Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The financial statements and this Management's Discussion and Analysis of Financial Condition and Results of Operations (this "MD&A") have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.

The Company expects to continue to incur significant operating losses for the foreseeable future. If the Company is unable to secure additional capital, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These measures could cause significant delays or entirely prevent the Company's continued efforts to commercialize its current or future products, which are critical to the realization of its business plan and the future operations of the Company. This uncertainty, along with the Company's history of losses, indicates that there is substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. The accompanying condensed consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

In addition to accessing public markets through the exercise of outstanding warrants, additional public and private debt and equity financings, management believes that the Company has access to additional capital resources through public and/or private equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, it is possible that the Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company's shareholders. If the Company is unable to obtain funding, the Company could be required to delay, reduce or eliminate research and development programs, product portfolio expansion, or future commercialization efforts, which could adversely affect its business prospects. The Company is subject to risks associated with any pharmaceutical company that has substantial expenditures for research and development. There can be no assurance that the Company's research and development projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable.

Available Information

The following discussion should be read in conjunction with our interim Condensed Consolidated Financial Statements and the related notes and other financial information appearing elsewhere in this report as well as Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Form 10-K for the year ended December 31, 2025 ("Form 10-K") and this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026.

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions.

We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.

Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview

Summary

We are diversified, vertically integrated global healthcare group, owner of proprietary pharmaceutical and nutraceutical brands, generics, manufacturer and distributor of healthcare products, engaged in research & development of innovative medicines and repurposing drugs as well as operator of a telehealth platform. The Company, through its subsidiaries, is operating within the pharmaceutical industry and in order to compete successfully in the healthcare industry, must demonstrate that its products offer medical benefits as well as cost advantages. Currently, most of the products that the Company is trading, compete with other products already on the market in the same therapeutic category, and are subject to potential competition from new products that competitors may introduce in the future.

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Revenue sources

Full Line Wholesaler

As a full line pharmaceutical wholesaler, we distribute a comprehensive range of pharmaceutical products, including prescription medications, over-the-counter (OTC) drugs, medical devices, food supplements, nutraceuticals, cosmetics and other healthcare products, to various businesses within the healthcare sector such as retail pharmacies, hospitals, private clinics and other wholesale pharmaceutical distributors.

Branded Pharmaceuticals & Generics

We are engaged in the production, promotion, distribution and sale of licensed branded generics and OTC products throughout Europe by our subsidiaries in Greece and UK. Our capital efficient business model is based on infrastructure, efficiency and scale. We believe that there is a significant growth on opportunities through product additions and geographic expansion.

Healthcare Distribution

We conduct direct distribution and sales of pharmaceuticals, medical devices, branded generics and OTC products. Our automated and GDP licensed distribution facilities ensure all medications reach their destination daily on an efficient and secure way. Our network exceeds over 1,500 pharmacies in Greece. We have created an upgraded and high-end distribution center in Greece due to our Robotic systems and integrated automations ("ROWA" robotics).

Nutraceutical

We have created and developed our own proprietary branded nutraceutical products, named "Sky Premium Life®" which was launched in 2018 and "Mediterranation®" which was launched in 2022. Utilizing unique formulations, and specialized extraction processes which follow strict pharmaceutical standards, our proprietary lines of nutraceuticals aim for excellence. We have a full portfolio of fast-moving and specialty formulas with more than 160 product codes including vitamins, minerals and other herbal extracts. Our nutraceutical products are manufactured exclusively by Doc Pharma. Our nutraceutical products have penetrated several markets within 2022 and 2023 through digital channels such as Amazon and Tmall. We focus on nutraceutical products because we foresee it as a market with high growth opportunities due to its large market size and margin contribution as the demand for nutraceutical products is increasing globally.

Regulations and Licenses

Decahedron received its Wholesale Distribution Authorization for human use on February 5, 2021, from the UK Medicines and Healthcare Products Regulatory Agency ("MHRA") in accordance with Regulation 18 of the Human Medicines Regulations 2012 (SI 2012/1916) and it is subject to the provisions of those Regulations and the Medicines Act 1971. This License will continue to remain in force from the date of issue by the Licensing Authority unless cancelled, suspended, revoked or varied as to the period of its validity or relinquished by the authorization holder.

Cosmofarm received its Wholesale Distribution Authorization for human use on February 15, 2019, issued by the National Organization for Medicines. The license is valid for a period of five years in accordance with EU Directive 2013/C343/01 and was renewed on February 14, 2024. Furthermore, Cosmofarm was granted a GDP (Good Distribution Practice) certificate on November 11, 2019.

Our subsidiary, Cana SA, is a holder of Good Manufacturing Practices license (GMP), which means that it is certified for fulfilling the minimum standards that a medicines manufacturer must meet in the production processes.

Our subsidiaries are ISO 9001 certified for a management system for the trade and distribution of pharmaceuticals. As part of the certification process by the International Organization for Standardization, we need to be compliant with the General Data Protection Regulation ("GDPR") adopted by the European Union in May 2018. GDPR applies to the processing of personal data of persons in the EU by a controller or processor.

