Cosmos Health Inc.

Current report

For the six months ended June 30, 2025, the Company reported revenue of $28,458,230 and a net loss of $3,646,165, compared to revenue of $27,191,190 and a net loss of $4,457,401 for the corresponding period in 2024.

Current report

Revenue for the three months ended June 30, 2025, increased by approximately 11.7% compared to the same period in 2024, primarily due to higher revenue from SkyPharm S.A. (“SkyPharm”) and Cana S.A. (“Cana”), our wholly owned subsidiaries. SkyPharm, which markets our proprietary nutraceutical line under the Sky Premium Life (“SPL”) brand, achieved higher sales in the United Arab Emirates, Cyprus, and Greece. Cana, our manufacturing subsidiary acquired on June 30, 2023, entered into new contract manufacturing agreements and expanded existing agreements, resulting in a significant increase in revenue for the period. For the six months ended June 30, 2025, revenue increased by approximately 2.4% compared to the same period in 2024. This increase was primarily attributable to the same factors that contributed to the revenue growth for the three‑month period.

Current report

Net loss for the three months ended June 30, 2025, increased by 9.2% (or $237,357) compared to the same period in 2024. The increase was primarily driven by non‑cash interest expense and the change in fair value of convertible notes related to the new convertible notes issued during the second quarter of 2025 (see Note 11 to the unaudited condensed consolidated financial statements included in this Form 10‑Q). For the six months ended June 30, 2025, net loss decreased by 18.2% compared to the same period in 2024, primarily as a result of a significantly higher gross profit of 51.7% for the period.

Current report

For the three months ended June 30, 2025, and 2024, the Company reported cost of goods sold (“COGS”) of $13,581,888 and $12,439,469, respectively, representing an increase of $1,142,419, or approximately 9.2%. For the six months ended June 30, 2025, and 2024, COGS was $25,244,617 and $25,690,316, respectively, representing a decrease of $445,699, or approximately 1.7%.

Current report

The increase in COGS for the three‑month period was consistent with the revenue increase of 11.7%. However, due to a shift in the Company’s revenue mix toward higher‑margin product lines, particularly nutraceuticals and contract manufacturing, which generally carry lower direct costs relative to the wholesale revenue stream, the increase in COGS was proportionally lower than the increase in revenue. For the six‑month period, COGS decreased despite the slight increase in revenue, further supporting the trend of a shift toward higher‑margin revenue streams.

Current report

For the three months ended June 30, 2025, the Company reported gross profit of $1,163,814, an increase of 51.7% compared to the same period in 2024. For the six months ended June 30, 2025, gross profit was $3,213,613, an increase of 52.7% compared to the corresponding period in 2024.

Current report

The significant improvement in gross profit for both periods was primarily attributable to a favourable shift in the Company’s revenue mix, with a greater proportion of sales derived from higher‑margin product lines, particularly within the nutraceuticals segment and from contract manufacturing revenue generated by the Company’s subsidiary, Cana.

Current report

For the three‑month period ended June 30, 2025, total operating expenses were $3,809,133 compared to $3,269,274 for the corresponding period in 2024, an increase of $539,859, or approximately 16.5%. For the six‑month period ended June 30, 2025, total operating expenses were $6,692,077 compared to $6,439,008 for the same period in 2024, an increase of $253,069, or approximately 3.9%. The increase in operating expenses for both periods was primarily driven by higher salaries and wages, largely attributable to the addition of management and scientific personnel at our subsidiary, Cana.

Current report

Interest expense for the three months ended June 30, 2025 increased by $46,368 or 13.6%, to $388,814 compared to $342,446 in the prior‑year quarter. For the six‑month period ended June 30, 2025, interest expense increased by $64,803 or 12.7%, to $575,921 from $511,118 in 2024. The increase is primarily attributable to the financing arrangement entered into by our subsidiary, Cosmofarm, with Attica Bank, as well as the issuance of new convertible notes by the Parent company during the second quarter of 2025.

