Cosmos Health Inc.

Current report

In June 2023, the Company completed the acquisition of Cana Laboratories Holdings (Cyprus) Limited (“Cana”), including its wholly owned subsidiary Pharmaceutical Laboratories Cana S.A., a Greek pharmaceutical company engaged in the manufacturing, distribution, and marketing of branded pharmaceutical and healthcare products. The total consideration consisted of €800,000 in cash, 46,377 shares of restricted common stock valued at $800,000, and a €4.1 million secured promissory note. The acquisition strengthened the Company’s vertical integration capabilities and manufacturing operations through Cana’s GMP-licensed facilities and established relationships with multinational healthcare companies.

Current report

In June 2023, the Company also acquired the pharmaceutical distribution network and customer base of Ioannis Bikas O.E. (“Bikas”) for total consideration of approximately €400,000, consisting of cash and common stock. The acquisition was accounted for as an asset acquisition under ASC 805, resulting in the recognition of an intangible asset related to the acquired customer base. The acquisition expanded the Company’s distribution footprint in Greece and contributed to increased revenues and operational synergies.

Current report

In January 2024, the Company completed the acquisition of Cloudscreen, an AI-powered drug repurposing platform, for total consideration of $637,080 consisting of common stock and cash payable under a promissory note. The acquisition was accounted for as an asset acquisition under ASC 805, and the acquired technology platform was recorded as an intangible asset.

Current report

Gross profit for the three months ended March 31, 2026 was $1,381,171, compared to $2,049,799 for the same period in 2025, representing a decline of approximately 32.6% despite the 30.7% increase in revenue. Gross margin compressed to approximately 7.7% from approximately 15.0% in the prior year period. This compression reflects two principal factors: first, a higher proportion of revenue was derived from Cosmofarm S.A.'s wholesale distribution business, which operates at structurally lower gross margins relative to our nutraceutical and contract manufacturing segments; and second, $375,337 of nutraceutical revenue attributable to sales to Medihelm S.A. — a customer with a significant historical allowance — was reversed during the period, as the Company recognizes revenue from this customer only to the extent that cash is actually received.

Current report

The net loss increased $1,987,326 (approximately 243%) for the three-month period. The wider loss reflects the gross margin compression described above, as well as newly recognized non-cash charges, including:

Current report

partially offset by a $239,480 gain on the change in fair value of convertible notes and a $231,968 gain on the change in fair value of derivative liabilities.

Current report

For the three months ended March 31, 2026 and 2025, the Company reported cost of goods sold ("COGS") of $16,546,721 and $11,662,729, respectively — an increase of $4,883,992 (approximately 41.9%). The growth in COGS is consistent with the significant increase in revenue over the period; however, because a higher proportion of revenue was derived from Cosmofarm S.A.'s wholesale distribution business, which carries structurally lower gross margins, COGS grew at a faster rate than revenue. This dynamic, combined with the reversal of $375,337 in nutraceutical revenue related to Medihelm S.A., resulted in gross margin compression to approximately 7.7% for the three months ended March 31, 2026, compared to approximately 15.0% for the same period in 2025.

Current report

For the three months ended March 31, 2026, gross profit was $1,381,171, compared to $2,049,799 for the same period in 2025, representing a decrease of $668,628 (approximately 32.6%). As discussed above, the decline in gross profit and the compression in gross margin to approximately 7.7% from approximately 15.0% in the prior year period reflect the shift in revenue mix toward wholesale distribution and the Medihelm S.A. revenue reversal.

Current report

For the three months ended March 31, 2026, total operating expenses were $3,565,350, an increase of $682,406 (approximately 23.7%) compared to $2,882,944 for the same period in 2025. The increase was primarily driven by higher personnel costs consistent with the Company's operational expansion.

Current report

For the three months ended March 31, 2026, the Company recognized a foreign currency translation loss of $295,061, compared to a gain of $1,031,268 for the same period in 2025. The current period loss reflects the strengthening of the U.S. dollar relative to the euro during Q1 2026, which reduced the USD-translated carrying value of the Company's European subsidiaries. The prior year gain reflected the opposite dynamic, as the euro appreciated against the U.S. dollar during Q1 2025, increasing the USD value of European net assets upon translation.

Current report

Financing activities generated net cash inflows of $347,627 for the three months ended March 31, 2026, compared to $560,862 for the same period in 2025. The Company actively managed its lines of credit during the period, drawing $7,972,951 and repaying $9,142,284, reflecting ongoing oversight of short-term debt facilities. Proceeds from the issuance of common stock totalling $1,832,524 were related to sales conducted pursuant to the Company's at-the-market (ATM) equity program. Financing cash outflows included payments of financing fees of $54,976, repayments of notes payable of $258,640, and payments of finance lease liabilities of $1,948. No proceeds were received from convertible notes, new note payables, or related party loans during the period.

Current report

In summary, for the three months ended March 31, 2026, net cash decreased by $1,300,972 with operating and investing outflows exceeding financing inflows. Total cash and restricted cash at March 31, 2026 stood at $2,158,921, compared to $3,459,893 at December 31, 2025. The restricted cash balance of $1,644,219, earmarked for crypto purchases under the August 5, 2025 convertible note agreement, represents a planned and strategic deployment of funds. The Company continues to rely on a combination of lines of credit, ATM equity issuances, and convertible note financing to sustain working capital and fund its operational and strategic requirements.