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General Risks

Supply chain disruption is a growing concern for the European pharmaceutical industry as it increasingly looks to cut costs by relying on 'emerging markets', where standards can be lower in terms of compliance, ethics and health and safety. Our business depends on the timely supply of materials, services and related products to meet the demands of our customers, which depends, in part, on the timely delivery of materials and services from suppliers and contract manufacturers. Significant or sudden increases in demand for our products, as well as worldwide demand for the raw materials and services we require to manufacture and sell our products, may result in a shortage of such materials or may cause shipment delays due to transportation interruptions or capacity constraints. Such shortages or delays could adversely impact our suppliers' ability to meet our demand requirements. Difficulties in obtaining sufficient and timely supply of materials or services can have an adverse impact on our manufacturing operations and our ability to meet customer demand.

We may also experience significant interruptions of our manufacturing operations, delays in our ability to deliver products, increased costs or customer order cancellations as a result of:

	·	the failure or inability to accurately forecast demand and obtain sufficient quantities of quality raw materials on a cost-effective basis;
	·	volatility in the availability and cost of materials or services, including rising prices due to inflation;
	·	difficulties or delays in obtaining required import or export approvals;
	·	shipment delays due to transportation interruptions or capacity constraints, such as reduced availability of air or ground transport or port closures;
	·	information technology or infrastructure failures, including those of a third-party supplier or service provider; and
	·	natural disasters or other events beyond our control (such as earthquakes, utility interruptions, tsunamis, hurricanes, typhoons, floods, storms or extreme weather conditions, fires, regional economic downturns, regional or global health epidemics, pandemics, geopolitical turmoil, increased trade restrictions between the U.S. and China and other countries, social unrest, political instability, terrorism, or acts of war) in locations where we or our customers or suppliers have manufacturing or other operations.

Hikes in the price of medicine and their impact on the sustainability of the healthcare systems are garnering more and more attention. European regulators are willing to play their part in safeguarding continued access to safe and effective medicines. Regulators can speed up the approval of branded pharmaceuticals and biosimilars to boost competition and drive down prices.

Cuts in healthcare spending have been frequently occurring since the financial crises of the late of 2000's. Europe's slow recovery has been uneven, with austerity and economic uncertainty, especially in the EU's poorer member states, such as Greece.

Distribution and Trade Agreements

On November 25, 2021, SkyPharm SA signed a trade agreement with a wholesaler which operates in the storage, distribution, trading and promotion of pharmaceutical products ("Distributor C"). Based on the agreement, Distributor C is appointed as the exclusive representative for the promotion and distribution of our proprietary nutraceutical products Sky Premium Life® in Greece.

During July 2021, the Company's subsidiary Decahedron Ltd created a distribution page on Amazon UK, through which it sells, advertises and promotes our own proprietary branded nutraceutical product line Sky Premium Life®, directly to final consumers.

On September 22, 2022, the Company entered into a distribution agreement with a third party in order to become the distributor of Monkeypox Virus Real-Time PCR Detection Kits. Cosmos has exclusive distribution rights for Greece and Cyprus, with the opportunity to distribute the test kits across Europe on a non-exclusive basis.

On June 27, 2024, the Company entered into an exclusive distribution agreement (the "Agreement") with Pharmalink for the distribution of its Sky Premium Life® products in the United Arab Emirates (UAE). Under the Agreement, Pharmalink is responsible for all key functions, including sales and marketing, regulatory affairs, logistics, supply, and distribution of the Sky Premium Life® product line within the UAE. The Company has received an initial purchase order from Pharmalink for 130,000 units and expects to receive orders exceeding 500,000 units during 2026, and more than 3,000,000 units over the next five years. However, as of the filing date, no additional orders have been executed.

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Acquisitions and Co-Ventures

ZipDoctor

On September 28, 2022, the Company entered into a non-binding letter of intent ("LOI") agreement to wholly acquire ZipDoctor Inc., a company that possesses a direct-to-consumer subscription-based telemedicine platform, that expects to provide its customers affordable, unlimited, 24/7 access to board certified physicians and licensed mental and behavioral health counselors and therapists. The current parent company of the acquiree will continue to manage all its aspects of the day-to-day operations, including product development, marketing, and operational support.

On March 17, 2023, the Company entered into a definitive agreement to acquire ZipDoctor Inc. for a total sum of $150,000. The transaction closed on April 3, 2023.

CANA

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.

Bikas

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.

Cloudscreen

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.

Results of Operations

Revenue and net loss

For the three months ended June 30, 2026, the Company reported revenue of $18,986,376 and a net loss of $ 6,086,522, compared to revenue of $14,745,702 and a net loss of $2,828,068 for the corresponding period in 2025.

For the six months ended June 30, 2026, the Company reported revenue of $36,914,268 and a net loss of $8,891,945, compared to revenue of $28,458,230 and a net loss of $3,646,165 for the corresponding period in 2025.