Current report

Interest income for the three‑month period showed a slight increase of $3,757 or 3.7%, from $102,030 in 2024 to $105,787 in 2025, whereas for the six‑month period it decreased by $10,682 or 5.1%, from $207,795 in 2024 to $197,113 in 2025. Interest income remained relatively consistent, as the Company did not enter into any new loan receivable agreements, and the repayments made during the period were not significant enough to materially impact the amount of interest income recognized.

Current report

For the three-month period ended June 30, 2025, the Company recognized foreign currency translation adjustment net income of $1,562,470, compared to a translation loss of $176,591 in the same period of 2024, representing a favourable variance of approximately $1,739,061. For the six-month period, translation adjustment net income rose to $2,593,738, versus a loss of $775,867 in the prior-year period, a favourable swing of approximately $3,369,605.

Current report

This improvement primarily reflects pronounced appreciation of both the euro and the British pound against the U.S. dollar during the reporting periods, which positively impacted the translation of our euro‑denominated and GBP‑denominated subsidiaries when consolidated into USD.

Current report

In particular, the average EUR/USD exchange rate strengthened to approximately 1.18 USD per EUR by June 30, 2025 from roughly 1.13 USD per EUR one year earlier, which enhanced the U.S. dollar value of results reported by our euro‑area operations. Similarly, the GBP/USD rate averaged around 1.3722 USD per GBP as of June 2025, up from approximately 1.27 USD per GBP in mid‑2024, resulting in a significant favourable translation impact for our GBP‑denominated subsidiary (Decahedron Ltd).

Current report

As of June 30, 2025, the Company had negative working capital of $604,249, compared to negative working capital of $296,193 as of December 31, 2024. Although the Company’s current assets increased by approximately $5.1 million, this increase was largely offset by a significant rise in current liabilities. The increase in current liabilities was primarily driven by the issuance of new convertible notes by the parent entity during the second quarter of 2025 (approximately $1.6 million), an increase in lines of credit and notes payable totaling $1.8 million, and an increase in third‑party and related‑party accounts payable of approximately $1 million.

Current report

The negative operating cash flow for the current period was primarily attributable to consolidated operating losses, mainly incurred at the Parent Company level, partially offset by non‑cash items such as stock‑based compensation expense of approximately $1.2 million and depreciation and amortization of approximately $0.7 million. Changes in working capital during the period had a mixed impact, with increases in accounts payable and accrued expenses (both third‑party and related‑party) contributing positively but offset by higher prepaid expenses and related‑party assets as well as increases in inventory.

Current report

The significant reduction in operating cash outflows compared to the prior period was mainly due to the lower net loss recognized in 2025 and the absence of substantial operating investments that occurred during the first half of 2024, particularly related‑party prepayments for inventory and product purchases.

Current report

For the six‑month period ended June 30, 2025, the Company generated net cash of $64,751 from investing activities, compared to $242,404 in the same period of the prior year. The investing cash inflows in the current period were primarily driven by proceeds from loan receivables of approximately $0.2 million, partially offset by capital expenditures and limited spending on intangible assets totalling approximately $0.1 million.

Current report

The decrease in net cash provided by investing activities compared to the prior period is mainly attributable to lower loan repayments received during 2025, as well as the absence of proceeds from sales of intangible assets that occurred in the comparative period. The Company’s investing cash flows during the current period were minimal and primarily related to routine asset purchases and scheduled loan collections.

Current report

For the six‑month period ended June 30, 2025, the Company generated $2,165,227 in net cash from financing activities, compared to $746,610 during the same period in 2024. The increase was primarily driven by proceeds from convertible notes issued by the Parent Company during the current period, which represented the most significant source of financing inflows. Additionally, both the Parent Company and its wholly owned subsidiary, Cosmofarm SA, entered into new debt facilities, collectively providing substantial proceeds that contributed to strengthening liquidity.

Current report

The Company also utilized its lines of credit, generating approximately $14.1 million in proceeds, which were offset by repayments of $13.8 million during the period. Debt repayments on notes payable and related party obligations totaled $746,679 for the six‑month period ended June 30, 2025, consistent with prior‑year levels. No equity financing transactions occurred in the current period, compared to gross proceeds of approximately $0.6 million from equity raises completed in early 2024. Overall, financing inflows during the first half of 2025 provided the primary source of liquidity to offset operating cash outflows and support the Company’s ongoing working capital needs.