Current report

From a financing perspective, during the three-month period ended March 31, 2026, the Company raised capital through its At-the-Market (“ATM”) program, generating gross proceeds of approximately $1,832,524, which enhanced its liquidity position. In addition, 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, and potential additional tranches subject to certain conditions; this agreement remains in effect. The Company may also enter into new convertible financing arrangements and intends to continue and potentially expand its ATM program to support future liquidity needs. Moreover, on November 7, 2025, the Company filed a shelf Registration Statement on Form S-3 (File No. 333-286550) with the Securities and Exchange Commission to register up to $200.0 million of securities, including common stock, preferred stock, warrants, units, and subscription rights, for potential future capital raising activities. The filing also served as a replacement registration statement pursuant to Rule 415(a)(6) under the Securities Act for previously unsold securities registered under the prior Registration Statement on Form S-3 (File No. 333-267550). As of the filing date of these unaudited condensed consolidated financial statements, the registration statement has not yet been declared effective by the SEC.

Previous report

On May 31, 2023, the Company entered into a Stock Purchase Agreement with the owners of one hundred (100%) percent of the equity (the “Shares”) of Cana Laboratories Holdings (Cyprus) Limited (“Cana”), which wholly owned an operating subsidiary, Pharmaceutical Laboratories Cana S.A. (“Cana SA”). The purchase price for the shares for the two sellers is €800,000 and 46,377 shares of Cosmos restricted common stock at an issuance price of $17.25 per share or $800,000. Moreover, on February 28, 2023, the Company signed a Secured Promissory Note with Cana, whereby Cana borrowed the sum of €4,100,000 ($4,457,520), included in the total cash consideration provided for the acquisition. The acquisition was successfully completed on June 30, 2023.

Previous report

Cana SA is a Greek pharmaceutical company that manufactures, sells, distributes, and markets original branded products researched and developed by leading global pharmaceutical and healthcare companies. Cana stands out as it brings significant synergies and vertical integration. With a long-standing history spanning almost a century, Cana has earned the trust of industry giants like AstraZeneca, Merck, Unilever, and Procter & Gamble. Cana's Good Manufacturing Practice (GMP) license enables us to manufacture pharmaceuticals, including medicines, within the EU, which creates attractive opportunities for high-margin contract manufacturing agreements with major multinational clients.

Previous report

On June 15, 2023, Cosmos Health Inc. entered into an Assignment and Assumption Agreement (the “Agreement”) with Ioannis Bikas O.E., a Greek Company (“Bikas”). Bikas is owner of a pharmaceutical distribution network in Greece and agreed to sell the Company their distribution network and customer base. The purchase price of the network was €100,000 ($109,330) of cash, and €300,000 ($316,081) of the Company’s stock. The Company issued 99,710 shares of common stock related to the acquisition of the customer base, based on the fair value of the stock on the acquisition date. The Company accounted for the acquisition as an asset acquisition in accordance with ASC 805 and recorded $425,411 as an intangible asset related to the customer base acquired.

Previous report

This acquisition positively impacted on our revenue (an increase of more than $10 million annually) and enhanced the Company's gross margins due to economies of scale. Additionally, synergies with Cosmofarm's state-of-the-art facility, which employs robotic technologies for procurement, inventory management, and order execution, provide an elevated level of service to pharmacies, leading to increased orders. We are pleased to announce that we have now successfully integrated Bikas within the Cosmofarm platform.

Previous report

On January 23, 2024, the Company completed the acquisition of Cloudscreen, a cutting-edge Artificial Intelligence (AI) powered platform. The acquisition is pursuant to the purchase agreement announced on October 11, 2023. Cloudscreen is a multimodal platform specialized in drug repurposing, a process that involves uncovering new target proteins or indications for existing drugs for use in treating different diseases. The total purchase price amounted to $637,080 and consisted of 280,000 shares of common stock with a fair value of $319,200 and an amount of $317,880 to be settled in cash during 2024 based on the Promissory Note signed on October 10, 2023. The Company accounted for the acquisition as an asset acquisition in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, (“ASC 805”) and recorded $637,080 as another asset related to the technology platform acquired. The total amount was reclassified to “Goodwill and intangible assets, net” in January 2024 with the closing of the agreement (refer to Notes 2 & 5).

Previous report

The net loss increased $3.17 million (≈145%) for the three-month period, primarily as a result of newly recognized non-cash charges:

Previous report

For the nine-month period, the net loss rose 35.5%, also due to the same non-cash valuation adjustments and higher interest expense, partially offset by improved gross profit and favorable foreign currency translation gains.

Previous report

For the three months ended September 30, 2025 and 2024, the Company reported cost of goods sold (“COGS”) of $14,507,807 and $11,204,186, respectively—an increase of $3,303,621 (29.5%). For the nine-month periods, COGS was $39,752,424 and $36,894,502, respectively—an increase of $2,857,922 (7.7%).