Revenue for the three months ended June 30, 2026 increased by approximately 28.8% compared to the same period in 2025. For the six months ended June 30, 2026, revenue increased by approximately 29.7% compared to the same period in 2025, primarily driven by higher sales generated by our wholly owned subsidiaries, Decahedron Ltd, Cosmofarm S.A., and Cana S.A. Decahedron Ltd, our U.K. wholesale subsidiary, nearly doubled its revenue compared to the same period in 2025, driven by increased sales of the Company's nutraceutical and pharmaceutical products. Cana, our pharmaceutical manufacturing subsidiary, further expanded its contract manufacturing agreements and renewed existing customer relationships, resulting in a material increase in revenue. Additionally, our wholesale subsidiary, Cosmofarm S.A., was the key contributor to revenue growth, having expanded its client portfolio by adding more than 75 new pharmacies during the period, reflecting continued momentum across its growing customer base in nutraceutical and pharmaceutical distribution.

Our other operating subsidiary, SkyPharm SA continued to expand the distribution of its proprietary nutraceutical brand, Sky Premium Life ("SPL"), in the United Arab Emirates, Cyprus, and Greece, achieving strong growth across export channels. However, its revenue growth was partially impacted by revenue reversals related to Medihelm, as discussed in Note 2, Revenue Recognition. Due to the limited collectability history with this customer, the Company recorded revenue reversals for amounts not collected during the period in accordance with the variable consideration constraint under ASC 606. As a result, reported SkyPharm revenue for the three and six months ended June 30, 2026 reflects the impact of these reversals. To provide additional transparency regarding the underlying performance of the business, the Company has included a supplemental table at the end of the revenue and gross profit analysis presenting revenue and gross profit excluding the impact of these reversals.

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Net loss for the three months ended June 30, 2026 increased by approximately 115.2% (or $3,258,454) compared to the same period in 2025. For the six months ended June 30, 2026, net loss increased by approximately 143.9% (or $5,245,780) compared to the same period in 2025. The wider loss in both periods reflects several non-cash items recognized during the three months ended June 30, 2026, including a $401,413 non-cash interest expense on convertible notes, a $404,145 loss on digital assets, and a $2,384,374 charge from the change in fair value of convertible notes, partially offset by a $577,347 gain from the change in fair value of the derivative liability.

Cost of Goods Sold

For the three months ended June 30, 2026 and 2025, the Company reported cost of goods sold ("COGS") of $17,474,714 and $13,581,888, respectively, representing an increase of $3,892,826, or approximately 28.7%. For the six months ended June 30, 2026 and 2025, COGS was $34,021,435 and $25,244,617, respectively, representing an increase of $8,776,818, or approximately 34.8%. The increase in COGS was primarily attributable to higher sales volumes across the Company's wholesale, manufacturing, and proprietary nutraceutical businesses, particularly at Cosmofarm S.A., Decahedron Ltd, and CANA S.A. The increase in COGS generally reflects the higher level of business activity during the period and changes in product mix.

Gross Profit

For the three months ended June 30, 2026, the Company reported gross profit of $1,511,662, an increase of approximately 29.9% compared to $1,163,814 for the same period in 2025. Gross margin was approximately 8.0% for the three months ended June 30, 2026, compared to approximately 7.9% for the same period in 2025.

For the six months ended June 30, 2026, gross profit was $2,892,833, a decrease of approximately 10.0% compared to $3,213,613 for the same period in 2025. Gross margin was approximately 7.8% for the six months ended June 30, 2026, compared to approximately 11.3% for the same period in 2025. The decrease in gross profit and gross margin for the six-month period was primarily attributable to the revenue reversal recognized in connection with Medihelm, as discussed in Note 2, Revenue Recognition. Because the related cost of goods sold had previously been recognized, the revenue reversal reduced gross profit and gross margin for the period. Excluding the impact of this accounting adjustment, the Company's underlying gross profit and gross margin would have been higher, as reflected in the supplemental information below.

Supplemental Impact of Medihelm Revenue Reversal (Unaudited) - (6 Months)

(USD)		As Reported				Impact of Revenue Reversal				Excluding Revenue Reversal
Revenue			36,914,268				802,528				37,716,796
Cost of goods sold			34,021,435				-				34,021,435
Gross profit			2,892,833				802,528				3,695,361
Gross margin			7.8	%			-				9.8	%

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Operating Expenses

For the three months ended June 30, 2026, total operating expenses were $4,437,269, an increase of $628,136 (approximately 16.5%) compared to $3,809,133 for the same period in 2025. For the six months ended June 30, 2026, total operating expenses were $8,002,619, an increase of $1,310,542 (approximately 19.6%) compared to $6,692,077 for the same period in 2025.

Breakdown of principal expense categories:

