10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from __________ to __________

Commission file number: 000-54436

COSMOS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Nevada	27-0611758
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
141 West Jackson Blvd, Suite 4236, Chicago, IL.	60604
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number: (312) 536-3102

Securities registered under Section 12(b) of the Exchange Act:

Title of each class	Name of each exchange on which registered
None	not applicable

Securities registered under Section 12(g) of the Exchange Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.001	not applicable

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a smaller reporting company)		Emerging growth company	o

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter $14,636,141 as of June 30, 2019.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 13,305,030 as of April 14, 2020.

TABLE OF CONTENTS

PART I
Item 1.	Business	4
Item 1A.	Risk Factors	14
Item 1B.	Unresolved Staff Comments	14
Item 2.	Properties	14
Item 3.	Legal Proceedings	14
Item 4.	Mine Safety Disclosures	14
PART II
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities	15
Item 6.	Selected Financial Data	16
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 8.	Financial Statements and Supplementary Data	F-1
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	37
Item 9A.	Controls and Procedures	37
Item 9B.	Other Information	38
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	39
Item 11.	Executive Compensation	41
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	42
Item 13.	Certain Relationships and Related Transactions, and Director Independence	44
Item 14.	Principal Accountant Fees and Services	47
PART IV
Item 15.	Exhibits and Financial Statements Schedules	48
Item 16.	Form 10-K Summary	53
SIGNATURES		54

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FORWARD-LOOKING STATEMENTS

Statements contained or incorporated by reference in this document contain information that includes or is based on “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, of the Exchange Act. These statements, including estimates of future revenues, future expenses, future net income and future net income per share, contained in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is included in this document, are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed results of operations. We have tried, whenever possible, to identify such statements by words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plan,” “projected,” “forecast,” “will,” “may” or similar expressions.

We have based these forward-looking statements on our current expectations and projections about the growth of our business, our financial performance and the development of our industry. Because these statements reflect our current views concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors, could affect our future financial results and could cause our actual results to differ materially from those expressed in forward-looking statements contained or incorporated by reference in this document.

We do not undertake any obligation to update our forward-looking statements after the date of this document for any reason, even if new information becomes available or other events occur in the future, except as may be required under applicable securities law. You are advised to consult any further disclosures we make on related subjects in our reports filed with the Securities and Exchange Commission (SEC).

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PART I

Item 1. Business

Company Overview

Cosmos Holdings Inc. (“us”, “we”, or the “Company”) is a multinational pharmaceutical wholesaler. The Company imports, exports and distributes pharmaceutical products of brand-name and generic pharmaceuticals, over-the-counter (OTC) medicines, and a variety of dietary and vitamin supplements. Currently, the Company distributes products mainly in the EU countries via its two wholly owned subsidiaries SkyPharm SA and Decahedron Ltd. SkyPharm operates from its facilities in Greece and Decahedron from its facilities in the UK. Most of our business derives from purchasing and reselling branded pharmaceutical products. Large pharmaceutical manufacturers have variable pricing strategies within the EU. The varying prices allow us to source products produced by multi-national pharmaceutical companies in different countries throughout Europe and export them into countries that pay more for those products.

Our core operations were focused on expanding the business of SkyPharm and Decahedron. The Company’s focus is primarily on branded pharmaceutical and some generic pharmaceuticals. The Company has also begun to expand into the food supplements industry and has already created its own line of vitamins and food supplement products. Through the sale of pharmaceutical products, the Company has created a wide network of pharmaceutical wholesalers and pharmacies that we believe we can utilize to promote and sell our vitamins and food supplements. There is growing demand for various food supplements. We plan to serve this demand by offering quality products to our existing network of wholesalers and pharmacies. Pharmacies are still the key channels for distribution and sales of food supplements in the European market.

In addition, we expanded into the full-line wholesale distribution business through the December 2018 acquisition of Cosmofarm Ltd. Full-line pharmaceutical wholesalers provide the local markets with branded pharmaceuticals, generic pharmaceuticals, over-the-counter (OTC) medicines, vitamins, and food supplements. By expanding our pharmaceutical distribution business, we expect to have the ability to source branded and generic products directly from manufacturers and sell vitamins as well as food supplements directly to pharmacies that the full-line wholesalers currently sell. We expect this expansion to increase our sales and profit margins as we vertically integrate into the supply chain.