Current report

These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of 12 months from the date of this filing. While the Company’s revenues have grown, they remain insufficient to fund operating expenses and meet debt obligations as they become due. Furthermore, the Company remains dependent on external financing sources to sustain operations and fund growth initiatives.

Current report

Management has evaluated these factors and its ability to meet obligations due within the next 12 months. Its plans include expanding the portfolio of brand‑name and private‑label products, launching new distribution channels, and increasing sales from recently secured agreements, such as the exclusive distribution of Sky Premium Life products in the United Arab Emirates (“UAE”). Significant purchase orders have already been received under this agreement and are expected to contribute to operating cash inflows in the near term. Moreover, the Company is planning to expand the customer base of its subsidiary, Cosmofarm S.A., which is expected to substantially increase its wholesale revenue stream. In addition, the Company’s manufacturing subsidiary, CANA S.A., which is already demonstrating improved revenue and gross profit, is planning to strengthen its existing contract manufacturing agreements and secure new ones.

Current report

From a financing perspective, during the six‑month period ended June 30, 2025, the Company raised capital through the issuance of convertible notes by the Parent Company and by entering into new debt facilities at both the Parent Company and subsidiaries level. Management intends to continue accessing capital markets to raise additional funds through equity offerings. Beginning in August 2025, the Company expects to become eligible to utilize an S‑3 registration statement (12 months after regaining compliance with Nasdaq Listing Rule 5250(c)(1)) to access equity capital more efficiently. In addition, the Company is pursuing amendments to certain debt facilities to defer principal repayments and exploring additional debt financing opportunities to enhance liquidity. Finally, on August 5, 2025, the Company entered into a Securities Purchase Agreement for the issuance of up to $300 million of senior secured convertible promissory notes, with an initial $8 million closing completed on August 6, 2025. The availability of these proceeds, primarily intended for digital asset acquisition and working capital, significantly improves the Company’s liquidity and alleviates substantial doubt regarding our ability to continue as a going concern for at least the next 12 months.

Current report

Management is also considering postponing certain payments to suppliers and other creditors if required. Although these actions are intended to address the going concern uncertainty, there can be no assurance that the Company will be successful in executing its plans or obtaining the necessary funding.

Current report

Convertible Promissory Note

Current report

As permitted under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 825,Financial Instruments (“ASC 825”), the Company elects to account for its convertible promissory note, which meets the required criteria, at fair value at inception and at each subsequent reporting date. Subsequent changes in fair value are recorded as a component of non-operating loss in the consolidated statements of operations. This election is made on an instrument-by-instrument basis as permitted under ASC 825. The portion of total changes in fair value of the convertible promissory note attributable to changes in instrument-specific credit risk are determined through specific measurement of periodic changes in the discount rate assumption exclusive of base market changes and are presented as a component of comprehensive income in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss). As a result of electing the fair value option, direct costs and fees related to the convertible promissory note are expensed as incurred.

Current report

The Company estimates the fair value of the convertible promissory note using a Monte Carlo simulation model, which uses as inputs the fair value of our common stock and estimates for the equity volatility and volume volatility of our common stock, the time to expiration of the convertible promissory note, the risk-free interest rate for a period that approximates the time to expiration, and probability of default. Therefore, we estimate our expected future volatility based on the actual volatility of our common stock and historical volatility of our common stock utilizing a lookback period consistent with the time to expiration. The time to expiration is based on the contractual maturity date, giving consideration to the voluntary, mandatory and potential accelerated redemption scenarios. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of measurement for time periods approximately equal to the time to expiration. Probability of default is estimated using Bloomberg's Default Risk function which uses our financial information to calculate a default risk specific to the Company

Previous report

On July 1, 2021, the Company’s subsidiary, SkyPharm SA, entered into an exclusive distribution agreement with a company based in Germany (“Distributor A”), whereas SkyPharm appointed Distributor A to be the responsible partner for the distribution, promotion, trade marketing, logistics and sale of the nutraceuticals manufactured and supplied by SkyPharm (Sky Premium Life®), in the territories of Austria and Germany. Distributor A places purchase orders with SkyPharm at the company’s address and a purchase order is necessary to initiate any shipment.