	·	General and Administrative Expenses increased by approximately 38.6% to $2,066,053 for the three months ended June 30, 2026, compared to $1,490,485 in the prior year period. For the six months ended June 30, 2026, General and Administrative Expenses increased by approximately 30.2% to $3,866,215, compared to $2,969,187 for the same period in 2025. The increase was primarily attributable to higher audit and review fees, increased investor relations expenses incurred by Cosmos Health Inc., the parent company, and higher administrative costs at Decahedron Ltd. associated with the expansion of its operations.
	·	Salaries and Wages decreased by approximately 0.7% to $1,855,257 for the three months ended June 30, 2026, compared to $1,868,443 in the prior year period. For the six months ended June 30, 2026, Salaries and Wages increased by approximately 11.8% to $3,252,914, compared to $2,908,462 for the same period in 2025. The change was primarily due to normal fluctuations in payroll costs, as overall headcount and salary levels remained substantially consistent with the prior year period.
	·	Sales and Marketing Expenses increased to $98,226 for the three months ended June 30, 2026, compared to $21,706 for the same period in 2025, an increase of approximately 352.5%. For the six months ended June 30, 2026, Sales and Marketing Expenses increased to $117,578, compared to $49,861 for the same period in 2025, an increase of approximately 135.8%. The increase was primarily attributable to higher advertising and promotional expenses incurred by SkyPharm S.A. to support the marketing of its proprietary nutraceutical brands, including increased radio and television advertising costs, as well as certain corporate marketing expenses incurred by Cosmos Health Inc., the parent company.
	·	Research and Development Costs were $68,552 for the three months ended June 30, 2026, compared to $74,637 in the same period in 2025. For the six months ended June 30, 2026, Research and Development Costs were $68,552, compared to $90,266 in the same period in 2025. R&D costs include costs incurred under agreements with third-party contract research organizations, contract manufacturing organizations and other third parties, as well as other costs associated with the Company's R&D programs.
	·	Depreciation and Amortization decreased by approximately 1.3% to $349,181 for the three months ended June 30, 2026, compared to $353,862 in the prior year period. For the six months ended June 30, 2026, Depreciation and Amortization increased by approximately 3.4% to $697,360, compared to $674,301 for the same period in 2025. The changes were primarily due to normal fluctuations in depreciation and amortization expense, as the Company did not have significant additions or disposals of depreciable or amortizable assets during the period. Overall, depreciation and amortization remained substantially consistent with the prior year period.

Other Income (Expense)

Total other income (expense), net, was a loss of $3,160,915 for the three months ended June 30, 2026, compared to a loss of $182,749 for the three months ended June 30, 2025. For the six months ended June 30, 2026, total other income (expense), net, was a loss of $3,782,159, compared to a loss of $167,701 for the same period in 2025. The wider loss in both periods is primarily explained by the non-cash items discussed above, as follows:

	·	Non-cash Interest Expense amounted to $401,413 for the three months ended June 30, 2026, compared to $163,103 for the same period in 2025, representing an increase of $238,310, or approximately 146.1%. For the six months ended June 30, 2026, non-cash Interest Expense amounted to $791,763, compared to $163,103 for the same period in 2025, representing an increase of $628,660, or approximately 385.4%. The increase was primarily attributable to higher amortization of debt discounts associated with the Company's August 2025 convertible note.
	·	Other Income (Expense), Net was income of $37,980 for the three months ended June 30, 2026, compared to an expense of $42,190 for the same period in 2025, representing an improvement of $80,170. For the six months ended June 30, 2026, Other Income (Expense), Net was income of $479,042, compared to an expense of $110,327 for the same period in 2025, representing an improvement of $589,369. The improvement was primarily attributable to the recognition of income related to the write-off of a Greek tax liability of Cana S.A., as well as a gain of approximately $100,000 resulting from the receipt of advances related to a building project in Canada that had previously been written off as uncollectible.
	·	Change in Fair Value of Convertible Notes resulted in a loss of $2,384,374 for the three months ended June 30, 2026, compared to a loss of $139,592 for the same period in 2025, representing an increase in expense of $2,244,782, or approximately 1,607.0%. For the six months ended June 30, 2026, the Company recorded a loss of $2,144,894, compared to a loss of $139,592 for the same period in 2025, representing an increase in expense of $2,005,302, or approximately 1,436.4%. The increase was primarily attributable to changes in the fair value of the Company's convertible note obligations, which are remeasured at fair value each reporting period.
	·	Change in Fair Value of Derivative Liabilities resulted in a gain of $577,347 for the three months ended June 30, 2026, compared to $nil for the same period in 2025. For the six months ended June 30, 2026, the Company recorded a gain of $809,315, compared to $nil for the same period in 2025. The gains reflect fair value adjustments related to embedded derivatives arising from the ATW convertible note agreement entered into in August 2025.
	·	Loss on Digital Assets amounted to $404,145 for the three months ended June 30, 2026, compared to $nil for the same period in 2025. For the six months ended June 30, 2026, Loss on Digital Assets amounted to $846,584, compared to $nil for the same period in 2025. The losses resulted from the remeasurement of the Company's digital asset holdings based on changes in fair value during the period and the majority of the loss is attributable to the Company's ETH holdings (refer to Note 17).