Concerning our vitamins and food supplement division, we have expanded our business in developing our own brand of vitamins and food supplements. The brand name of our product line is Sky Life Premium. We have a contract with Doc Pharma S.A. to develop and manufacture the products according to our specifications. Doc Pharma S.A is considered a related party to the Company due to the fact that the Chief Executive Officer (“CEO”) of Doc Pharma is the wife of Grigorios Siokas, the Company’s CEO and principal shareholder, who also served as a principal of Doc Pharma SA in the past. Sales of our own brand of nutraceuticals began in the fourth quarter of 2018. Our current business has provided us with access to wholesalers both from the sourcing and the sales division of our wholesale business. We intend to sell our products to vendors that supply us with pharmaceutical products as well as to our clients to whom we currently sell pharmaceutical products.

We are also closely monitoring the legal framework for prescription and non-prescription derivatives of cannabis products as it develops in Europe. As the legal framework and processes are developed and implemented in each respective EU country, we will utilize our existing network to distribute both prescription and non-prescription derivatives of cannabis products to our current customer base. We currently intend to only distribute prescription and non-prescription derivates of cannabis products to approved EU countries and not in the US. The Company intends to await further clarification from the U.S. Government on cannabis regulation prior to determining whether to enter the domestic market.

We regularly evaluate acquisition targets that would allow us to expand our distribution reach and/or vertically integrate into the supply chain of the products that we currently distribute. We believe that the demand for reasonably-priced medicines, delivered on time and in the highest quality is set to increase in the years to come, as the population’s life expectancy increases. With our product portfolio of patented and non-patented medicines, we contribute to the optimization of efficient medicinal care, and thereby lowering cost for health insurance funds, companies, and patients. We also believe that the demand for non-prescription wellness products such as food and dietary supplements will continue to increase as individuals are increasingly supplementing their nutritional intake.

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We believe the EU pharmaceutical import/export market will continue to grow. We continue to encounter competition in the market as we grow. The competition comes in the form of level of service, reliability, and product quality. On the procurement side we continue to expand our vendor base. In order to minimize business risks, we diversify our sources of supply. We maintain our high-quality standards by carefully selecting and qualifying our suppliers as well as actively ensuring that our suppliers meet our standard of quality control on an ongoing basis.

As of July 22, 2015, the Hellenic Ministry of Health and more specifically the National Organization for Medicines granted to SkyPharm a license for the wholesale of pharmaceutical products for human use. The license is valid for a period of five years and pursuant to the EU directive of (2013/C343/02). SkyPharm is subject to the Guidelines of the Good Distribution Practices of the European Union (the “Good Distribution Practices”) for the sale and distribution of medical products for human use. SkyPharm believes it has properly incorporated all the methodologies, procedures, processes and resources in order to be in accordance with the guidelines of the Good Distribution Practices. Our warehouse has been equipped with the proper equipment, specifically with the proper shelves, working tables, medicines, cold fridge and barcode machines to comply with all requirements. The Company commenced sales of pharmaceutical products in the beginning of November 2015.

Decahedron received its Wholesale Distribution Authorization for human use on November 7, 2013, 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 provision 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.

Business Environment

The Company conducts its business within the pharmaceutical industry and is active in both branded and generic pharmaceutical product markets. The pharmaceutical industry is highly competitive and is subject to comprehensive government regulations. Many factors may significantly affect the Company’s sales of its products, including, but not limited to, efficacy, safety, price and cost-effectiveness, marketing effectiveness, product labeling, quality control and quality assurance. 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.

Generic medicines are the pharmaceutical and therapeutic equivalents of branded pharmaceutical products and are generally marketed under their generic (chemical) names rather than by brand names. Typically, a generic drug may not be marketed until the expiration of applicable patent(s) on the corresponding branded product, unless a resolution of patent litigation results in an earlier opportunity to enter the market. Generic drugs are the same as branded products in dosage form, safety, efficacy, route of administration, quality, performance characteristics and intended use, but they are sold generally at prices below those of the corresponding branded products. Generic drugs provide a cost-effective alternative for consumers, while maintaining the same high quality, efficacy, safety profile, purity and stability of the branded product.

