Exhibit 99.2

OSR Holdings Co., Ltd.

and its subsidiaries

Consolidated financial statements

for the years ended December 31, 2023 and 2022

with the independent Registered Public Accounting Firm’s report

OSR Holdings Co., Ltd.

Table of contents

	Page
Report of Independent Registered Public Accounting Firm	1
Consolidated financial statements
Consolidated balance sheets	3
Consolidated statements of operations and comprehensive income	4
Consolidated statements of changes in stockholders’ equity	5
Consolidated statements of cash flows	6
Notes to the consolidated financial statements	7 ~ 36

i

	8th FL, 8, Uisadang-daero Yeongdeungpo-gu,Seoul, 07236, Korea Telephone:  82-2-782-9940 Telefax:  82-2-782-9941 www.rsm.global/korea

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

OSR Holdings Co., Ltd.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of OSR Holdings Co., Ltd. and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statement of operations and comprehensive income, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022 and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ RSM Shinhan Accounting Corporation 

Shinhan Accounting Corporation

We have served as the Company’s auditor since 2023.

Seoul, Korea

February 7, 2025

1

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

December 31, 2023 and 2022

OSR HOLDINGS CO., LTD AND SUBSIDIAIRIES

Consolidated Balance Sheets

December 31, 2023 and 2022

(In Korean won, except share data)

	2023			2022
Assets
Current assets:
Cash and cash equivalents	₩	696,542,458		₩	3,556,865,658
Trade and other receivables, less allowance for credit losses of ₩45,492,513 in 2023 and ₩0 in 2022		1,543,542,712			624,460,396
Inventories, net		1,790,054,138			1,362,517,619
Prepaid income taxes		6,705,149			14,528,800
Other current financial assets		68,777,020			-
Other current assets		91,500,706			20,610,753
Total current assets		4,197,122,183			5,578,983,226
Equipment and vehicles, net		22,726,614			26,507,938
Operating lease right-of-use assets, net		210,350,535			376,778,565
Intangible assets, net		230,848,992,354			130,822,779,153
Goodwill		35,800,477,223			3,628,205,933
Other non-current financial assets		483,286,651			349,347,363
Deferred tax assets		108,925,647			35,923,816
Total assets	₩	271,671,881,207		₩	140,818,525,994
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowing	₩	500,000,000		₩	1,436,615,903
Trade and other payables		1,955,746,193			5,374,746,607
Accrued expenses		558,554,905			389,722,861
Operating lease liabilities-current		105,829,155			62,511,022
Other current liabilities		106,140,035			132,572,190
Income taxes payable		17,873,233			5,396,752
Total current liabilities		3,244,143,521			7,401,565,335
Long-term debt		460,000,000			160,000,000
Operating lease liabilities- non-current		101,657,569			311,935,157
Other non-current liabilities		2,435,281			-
Deferred tax liabilities		43,328,007,126			19,480,344,941
Total liabilities		47,136,243,497			27,353,845,433
Stockholders’ equity:
Common stock, ₩5,000 par value, Authorized 4,000,000 shares; 1,887,070 and 1,160,672 shares issued and outstanding as of December 31, 2023 and 2022, respectively		9,435,350,000			5,803,360,000
Additional paid-in capital		229,027,323,455			108,148,632,336
Accumulated deficit		(14,095,976,021	)		(487,311,775	)
Accumulated other comprehensive income		168,940,276			-
Total stockholders’ equity		224,535,637,710			113,464,680,561
Total liabilities and stockholders’ equity	₩	271,671,881,207		₩	140,818,525,994

The accompanying notes are an integral part of the consolidated financial statements

3

OSR HOLDINGS CO., LTD AND SUBSIDIAIRIES

Consolidated Statements of Operations and Comprehensive Income

Years ended December 31, 2023 and 2022

(In Korean won)

	2023			2022
Net sales	₩	4,453,551,060		₩	8,758,337
Cost of sales		3,278,702,931			-
Gross profit		1,174,848,129			8,758,337
Selling, general, and administrative expenses		15,955,518,638			1,339,668,875
Operating loss		(14,780,670,509	)		(1,330,910,538	)
Other income (expense):
Interest income		22,585,540			2,810,755
Interest expense		(454,140,294	)		(17,011,225	)
Other income		160,571,422			2,338,095,795
Other expenses		(685,461,727	)		(204,788,996	)
(Loss) income before income taxes		(15,737,115,568	)		788,195,791
Income tax benefit		2,128,451,322			2,376,396
Net (loss) income		(13,608,664,246	)		790,572,187
Attributable to:
OSR Holdings Co., Ltd. and subsidiaries		(13,608,664,246	)		790,572,187
Non-controlling interests		-			-
Other comprehensive income for the year, net of tax
Gain on foreign currency translation		168,940,276			-
Total comprehensive (loss) income for the year	₩	(13,439,723,970	)	₩	790,572,187
Attributable to:
OSR Holdings Co., Ltd. and subsidiaries		(13,439,723,970	)		790,572,187
Non-controlling interests		-			-
(Loss) earnings per share attributable to OSR Holdings Co., Ltd. and subsidiaries
Basic (loss) earnings per ordinary share	₩	(8,156	)	₩	2,025

The accompanying notes are an integral part of the consolidated financial statements.

4

OSR HOLDINGS CO., LTD AND SUBSIDIAIRIES

Consolidated Statements of Changes in Stockholders’ Equity

Years ended December 31, 2023 and 2022

(In Korean won, except share data)

	Common stock			Additional paid-in		Retained Earnings (accumulated			Accumulated other comprehensive		Total stockholders’
	Shares	Amounts		capital		deficit)			Income (loss)		equity
Balance at January 1, 2022	301,000	₩	1,505,000,000	₩	4,237,000	₩	(1,277,883,962	)	₩	—	₩	231,353,038
Net income	—		—		—		790,572,187			—		790,572,187
Stock issued	859,672		4,298,360,000		108,144,395,336		—			—		112,442,755,336
Balance at December 31, 2022	1,160,672	₩	5,803,360,000	₩	108,148,632,336	₩	(487,311,775	)	₩	—	₩	113,464,680,561
Balance at January 1, 2023	1,160,672	₩	5,803,360,000	$	108,148,632,336	₩	(487,311,775	)	₩	—	₩	113,464,680,561
Net loss	—		—		—		(13,608,664,246			—		(13,608,664,246	)
Foreign currency translation adjustment	—		—		—		—			168,940,276		168,940,276
Stock issued	726,398		3,631,990,000		120,878,691,119		—			—		124,510,681,119
Balance at December 31, 2023	1,887,070	₩	9,435,350,000	₩	229,027,323,455	₩	(14,095,976,021	)	₩	168,940,276	₩	224,535,637,710

The accompanying notes are an integral part of the consolidated financial statements.