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	·	Gain on Equity Investments was $3,650 for the three months ended June 30, 2026, compared to $2,639 for the same period in 2025, representing an increase of $1,011, or approximately 38.3%. For the six months ended June 30, 2026, the Company recorded a loss of $7,602, compared to a gain of $5,781 for the same period in 2025, representing a decrease of $13,383. These amounts reflect realized and unrealized changes in the fair value of equity investments.
	·	Interest Expense increased to $602,364 for the three months ended June 30, 2026, compared to $388,814 for the same period in 2025, representing an increase of $213,550, or approximately 54.9%. For the six months ended June 30, 2026, Interest Expense increased to $1,025,593, compared to $575,921 for the same period in 2025, representing an increase of $449,672, or approximately 78.1%. The increase was primarily attributable to higher interest costs associated with the Company's financing arrangements, including convertible notes. The increase was mainly driven by interest expense related to the Company's August 2025 Convertible Note, which was issued during the third quarter of 2025 and therefore did not generate any interest expense during the three and six months ended June 30, 2025. Interest expense associated with this note increased the Company's overall borrowing costs during the three and six months ended June 30, 2026.
	·	Interest Income was $45,741 for the three months ended June 30, 2026, compared to $105,787 for the same period in 2025, representing a decrease of $60,046, or approximately 56.8%. For the six months ended June 30, 2026, Interest Income was $92,414, compared to $197,113 for the same period in 2025, representing a decrease of $104,699, or approximately 53.1%. The decrease in Interest Income was primarily driven by the continued impact of the DocPharma S.A. note receivable write-off recognized in the prior year. As the related interest income from this note is no longer recognized, the reduction in interest income continued to affect the three and six months ended June 30, 2026 periods compared to the same periods in 2025.
	·	Foreign Currency Transaction Loss, Net was $33,336 for the three months ended June 30, 2026, compared to a gain of $442,524 for the same period in 2025, representing an unfavorable change of $475,860. For the six months ended June 30, 2026, Foreign Currency Transaction Loss, Net was $346,493, compared to a gain of $618,348 for the same period in 2025, representing an unfavorable change of $964,841. The change primarily reflects fluctuations in foreign exchange rates affecting USD- and GBP-denominated balances held by entities with EUR functional currencies.

The overall decline in other income (expense) results primarily from the introduction of non-cash valuation and fair value remeasurement items which did not exist in the prior year period (including the $2,384,374 charge from the change in fair value of convertible notes), together with higher interest expense, partially offset by the $577,347 gain on the change in fair value of the derivative liability noted above.

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Foreign Currency Translation Adjustment

For the three months ended June 30, 2026, the Company recognized a foreign currency translation loss of $56,360, compared to a gain of $1,562,470 for the same period in 2025. For the six months ended June 30, 2026, the Company recognized a foreign currency translation loss of $351,421, compared to a gain of $2,593,738 for the same period in 2025.

The translation losses during the three and six months ended June 30, 2026 primarily reflected fluctuations in foreign currency exchange rates, including changes in the relative value of the U.S. dollar against the euro, which impacted the USD-translated carrying values of the Company's European subsidiaries. The prior-year translation gains reflected the opposite impact of exchange rate movements, as changes in the euro-to-U.S. dollar exchange rate increased the USD value of the Company's foreign operations upon translation.

Period-to-period fluctuations in foreign currency translation gains and losses are driven by changes in period-end exchange rates, the relative strength of the U.S. dollar, and the composition of foreign-currency-denominated assets and liabilities across the Group, highlighting the Company's ongoing exposure to currency translation risk.

Liquidity and Capital Resources

As of June 30, 2026 compared with December 31, 2025

As of June 30, 2026, the Company held total cash and restricted cash of $2,445,168, compared to $3,459,893 at December 31, 2025, reflecting net cash outflows during the six-month period ended June 30, 2026, primarily from operating and investing activities. Of the June 30, 2026 balance, $644,219 represents restricted cash specifically earmarked for the purchase of certain crypto assets in accordance with the convertible note agreement signed on August 5, 2025, with the remaining $1,800,949 representing unrestricted cash and cash equivalents.

Cash Flows from Operating Activities

Cash flows used in operating activities amounted to $2,785,320 for the six months ended June 30, 2026, compared to $1,396,236 for the same period in 2025. The outflow was driven primarily by the consolidated net loss of $8,891,945, partially offset by non-cash adjustments including stock-based compensation of $1,094,644, depreciation and amortization of $694,053, non-cash financing expense of $850,110, loss from the change in fair value of convertible notes of $2,144,894 and a loss on digital assets of $846,584, partially offset by gains on the change in fair value of derivative liabilities of $809,315. Working capital movements had a mixed impact, with an increase in other current liabilities providing a partial offset to the net loss, while an increase in accounts receivable, a decrease in accounts payable and accrued expenses, and increases in related party prepayments represented additional cash outflows.

Cash Flows from Investing Activities

Investing activities during the six months ended June 30, 2026, resulted in a net cash outflow of $594,358, primarily driven by the purchase of $1,100,000 in digital assets, partially offset by the return of $599,714 in advances previously made for a property acquisition. Expenditure on property and equipment and intangible assets were minimal during the period. Net cash provided by investing activities in the same period in 2025 was $64,751, with the variance driven almost entirely by the digital asset purchase, which had no equivalent in the prior year period.

Cash Flows from Financing Activities

Financing activities generated net cash inflows of $2,136,372 for the six months ended June 30, 2026, compared to $2,165,227 for the same period in 2025. The Company actively managed its lines of credit during the period, drawing $17,045,999 and repaying $17,232,393, reflecting ongoing oversight of short-term debt facilities. Proceeds from the issuance of common stock totaling $2,941,760 were related to sales conducted pursuant to the Company's at-the-market (ATM) equity program. Additionally, the Company received proceeds of $516,000 from the issuance of convertible notes entered into during April 2026. Financing cash outflows included payments of financing fees of $129,253, repayments of notes payable of $488,859, payments of finance lease liabilities of $3,885, and the repurchase of treasury stock totaling $512,997. No proceeds were received from new note payables or related party loans during the period.