The Company started operating within the Health Products & Food Supplements industry markets in October 2017. These specific industries are highly competitive, and many factors may significantly affect the Company’s sales of its products, including, but not limited to, price and cost-effectiveness, marketing effectiveness, product labeling, quality control and quality assurance. Currently, the Company has added vitamins and food supplements into the portfolio of products that it wholesales to its clients. The Company has also developed and began selling its own brand of food supplements under the brand name Sky Life Premium.

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Corporate Strategy

The main strategy initiative is focused on continuing our progress in becoming a global pharmaceutical wholesale and import/export company through the development of a lean and efficient operating model. 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 building a multinational network or wholesalers, distributors, and pharmacies and simultaneously continuing to expand the portfolio of 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. Implementing this disciplined, focused strategy has allowed us to significantly expand our business, and we believe we are well-positioned to grow revenue and increase operating income through the execution of the following key elements of our business:

· Optimize and Grow Our Pharmaceutical Sourcing and Distribution Businesses. We believe we are well-positioned in size and market breadth to continue to grow our trading businesses as we invest to improve our operating and capital efficiencies. Sourcing and distribution, including specialty pharmaceuticals, anchors our growth and position in the pharmaceutical supply channel as we provide superior services and deliver value-added products, which improve the efficiency and competitiveness of healthcare providers, thus allowing the pharmaceutical supply channel to better deliver healthcare to patients.

· Branded Pharmaceuticals: Branded pharmaceutical products are the primary product category that we import and export. We constantly evaluate product availability, pricing, demand trends, and patent expirations to maximize our performance. As the patents for branded products near expiration, the generic equivalents enter the marketplace and the demand for those branded products start to decrease. We monitor these cycles closely and always look to find value in pricing fluctuations caused by the patent expirations as the generic equivalents enter the market.

· Generic Pharmaceuticals: Generic pharmaceutical products are the secondary product category that we import and export. We apply the same discipline to generics that we do to the branded. We evaluate the demand and supply dynamics of branded products as their patents expire. This insight sheds light on the demand for generic products that take their place. Understanding the historical and market specific characteristics of generic product demand provides insight that we use to give guidance to our vendors that source our generic drug exports.

· Health Products & Food Supplements: The wholesale distribution of food supplements offers greater margins than pharmaceutical product distribution. We are always looking to expand the portfolio of products that we distribute to maximize our margins. We also convenience our customers by providing them a larger portfolio of products that they can source from a single vendor. In addition to being wholesalers for food supplements and related products we also created our own brand of products to sell to our current customer base. Our wholesale business gives insight to what products are in demand and we communicate with our customer base to identify which products to develop. We have a contract with Doc Pharma to develop and manufacture the products according to our specifications. Doc Pharma S.A is considered a related party to the Company due to the fact that the CEO of Doc Pharma is the wife of Grigorios Siokas, the Company’s CEO and principal shareholder, who also served as a principal of Doc Pharma SA in the past. Sales of our own brand of nutraceuticals began in the fourth quarter of 2018. Our own branded nutraceuticals carry significantly higher margins than simply serving as a wholesaler for other brands.

· Research & Development: We are committed to strategic R&D across each business unit with a particular focus for food supplements with inherently lower risk profiles and clearly defined regulatory pathways. We are constantly evaluating the demand for food supplements in the markets that we currently distribute pharmaceutical products to. This research and analysis determine which food and nutritional supplements we choose to develop as well as their formulations. This approach maximizes the probability of successfully competing with other brands in the marketplace.

· Acquisitions: We regularly evaluate acquisition targets that would allow us to expand our distribution reach and/or vertically integrate into the supply chain of the products that we currently distribute. In addition to focusing on organic growth drivers, we are also actively pursuing accretive acquisitions that offer long-term revenue growth, margin expansion through synergies, and the ability to maintain a flexible capital structure.

· Cannabis derived products: We closely monitor the legal framework for prescription and non-prescription derivatives of cannabis products as it develops in Europe. As the legal framework and processes are developed and implemented in each respective EU country, we intend to utilize our existing network to distribute both prescription and non-prescription derivatives of cannabis products to our current customer base. We currently intend to only distribute prescription and non-prescription derivatives of cannabis products to approved EU countries and not in the US.

· Local & Direct to Pharmacy Wholesale: We are expanding into the full-line wholesale distribution business through acquisition. Full-line pharmaceutical wholesalers provide the local markets with branded pharmaceuticals, generic pharmaceuticals, over-the-counter (OTC) medicines, vitamins and food supplements. By expanding our pharmaceutical distribution business, we expect to have a better ability to source more branded and generic products directly from manufacturers and sell our vitamins, food supplements and cosmetic products directly to pharmacies for better prices. We expect this expansion to increase our sales and profit margins as we vertically integrate into the supply chain.

To successfully execute our corporate strategy, we believe that the Company must adopt, incorporate and maintain the aforementioned core strengths, although no assurances can be made that the Company will be able to effectively implement these strategies.

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Sales and Marketing

The majority of our products are represented directly and indirectly through a dedicated sales force team. Our sales force targets mainly wholesale distributors and other healthcare providers. We sell our products principally through independent wholesale distributors, but we also sell directly to other healthcare providers such as; clinics, government agencies, independent retail and specialty pharmacies and independent specialty distributors. Customer service representatives are centralized in order to respond to customer needs in a timely and effective manner.

The following diagram illustrates the Company’s typical sales cycle:

5. Clients pick up products from our warehouses		1. Clients send purchase orders
	Sales Cycle
4. Cosmos invoices clients for  portion of p.o. it could source		2. Cosmos contacts vendors to source products
	3. Vendors gather batches of products and invoice Cosmos

Products & Services

The current principal activity of SkyPharm is the trading of branded and generic pharmaceutical products and medicines across the European Union member states. SkyPharm operates as a buyer from wholesale pharmaceutical companies and as a reseller to other companies. The principal activity of Decahedron is virtually the same as the business of SkyPharm. It is the trading of branded and generic pharmaceutical products and medicines across mainly the European Union member states. Decahedron buys from pharmacies and other wholesale pharmaceutical companies and resells these products mainly to other EU countries. We purchase excess inventories at a discount from wholesalers and export approximately 11,000 pharmaceutical product codes to EU member states capturing contract price differentials in the process. The Company only purchases stock with purchase orders at hand, limiting inventory risk. EU countries have put into force new legal frameworks and mandates that boost the parallel trade market in order to deflate healthcare pricing across the region. We have over 160 clients and vendors in Germany, UK, France, Italy, Netherlands, Denmark, Ireland, Poland, Hungary, UAE, Indonesia, Croatia, Iraq, Libya, Turkey, Jordan, Greece and Georgia. The parallel pharmaceutical trade in the EU was approximately €5.5 bn in fiscal 2016 according to The European Federation of Pharmaceutical Industries and Associations. “The Pharmaceutical Industry in Figures,” Brussels EFPIA 2017. The major parallel exporting countries are Greece, Czech Republic and Slovakia, while major importing countries are Germany, United Kingdom, France, Italy and Netherlands. Thus, SkyPharm and Decahedron are each an operator and the mechanism between the supply and demand sides in the wholesale market. The Company could be characterized as the middle ring of this distribution channel.

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The operational business life cycle performed by the Company could be described as follows:

a.	Searching and analyzing within market the demand and price of medicines;
b.	Demand list placement by the clients including specific medicines, volumes and prices;
c.	Research availability of the demanded medicines in the market;
d.	Choosing the appropriate supplier based upon available medicines and volumes;
e.	Order placement by the client;
f.	Checking control of the relevant authorities;
g.	Purchase of the medicines from the wholesaler;

h.	Assortment and storage of the medicines in the Company’s facilities;
i.	Packaging the medicines according to the buyer’s order list;
j.	Delivery of the medicines to clients’ facilities; and
k.	Direct payment for the shipment.

We believe that the entire aforementioned product life cycle would take approximately six weeks to two months, from the demand list to the payment for the shipment.

In addition, Cosmofarm distributes to a growing network of over 320 pharmacies and 14 wholesalers primarily located in the greater Athens area. Cosmofarm consistently invests in upgrading automation capacity. Cosmofarm operates a fully automated ROWA (German pharmacy robotics) robotic warehouse system that ensures 0% error selection rate and accelerates the distribution process while ensuring higher cost-efficiency from local competitors.

Our subsidiaries SkyPharm and Decahedron trade over 400 different types of pharmaceutical products with the principal products being the following:

Product Description	Percentage of Total Current Sales	Treatment
OTEZLA TABL.	2.19%	Treatment of psoriasis
SPRYCEL TABL.	1.41%	Treatment of cancer
OTOMIZE EAR SPRAY	1.21%	Treatment of otitis externa

We are formulating a broader and more diversified pharmaceutical product portfolio and a greater selection of targets for potential development. We target products with limited competition for reasons such as trading complexity or the market size, which make our pharmaceutical products a key growth driver of our portfolio and complementary to other product offerings.

On September 30, 2018, the Company sold 100% of the share capital of Amplerissimo, which was, the former owner of SkyPharm, now a wholly-owned subsidiary of Cosmos Holdings, to an unaffiliated third party. The information technology business of Amplerissimo was not a priority of the Company and we were not pursuing such business. The Company is focusing its efforts in expanding the pharmaceutical trading business.

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Customers

Through our subsidiaries, SkyPharm and Decahedron, we primarily sell pharmaceutical products directly to a limited number of large wholesale drug distributors who, in turn, supply-sell the products to other wholesalers, hospitals, pharmacies, governmental agencies across the European Union member states. Total revenues from the customers that accounted for 10% or more of our total consolidated revenues during the years ended December 31, 2019 & 2018 are as follows:

	2019			2018
MPA Pharma GmbH		5.78	%		15.13	%
Beragena Arzneimittel GmbH		1.52	%		11.36	%

No other customer generated over 10% of our total revenues.

We have a diverse customer base that includes wholesalers and retail healthcare providers. We make a significant amount of our sales to a relatively small number of pharmaceutical wholesalers. These customers represent an essential part of the distribution chain of our products. Pharmaceutical wholesalers have undergone, and are continuing to undergo, significant consolidation in a worldwide basis. This consolidation resulted in these groups gaining additional purchasing leverage and consequently increasing the product pricing pressures facing our business.

Geographic Markets

All of our revenues are generated from operations in the European Union or otherwise earned outside the U.S. All of our foreign operations are subject to risks inherent in conducting business abroad, including price and currency exchange controls, fluctuations in the relative values of currencies, political and economic instability and restrictive governmental actions including. Our geographical market sales distribution of our total consolidated revenues during the years ended December 31, 2019 and 2018 are as follows:

	2019			2018
Greece		65.71	%		8.01	%
Germany		16.82	%		39.86	%
UK		8.22	%		26.72	%
Hungary		2.76	%		4.51	%
Netherlands		2.13	%		10.41	%
Ireland		1.18	%		4.10	%
Libya		1.00	%		0.00	%
Poland		0.78	%		2.39	%
Italy		0.49	%		1.30	%
France		0.39	%		1.05	%
Denmark		0.25	%		1.16	%
Croatia		0.06	%		0.00	%
Turkey		0.06	%		0.00	%
Jordan		0.05	%		0.44	%
Indonesia		0.02	%		0.02	%
Georgia		0.01	%		0.00	%
Belgium		0.00	%		0.01	%
Spain		0.00	%		0.02	%
Total		100.00	%		100.00	%

We currently sell the products to wholesalers through our own sales force. We do not sell directly to large drug store chains or through distributors in countries where we do not have our own sales staff. As part of our sales marketing and promotion program, we use direct advertising, direct mailings, trading techniques, direct and personal contacts, exhibition of products at medical conventions and sponsor medical education symposia.

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Suppliers

We obtain pharmaceuticals and over the counter pharmaceutical products directly from manufacturers and other wholesalers of pharmaceutical products, three of which set forth below are the largest suppliers of our purchases in the fiscal years ended December 31, 2019 and 2018. The loss of a supplier could adversely affect our business if alternate sources of supply are unavailable since we are committed to be the primary source of pharmaceutical products for a majority of our customers. We believe that our relationships with our suppliers are strong. The 10 largest suppliers in fiscal year ended December 31, 2019 accounted for approximately 38% of our purchases.

	2019			2018
Medihelm Farmakapothiki S.A		6.91	%		35.25	%
Doc Pharma S.A		5.80	%		15.61	%
Nikolaos Katsinoulas Farmakapothiki S.A		4.85	%		8.75	%

Medihelm S.A. is considered a related party to the Company through June 30, 2019 due to the fact that the managing director of Medihelm is the mother of Nicholaos Lazarou, who was the managing director of the Company’s UK subsidiary, Decahedron until June 30, 2019. 

Doc Pharma S.A is considered a related party to the Company due to the fact that the CEO of Doc Pharma is the wife of Grigorios Siokas, the Company’s CEO and principal shareholder, who also served as a principal of Doc Pharma SA in the past.

Competition

Our pharmaceutical businesses are conducted in intensely competitive and often highly regulated markets. Many of our trading of pharmaceutical products face competition in the form of branded or generic drugs that treat similar diseases or indications. The principal forms of competition include efficacy, safety, ease of use, and cost effectiveness. The means of competition vary across product categories and business groups, demonstrating that the value of our trading products is a critical factor for success in all of our principal businesses.

Our competitors include other trading companies, smaller companies, with generic drug and consumer healthcare products. We compete with other companies that manufacture and sell products that treat diseases or indications similar to those treated by our trading pharmaceutical products.

Our competitive position in pharmaceutical sector is affected by several factors, including, among others, the amount and effectiveness of our and our competitors’ promotional resources; customer acceptance; product quality; our and our competitors’ introduction of new products, ingredients, claims, dosage forms, or other forms of innovation; and pricing, regulatory and legislative matters (such as product labeling, patient access and prescription).

The branded pharmaceutical industry is highly competitive. Our products compete with products manufactured by many other companies in highly competitive markets throughout the EU territory and internationally as well. Competitors include many of the major brand name and generic manufacturers of pharmaceutical products. If competitors introduce new products, delivery systems or processes with therapeutic or cost advantages, our products can be subject to progressive price reductions or decreased volume of sales, or both. 

In the generic pharmaceutical market, we might face intense competition from other generic drug manufacturers, brand name pharmaceutical companies, existing brand equivalents and manufacturers of therapeutically similar drugs.

By specializing in high barrier to entry products, we endeavor to market more profitable and longer-lived products relative to commodity generic products. We believe that our competitive advantages include our integrated team-based approach to product development that combines our formulation, regulatory, legal and commercial capabilities; our ability to introduce new generic equivalents for brand-name drugs; our ability to meet customer expectations; and the breadth of our existing generic product portfolio offering.

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Newly introduced generic products with limited or no other generic competition typically garner higher prices. At the expiration of the exclusivity period, other generic distributors may enter the market, resulting in a significant price decline for the drug. Consequently, the maintenance of profitable operations in generic pharmaceuticals depends, in part, on our ability to select, develop and launch new generic products in a timely and cost-efficient manner and to maintain efficient, high quality business capabilities.

Operating conditions have become more challenging under the mounting global pressures of competition, industry regulation and cost containment. We continue to take measures to evaluate, adapt and improve our organization and business practices to better meet customer and public needs. We also seek to continually enhance the organizational effectiveness of all of our functions, including efforts to accurately and ethically launch and promote our products.

Information Systems

The Company operates its full-service wholesale pharmaceutical distribution facilities in the Europe on one primary enterprise resource planning (“ERP”) system that provides for, among other things, electronic order entry by customers, invoice preparation and purchasing, and inventory tracking. We are currently making significant investments to enhance and upgrade the ERP system.