5

OSR HOLDINGS CO., LTD AND SUBSIDIAIRIES

Consolidated Statements of Cash Flows

Years ended December 31, 2023 and 2022

(In Korean won)

Cash flows from operating activities:	2023			2022
Net (loss) income	₩	(13,608,664,246	)	₩	790,572,187
Adjustments to reconcile net (loss) income to cash used in operating activities:
Income tax benefit		(2,146,399,043	)		180,988,010
Depreciation		101,467,794			22,391,361
Amortization		12,310,159,342			31,980,873
Loss on disposal of intangible assets		402,355,143			-
Gain on sale of tangible assets		(1,362,637	)		-
Loss on disposal of ROU assets		109,881,120			-
Bad debts		45,492,513			-
Severance pay		91,730,517			-
Interest expense		391,130,545			2,088,669
Impairment loss on investment under equity method		-			97,742,345
Gain on termination of lease contract		-			(435,178	)
Interest Income		-
Loss on foreign currency translation		92,438,038			10,811,148
Gain on disposal of financial assets measured at fair value		-			(2,305,743,718	)
Changes in operating assets and liabilities
(Increase) decrease in trade and other receivables		(898,335,701	)		3,191,433
Increase in inventories, net		(427,536,519	)		-
Decrease in prepaid income taxes		7,823,651			-
Increase in other current financial assets		(68,777,020	)		-
Increase in other current assets		(70,889,953	)		(6,981,399	)
(Decrease) increase in trade and other payables		(3,419,000,414	)		90,570,415
Increase in accrued expenses		168,832,044			30,434,414
Increase in tax payables		12,476,481			-
Decrease in lease liabilities		(83,945,144	)		(28,290,000	)
(Decrease) Increase in other liabilities		(23,996,874	)		50,206,160
Net cash used in operating activities		(7,015,120,363	)		(1,030,473,280	)
Cash flows from investing activities:
Decrease in deposits		150,000			-
Purchase of FVTPL financial assets		-			(4,313,105,181	)
Disposal of equipment and vehicles		4,350,940			-
Purchase of equipment and vehicles		(11,436,364	)		(97,742,345	)
Purchase of intangible assets		(9,589,573	)		-
Increase in deposits		(35,058,299	)		-
Increase in cash and cash equivalents from business combination		-			2,249,585,068
Net cash used in investing activities		(51,583,296	)		(2,161,262,458	)
Cash flows from financing activities		1,443,140,500			1,574,166,000
Proceeds from long-term debt Repayment of long-term debt		(544,538,903	)		(200,000,000	)
Repayment of short-term borrowing		(636,263,607	)		-
Issuance of convertible bonds		4,000,000,000			-
Proceeds from issuance of common stock		-			4,609,463,880
Payment of stock issuance costs		(17,806,500	)		-
Net cash provided by financing activities		4,244,531,490			5,983,629,880
Net change in cash and cash equivalents		(2,822,172,169	)		2,791,894,142
Effects of changes in exchange rate on cash and cash equivalents		(38,151,031	)		323,879,830
Cash and cash equivalents at beginning of year		3,556,865,658			441,091,686
Cash and cash equivalents at end of year	₩	696,542,458		₩	3,556,865,658
Supplemental disclosures of cash flow information
Cash paid for interest	₩	-		₩	-
Cash paid for income taxes (net of refunds received)		-			-

The accompanying notes are an integral part of the consolidated financial statements.

6

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Notes to The Consolidated Financial Statements

December 31, 2023 and 2022

(1) Organization and nature of business

The consolidated financial statements of OSR Holdings Co., Ltd. (the “Company” or the “Parent”) and its subsidiaries (collectively, the “Group”) for the year ended December 31, 2023 were authorized for issuance in accordance with a resolution of the directors meeting on January 31, 2025. The registered office is located at 37-36 Hoedong-gil, Paju-si, Gyeongi-do, Republic of Korea.

The Company is a global life sciences holding company based in South Korea and is actively engaging in drug development, dedicating to advance healthcare outcome and driving social progress. Through open innovation and responsible investment, the Company aims to make a lasting impact across the industry as well as our society. With a strong focus on oncology and immunology, the Company’s mission is to build a robust portfolio of ventures, bringing innovative and transformative therapies to market.

Details of shareholders as of December 31, 2023 are as follows:

Name of Shareholder	Number of ordinary share		Percentage of ownership
Bellevue Capital Management LLC		580,572		30.77	%
Bellevue Capital Management Europe AG		241,000		12.77	%
Joint Protein Central		200,868		10.64	%
Invites Ventures Co., Ltd.		135,129		7.16	%
CG Invites Co., Ltd.		83,999		4.45	%
PARK, CHAN KYOO		82,721		4.38	%
Joint Center For Biosciences		78,720		4.17	%
Others		484,061		25.66	%
Total		1,887,070		100.00	%

Details of investments in subsidiaries as of December 31, 2023 are as follows:

Name of subsidiary	Share capital		Percentage of ownership			Principal activities	Country of incorporation
VAXIMM AG (“VAXIMM”)		1,091,203,754		100.00	%	Biotech (drug development)	Switzerland
RMC Co., Ltd. (“RMC”)		35,000,000		100.00	%	Medical device distribution	Republic of Korea
Darnatein Co., Ltd. (“Darnatein”)		6,466,667,000		100.00	%	Biotech (drug development)	Republic of Korea

Key financial information of the subsidiaries at December 31, 2023 are as follows (Korean won in thousands):

Name of subsidiary	Asset		Liability		Equity		Sales		Net Income(loss)
VAXIMM	₩	1,656,712	₩	190,821	₩	1,465,891	₩	74,225	₩	(875,529	)
RMC		3,821,285		2,653,735		1,167,550		4,379,326		79,068
Darnatein		714,773		409,562		305,211		-		(234,337	)

7

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Notes to The Consolidated Financial Statements

December 31, 2023 and 2022

For the year ended December 31, 2023

Name of subsidiary	Reason	Type of purchase consideration
Darnatein	Acquisition (*1)	New shares of the Parent and other financial assets

For the year ended December 31, 2022

Name of subsidiary	Reason	Type of purchase consideration
VAXIMM	Acquisition (*2)	New shares of the Parent and other financial assets
RMC	Acquisition (*2)	New Share of the Parent

(*1)  The Parent acquired subsidiary in March 2023 and accounted the acquisitions on March 31, 2023, which is deemed the acquisition date.

(*2)  The Parent acquired subsidiaries in December 2022 and accounted for the acquisitions on December 31, 2022, which is deemed the acquisition date.

(2) Summary of significant accounting policies

a. Basis of presentation

These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (US-GAAP).

b. Principle of consolidation

The consolidated financial statements include the accounts of OSR Holdings Co., Ltd. and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity (VIE) or voting interest model. The Company is required to first apply the VIE model to determine whether it holds a variable interest in an entity, and if so, whether the entity is a VIE. If the Company determines it does not hold a variable interest in a VIE, it then applies the voting interest model. Under the voting interest model, the Company consolidates an entity when it holds a majority voting interest in an entity.

The Company accounts for investments in which it has significant influence but not a controlling financial interest using the equity method of accounting.

c. Use of estimates

The preparation of the 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 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.

8

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Notes to The Consolidated Financial Statements

December 31, 2023 and 2022

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 consolidated statements of cash flows.

g. Inventories

Inventories are stated at the lower of cost or net realizable value and cost is determined by the first-in, first-out method. Cost comprises of direct materials and delivery costs, direct labor, import duties and other taxes, an appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity, and, where applicable, transfers from cash flow hedging reserves in equity. Costs of purchased inventory are determined after deducting rebates and discounts received or receivable.

Stock in transit is stated at the lower of cost and net realizable value. Cost comprises of purchase and delivery costs, net of rebates and discounts received or receivable.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

h. Equipment and vehicles

Equipment and vehicles are stated at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation of all equipment and vehicles is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives as follows:

	Estimated useful lives
Vehicle	5 years
Office equipment	5 years
Facility equipment	3 to 13 years

9

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Notes to The Consolidated Financial Statements

December 31, 2023 and 2022

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 of long--lived assets

Long-lived assets, such as equipment, vehicles and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Group first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment loss is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

k. Leases

The Group is a lessee in several noncancellable operating leases, primarily for plants and main offices. The Group does not have a finance lease.

The Group accounts for leases in accordance with ASC Topic 842, Leases. The Group determines if an arrangement is or contains a lease at contract inception. The Group recognizes a right-of-use (ROU) asset and a lease liability at the lease commencement date.

For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases and is subsequently measured at amortized cost using the effective-interest method.

Key estimates and judgments include how the Group determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term, and (3) lease payments.

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OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Notes to The Consolidated Financial Statements

December 31, 2023 and 2022

● 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.

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.

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OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Notes to The Consolidated Financial Statements

December 31, 2023 and 2022

Operating lease ROU assets are presented as operating lease right of use assets on the consolidated balance sheets. The current portion of operating lease liabilities are presented separately on the consolidated balance sheets.

The Group has elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less. The Group recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term.

l. Foreign currency translation

The Group has operations in South Korea, Switzerland, and Germany. Accounting records in foreign operations are maintained in local currencies and remeasured to the Korean won during the consolidation. Nonmonetary assets and liabilities are translated at historical rates, and monetary assets and liabilities are translated at exchange rates in effect at the end of the year. Income statement accounts are translated at average rates for the year. Gains or losses from remeasurement of foreign currency financial statements into the Korean won are included in current results of comprehensive income.

m. Revenue recognition

The Group only has revenue from customers. The Group recognizes revenue when it satisfies performance obligations under the terms of its contracts, and control of its products is transferred to its customers in an amount that reflects the consideration the Group expects to receive from its customers in exchange for those products. This process involves identifying the customer contract, determining the performance obligations in the contract, determining the transaction price, allocating the transaction price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it (a) provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and (b) is separately identified in the contract. The Group considers a performance obligation satisfied once it has transferred control of a good or product to a customer, meaning the customer has the ability to direct the use and obtain the benefit of the good or product.

n. Income taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Group recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Group reports income tax-related interest and penalties relating to uncertain tax positions, if applicable, as a component of income tax expense.

o. Fair value measurements

The Group utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Group determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

– Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

12

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Notes to The Consolidated Financial Statements

December 31, 2023 and 2022

– 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 consolidated balance sheets for notes payable to related party may differ from fair value since the interest rate is fixed.

p. Accounting pronouncements adopted during 2023

The Group did not adopt any new accounting pronouncements during 2023.

q. Accounting pronouncements issued, but not adopted as of December 31, 2023

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. Early adoption is permitted. The ASU is applied to business combinations occurring on or after the effective date. The Group is currently evaluating the impact this ASU will have on the Group’s consolidated financial statements.

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 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 is currently evaluating the impact this ASU will have on the Group’s consolidated financial statements.

13

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Notes to The Consolidated Financial Statements

December 31, 2023 and 2022

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 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.

Patent technology

Patent technology is recognized in Intangible assets on the 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.

14

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Notes to The Consolidated Financial Statements

December 31, 2023 and 2022

● 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 following table sets forth the result of foreign currency translation into Korean won for financial assets and liabilities denominated in foreign currency of the Group as of December 31, 2023 and 2022:

(Korean won in unit)	December 31, 2023
	USD		EUR		CHF
Assets in foreign currency	₩	29,220,473	₩	301,368,136	₩	744,194,360
Liabilities in foreign currency		64,470,000		16,289,133		-

(Korean won in unit)	December 31, 2022
	USD		EUR		CHF
Assets in foreign currency	₩	1,094,039,015	₩	-	₩	-
Liabilities in foreign currency		63,365,000		-		-

15

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Notes to The Consolidated Financial Statements

December 31, 2023 and 2022

The following table sets forth the impact of strengthening (or weakening) of the Korean won by a hypothetical 10% against each foreign currency on the Group’s after-tax profit (or loss), assuming all other variables remain constant.

(Korean won in unit)	December 31, 2023						December 31, 2022
	Rise			Fall			Rise		Fall
USD	₩	(3,524,953	)	₩	3,524,953		₩	103,067,402	₩	(103,067,402	)
EUR		28,507,900			(28,507,900	)		-		-
CHF		74,419,436			(74,419,436	)		-		-

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 December 31, 2023, the Group believes that there are low signs of material default, and the maximum exposure to credit risk as of December 31, 2023 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.

16

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Notes to The Consolidated Financial Statements

December 31, 2023 and 2022

The Group’s liquidity risk analysis details as of December 31, 2023 and 2022 are as follows:

(Korean won in unit)	December 31, 2023
						Remaining maturity
	Book Value		Cashflow by contract		Within a year		1 year to 3 years		More than 3 years
Borrowings	₩	960,000,000	₩	1,000,657,534	₩	523,000,000	₩	477,657,534	₩	-
Other Payables		2,514,301,098		2,514,301,098		2,514,301,098		-		-
Lease liabilities		207,486,724		259,101,400		114,981,120		134,120,280		10,000,000
Total	₩	3,681,787,822	₩	3,774,060,032	₩	3,152,282,218	₩	611,777,814	₩	10,000,000

(Korean won in unit)	December 31, 2022
					Remaining maturity
	Book Value		Cashflow by contract		Within a year		1 year to 3 years		More than 3 years
Borrowings	₩	1,596,615,903	₩	1,628,827,375	₩	1,628,827,375	₩	-	₩	-
Other Payables		5,764,469,468		5,617,804,634		5,617,804,634		-		-
Lease liabilities		374,446,179		174,882,520		67,281,120		85,601,400		22,000,000
Total	₩	7,735,531,550	₩	7,421,514,529	₩	7,313,913,129	₩	85,601,400	₩	22,000,000

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 December 31, 2023 and 2022 are as follows:

(In Korean won)	December 31, 2023			December 31, 2022
Net borrowings (A)
Borrowings	₩	960,000,000		₩	1,596,615,903
Lease liabilities		207,486,724			374,446,179
Less: cash and cash equivalents		(696,542,458	)		(3,556,865,658	)
		470,944,266			(1,585,803,576	)
Total equity (B)		224,535,637,710			113,464,680,561
Debt ratio (A / B)		0.2	%		(*	)

(*) Debt ratio is not presented as net borrowings and debt ratio are negative as of December 31, 2022.