In summary, for the six months ended June 30, 2026, total cash and restricted cash decreased by $1,014,725, from $3,459,893 at December 31, 2025 to $2,445,168 at June 30, 2026, primarily reflecting net cash outflows from operating and investing activities, partially offset by financing inflows. Operating activities used $2,785,320 of cash, while investing activities resulted in a net outflow of $594,358, primarily due to the acquisition of digital assets, partially offset by the return of advances previously made for a property acquisition. Financing activities generated net cash inflows of $2,136,372, supported by ATM equity issuances, convertible note proceeds, and active management of the Company's short-term debt facilities.

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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 six-month period ended June 30, 2026, the Company generated revenue of $36,914,268, incurred a net loss of $8,891,945, and used $2,785,320 of net cash in operating activities. As of June 30, 2026, the Company had cash and cash equivalents of $1,800,949 and restricted cash of $644,219, compared to $715,674 and $2,744,219 as of December 31, 2025. The Company also had positive working capital of $1,825,987, an accumulated deficit of $142,059,218, and stockholders' equity of $20,674,483.

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 three-month period ended June 30, 2026, the Company raised capital through its At-the-Market ("ATM") program, generating gross proceeds of approximately $2,941,760, 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.

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 unaudited condensed 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 condensed consolidated financial statements are issued.

The condensed 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 condensed consolidated financial statements.

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Strategic Plan

Our strategic plan, which strikes a balance between growth and sustainability, emphasizes synergies, vertical integration, operational efficiencies, R&D, brand expansion, and the global growth of our distribution network and facilities.

We intend to continue to pursue active ongoing acquisitions. In fact, many of our acquisitions entail exploring opportunities, with discounted assets through business combinations or joint ventures, all to enhance our distribution network. We will expand our R&D division which is a platform and incubator to develop new patented pharmaceuticals and proprietary innovative nutraceutical products. To foster organic growth, we will enhance our business development and marketing efforts, pursue global expansion via prominent retailers, pharmacies and e-commerce platforms, and recapture lost markets such as the infant and baby care categories. In addition, we will invest in the expansion of our production capacity and global network of facilities to boost sales of our brands, engage in contract manufacturing with large multinational pharmaceutical companies, produce pharma grade ethanol for hospitals, and expand into new large markets capitalizing on our comparative advantages. Last but not least, we aim to strategically invest in key personnel, from seasoned export managers to highly skilled scientists, to ensure we have the necessary expertise at our fingertips.

Growth Strategy

Our main strategy initiative is focused on continuing our progress in becoming a global healthcare company through the development of a lean, efficient and vertically integrated operating model, as well as, to expand our portfolio of our own branded nutraceutical and pharmaceutical products, grow our customer base and achieve our growth stabilization in this new market and gain an adequate size in the global pharmaceutical market. We are committed to serving our customers while continuing to innovate and provide products that make a difference in the lives of individuals. We strive to maximize our shareholders' value by adapting to market realities and customer needs. Our strategy involves the enhancement of our manufacturing capacities and building a multinational network or wholesalers, distributors, and pharmacies and simultaneously continuing to expand the portfolio of innovative products that we distribute to that network.

We are committed to driving organic growth at attractive margins by improving execution, optimizing cash flow and leveraging our strong market position, while maintaining a streamlined cost structure throughout each of our businesses. We continue to further align our organization to our customers' needs in a more seamless and unified way, while supporting corporate strategy and accelerating growth.

During the three-month period ended June 30, 2026, we continued to execute on the core elements of our "Growth Strategy", which remains as follows:

	-	High Marking Segments: delivering on our growth areas and high-margin segments, we continued to show strong performance of our key proprietary brands such as Sky Premium Life® ("SPL"), Mediterranation® and C-Sept® / C-Scrub® with launches into new fast growing geographical regions.
	-	Generic Pharmaceuticals: focusing on our generic medicines' capital with a view on a global commercial reach, focused portfolio and pipeline footprint, we continued to optimize our generics business and build a strong pipeline that will allow us to leverage our assets, know-how and sales network.
	-	Manufacturing of Pharmaceuticals: directing our manufacturing business by optimizing our production facilities and establishing a global footprint in the pharmaceutical fields of contract manufacturing organization (CMO) and contract development and manufacturing organization (CDMO).
	-	Global Networks, leveraging our extensive global network to access new markets and business segments, amplifying our reach and impact. We aim to expand and consort our sales distribution networks of our proprietary brands through strategic agreements in new regions and territories, such as the UAE and other GCC countries, Eastern Europe etc., while strengthening our market share in core markets.
	-	Corporate Reorganization: through vertical integration and efficiency, a corporate reorganization is underway to streamline costs and enhance asset and resource utilization through the integration of business units. A key component of this plan is to achieve operational efficiencies and economies of scale through organic growth and a cost optimization initiative aimed at significantly reducing recurring operating expenses and while maintaining the Company's growth outlook.
	-	Innovation: stepping up innovation through taken steps to deliver innovative products pipeline, by accelerating our R&D efforts on IP-driven products such as the CCX0722 obesity and weight management pill, CCDL24 an innovative treatment for gastrointestinal disorders, CNS, Prostate, Ovarian and Colorectal cancer treatments. Finally, our recently acquired AI-driven drug repurposing platform "Cloudscreen®", aims to address major health challenges in various treatment areas.

