CryptoSlate
Cosmos Health warned investors that recurring losses and reliance on outside financing raised substantial doubt about its ability to continue as a going concern over the next 12 months. At June 30, the Nasdaq-listed company held 474.85 ETH and 15.66 BTC worth $1.66 million against a $3.1 million cost basis, leaving roughly $1.44 million in unrealized losses. About 87% of that shortfall sat on Ethereum, not Bitcoin.
Why it matters
The treasury was funded by an August 2025 financing agreement with ATW Digital Asset Opportunities VII, which let Cosmos issue up to $300 million of senior secured convertible notes. The first $8 million note carried a $720,000 original-issue discount, 9% annual interest, and a covenant requiring 72.5% of net proceeds to flow into crypto. The structure was always a leveraged bet that treasury appreciation would cover the financing. With ETH underwater and the operating business burning cash, the bet is unwinding in slow motion.
Market impact
The convertible note is converting at scale. Cosmos issued 22.9 million shares in the first half to settle $4.52 million of principal and interest, then another 20.48 million shares after the quarter to clear $3.69 million more. Outstanding shares jumped from 41.07 million at year-end 2025 to roughly 100.6 million by Aug. 18, a 145% increase in eight months, while just $82,500 of principal remains on the August note. The going-concern flag is driven more by the $8.89 million first-half net loss and $2.79 million of operating cash burn than by the crypto drawdown itself, but the combination of underwater holdings, conversion-driven dilution, and thin unrestricted cash is now the cautionary template for any small-cap public company funding BTC or ETH buys with convertibles.
Frequently asked questions
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What is Cosmos Health's going-concern warning?
Cosmos Health, a Nasdaq-listed company, told investors that recurring losses and reliance on outside financing raised substantial doubt about its ability to continue operations over the next 12 months.
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How much did Cosmos Health's crypto treasury lose?
At June 30, the company held 474.85 ETH and 15.66 BTC worth $1.66 million against a $3.1 million cost basis, leaving roughly $1.44 million in unrealized losses, with about 87% of the shortfall on Ethereum.
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How was the crypto treasury funded?
An August 2025 financing agreement with ATW Digital Asset Opportunities VII let Cosmos issue up to $300 million of senior secured convertible notes. The first $8 million note carried a $720,000 original-issue discount and 9% annual interest, with 72.5% of proceeds mandated for crypto purchases.
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How much has the convertible note diluted shareholders?
Cosmos issued 22.9 million shares in the first half to settle $4.52 million of principal and interest, then another 20.48 million shares after the quarter to clear $3.69 million more, lifting the outstanding share count from 41.07 million at year-end 2025 to roughly 100.6 million by Aug. 18.
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What is left on the convertible note?
Just $82,500 of principal remains on the original $8 million August 2025 note after the first-half conversions and the post-quarter share issuances.
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