Previous report

On July 7, 2021, SkyPharm SA signed a trade agreement with a company specializing in e-commerce mall advice and operation (“Distributor B”). Based on the agreement, SkyPharm sells its own branded products Sky Premium Life® to final consumers through the e-commerce store opened by Distributor B on Tmall International MALL and Distributor B provides platform operation services to SkyPharm. The services provided by Distributor B include mall construction, mall operation and network promotion, along with collection, settlement, customer service, logistics and distribution.

Previous report

The decrease in net loss of approximately $1,048,593 is primarily attributable to a significant improvement in gross profit, driven by a shift in the Company’s revenue mix toward higher-margin product lines. In particular, the nutraceutical segment of our subsidiary, SkyPharm SA, recorded substantial growth during the period, contributing positively to overall gross profitability.

Previous report

Revenue for the three-month period ended March 31, 2025, decreased by approximately 5.98% compared to the same period in 2024. This decline is predominantly due to unfavorable foreign exchange movements, specifically the depreciation of the euro against the U.S. dollar, which negatively impacted the translation of euro-denominated revenues. Additionally, a marginal decrease in sales from our wholesale subsidiary, Cosmofarm SA, contributed modestly to the overall revenue decline.

Previous report

For the three-month periods ended March 31, 2025 and 2024, the Company reported cost of goods sold (“COGS”) of $11,662,729 and $13,250,847, respectively, representing a decrease of $1,588,118 or approximately 11.99%. This decrease in COGS is primarily attributable to a shift in the Company’s revenue mix toward higher-margin product lines, particularly the nutraceuticals segment, which generally carries lower direct costs relative to other product categories. The reduction in COGS is also broadly aligned with the overall decline in revenues during the same period, thus maintaining consistency in the Company’s cost structure relative to sales performance.

Previous report

For the three months ended March 31, 2025, the Company reported gross profit of $2,049,799, representing an increase of 53.7% compared to the same period in 2024. This significant improvement in gross profit is primarily attributable to a favorable shift in the Company’s revenue composition, with a greater proportion of sales generated from higher-margin product lines—most notably, those within the nutraceuticals segment. Additionally, the increase in gross profit corresponds with a reduction in COGS for the period, further reinforcing the positive impact of the evolving product mix on the Company’s margin performance.

Previous report

For the three-month period ended March 31, 2025, total operating expenses amounted to $2,882,944, compared to $3,169,734 for the corresponding period in 2024, representing a decrease of $286,790, or approximately 9.05%. This decrease was primarily driven by reductions in personnel and marketing-related expenditure, as outlined below:

Previous report

Overall, the reduction in operating expenses reflects the Company’s continued focus on disciplined cost management while aligning spending with its strategic priorities.

Previous report

For the three-month period ended March 31, 2025, interest expense totalled $187,107, representing an increase of $18,435, or 10.93%, compared to $168,672 for the prior period ended March 31, 2024. The increase was primarily driven by new debt facilities, entered into by our subsidiary Cosmofarm SA.

Previous report

Interest income for the three-month period ended March 31, 2025, was $91,326, reflecting a decrease of $14,439, or 13.65%, compared to $105,765 for the three-month period ended March 31, 2024. This decline was primarily due to the receipt of loan repayments during 2024, which reduced outstanding loan receivable balances and, consequently, interest earned on them.

Previous report

For the three-month period ended March 31, 2025, the Company recorded a foreign currency translation adjustment gain of $1,031,268, compared to a loss of $599,276 in the corresponding period of the prior year. The improvement is partially attributable to favourable movements in foreign exchange rates during the current reporting period, which positively impacted the translation of the financial statements of foreign subsidiaries. It should be noted that during the year 2024, the Company’s Parent, Cosmos Health Inc., executed a share capital increase of €18,400,000 ($20,345,432) in favour of its subsidiary, SkyPharm SA. This transaction had a substantial adverse impact on the accumulated comprehensive loss as of December 31, 2024, due to the nature of foreign currency translation under ASC 830, where equity-related transactions are translated using historical exchange rates. The exchange rate applied at the time of the capital contribution was less favourable than the year-end rate, leading to a significant unrealized currency loss on intercompany balances that is reflected in other comprehensive income. The combined effect of these factors contributed to the period-over-period fluctuation in the foreign currency translation adjustment recognized in other comprehensive income.