We have made several strategic acquisitions of companies, products and technologies to complement our internal growth and expertise. These acquisitions have strengthened our core product technology infrastructure by providing additional manufacturing, marketing, and research and development capabilities, including the ability to manufacture our products, other product components and services.

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While the Company intends to pursue these milestones, there may be circumstances where for valid business reasons or due to factors beyond the control of the Company, a reallocation of efforts may be necessary or advisable.

The Company intends to spend the funds available to strengthen working capital, inventories, intangible assets, acquisitions, research and development, sales and marketing expenses. Due to the uncertain nature of the industry in which the Company operates, projects may be frequently reviewed and reassessed. Accordingly, while it is currently intended by management that the available funds will be expended as set forth above, actual expenditures may in fact differ from these amounts and allocations.

Product Portfolio

Our product portfolio includes generics and over-the-counter ("OTC") pharmaceutical products, innovative medicines, as well as nutraceuticals and biocides. This structure enables strong alignment and integration between manufacturing, operations, commercial regions, research & development and our global marketing and portfolio function, optimizing our product lifecycle across therapeutic areas and physical wellbeing.

Generic Medicines

Generic medicines are the chemical and therapeutic equivalents of originator medicines and are typically more affordable in comparison to the originator's products. Generic medicines are required to meet similar governmental requirements as their brand-name equivalents, such as those relating to current Good Manufacturing Practices ("GMP"), manufacturing processes and health authorities' inspections, and must receive regulatory approval prior to their sale in any given country. Generic medicines may be manufactured and marketed if relevant patents on their brand-name equivalents (and any additional government-mandated market exclusivity periods) have expired.

We develop, manufacture and sell generic medicines in a variety of dosage forms, including tablets, capsules, liquids, ointments and creams.

Our portfolio of generic medicines includes: 1) ASTO-CHOL (Pravastatin); 2) Diorium (Omeprazole); 3) HEART-FREE (Clopidogrel); 4) the LIPICHOL (Atorvastatin); 5) Miltus (Donepezil); 6) Newzypra (Olanzapine); 7) the PNEUMO-KAST (Montelukast); 8) Sahar (Pioglitazone); 9) VIVALCID (Leucovorin); and 10) the Diabit-is (Sitagliptin).

Nutraceuticals

Nutraceuticals is referring to a broad range of products derived from food sources that provide health benefits in addition to their basic nutritional value. While nutraceuticals are not classified as drugs, they are often used for their therapeutic effects in a manner similar to pharmaceuticals.

Our proprietary nutraceutical brands are Sky Premium Life® ("SPL") and Mediterranation®. Our portfolio currently includes around 165 SKUs and more specifically product codes such as Vitamins and Minerals, Amino Acids, Botanical and other Herbal extracts used for health prevention and care needs.

Biocides

Our proprietary portfolio of branded biocides and antiseptic soaps comprises of our brands C-Sept® and C-Scrub®. The biocide C-Sept Pro 2% has a broad-spectrum antimicrobial formulation that combines 76% Isopropyl Alcohol and 2% chlorhexidine digluconate as active substances. On the other hand, our antiseptic soap, C-Scrub Wash 4% CHG, contains chlorhexidine digluconate as its active antiseptic substance, which is approved by the World Health Organization for human use. The broad antimicrobial spectrum of C-Scrub Wash 4% CHG encompasses Gram-positive and Gram-negative microbes, fungi, and viruses, and its efficacy has been demonstrated in numerous published clinical studies. C-Scrub Wash 4% CHG significantly reduces bacterial load on the skin with long lasting.

Other Pharmaceutical Products:

Our portfolio of other pharmaceutical products includes brands such as:

	-	Melatonin Spray®;
	-	Otikon™; and
	-	Bio-bebe®.

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Melatonin Spray®, is recommended for addressing insomnia and jet lag, offering a peaceful sleep. It is manufactured using nanonemulsification technology and primarily contains melatonin, a lipophilic molecule. To increase the absorption of such molecules, nanoemulsification is one of the most effective methods. The absorption of the ingredient increases proportionally with the reduction of the micelle diameter. The diameter of a nanoemulsion micelle ranges between 50 and 300nm.

Otikon™ ear drops, is a class II medical device in the form of ear drops for spray application and contains natural ingredients used to relieve ear pain, remove excess ear wax (cerumen) and improve hearing. The efficacy and safety of Otikon™ ear drops, or naturopathic drops, has been studied in children with ear pain associated with otitis media. Among other ingredients, it contains olive oil, mullein olive oil extract (Verbascum Thapsus), marigold oil extract (Calendula officinalis), St. John's wort oil extract (Hypericum perforatum) and lavender oil (Lavandula officinalis).

Bio-bebe® is an organic infant care and nutrition brand. All product lines are made exclusively of 100% organic, high-quality ingredients, and are produced with minimal environmental impact. The range includes a variety of baby foods such as organic powder milk, pear, carrot and banana purée, pasta with minced meat, whole grain rice cereals, whole grain cereal porridges and organic rice creams with vanilla milk. Additional brand extensions include baby cosmetics, liquid dish soaps and detergents.

In line with our growth strategy, we are constantly evaluating and optimizing our products portfolio, including through the sale of certain product rights in our operating or entering areas.

Contractual Obligations

We have no significant contractual arrangements other than those noted in our financial statements.

Off Balance Sheet Arrangements

As of June 30, 2026, there were no off-balance sheet arrangements.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most "critical accounting polices" under the Management's Discussion and Analysis section. The SEC indicated that a "critical accounting policy" is one which is both important to the portrayal of a company's financial condition and results, and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Revenue Recognition: The Company adopted Topic 606 Revenue from Contracts with Customers on January 1, 2018. As a result, it has changed its accounting policy for revenue recognition as detailed in Note 2.

Foreign Currency. Assets and liabilities of all foreign operations are translated at period-end rates of exchange, and the statements of operations are translated at the average rates of exchange for the period. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders' equity until the entity is sold or substantially liquidated. Gains or losses from foreign currency transactions (transactions denominated in a currency other than the entity's local currency) are included in net (loss) earnings.

Income Taxes. The Company accounts for income taxes under the asset and liability method, as required by the accounting standard for income taxes, ASC 740. Under this 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 basis, as well as net operating loss 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 Company is liable for income taxes in Greece and the United Kingdom. The corporate income tax rate is 22% in Greece (tax losses are carried forward for five years effective January 1, 2013) and 25% in United Kingdom. Losses may also be subject to limitation under certain rules regarding change of ownership.

We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized. Our review includes evaluating both positive (e.g., sources of taxable income) and negative (e.g., recent historical losses) evidence that could impact the realizability of our deferred tax assets.

We recognize the impact of an uncertain tax position in our financial statements if, in management's judgment, the position is not more-likely-than-not sustainable upon audit based on the position's technical merits. This involves the identification of potential uncertain tax positions, the evaluation of applicable tax laws and an assessment of whether a liability for an uncertain tax position is necessary. We operate and are subject to audit in multiple taxing jurisdictions.

We record interest and penalties related to income taxes as a component of interest and other expense as incurred, respectively.

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Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 "Accounting for Income Taxes" as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in this financial statement because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

The Company has net operating loss carry-forwards in our parent, Cosmos Health Inc., which are applicable to future taxable income in the United States (if any). Additionally, the Company has income tax liabilities in the United Kingdom. The income tax assets and liabilities are not able to be netted. We therefore reserve the income tax assets applicable to the United States but recognize the income tax liabilities in Greece and the United Kingdom. Losses may also be subject to limitation under certain rules regarding change of ownership.

Accounts Receivable and Allowance for Credit Losses

The Company follows ASC 310 to estimate the allowance for doubtful accounts. Pursuant to FASB ASC paragraph 310-10-35-9, losses from uncollectible receivables shall be accrued when both of the following conditions are met: (a) information available before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) indicates that it is probable that an asset has been impaired at the date of the financial statements, and (b) the amount of the loss can be reasonably estimated. Those conditions may be considered in relation to individual receivables or in relation to groups of similar types of receivables. If the conditions are met, accrual shall be made even though the receivables that are uncollectible may not be identifiable. The Company reviews individually each trade receivable for collectability and performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer's current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and general economic conditions that may affect a client's ability to pay. Bad debt expense is included in general and administrative expenses, if any.

Inventory Reserves

Our merchandise inventories are made up of finished goods and are valued at the lower of cost or market using the weighted-average cost method. Average cost includes the direct purchase price, net of vendor allowances and cash discounts, of merchandise inventory. We record valuation reserves on an annual basis for merchandise damage and defective returns, merchandise items with slow-moving or obsolescence exposure and merchandise that has a carrying value that exceeds market value. These reserves are estimates of a reduction in value to reflect inventory valuation at the lower of cost or market. The reserve for merchandise returns is based upon the determination of the historical net realizable value of products sold from our returned goods inventory or returned to vendors for credit. Our reserve for merchandise returns includes amounts for returned product on-hand as well as for new merchandise on-hand that we estimate will ultimately become returned goods inventory after being sold based on historical return rates.

Convertible Promissory Note

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 condensed 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 condensed 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.

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.

Digital Assets

The Company's digital assets are initially recorded at cost and are subsequently measured at fair value as of each reporting period. The Company determines the fair value of its digital assets in accordance with ASC 820, Fair Value Measurement, based on quoted prices in its principal market for Ethereum (Level 1). Changes in fair value are recognized as incurred in the Company's condensed consolidated statement of income (loss) and comprehensive income (loss), as "Gain (loss) on digital assets," within non-operating (income) and expenses, net.

Updated share information

As of June 30, 2026, we had 83,407,714 shares of our common stock issued and 80,671,717 shares outstanding. In addition, there were 34,209,667 common shares issuable upon the conversion of our outstanding convertible notes and the exercise of our outstanding warrants.

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