Company: OSRH
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001213900-25-109054
Chunk: 42

Company: OSR Holdings, Inc.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 42
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%.

This improvement in profitability was driven by a change in RMC’s contractual arrangement with one of its major suppliers. Specifically,
RMC transitioned from a traditional purchase-and-resale model to a consignment-based arrangement under which only commission revenue
is recognized. Although the new contract was executed in April, the change began to affect revenue recognition starting in July. Management
expects this consignment-based model to enhance gross-margin stability in future periods.

For the nine months ended September 30, 2025, RMC’s net sales
decreased by $90,515, or 3%, while cost of sales increased by $97,500, or 5%, compared to the same period in the prior year. As a result,
gross profit decreased by $188,014, or 29%. The decline in gross profit for the nine-month period was primarily due to the impact of the
second quarter, during which RMC sold previously held inventory back to the supplier at cost as part of the transition to the new consignment-based
model. This transaction temporarily depressed gross margin in the second quarter, offsetting the margin improvement realized in the third
quarter. The margin decline in the second quarter was a one-time event.

28

Selling, General and Administrative Expenses

For the three months ended September 30, 2025, OSR Holdings’
selling, general and administrative (SG&A) expenses increased by $319,564, or 9%, compared to the same period in the prior year.

For the nine months ended September 30, 2025, OSR Holdings’ selling,
general and administrative (SG&A) expenses increased by $1,683,277, or 16%, compared to the same period in the prior year.

Following the completion of the Business Combination on February 14,
2025, various costs associated with fulfilling public company obligations began to rise. The increase was primarily attributable to higher
personnel-related expenses, including salaries, severance payments, employee benefits, bonuses, and travel costs. Additional SG&A
expenses included amortization of intangible assets, research and development expenses, and professional service fees such as legal, audit,
investor relations, and press release costs, as well as non-income taxes, insurance premiums, and employee recruiting and training expenses.
The 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