Previous report

The growth in COGS reflects higher volumes consistent with revenue growth; however, because of a shift toward higher-margin product lines, notably nutraceuticals and contract manufacturing, COGS grew at a slower rate than revenue, yielding a stronger gross margin profile.

Previous report

Gross profit for the three months ended September 30, 2025, was $2,602,618, compared to $1,206,862 in 2024, representing an increase of $1,395,756 (115.6%). For the nine-month period, gross profit rose to $5,816,231, from $3,307,736 in 2024, an increase of $2,508,495 (75.9%).

Previous report

The improvement in gross profit and margin was primarily driven by the overall increase in revenue, reflecting higher sales volumes across the Group’s operations, as well as a favorable sales mix, with a larger proportion of revenue derived from high-margin nutraceutical products and contract manufacturing activities at Cana.

Previous report

Total operating expenses for the three-month period ended September 30, 2025, were $4,421,333, up 28.3% from $3,446,726 in 2024. For the nine months ended September 30, 2025, total operating expenses were $11,113,410, up 12.4% from $9,885,734 in 2024. The increases were primarily due to higher personnel costs, consistent with the Company’s operational expansion, and the inclusion of research and development (R&D) expenses that were not present in the prior-year periods.

Previous report

The Company recognized foreign currency translation gains of US $255,263 for Q3 2025 and US $2,849,001 for the nine months ended September 30, 2025, compared to US $747,879 and a loss of US $27,988, respectively, in the prior year. These gains primarily reflect the appreciation of the euro and British pound against the U.S. dollar, which increased the USD value of the Company’s European and UK subsidiaries when their financial statements were translated into the reporting currency.

Previous report

The primary source of cash inflows during the nine months ended September 30, 2025, was financing activities, which generated net inflows of $9,357,403. The largest contributor to these inflows was the issuance of convertible notes by the Company, providing proceeds of $9,839,348. In addition, the Company actively managed its lines of credit, drawing $20,798,759 during the period, partially offset by repayments of $21,117,614, reflecting careful oversight of short-term debt facilities to maintain liquidity. Proceeds from the issuance of common stock, totaling $1,021,934, were primarily related to sales conducted pursuant to the Company’s at-the-market (ATM) equity program, supporting additional capital needs. Financing cash outflows included payments of financing fees of $1,698,606 related to the convertible notes and the ATM program, repayments of notes payable totaling $1,574,100—which were higher than the prior period as the proceeds from new note issuances were also larger—and payments of related party loans of $6,700, while the Company additionally received proceeds of $2,101,751 from new note payables. Collectively, these financing activities more than offset the combined cash outflows from operating and investing activities, highlighting the Company’s continued focus on advantageous funding, including convertible notes, lines of credit, and ATM equity sales, to sustain working capital, support operations, and fund strategic investments during the period.

Previous report

In summary, the Company’s total liquidity strengthened significantly in the first nine months of 2025, reflecting successful financing initiatives and prudent cash management. Cash and restricted cash increased to $4,633,660, providing a solid foundation to support ongoing operations, working capital requirements, and strategic investments. The restricted cash earmarked for the ETH purchase under the August 5, 2025 convertible note agreement represents a planned and strategic use of funds, positioning the Company to capitalize on emerging digital asset opportunities. Overall, the Company’s enhanced liquidity position highlights its improved financial flexibility and ability to fund growth initiatives while continuing to manage operational and investment needs effectively.

Previous report

We anticipate using cash in our bank account as of September 30, 2025, cash generated from debt or equity financing, from investing activities or from management loans to the extent that funds are available to do so to conduct our business in the upcoming year. Management is not obliged to provide these or any other funds. If we fail to meet these requirements, we may lose the qualification for quotation and our securities would no longer trade on Nasdaq Capital Market. Further, as a consequence we would fail to satisfy our reporting obligations with the Securities and Exchange Commission (“SEC”), and investors would then own stock in a company that does not provide the disclosure available in quarterly and annual reports filed with the SEC and investors may have increased difficulty in selling their stock as we will be non-reporting.

Previous report

From a financing perspective, during the nine‑month period ended September 30, 2025, the Company raised capital through the issuance of convertible notes and by entering into new third-party debt facilities. 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 (the “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 “Initial Note”), while additional tranches of up to $292 million may be issued in multiple subsequent closings, subject to the satisfaction of certain management and regulatory conditions as defined in the Agreement. 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. Under the terms of the Initial Note, the Company is entitled to receive an additional $2 million upon the effectiveness of the registration statement covering the shares issuable upon conversion of the Initial Note. 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. Moreover, following the Company’s resolution of the SEC-related limitations on the use of its Form S-3 registration statement, which had been temporarily affected by delayed filings, the Company was able to resume issuances under its At-the-Market (“ATM”) sales program. During the period from September 22, 2025, through the date of issuance of this report, the Company issued an aggregate of 3,992,541 shares of its common stock pursuant to its Shelf Registration Statement on Form S-3 (File No. 333-267550). The shares were sold for gross proceeds of $4,376,622, thereby enhancing the Company’s cash position and liquidity.