What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-14 compared with 2026-05-13 · 142 added, 141 removed, 84 unchanged (77% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

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.

Report”) to “we,” “us” or the “Company” refer to OSR Health, Inc.

References to our “management”

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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.

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

The amendment enhances the Company’s flexibility under its equity

line of credit by introducing intraday and fixed purchase notice mechanisms, each subject to specified conditions and based on discounted

volume-weighted average price (“VWAP”) formulas.

The amendment also provides for related settlement procedures, including

generally one business day settlement, and includes certain threshold price adjustment provisions applicable to specific purchase notices.

Additional information regarding this amendment is set forth in the

Company’s Current Report on Form 8-K filed with the U.S.

Securities and Exchange Commission on April 7, 2026, which is incorporated

herein by reference.

Convertible Note Issuance

On April 7, 2026, the Company entered into a Note Purchase Agreement

with White Lion Capital, LLC, d/b/a White Lion GBM Innovation Fund (“White Lion”), pursuant to which the Company issued a

senior secured convertible promissory note in the principal amount of $1,055,555.55.

In consideration, the Company received $500,000 in cash and a reduction

of approximately $2.0 million of outstanding warrant obligations held by White Lion, resulting in the effective cancellation of such warrant.

The note bears interest at 5% per annum, matures nine months from issuance,

and is convertible into shares of the Company’s common stock at a fixed conversion price of $1.00 per share, subject to adjustment,

or, under certain conditions, at a discounted market-based price.

Conversion is generally restricted until six months following issuance,

subject to certain exceptions, and is further subject to customary beneficial ownership limitations.

The note is secured by substantially

all of the Company’s assets and includes customary covenants and events of default.

Additional information regarding the foregoing transactions is set

forth in the Company’s Current Report on Form 8-K filed with the U.S.

Securities and Exchange Commission on April 7, 2026, which

is incorporated herein by reference.

Appointment of Chief Operating Officer

On March 26, 2026, the Board of Directors of OSR Holdings, Inc.

the appointment of Yeiseok Kim as Chief Operating Officer of the Company, effective April 16, 2026.

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.

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.

Shareholder Loyalty CVR Program

In June 2026, the Company announced a shareholder

loyalty program (the “Loyalty Program”) under which the Company intends to distribute one non-transferable contingent value

right (“CVR”) for each share of the Company’s common stock held of record as of the record date, which is August 14, 2026.

participate, holders must enroll in the Loyalty Program and continuously hold their shares;

enrolled holders would be eligible to receive

additional shares of common stock, at no additional cost, if specified closing-price thresholds are met at four measurement dates over

the twelve months following the record date, as set forth in the table below.

The tiers are cumulative, and a holder that enrolls and

continuously holds through all four measurement dates could receive up to a maximum of five additional shares for each share held on the

record date if all thresholds are met.

Measurement date

Closing-price threshold

Shares delivered per CVR

Cumulative position

The CVRs are non-transferable and have no standalone

value, and the distribution of CVRs and any delivery of shares remain subject to an effective registration statement or an available exemption,

applicable Nasdaq listing requirements, and other conditions.

A more detailed description of the Loyalty Program is available on the Company’s

website at www.osr-health.com/loyaltyprogram.

Information on, or accessible through, the Company’s website is not incorporated by reference

into, and does not form a part of, this Report.

On July 31, 2026, the Company announced that Nasdaq

had informed the Company, in a verbal communication, that the Loyalty Program would not result in any mechanical adjustment to the price

of the Company’s common stock, either upon the distribution of the CVRs or upon the delivery of additional shares to enrolled holders.

This communication relates solely to the exchange’s treatment of the CVR distribution and related share deliveries for price-adjustment

it does not constitute an endorsement of the Loyalty Program and does not address the separate securities-law requirements applicable

to the distribution of the CVRs or the delivery of shares, which remain subject to the Company’s ongoing regulatory process.

Results of Operations

Comparison of the Three Months Ended March 31, 2025 and

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,

Comparison of the Three and Six Months

Ended June 30, 2025 and 2026

The following tables present OSR Health’s

statements of operations for the three and six months ended June 30, 2025 and 2026, and percentage change between the two periods:

Three Months Ended June 30,

Cost of Sales

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Profit (loss) before income taxes

Six Months Ended June 30,

Cost of Sales

Selling, general and administrative expenses

Operating loss

Other income (expense)

Profit (loss) before income taxes

(16,618,012 )

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.

OSR Health’s 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.

Based on cumulative revenue for the first half of 2026, approximately 98% of total revenue was

attributable to RMC.

In addition, Woori IO was first consolidated in the first quarter of 2026.

For the three months ended June 30, 2026, OSR

Health’s net sales decreased by $819,848, or 72%, compared to the same period in the prior year.

Cost of sales decreased at a higher rate

of 79%, or $873,670, resulting in an increase in gross profit of $53,823 for the period.

Overall, gross profit margin increased from approximately

3% in the second quarter of 2025 to 27% in the second quarter of 2026.

This improvement in profitability was driven by

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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.

During the second quarter of 2025, RMC sold previously

held inventory back to the supplier at cost, which resulted in relatively high net sales but temporarily and significantly depressed profitability

for that period.

