Cosmos Health warns of 12-month survival risk after crypto slump

Cosmos Health warned it may not be able to continue as a going concern over the next 12 months after a 46% decline in its crypto treasury produced $1.44 million in unrealized losses on $3.1 million invested.

As of June 30, the company held 474.85 Ethereum and 15.66 Bitcoin with a combined market value of $1.66 million against a $3.1 million cost basis. The unrealized shortfall was driven largely by the Ethereum position, which accounted for about $1.25 million of the loss.

The digital-asset holdings trace to an August 2025 financing agreement with ATW Digital Asset Opportunities VII that allowed Cosmos to issue up to $300 million of senior secured convertible notes. The agreement required 72.5% of net note proceeds to be directed into crypto, with the remainder available for working capital and general corporate purposes. Cosmos disclosed it used roughly $3.1 million to buy Bitcoin and Ethereum and about $1.8 million for working capital. Another $644,219 remained restricted for future crypto purchases at the end of June.

Cosmos initially issued an $8 million note that carried a $720,000 original-issue discount, 9% annual interest and approximately $736,250 in direct issuance costs and fees. The assets acquired with the note proceeds are subject to collateral and custody arrangements that secure the financing.

The company’s operating results continued to strain its cash position. Cosmos reported a net loss of $8.89 million for the first half of the year and used $2.79 million in operating cash over the same period. It finished June with $1.80 million of unrestricted cash and reported revenue that did not cover operating expenses and upcoming debt obligations. Company management characterized the going-concern warning as reflecting these broader financial pressures rather than the crypto losses alone.

The convertible financing also produced significant equity dilution. Cosmos converted and issued 22.9 million shares during the first half to settle about $4.52 million of principal and interest on the August note. After the quarter, the company issued another 20.48 million shares to satisfy roughly $3.69 million of obligations, leaving about $82,500 of principal outstanding. Shares outstanding rose from about 41.07 million at the end of 2025 to roughly 100.6 million by Aug. 18.

With a large portion of proceeds tied to collateralized crypto assets and restricted funds, the company continues to seek additional liquidity to meet operating and debt requirements.