17

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES

Notes to The Consolidated Financial Statements

December 31, 2023 and 2022

(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 December 31, 2023 and 2022 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 December 31, 2023 and 2022, which are accounted as amortized cost, are categorized as Level 3.

Recurring transfer between levels of the fair value hierarchy

There is no transfer of fair value hierarchy among Level 1, Level 2 and Level 3 for the years ended December 31, 2023 and 2022, respectively.

(6) Financial instruments by category

The carrying value of financial instruments category as of December 31, 2023 and 2022 are as follows:

(Korean won in unit)	December 31, 2023
	Financial assets  at amortized cost		Financial assets at fair value		Financial liabilities at amortized cost		Total
Financial assets:
Cash and cash equivalents	₩	696,542,458	₩	-	₩	-	₩	696,542,458
Trade and other receivables		1,543,542,712		-		-		1,543,542,712
Other current financial assets		68,777,020		-		-		68,777,020
Other non-current financial assets		483,286,651		-		-		483,286,651
Financial liabilities:
Trade and other payables		-		-		1,955,746,193		1,955,746,193
Borrowings		-		-		960,000,000		960,000,000

(Korean won in unit)	December 31, 2022
	Financial assets  at amortized cost		Financial assets at fair value		Financial liabilities at amortized cost		Total
Financial assets:
Cash and cash equivalents	₩	3,556,865,658	₩	-	₩	-	₩	3,556,865,658
Trade and other receivables		624,460,396		-		-		624,460,396
Other non-current financial assets		349,347,363		-		-		349,347,363
Financial liabilities:
Trade and other payables		-		-		5,374,746,607		5,374,746,607
Borrowings		-		-		1,596,615,903		1,596,615,903

18

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

Net gains or losses by financial instrument category for the years ended December 31, 2023 and 2022 are as follows:

(Korean won in unit)
	2023			2022
Amortized cost:
Interest income	₩	24,992,432		₩	3,179,480
Foreign exchange gains		47,005,063			9,899,816
Gains on foreign currency translation		102,283,538			15,441,000
Interest expense		(447,915,943	)		(18,619,877	)
Losses on foreign currrency transaction		(86,945,552	)		(80,771,048	)
Losses on foreign currrency translation		(194,721,576	)		(26,252,148	)
Financial assets measured at fair value through profit and loss:
Gains on disposal		-			2,305,743,718

(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.

(In Korean won)
	December 31, 2023		December 31, 2022
Cash and cash equivalents	₩	696,542,458	₩	3,556,865,658

(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.

(In Korean won)	December 31, 2023			December 31, 2022
Trade receivables	₩	1,520,894,893		₩	470,304,368
Less: Allowance for credit losses		(45,492,513	)		-
Net trade receivables		1,475,402,380			470,304,368
Other receivables		68,140,332			154,156,028
Total	₩	1,543,542,712		₩	624,460,396

(9) Inventories, net

Inventories consisted of the following as of December 31, 2023 and 2022:

(In Korean won)	December 31, 2023			December 31, 2022
Merchandised goods	₩	1,812,931,553		₩	1,385,395,034
Less: allowance for valuation		(22,877,415	)		(22,877,415	)
	₩	1,790,054,138		₩	1,362,517,619

19

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

(10) Other financial assets

Details of other financial assets as of December 31, 2023 and 2022 are as follows:

(in Korean won)	December 31, 2023				December 31, 2022
	Current		Non-current		Current		Non-current
Leasehold guarantee deposits	₩	68,777,020	₩	34,917,468	₩	-	₩	66,719,787
Other deposits		-		7,947,500		-		6,677,500
Loan		-		440,421,683		-		275,950,076
Total	₩	68,777,020	₩	483,286,651	₩	-	₩	349,347,363

(11) Other assets

Details of other assets as of December 31, 2023 and 2022 are as follows:

(in Korean won)	December 31, 2023				December 31, 2022
	Current		Non-current		Current		Non-current
Prepayments	₩	58,543,364	₩	-	₩	20,610,753	₩	-
Prepaid expenses		32,957,342		-		-		-
Total	₩	91,500,706	₩	-	₩	20,610,753	₩	-

(12) Equity method investment

Details of investment under the equity method are as follows:

(In Korean won)

December 31, 2023

December 31, 2022

Location

Main business

Ownership

Book value

Ownership

Book value

Taction Co., LTD

Korea

Software development

33.3

%

₩

-

33.3

%

₩

-

The summarized financial information of investment under the equity method as of the closing date and for the current period is as follows:

(In Korean won)	As of and for the year ended December 31, 2023
	Assets		Liabilities		Revenue		Net loss		Comprehensive loss
Taction Co., LTD	₩	143,966,473	₩	48,194,665	₩	-	₩	109,868,483	₩	109,868,483

20

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

Changes of book value of investments in associate accounted using equity method for the years ended December 31, 2023 and 2022 are as follows:

(in Korean won)	For the year ended December 31, 2023
	Beginning		Acquisition		Impairment loss		Ending
Taction Co., Ltd.	₩	-	₩	-	₩	-	₩	-

(in Korean won)	For the year ended December 31, 2022
	Beginning		Acquisition		Impairment loss		Ending
Taction Co., Ltd.	₩	-	₩	97,742,345	₩	97,742,345	₩	-

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 December 31, 2023 and 2022:

	December 31, 2023			December 31, 2022
Office equipment	₩	39,560,713		₩	16,274,259
Tools and instruments		33,350,272			-
Machinery and equipment		32,709,091			-
Facilities		374,868,705			160,241,386
Vehicles		39,785,349			75,947,865
		520,274,130			252,463,510
Less accumulated depreciation		(497,547,516	)		(225,955,572	)
Equipment and vehicles, net	₩	22,726,614		₩	26,507,938

(14) Goodwill

Changes of goodwill for the years ended December 31, 2023 and 2022 are as follows:

(in Korean won)	For the year ended December 31, 2023
	Beginning		Business combination		Impairment loss		Ending
Goodwill	₩	3,628,205,933	₩	32,172,271,290	₩	-	₩	35,800,477,223

(in Korean won)	For the year ended December 31, 2022
	Beginning		Business combination		Impairment loss		Ending
Goodwill	₩	-	₩	3,628,205,933	₩	-	₩	3,628,205,933

21

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

(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 December 31, 2023.

	For the year ended December 31, 2023
(In Korean won)	Average useful life	Gross carrying amount		Accumulated amortization		Net carrying amount
Technology license	20 years	₩	140,342,664	₩	109,946,192	₩	30,396,472
Customer relationship	20 years		851,287,339		170,257,468		681,029,871
Patent technology	20 years		242,277,049,512		12,139,483,501		230,137,566,011
		₩	243,268,679,515	₩	12,419,687,161	₩	230,848,992,354

	For the year ended December 31, 2022
(In Korean won)	Average useful life	Gross carrying amount		Accumulated amortization		Net carrying amount
Technology license	20 years	₩	44,054,025	₩	-	₩	44,054,025
Customer relationship	20 years		851,287,339		-		851,287,339
Patent technology	20 years		129,927,437,789		-		129,927,437,789
		₩	130,822,779,153	₩	-	₩	130,822,779,153

Accumulated amortization expense for intangible assets is ₩12,419,687,161 and ₩0 for the years ended December 31, 2023 and 2022, respectively.

(16) Short-term borrowings

The Group has a loan agreement with an individual and as of December 31, 2023, the outstanding balance was ₩200,000,000 (0% interest rate at December 31, 2023), which was fully paid in 2024.

The Group has a loan agreement with an individual and as of December 31, 2023, the outstanding balance was ₩300,000,000 (0% interest rate at December 31, 2023), ₩33,000,000 of which was paid in 2024.

The Group has a short-term debt agreement with Woori Bank Co., Ltd. and as of December 31, 2022, the outstanding balance was ₩283,250,903 (5.54% interest rate at December 31, 2022), which was fully paid in 2023.

The Group has multiple loan agreements with individuals. The total outstanding balance was total ₩1,153,365,000 with 7% interest rate as of December 31, 2022.

(17) Long-term debt

The Group has a long-term debt agreement with individuals and as of December 31, 2023, the outstanding balance was ₩460,000,000 (4.6% interest rate at December 31, 2023), which matures in 2030.

The Group has a long-term debt agreement with Woori Bank Co., Ltd. and as of December 31, 2022, the outstanding balance was ₩160,000,000 (6% interest rate at December 31, 2022), which was early paid in 2023.

(18) Leases

The Group has operating leases for properties, including manufacturing plants, offices, and a vehicle.

Leases have remaining lease terms of longer than 12 months, some of which include options to extend the lease and some include options to terminate the lease before term. The Group does not assume renewals in our determination of the lease term, unless the renewals are deemed to be reasonably certain as of the commencement date of the lease. Lease agreements do not contain any material residual value guarantees or material variable lease payments.

22

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

The Group has entered into various operating leases with a lease term of 12 months or less. The Group has elected to not capitalize leases with a lease term of 12 months or less.

As the rate implicit in most of our leases is not readily determinable, the Group uses its estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments.

The lease expense is included in rent expense of Selling, general and administrative expenses in the consolidated statements of operation and the amounts for the years ended December 31, 2023 and 2022, are as follows:

	Years ended December 31
(In Korean Won)	2023		2022
Operating lease expense	₩	109,881,120	₩	7,500,000

Supplemental balance sheet information related to leases is as follows:

	As of December 31
(In Korean Won)	2023			2022
Operating leases:
Total operating lease right-of-use assets	₩	210,350,535		₩	376,778,565
Current operating lease liabilities	₩	105,829,155		₩	62,511,022
Non-current operating lease liabilities		101,657,569			311,935,157
Total operating lease liabilities	₩	207,486,724		₩	374,446,179
Weighted-average remaining lease term
Operating leases		31.1 months			23.7 months
Weighted-aveage discount rate
Operating leases		16.9	%		13.1	%

The following table summarizes maturities of lease liabilities in undiscounted basis as of December 31, 2023 (in Korean Won)

2024	114,981,120
2025	78,620,280
2026	55,500,000
2027	10,000,000
Total undiscounted lease payments	259,101,400
Less imputed interest	(51,614,676	)
Total lease liabilities	207,486,724

23

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

Other information related to leases as of December 31, 2023 and 2022 were as follows:

	As of December 31
(In Korean Won)	2023		2022
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities:
Cash used in operations for operating leases	₩	83,945,144	₩	28,290,000
ROU assets obtained in exchange for lease obligations:
Operating leases		13,979,432		192,881,475
Reductions to ROU assets resulting from reductions to lease obligations:
Operating leases		109,881,120		-

(19) 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 years ended December 31, 2023 and 2022 are ₩119,411 thousand and ₩22,458 thousand, respectively.

(20) Stockholders’ equity

Details of share capital as at December 31, 2023 and 2022 are as follows:

(Korean won in unit and number of shares)
	December 31, 2023
	Par value per share		Shares authorized		Shares issued and outstanding		Common stock
Common stock	₩	5,000		4,000,000		1,887,070	₩	9,435,350,000

(Korean won in unit and number of shares)
	December 31, 2022
	Par value per share		Shares authorized		Shares issued and outstanding		Common stock
Common stock	₩	5,000		4,000,000		1,160,672	₩	5,803,360,000

24

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

Changes in number of common stock for the years ended December 31, 2023 and 2022 are as follows:

(In Korean Won in unit and number of shares)	For the year ended December 31, 2023
	Number of common stock		Common stock
January 1, 2023		1,160,672	₩	5,803,360,000
Issuance of common stock		669,145		3,345,725,000
Conversion of convertible bonds		57,253		286,265,000
December 31, 2023		1,887,070	₩	9,435,350,000

(In Korean Won in unit and number of shares)	For the year ended December 31, 2022
	Number of common stock		Common stock
January 1, 2022		301,000	₩	1,505,000,000
Issuance of common stock		859,672		4,298,360,000
December 31, 2022		1,160,672	₩	5,803,360,000

(21)  Additional paid-in capital

Details of other components of stockholders’ equity as of December 31, 2023 and 2022, are as follows:

(In Korean won)

	December 31, 2023		December 31, 2022
Additional paid-in capital in excess of par value	₩	229,027,323,455	₩	108,148,632,336

Changes in additional paid-in capital for the years ended December 31, 2023 and 2022 are as follows:

(In Korean won)	For the year ended
	December 31, 2023		December 31, 2022
Beginning balance	₩	108,148,632,336	₩	4,237,000
Issuance of common stock		115,641,230,170		119,277,582,177
Conversion of convertible bonds		5,237,460,949		—
Business combination		—		(11,133,186,841	)
Ending balance	₩	229,027,323,455	₩	108,148,632,336

(22)  Related party transactions

As of December 31, 2023, 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	RCM, VAXIMM, Darnatein
Associates	Taction Co., Ltd.
Other related parties	Bellevue Global Life Sciences Investors LLC

25

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

There are no sales and procurement transactions and treasury transactions with related parties for the years ended December 31, 2023 and 2022. The Group acquired Vaximm from BCM Europe AG in December 2022 (Transaction between entities under common control), which is disclosed in detail in Note 27 Business combinations.

Details of receivables and payables from related party transactions as at December 31, 2023 and 2022 are as follows:

(In Korean Won)	December 31, 2023
	Related parties		Short-term borrowings
Key management		Individuals	₩	500,000,000

(In Korean Won)	December 31, 2022
	Related parties		Short-term borrowings
Key management		Individuals	₩	700,000,000

Compensations paid or accrued to key management of the Parent for the years ended December 31, 2023 and 2022 are as follows:

(In Korean Won)	Year ended December 31
	2023		2022
Salaries	₩	615,446,525	₩	269,492,304

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 December 31, 2023 and 2022.

26

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

(23)  Administrative expenses

Details of administrative expenses for the years ended December 31, 2023 and 2022 are as follows:

(Korean won in unit)	2023		2022
Salary	₩	1,081,263,640	₩	561,113,054
Retirement payment		151,441,927		29,996,154
Employee benefits		69,035,866		44,198,109
Travel expenses		54,919,163		13,909,740
Entertainment expenses		56,884,678		18,208,300
Communication cost		2,973,063		1,285,299
Tax and due		27,741,980		11,217,710
Depreciation cost		101,467,794		22,391,361
Amortization of intangible assets		12,310,159,342		31,980,873
Rental cost		139,501,473		7,915,600
Repair fee		5,751,818		-
Insurance cost		26,876,797		1,364,200
Vehicle maintenance fee		23,552,429		5,644,649
Allowance for expected credit losses		45,492,513		-
Research and development expenses		323,591,877		244,099,988
Travel expenses		3,232,644		-
Training cost		292,000		-
Publishing fee		956,700		1,117,400
Office supplies fee		5,910		56,094
Consumable cost		34,622,650		7,577,655
Commisions and professional fee		736,699,779		324,090,719
Building management fee		712,429,052		6,701,970
Advertising expenses		8,925,543		-
Personal services		37,700,000		6,800,000
Total	₩	15,955,518,638	₩	1,339,668,875

(24)  Income taxes

A summary of income tax benefit for the years ended December 31, 2023 and 2022, is as follows:

(In Korean Won)	Year ended December 31
	2023		2022
Current:
Primary jurisdiction (Republic of Korea)	₩	2,128,451,322	₩	—
Foreign		—		2,376,396
		2,128,451,322		2,376,396
Deferred:
Primary jurisdiction (Republic of Korea)		—		—
Foreign		—		—
		—		—
Income tax benefits	₩	2,128,451,322	₩	2,376,396

There is no deferred tax recognized in other than net income for the years ended December 31, 2023 and 2022.

27

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

The provision for income taxes differs from that computed by applying statutory rates to (loss) income before income taxes. Explanations of the relationship between income tax benefits and accounting (loss) profit for the years ended December 31, 2023 and 2022 are as follows:

(In Korean Won)
	2023			2022
(Loss) income before income taxes	₩	(15,737,115,568	)	₩	788,195,791
Income tax based on statutory tax rate		3,269,257,154			(195,403,074	)
Adjustments:
Non-deductible expenses (benefits) for tax purposes		(1,679,707	)		161,696
Special tax for rural areas		792,427			-
Reduction in tax rate		-			(933,388	)
Unrecognized changes in temporary differences		(1,249,007,755	)		176,551,162
Others (changes in effective tax rate)		109,089,203			22,000,000
Income tax benefits	₩	2,128,451,322		₩	2,376,396

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 December 31, 2023 and 2022, 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 December 31, 2023 and 2022, 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 December 31, 2023.

Items that result in deferred tax assets and liabilities at December 31, 2023 and 2022 are as follows:

 

(Korean won in unit)	Year ended December 31
	2023			2022
Deferred tax assets:
Account payable (severance)	₩	96,264,791		₩	80,472,827
Interest payable		98,415,885			2,961,469
Amortization of intangible assets		438,988,604			-
Net operating loss carryforward		742,068,617			452,046,322
Other		148,399,441			123,517,812
Gross Deferred tax assets		1,524,137,338			658,998,430
Valuation allowance		(1,415,211,691	)		(623,074,614	)
Total deferred tax assets Deferred tax liabilities:		108,925,647			35,923,816
PPA effect		(43,328,007,126	)		(19,480,344,941	)
Total deferred tax liabilities		(43,328,007,126	)		(19,480,344,941	)
Net deferred tax liabilities	₩	(43,219,081,479	)	₩	(19,444,421,125	)

The Company did not have any material uncertain tax positions, which should be recognized in the consolidated financial statements as of December 31, 2023. In addition, the Company did not have any unrecognized tax benefits, which, if recognized, would affect the effective tax rate for the year then ended.

28

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

(25) Earnings (loss) per share

Basic (loss) earnings per share for the years ended December 31, 2023 and 2022 are calculated as follows: 

(Korean won in unit and number of shares)	Year ended December 31
	2023			2022
Net (loss) income (A)	₩	(13,608,664,246	)	₩	790,572,187
Weighted average number of ordinary shares outstanding (B)		1,668,498			390,425
Basic (loss) earnings per ordinary share (A/B)	₩	(8,156	)	₩	2,025

Weighted average number of ordinary shares outstanding for the years ended December 31, 2023 and 2022 are calculated as follows:

(Number of shares)	Year ended December 31
	2023		2022
Ordinary shares outstanding at the beginning		1,160,672		301,000
Weighted number of ordinary shares newly issued		446,458		89,425
Weighted number of ordinary shares newly issued		49,604		-
Conversion of convertible bonds		11,764		-
Weighted average number of ordinary shares outstanding		1,668,498		390,425

The group’s diluted earnings (loss) per share is the same as basic earnings (loss) per share because there is no dilution effect.

(26) Business combinations

The Parent acquired Darnatein (a novel drug development company) (referred as the “Acquiree” herein) as it executes on its business plan to further expand its business by discovering and investing in innovative healthcare companies with cutting-edge technology and creating operating synergies between subsidiaries. As the Parent and the Acquiree former owners exchanged only equity interests in business combination transactions and the acquisition-date fair value of the Parent’s equity interests could not reliably be measured, the Parent determined the amount of goodwill by using the acquisition-date fair value of the Acquiree equity interests instead of the acquisition-date fair value of the shares transferred.

Vaximm and Darnatein can be reasonably categorized as “(bio)platform companies” which differ from the companies only with drug development pipelines. Bioplatforms can be defined as biotechnologies that, once created and harnessed, allow for the intentional and repeatable generation of multiple medicines or agricultural and sustainability products. Both Vaximm and Darnatein are biotech companies whose drug R&D pipelines are based on their own in-house platform technologies that are protected by either patents or trade secrets. According to the “hub-and-spoke” business model of OSR Holdings, the Parent has assumed the position to either own or control the technology platforms of Vaximm and Darnatein through the Business Combinations, which means that the Parent will be able to launch new services to external clients or create additional drug candidates by a new start-up or Joint Venture with business partners based on their direct ownership or control over the platform technologies acquired from the Business Combinations. Such quality would support the goodwill recognition.

29

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

Details of business combinations that occurred for the years ended December 31, 2023 and 2022 are as follows: 

(In Korean won)		For the year ended December 31, 2023
Acquiree	Main business	Acquisition date	Ownership (%)			Total  consideration
Darnatein	New drug development, etc.	March 31, 2023		100.00	%	₩	105,004,724,500

(In Korean won)		For the year ended December 31, 2022
Acquiree	Main business	Acquisition date	Ownership (%)			Total consideration
RMC	Medical device distribution, etc.	December 31, 2022		100.00	%	₩	5,449,676,000
VAXIMM	New drug development, etc.	December 31, 2022		100.00	%	₩	124,558,971,196

Business combination in 2023 - Darnatein

Details of identifiable assets and liabilities and goodwill, which are recognized as the result of the acquisition of Darnatein completed during the year ended December 31, 2023 are set forth in the table below.

(in Korean won)	Darnatein
Fair value of total identifiable assets:
Current assets:
Cash and cash equivalents	₩	88,452,978
Trade and other receivables		5,593,090
Current tax assets		368,040
Non-current assets:
Equipment and vehicles		9,421,068
Right-of-use assets		94,273,525
Intangible assets		95,348,738,746
Non-current financial assets		1,420,000
		95,548,267,447
Fair value of total identifiable liabilties:
Current liabilities:
Trade and other payables		90,567,854
Lease liabilities		43,339,023
Current other liabilities		8,377,504
Non-current liabilities:
Severance payment		2,435,281
Lease liabilities		75,796,433
Deferred tax liabilities		25,024,086,000
		25,244,602,095
Fair value of identifiable net assets		70,303,665,352
Goodwill		34,701,059,198
Purchase consideraation transferred (*)	₩	105,004,724,550

For the year ended December 31, 2023, the Group’s consolidated statement of operations included ₩271,016,537 of operating loss, which included ₩91,179,603 of intangible amortization, from Darnatein. The following unaudited pro forma consolidated results of operations assume that the acquisition of Darnatein was completed as of January 1, 2022.

30

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

(Korean won in unit)	(Unaudited) Year ended December 31
	2023			2022
	₩	-		₩	-
Total operating revenues Net loss attributable to OSR Holdings		(1,002,639,294	)		(1,097,951 ,893	)

Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results.

The acquisition-date fair value of Darnatein was measured using the Discount Cash Flow (“DCF”) method and the Risk adjusted Net Present Value (“r-NPV”) method by outside valuation professionals. Key estimations and assumptions used in measuring the fair value of Darnatein are as follows:

● 19.88% of discount rate (Weighted Average Cost of Capital: WACC) used in discounting operating cashflows

● Patent technology will generate operating revenue for 20 years

(*1) OSR ordinary shares issued for purchase consideration of ₩105,004,724,550 is 590,425 shares at ₩177,846 per share. The number of OSR ordinary shares to be issued was determined based on negotiation with former owners of Darnatein.

Business combination in 2022 - RMC

Details of identifiable assets and liabilities of RMC and goodwill, which are recognized as the result of the acquisition of RMS completed during the year ended December 31, 2022 are set forth in the table below.

(in Korean won)	RMC
Fair value of total identifiable assets:
Current assets:
Cash and cash equivalents	₩	492,332,061
Trade and other receivables		546,515,991
Inventories, net		1,362,517,619
Current tax assets		14,528,800
Non-current assets:
Equipment and vehicles		8,992,855
Right-of-use assets		96,363,961
Intangible assets		851,287,339
Non-current financial assets		25,829,421
Deferred tax assets		72,044,355
		3,470,412,402
Fair value of total identifiable liabilties:
Current liabilities:
Trade and other payables		986,986,122
Short-term borrowings		283,250,903
Lease liabilities		34,471,452
Other liabilities		6,060,410
Non-current liabilities:
Long-term borrowings		160,000,000
Lease liabilities		59,874,430
Deferred tax liabilities		122,090,826
		1,652,734,143
Fair value of identifiable net assets		1,817,678,259
Goodwill		3,631,997,741
Purchase consideraation transferred (*2)	₩	5,449,676,000

For the years ended December 31, 2023, the Group’s consolidated statement of operations included ₩4,379,326,075 of revenues and ₩149,723,018 of operating income from RMC. The following unaudited pro forma consolidated results of operations assume that the acquisition of RMC was completed as of January 1, 2022.

31

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

(Korean won in unit)	(Unaudited) Year ended December 31
	2023		2022
Total operating revenues	₩	4,379,326,075	₩	1,676,437,856
Net income attributable to OSR Holdings		71,708,368		12,825,929

Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results.

The acquisition-date fair value of RMC was measured using the Discount Cash Flow (“DCF”) method by outside valuation professionals. Key estimations and assumptions used in measuring the fair value of RMC are as follows:

● 13.6% of discount rate (Weighted Average Cost of Capital: WACC) used in discounting operating cashflows

● Patent technology will generate operating revenue for 20 years

● Penetration ratio will reach at 100% in 7 years since approval of new drug

(*2) OSR ordinary shares issued for the purchase consideration transferred of ₩5,449,676,000 is 70,847 shares at ₩76,922 per share. The number of OSR ordinary shares to be issued was determined based on negotiation with former owners of RMC.

Business combination in 2022 – Vaximm (Transaction between entities under common control)

Vaximm acquisition is treated as business combination between entities under the control and is accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established. The transferring entity under common control transaction, BCM Europe AG, acquired Vaximm’s remaining share from a third party on November 4, 2022, which is considered when the common control was established for the Group. The Group’s acquisition of Vaximm from BCM Europe AG was completed on December 31, 2022. As such, the Group has presented the accompanying consolidated financial statements as though the assets and liabilities of Vaximm had been transferred at the beginning of November 2022, and accounted for the transactions using the guidance for transactions between entities under common control as described in ASC Topic 805, Business Combinations. Accordingly, the Group measured the recognized net assets transferred of Vaximm at the carrying amount of as of the beginning of November 2022 and the components of equity of Vaximm are added to the same components within the Group’s equity.

Details of identifiable assets and liabilities of Vaximm are set forth in the table below.

(in Korean won)
	VAXIMM
Book value of total identifiable assets:
Current assets:
Cash and cash equivalents	₩	1,757,253,007
Trade and other receivables		76,608,257
Other assets		13,394,354
Non-current assets:
Equipment and vehicles		10,641,115
Right-of-use assets		230,783,566
Intangible assets		129,971,491,814
Non-current financial assets		681,310,076
		132,741,482,189
Book value of total identifiable liabilties:
Current liabilities:
Trade and other payables		184,086,765
Other liabilities		49,909,316
Current tax liabilities		5,396,752
Non-current liabilities:
Lease liabilities		233,231,393
Deferred tax liabilities		19,398,166,462
		19,870,790,688
Book value of recognized net assets		112,870,691,501

For the years ended December 31, 2023 and 2022, the Group’s consolidated statement of operations included ₩74,224,985 and ₩8,758,337 of revenues and ₩1,038,984,245 and ₩545,710,913 of operating loss, respectively, from Vaximm. The following unaudited pro forma consolidated results of operations assume that the acquisition of Vaximm was completed as of January 1, 2022.

32

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

(Korean won in unit)	(Unaudited) Year ended December 31
	2023			2022
Total operating revenues	₩	74,224,985		₩	1,382,737,557
Net loss attributable to OSR Holdings		(1,044,469,241	)		(805,609,755	)

Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results.

Purchase consideration reflects the value of (i) 696,225 OSR Holdings ordinary shares issued to BCM Europe AG, (ii) 1,750 BCM Europe AG preferred shares assigned to BCM Europe AG by OSR Holdings, and (iii) $3,600,000 US dollars. The per share value of the OSR Holdings ordinary shares and BCM Europe AG preferred shares was ₩163,046 and ₩3,782,199, respectively. The purchase consideration was determined based on negotiations between OSR Holdings and BCM Europe AG. The difference between the book value of the recognized net assets and the consideration transferred is deemed a capital contribution.

Patent technology - Darnatein

Details of patent technology recognized from the acquisition of Darnatein that occurred during the year ended December 31, 2023 are set forth in the table below.

(Korean won in thousand)
		Amount
Patentl technology project code:
DRT 101	₩	94,788,203

DRT-101 is a synthetic bio-signaling molecule that replaces BMPRII-binding segments of BMP-7, one of the bone-forming proteins, with high affinity ActRII binding segments of Activin A, a member of the transforming growth factor β (TGF-β) superfamily along with BMP-7. In nature, endogenous BMP7 promotes chondrogenesis in damaged cartilage tissue by signaling primarily via the type II receptor BMPRII and to a lesser extent via the activin type II receptor ActRII, which it binds with lower affinity. DRT-101 amplifies intracellular regeneration signaling capacity compared to natural BMP-7 and allows for regeneration and restoration of mechanically depleted cartilage cells to normal levels.

Osteoarthritis is the most common joint disorder in the aging population. Although surgical treatment of osteoar-thritis can reduce pain and improve joint mobility and function, the operative management of osteoarthritis is associated with significant cost and morbidity. Unmet medical needs for DRT-101 for Osteoarthritis are enormous specially with aging population. Unique market opportunity of DRT-101 relies on novel Mechanism of Action of DRT-101 that can lead to potential first-in-class DMOAD (Disease-Modifying Osteoarthritis Drug) in the market.

Darnatein is pursuing pre-clinical studies of DRT-101 targeting osteoarthritis and plans to file Investigational New Drug Application (IND) to the U.S. Food and Drug Administration by 2025 for Phase 1 clinical trial, with aims of FDA approval by 2032. Darnatein will seek to create cashflow via licensing deals from the preclinical and clinical developments of its pipeline assets.

33

OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

Details of patent technology recognized from the acquisition of VAXIMM that occurred during the year ended December 31, 2022 are set forth in the table below.

(Korean won in thousand)
	Amount
Patent technology project code:
VMX01-GBM (ROW and China) (*)	₩	15,481,599
VMX01-mCRC (ROW and China) (*)		27,256,642
VMX01-Liver (ROW and China) (*)		41,297,472
VMX01-NF2 (ROW and China) (*)		16,214,016
VMX-Preclinical		29,047,708
Total fair value	₩	129,297,437

(*) Rest of the world (“ROW”) represents 7 major countries except China. These markets were separated purely from a licensing perspective, as the pre-determined terms would be applied when licensing out its technologies due to the license agreement with China Medical System Corp.

VXM01

VXM01 is an oral T-cell immunotherapy that is designed to activate T-cells to attack the tumor vasculature and tumor cells. VXM01 carries the vascular endothelial growth factor receptor-2 (VEGFR2), which is highly overexpressed on the tumor vasculature. The active, T-cell-mediated destruction of tumor vasculature cells leads to an increased infiltration of various immune cells into tumor tissue.

VXM-Preclinical

VAXIMM’s preclinical programs are composed of 4 different pipelines: VXM04, VXM06, VXM08 and VXM10

● VXM04 carries human mesothelin as the target antigen. Mesothelin is a protein that is overexpressed in several solid tumors.

● VXM06 targets WT1. WT1 is overexpressed in several hematological malignancies and solid tumors. In preclinical studies, VXM06 has shown potent T-cell activation against WT1 and stand-alone therapeutic activity in models of leukemia.

● VXM08 targets CEA, a human tumor-associated antigen overexpressed in many solid tumors. In preclinical studies, VXM08 has shown potent T-cell activation against its target antigen as well as stand-alone therapeutic activity in models of colorectal and lung cancer.

● VXM10 targets PD-L1, an immunomodulatory antigen upregulated in many solid tumors as well as hematological malignancies. VXM10 is currently in preclinical development and has shown stand-alone therapeutic activity in models of leukemia.

Net cashflow from the acquisitions for the years ended December 31, 2023 and 2022 are as follows:

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OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

(in Korean won)
	2023
Net cash outflow arising from acquisition of Darnatein:
Cash consideration	₩	-
Less: cash and cash equivalent balances acquired		(88,452,978	)
	₩	(88,452,978	)

(in Korean won)
	2022
Net cash outflow arising from acquisition of VAXIMM and RMC:
Cash consideration	₩	-
Less: cash and cash equivalent balances acquired		(2,249,584,807	)
	₩	(2,249,584,807	)

After the acquisitions, net sales revenue recognized by RMC and VAXIMM for the year ended December 31, 2023 were ₩4,379,326,075 and ₩74,224,985, respectively.

(27) Commitment and contingencies

The Group has no pending litigation cases arising in the ordinary course of business as of December 31, 2023 and 2022. The Parent has entered into various contractual commitments related to the acquisition of VAXIMM including a future financial obligation of CHF 143,356 underlying as of December 31, 2023. 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.

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OSR HOLDINGS CO., LTD. AND SUBSIDIARIES
Notes to The Consolidated Financial Statements
December 31, 2023 and 2022

(28) 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.

The Group’s subsidiaries operate in two geographic areas: Asia (Republic of Korea) and Europe (Switzerland and Germany). A break-down of the long-lived assets and ROU assets as of December 31, 2023 and 2022 is as follows:

(In Korean won)	December 31, 2023
	Asia			Europe			Total
Office equipment	₩	39,560,713			-		₩	39,560,713
Tools and instruments		33,350,272			-			33,350,272
Machinery and equipment		32,709,091			-			32,709,091
Facilities		229,358,179			145,510,526			374,868,705
Vehicles		39,785,349			-			39,785,349
		374,763,604			145,510,526			520,274,130
Less accumulated depreciation		(355,432,393	)		(142,115,123	)		(497,547,516	)
Equipment and vehicles, net	₩	19,331,211			3,395,403		₩	22,726,614
ROU assets	₩	342,790,028			-		₩	342,790,028
Less accumulated amortization		(132,439,493	)		-			(132,439,493	)
ROU assets, net	₩	210,350,535			-		₩	210,350,535

(In Korean won)	December 31, 2022
		Asia		Europe			Total
Office equipment	₩	16,274,259		-		₩	16,274,259
Tools and instruments		-		-			-
Machinery and equipment		-		-			-
Facilities		-		160,241,386			160,241,386
Vehicles		75,947,865		-			75,947,865
		92,222,124		160,241,386			252,463,510
Less accumulated depreciation		(76,355,301	)	(149,600,271	)		(225,955,572	)
Equipment and vehicles, net	₩	15,866,823		10,641,115		₩	26,507,938
ROU assets	₩	152,255,072		230,783,566		₩	383,038,638
Less accumulated amortization		(6,260,073	)	-			(6,260,073	)
ROU assets, net	₩	145,994,999		230,783,566		₩	376,778,565

The geographic break-down information on the other financial statement captions are considered impractical due to their immaterial nature.

(29) Subsequent events

The Group has evaluated subsequent events from the balance sheet date through January 31, 2025, the date at which the consolidated financial statements were available to be issued and determined that there are no other items to disclose.

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