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BASIS OF PRESENTATION | 9 Months Ended
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Sep. 30, 2025
BASIS OF PRESENTATION |
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION The terms “COSM,” “we,” the “Company,” the “Group” and “us” as used in this report refer to Cosmos Health Inc. The accompanying unaudited condensed consolidated balance sheet as of September 30, 2025 and unaudited condensed consolidated statements of operations and comprehensive income (loss) for the three months ended September 30, 2025 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of the management of COSM, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025, or any other period. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the financial statements for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (“Form 10-K”). The accompanying condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited financial statements filed in our Form 10-K and is included for comparison purposes on the accompanying balance sheet. Going Concern The Company’s unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplates the continuation of the Company as a going concern. For the nine‑month period ended September 30, 2025, the Company generated revenue of $45,568,655, incurred a net loss of $8,999,055, and used $3,851,273 of net cash in operating activities. As of September 30, 2025, the Company had cash and cash equivalents of $889,441 and restricted cash of $3,744,219, compared to $315,105 as of December 31, 2024, reflecting an increase of $4,318,555. The restricted cash relates to the Convertible Note Agreement dated August 5, 2025, and is designated for the purchase of crypto assets. The Company also had negative working capital of $430,029, an accumulated deficit of $123,021,330, and stockholders’ equity of $23,134,884. 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. 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. 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 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’). 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. The initial closing, amounting to $8 million, was completed on August 6, 2025, 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. 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. The proceeds from the ATM sales provide additional working capital and mitigate, to some extent, the Company’s liquidity constraints. As noted above, the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. However, the Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing to fund its operations and meet its obligations as they become due. Considering the Company’s significant net loss and negative operating cash flows for the reporting period, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Such adjustments could include the realization of assets and settlement of liabilities at amounts that may differ materially from those reflected in the accompanying consolidated financial statements.

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- Definition The entire disclosure for the business description and basis of presentation concepts. Business description describes the nature and type of organization including but not limited to organizational structure as may be applicable to holding companies, parent and subsidiary relationships, business divisions, business units, business segments, affiliates and information about significant ownership of the reporting entity. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147483426/235-10-50-4 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 205 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205/tableOfContent + Details
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