16.02 % 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 $ 10,453,116 is 84,338 shares at $ 124 per share. The number of OSR ordinary shares to be issued was determined based on negotiation with former owners of Woori-IO. (24) Commitment and contingencies The Group has no pending litigation cases arising in the ordinary course of business as of March 31, 2026 and December 31, 2025. The Parent has entered into various contractual commitments related to the acquisition of VAXIMM including a future financial obligation of CHF 28,898 underlying as of March 31, 2026. 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 8, 2026, the date at which the condensed consolidated financial statements were available to be issued. 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.   26   Item 2. 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.   27   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 %   28   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.”   29   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.   30   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. Item 3. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item. Item 4. Controls and Procedures Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.   31   As required by Rules 13a-15 and 15d-15 under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, management concluded that material weaknesses in internal control over financial reporting existed as of December 31, 2025, including deficiencies relating to (i) the completeness and accuracy of liabilities and (ii) the sufficiency of personnel within the accounting and financial reporting function. As a result of these material weaknesses, management concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2025. As of March 31, 2026, these material weaknesses have not been fully remediated. Accordingly, management concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2026. Management continues to implement remediation measures to address the identified material weaknesses. These measures include, among other things, enhancing review and approval procedures over financial reporting, strengthening processes related to the identification and recording of liabilities, and augmenting accounting and financial reporting personnel. Changes in Internal Control over Financial Reporting Except for the ongoing remediation efforts described above, there have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. However, a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system will be met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.   32   PART II—OTHER INFORMATION Item 1. Legal Proceedings We may from time to time become subject to a range of actual or potential claims, lawsuits and other legal and administrative proceedings (including those described below) that may arise in the ordinary course of business. Some of these claims, lawsuits and other proceedings may range in complexity and result in substantial uncertainty; it is possible that they may result in damages, fines, penalties, non-monetary sanctions, or relief. In March and May of 2025, Company Management became aware of a civil action filed against the Company by Benjamin Securities, Inc., in Supreme Court, New York County, seeking $425,000.00 in brokerage fees and costs that the plaintiff alleges are due and owing. As of March 31, 2026, the matter remains pending. On September 2, 2025, Chardan Capital Markets, LLC filed a complaint (the “Complaint”) in the United States District Court for the Southern District of New York against the Company and Kuk Hyoun Hwang (Chardan Capital Markets, LLC v. OSR Holdings, Inc. et al., No. 1:25-cv-07285-SHS). The Complaint asserts claims for breach of contract and related causes of action. The case has been assigned to Judge Sidney H. Stein, with Magistrate Judge Robert W. Lehrburger designated to handle matters that may be referred in this action. Service of process was waived on September 5, 2025, and an answer to the Complaint was filed on November 4, 2025. On October 6, 2025, the Court entered a Civil Case Management Plan and Scheduling Order setting discovery deadlines. The parties are currently engaged in settlement discussions while discovery proceeds. Item 1A. Risk Factors In addition to the risk factors set forth below and the other information set forth in this report, you should carefully consider the factors discussed under Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 31, 2026 (or “2025 Annual Report”), and in the other reports we file with the SEC before making a decision to invest in our securities. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report or we could face liquidation. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. The risks and uncertainties described in our 2025 Annual Report and below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business, financial condition and operating results. Except as disclosed below, there have been no material changes to the risk factors described in Part I, Item 1A, “Risk Factors,” included in our 2025 Annual Report. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Common Stock Purchase Agreement As previously disclosed on the Company’s Current Report on Form 8-K filed on February 28, 2025, on February 25, 2025, the Company entered into a common stock purchase agreement (the “Common Stock Purchase Agreement”) and a related registration rights agreement (the “White Lion RRA”) with White Lion GBM Innovation Fund (“White Lion”), which agreements were subsequently amended, as disclosed in the Company’s Current Reports on Form 8-K filed on May 12, 2025 and April 9, 2026. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Common Stock Purchase Agreement, as amended. Shares of Common Stock issuable under the Common Stock Purchase Agreement have been registered for resale by the selling stockholder pursuant to the Company’s registration statement on Form S-1, initially filed with the Securities and Exchange Commission on May 28, 2025 and subsequently amended by Amendment No. 1 to Form S-1 filed on June 10, 2025. Pursuant to the Common Stock Purchase Agreement, as amended, the Company has the right, but not the obligation, to require White Lion to purchase, from time to time, shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), in an aggregate gross purchase price of up to the lesser of (i) $78,900,000 and (ii) the Exchange Cap, in each case, subject to certain limitations and conditions set forth therein.   33   As further amended on April 7, 2026, the Common Stock Purchase Agreement was modified to revise certain defined terms, including “Purchase Notice” and “Purchase Notice Limit,” and to introduce additional purchase notice mechanisms, including intraday purchase notices and fixed purchase notices, providing the Company with enhanced flexibility in accessing the equity line. The Company intends to use the net proceeds from any sales of Common Stock under the Common Stock Purchase Agreement for general corporate purposes, including working capital, research and development, and other operating expenses. For the three months ended March 31, 2026, the Company issued an aggregate of 1,378,000 shares of its Common Stock under the Common Stock Purchase Agreement for gross proceeds of approximately $0.85 million. Warrant and Convertible Promissory Notes In connection with the foregoing financing arrangements, on May 12, 2025, the Company issued to White Lion (i) a warrant to purchase shares of Common Stock with an aggregate value of up to approximately $4.0 million (the “2025 Warrant”) and (ii) convertible promissory notes with an aggregate funding amount of approximately $1.0 million (the “2025 Note”). As of March 31, 2026, a portion of the 2025 Warrant remained outstanding with an aggregate value of $2,019,290, and the 2025 Note had been fully repaid. Subsequently, on April 7, 2026, the Company entered into a Note Purchase Agreement with White Lion, pursuant to which the Company issued a senior secured convertible promissory note in the principal amount of $1,055,555.55 (the “2026 Note”). In consideration for the issuance of the 2026 Note, the Company received (i) $500,000 in cash and (ii) a reduction of $2,019,290 of amounts outstanding under 2025 Warrant agreement, resulting in such warrant having no remaining value. The 2026 Note described above was issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder, as a transaction not involving a public offering. A more detailed discussion of the foregoing financing arrangements is included in Part II, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Use of Proceeds from Registered Offerings In connection with the closing of the Company’s business combination in February 2025, approximately $1.2 million remained in the trust account following shareholder redemptions. As of the date of this report, such funds have not yet been released and therefore have not been available for use by the Company. See “Item 3. Legal Proceedings” for additional information regarding certain ongoing matters involving the Company. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Mine Safety Disclosures Not applicable. Item 5. Other Information During the three months ended March 31, 2026, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.   34   Item 6. Exhibits The following exhibits are being filed herewith, or incorporated by reference into, this Quarterly Report on Form 10-Q and are numbered in accordance with Item 601 of Regulation S-K: EXHIBIT INDEX Exhibit No. Description 10.1 Global Exclusive License Agreement, dated April 29, 2026 (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 30, 2026 and incorporated herein by reference) 10.2 Pledge Agreement, dated April 29, 2026 (previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 30, 2026 and incorporated herein by reference) 10.3 Amendment No. 2 to Common Stock Purchase Agreement, dated April 7, 2026 between OSR Holdings, Inc. and White Lion Capital LLC. (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 9, 2026 and incorporated herein by reference) 10.4 Note Purchase Agreement, dated April 7, 2026, between OSR Holdings, Inc. and White Lion Capital LLC. (previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 9, 2026 and incorporated herein by reference) 10.5 Senior Secured Convertible Promissory Note, dated April 7, 2026, between OSR Holdings, Inc. and White Lion Capital LLC. (previously filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 9, 2026 and incorporated herein by reference) 31.1 Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 31.2 Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ** 32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ** 101.INS Inline XBRL Instance Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).   35   SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: May 13, 2026 OSR HOLDINGS, INC. By: /s/ Kuk Hyoun Hwang Name: Kuk Hyoun Hwang Title: Chief Executive Officer By: /s/ Gihyoun Bang Name: Gihyoun Bang Title: Chief Financial Officer   36