Previous report

As of March 31, 2025, the Company had positive working capital of $1,259,012, compared to a negative working capital of $296,193 as of December 31, 2024. The improvement in working capital is primarily attributable to higher inventory levels and increased accounts receivable as of March 31, 2025. These increases reflect the Company’s focus on supporting sales growth and ensuring product availability. In addition, the reduction in related party accounts payable contributed to the improved position, following debt-to-equity conversions executed by our Chief Executive Officer, Mr. Grigorios Siokas, during the period. The Company believes its current working capital is adequate to meet short-term obligations.

Previous report

For the three-month period ended March 31, 2025, the Company used $7,069 in net cash for investing activities, compared to net cash provided by investing activities of $126,454 in the prior-year equivalent period. The cash outflows for the current period were immaterial and primarily reflect limited investment activity. The variance compared to the prior period is largely attributable to the absence of principal and interest receipts from the Company’s loans receivable, which had contributed to investing inflows during the three-month period ended March 31, 2024. As of the date of this report, the Company expects to recover the outstanding principal and accrued interest related to such loans within the next few months.

Previous report

For the three-month period ended March 31, 2025, the Company generated $560,862 in net cash from financing activities, compared to $206,942 during the same period in 2024. The increase in net cash from financing activities was primarily driven by lower debt repayments and new financing arrangements. Debt repayments totalled $184,153 in the first quarter of 2025, a significant reduction compared to $364,354 in the prior-year period. In addition, during the first quarter of 2025, the Company’s subsidiary, Cosmofarm SA, entered into a new debt facility, which provided proceeds of $737,177. Equity financing activity during the three-month period ended March 31, 2024 included gross proceeds of $649,039 from two Prospectus Supplements to the Company’s Registration Statement on Form S-3. There were no comparable equity raises in the 2025 period. Furthermore, the Company generated $19,538 in net proceeds from its Lines of Credit during the first quarter of 2025. These inflows contributed to strengthening the Company’s liquidity position and funding ongoing operational needs.

Previous report

The Company’s revenues are not able to sustain its operations, and concerns exist regarding the Company’s ability to meet its obligations as they become due. The Company is subject to a number of risks to those of smaller commercial companies, including dependence on key individuals and products, the difficulties inherent in the development of a commercial market, the need to obtain additional capital, competition from larger companies, and other pharmaceutical and health care companies.

Previous report

Management evaluated the above conditions which raise substantial doubt about the Company’s ability to continue as a going concern to determine if it can meet its obligations for the subsequent 12 months from the date of this filing. Management considered its ability to access future capital, curtail expenses if needed, expand product lines, and acquire new products.

Previous report

Management’s plans include expansion of brand name products to the market, expanding the current product portfolio, and evaluating acquisition targets to expand distribution. The exclusive distribution agreement signed for its Sky Premium Life products in the United Arab Emirates (“UAE”) and the significant orders already received, are expected to substantially strengthen its operating cash flow. Furthermore, the Company intends to vertically integrate the supply chain distribution network. On top of that, the Company plans to access the capital markets further in order to raise additional funds through equity offerings. More specifically, commencing from August 2025, the Company will be eligible to utilize an S-3 registration statement, (12 months following the date that the Company had regained compliance with Listing Rule 5250(c)(1) (the “Filing Rule”)), to be in a position to raise equity capital more efficiently in conjunction with utilizing potential equity proceeds by its outstanding warrants. Management’s plans also include postponing certain debt repayments, through achieving favorable amendments to its debt facilities and in parallel intends to make substantial efforts to receive additional debt financing. Moreover, the Company’s management is considering of postponing certain repayments of suppliers and creditors. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described herein and eventually secure other sources of financing and attain profitable operations.