Excluding this one-time effect, the second quarter of 2026 reflects lower net sales but a more normalized level of profitability.

For the six months ended June 30, 2026, OSR Health’s

net sales decreased by $1,097,062, or 58%, compared to the same period in the prior year.

Cost of sales decreased at a higher rate of

67%, or $1,142,480, resulting in an increase in gross profit of $45,418.

Overall, gross profit margin increased from approximately 11%

in the first half of 2025 to 31% in the first half of 2026.

The overall drivers of this change are the same as those described above for

the second quarter (three months).

However, because the one-time transaction occurred in the second quarter of 2025, the year-over-year

variance for the six-month period appears relatively moderate.

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.

For the three months ended June 30, 2026, OSR

Health’s selling, general and administrative (SG&A) expenses decreased by $2,142,441, or 41%, compared to the same period in the prior

Following the completion of the Business Combination

on February 14, 2025, various costs associated with fulfilling public company obligations began to increase.

This 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 overall increase in these costs was primarily attributable to higher personnel-related expenses and professional

service fees.

Nevertheless, expenses appear to have decreased compared to the prior-year period because the second quarter of 2025 included

significant one-time costs associated with the completion of the Business Combination and related financing activities.

For the six months ended June 30, 2026, OSR Health’s

selling, general and administrative (SG&A) expenses decreased by $1,401,487, or 17%, compared to the same period in the prior year.

The decrease for the six-month period was more moderate than the year-over-year decline in the second quarter (three months) alone, as

the one-time cost increase in the second quarter of 2025 was particularly large.

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.

OSR Health’s 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.

Currently, OSR Health has been experiencing difficulties

in securing R&D-related funding, and as a result, such expenses have not yet been incurred in significant amounts.

However, if financing

efforts progress successfully going forward, OSR Health 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.”

For the three months ended June 30, 2026, OSR

Health’s operating loss decreased by $2,196,262, or 42%, compared to the same period in the prior year

For the six months ended June 30, 2026, operating

loss decreased by $1,446,906, or 18%, compared to the same period in the prior year.

This increase was

at a level generally consistent with the amount and percentage increase in SG&A expenses discussed in the section titled “Selling,

General and Administrative Expenses.”

Other Income (Expense)

OSR Holdings’ other income (expense) consists of interest income,

interest expense, foreign exchange-related gains and losses, and other non-operating items.

For the three months ended March 31, 2026, the Company recorded net

other expenses of $252,305, representing a decrease of $8,222,683, or 97%, compared to the same period in the prior year.

This significant

decrease was primarily attributable to the one-time recognition of approximately $8.5 million in merger-related expenses incurred in connection

with the Business Combination completed on February 14, 2025, which was recognized only during the first quarter of 2025.

OSR Health’s 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 June 30, 2026, the

Company recorded net other income of $1,589,374, an increase of $1,585,395, or 39,844%, compared to the same period in the prior year.

This was driven by a realized gain on financial liabilities measured at fair value of $1,798,064, resulting from the resolution of a liability

for which unrealized losses had previously been recognized.

For the six months ended June 30, 2026, the Company

recorded net other income of $1,337,069, a significant improvement compared to net other expense of $8,471,009 recorded in the same period

in the prior year.

This change 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

For the three months ended June 30, 2026, OSR

Health’s loss before income taxes decreased by $3,781,657, or 72%, compared to the same period in the prior year.

As previously discussed,

this was driven by a realized gain on financial liabilities measured at fair value of $1,798,064, resulting from the resolution of a liability

for which unrealized losses had previously been recognized.

For the six months ended June 30, 2026, OSR Health’s

loss before income taxes decreased by $11,254,983, or 68%, compared to the same period in the prior year.

This decrease was also primarily

attributable, as previously discussed, 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.

Since its inception through June 30, 2026, OSR

Health has incurred significant operating losses and negative cash flows from operating activities.

The Company recorded an operating

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for the same period in 2024.

In addition, the Company recorded an operating loss of approximately $3.67 million during the first quarter

As of March 31, 2026, OSR Holdings had an accumulated deficit of approximately $40.10 million.

To date, OSR Holdings has funded its operations

In addition, the Company recorded an operating loss of approximately $6.70 million during the first half

As of June 30, 2026, OSR Health had an accumulated deficit of approximately $40.95 million.

To date, OSR Health 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

As of June 30, 2026, the Company had cash and cash equivalents of approximately $1.49

million, consisting primarily of bank deposits.

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reduced the funds available for operations and created an urgent need for additional capital.

In response, in February 2025, OSR Holdings

In response, in February 2025, OSR Health

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.

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”)

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.

As of June 30, 2026, the Company had issued a total of 4,875,440 shares under the ELOC, raising gross proceeds of $3.38 million.

the Company has executed or is exploring various financing initiatives through the issuance of warrants and notes.

OSR Health 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 which was most recently

amended in April 2026 to provide additional flexibility in accessing the equity line.

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.

Contractual Obligations

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We have not identified any critical accounting estimates.

Quantitative and Qualitative Disclosures About Market

Quantitative and Qualitative

Disclosures About Market Risk

We are a smaller reporting company as defined

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis