OSR Health, Inc.: Form 10-Q for the period ended Jun 30, 2025

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to by 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

Strategic Roadmap for Tokenization under Regulation D Framework in Partnership with BCM Europe AG

In July 2025, we announced our strategic roadmap for tokenizing our equity, marking a significant step forward in the integration of blockchain-based finance with the Company's core business operations. This initiative is part of our broader strategy to leverage innovative financial mechanisms, including security token offerings (STO), to enhance capital raising opportunities, increase liquidity, and create value for shareholders.

The roadmap includes a partnership with BCM Europe AG, an affiliate of Bellevue Capital Management, LLC, under Swiss-based leadership with track records in the blockchain and digital asset space, to explore the potential of tokenizing OSRH shares under the Regulation D framework. This collaboration will enable OSRH to issue tokenized securities that meet regulatory standards, allowing for greater flexibility in fundraising activities and enabling the Company to tap into new capital markets.

This initiative aligns with OSRH’s commitment to explore novel avenues for financing, providing the Company with the ability to more effectively manage capital while maintaining compliance with securities laws. While the tokenization strategy is still in its early stages, our management views it as a promising long-term initiative that could significantly enhance the Company’s financial flexibility and increase the attractiveness of the Company to both institutional and retail investors.

Signing of Term Sheet to Acquire Woori IO, a Pioneer in Noninvasive Glucose Monitoring Technology

As previously disclosed in the Company’s Current Report on Form 8-K filed on July 25, 2025, we announced in July 2025 the signing of a term sheet with Woori IO Co., Ltd., a leader in noninvasive glucose monitoring technology based out of South Korea. Under this agreement, OSRH intends to acquire Woori IO, subject to completion of due diligence and other conditions. This acquisition would further strengthens OSRH’s presence in the burgeoning healthcare and medical technology sectors, particularly in diabetes management, which is expected to see substantial growth over the next decade.

Woori IO’s proprietary noninvasive continuous glucose monitoring (CGM) technology is poised to disrupt the current market by providing a pain-free alternative to traditional glucose monitoring methods. The company’s platform leverages near-infrared spectroscopy (NIRS) technology, which has already demonstrated promising proof-of-concept results from the studies conducted at the Korea University Hospital (Guro). This acquisition represents a strategic entry into the global CGM1 market, which is forecast to exceed $47 billion by 20342.

The acquisition, if consummated, is expected to enhance OSRH’s growth trajectory by providing access to cutting-edge technology in a high-demand area. Management believes that integrating Woori IO’s noninvasive glucose monitoring solutions with OSRH’s resources will accelerate the commercialization of this technology and open significant revenue opportunities. The deal structure, as outlined in the term sheet, will involve the issuance of OSRH shares to Woori IO’s stakeholders upon closing, subject to performance-based milestones (“$10 per share condition”), and will not result in immediate dilution for existing OSRH shareholders .

Strategic Outlook

Both initiatives reflect OSRH’s ongoing commitment to enhancing shareholder value through innovative business strategies and investments in high-growth sectors. We will continue to evaluate and pursue opportunities that align with our strategic vision, particularly in the areas of blockchain and healthcare technology. As these initiatives progress, we will provide further updates to shareholders, ensuring transparency and compliance with all relevant regulatory requirements.

1 Continuous Glucose Monitoring, 2 Market data from gminsights.com

Result of Operations

Comparison of the Three Months Ended June 30, 2024 and 2025

The following tables present OSR Holdings’ statements of operations for the three- and six-month periods ended June 30, 2024 and 2025, and percentage change between the two periods:

Net Sales, Cost of Sales and 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.

RMC’s net sales for the three months ended June 30, 2025, increased by $253,688, or 29%, compared to the same period in the prior year. However, cost of sales increased by $453,226, or 70%, resulting in a decline in gross profit of $199,539, or 86%. This disproportionate increase in cost of sales was primarily attributable to a one-time factor related to a change in the contractual arrangement with one of RMC’s suppliers. Specifically, RMC transitioned from a traditional purchase-and-resale model to a consignment-based arrangement under which only commission revenue is recognized. As part of this transition, RMC sold previously held inventory back to the supplier at cost, which materially impacted gross margin for the quarter.

For the six months ended June 30, 2025, the impact of the transaction was partially normalized. Net sales increased by $104,735, or 6%, while cost of sales increased by $375,389, or 28%, compared to the same period in the prior year. As a result, gross profit decreased by $270,654, or 57%.

Selling, General and Administrative Expenses

For the three months ended June 30, 2025, OSR Holdings’ selling, general and administrative (SG&A) expenses increased by $1,819,532, or 53%, compared to the same period in the prior year. The increase was primarily attributable to the completion of the Business Combination on February 14, 2025, which resulted in the consolidation of OSR Holdings Inc. (formerly Bellevue Life Sciences Acquisition Corp.) beginning in the second quarter. The largest component of the increase was higher commissions and professional fees incurred in connection with the Business Combination.

For the six months ended June 30, 2025, OSR Holdings’ selling, general and administrative (SG&A) expenses increased by $1,363,713, or 20%, compared to the same period in the prior year. The increase was primarily driven by 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 most significant drivers of the increase were personnel-related costs and professional service fees.

Research and Development (R&D) Expenses

OSR Holding’s R&D expenses consisted primarily of development costs associated with our product candidates in pre-clinical and clinical trials, and related costs of salaries and contractors. R&D costs are expensed as incurred. OSR Holdings expects to incur and report R&D related expenses mainly from its subsidiaries actively engaged in R&D at an estimated amount of $2.5 million to $3.0 million per quarter beginning in the second half of 2025, which could potentially increase to $5.0 million to $6.0 million per quarter.

Operating Loss

For the three months ended June 30, 2025, OSR Holdings’ operating loss increased by $2,019,069, or 63%, compared to the same period in the prior year. On a year-to-date basis, operating loss increased by $1,634,368, or 25%, for the six months ended June 30, 2025. As discussed in the section titled “Selling, General and Administrative Expenses,” this increase was primarily attributable to the consolidation of SG&A expenses beginning in the second quarter of 2025 following the completion of the Business Combination on February 14, 2025.

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 June 30, 2025, the Company recorded net other income of $3,979, representing an increase of $44,986 compared to net other expense of $41,007 for the same period in the prior year. This increase was primarily attributable to the consolidation of OSR Holdings Inc. (formerly Bellevue Life Sciences Acquisition Corp.) beginning in the second quarter of 2025, following the completion of the business combination on February 14, 2025.

For the six months ended June 30, 2025, net other expenses increased significantly by $8,377,168, from $93,841 in the prior-year period to $8,471,009. This substantial increase was primarily driven by the one-time recognition of approximately $8.5 million in merger-related expenses incurred in connection with the business combination that closed on February 14, 2025.

Loss Before Income Taxes

For the three months ended June 30, 2025, OSR Holdings’ loss before income taxes increased by $1,974,083, or 61%, compared to the same period in the prior year. As previously discussed, the increase was primarily attributable to the consolidation of OSR Holdings Inc. (formerly Bellevue Life Sciences Acquisition Corp.) beginning in the second quarter of 2025 following the completion of the business combination on February 14, 2025.

For the six months ended June 30, 2025, loss before income taxes increased by $10,011,536, or 152%, compared to the same period in the prior year, primarily due to the one-time recognition of approximately $8.5 million in merger-related expenses incurred in connection with the business combination that closed on February 14, 2025.

Liquidity and Capital Resources

Since its inception through June 30, 2025, OSR Holdings has incurred significant operating losses and negative cash flows from operating activities. The Company recorded an operating loss of approximately $6.5 million for the six months ended June 30, 2024, and approximately $8.1 million for the same period in 2025. As of June 30, 2025, OSR Holdings had an accumulated deficit of approximately $30.2 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 June 30, 2025, the Company had cash and cash equivalents of approximately $1.58 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 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. Through June 30, 2025, the Company issued a total of 10,000 shares under the ELOC, raising $14,050 in gross proceeds.

Subsequently in July, the Company issued a further 757,500 shares under the ELOC, to raise gross proceeds of $727,887. This brings the total proceeds under the facility to $741,937. OSR Holdings expects to continue utilizing the ELOC to secure additional financing for its ongoing operations.

As of June 30, 2025, the Company had consolidated cash and cash equivalents of approximately $1.58 million, primarily held in bank deposits.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of June 30, 2025. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual Obligations

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

Chardan Capital Markets, LLC (“Chardan”) is entitled to a deferred underwriting commission of $2,070,000, payable as of June 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.

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.

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.

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 June 30, 2025.

In our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, we reported that our disclosure controls and procedures were not effective due to the identification of certain material weaknesses in our internal control over financial reporting. During the second quarter of 2025, we implemented remediation measures designed to address these material weaknesses, which included:

• Enhancing our financial reporting policies and procedures;
• Engaging a new external accounting firm with SEC reporting expertise to provide enhanced support for our financial closing and reporting processes;
• Enhancing the internal documentation retention and storage system to improve accessibility and audit readiness.

Management tested the design and operating effectiveness of the remediated controls and concluded that the previously identified material weaknesses have been remediated as of June 30, 2025. Based on this evaluation, our management concluded that our disclosure controls and procedures were effective as of June 30, 2025.

We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems are 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.

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, 2024 filed with the SEC on April 22, 2025 (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 2024 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.