Additionally, we are improving our entity-wide infrastructure environment to drive efficiency, capabilities, and speed to market. We will continue to invest in advanced information systems and automated warehouse technology. For example, in an effort to comply with future pedigree and other supply chain custody requirements we expect to continue to make significant investments in our secure supply chain information systems.

The Company processes a substantial portion of its purchase orders, invoices, and payments electronically. However, it continues to make substantial investments to expand its electronic interface with its suppliers. The Company has integrated warehouse operating system, which are used to manage the majority of transactional volume. The warehouse operating system has improved the distribution services productivity and operating leverage.

Government Regulations

Government authorities in the EU and in other countries extensively regulate, among other things, the research, development, testing, approval, manufacturing, labeling, post-approval monitoring and reporting, packaging, advertising and promotion, storage, distribution, marketing and export and import of pharmaceutical products. As such, our branded pharmaceutical products and the generic product candidates are subject to extensive regulation both before and after approval. The process of obtaining regulatory approvals and the subsequent compliance with applicable state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with these regulations could result in, among other things, warning letters, civil penalties, delays in approving or refusal to approve a pharmaceutical product.

Our business is mainly the trading of branded and generic pharmaceutical products and medicines within the EU member states. In order to be able to operate our business, we need to comply with EU regulations, as well as EU member states regulations that govern various operations of our business. The most important government regulation that applies in our business is the granting to our companies SkyPharm and Decahedron of the Authorization for Wholesale Distribution of Medicinal Products for human use. In order for this Authorization to be granted the companies need to always comply with certain Good Distribution Practices (GDP) that mainly assure the proper storage, handling, distribution and trade of the pharmaceutical products.

SkyPharm received its Authorization for the Wholesale Distribution of Medical Products for humans use on July 22, 2015, from the Hellenic Republic National Organization for Medicines in accordance with Law 1316/1983, and the inspection by the National Organization for Medicines dated July 16, 2015 in accordance with the Guidelines 2013/C31/01. The license is valid for five years and expires on July 22, 2020. Pursuant to the EU directive of (2013/C 343/01), the Company is subject to fulfill the Guidelines of the Good Distribution Practices of medical products for human use.

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Decahedron received its Wholesale Distribution Authorization for human use on November 7, 2013, 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.

Our subsidiary, SkyPharm, is 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 neither of which apply to SkyPharm.

Patents, Trademarks, Licenses and Proprietary Property

We have developed or acquired various proprietary products, licenses, processes, software, and other intellectual property that are used either to facilitate the conduct of our business or that are made available as products or services to customers.

At present, besides the above licenses we do not have any intellectual property or other licenses, including, but not limited to, patents, trademarks, franchises, concessions, and royalty agreements or other proprietary interests.

We rely on confidentiality agreements with our employees, consultants and other parties to protect, among other things, trade secrets and other proprietary technology. There can be no assurance that these agreements will not be breached, that we will have adequate remedies for any breach, that others will not independently develop equivalent proprietary information or that other third parties will not otherwise gain access to our trade secrets and other intellectual property

International Cannabis Corp. (f/k/a Kaneh Bosm Biotechnology Inc.) - Cannabis

Distribution and Equity Agreement

On March 19, 2018, the Company entered into a Distribution and Equity Acquisition Agreement (the “Distribution and Equity Acquisition Agreement”) with Marathon Global Inc. (“Marathon”), a company incorporated in the Province of Ontario, Canada. Marathon was formed to be a global supplier of Cannabis, cannabidiol (CBD) and/or any Cannabis Extract products, extracts, ancillaries and derivatives (collectively, the “Products”). The Company was appointed the exclusive distributor of the Products initially throughout Europe and on a non-exclusive basis wherever else lawfully permitted. The Company has no present intention to distribute any Products under this Agreement in the United States or otherwise participate in cannabis operations in the United States. The Company intends to await further clarification from the U.S. Government on cannabis regulation prior to determining whether to enter the domestic market.

The Distribution and Equity Acquisition Agreement is to remain in effect indefinitely unless Marathon fails to provide Market Competitive (as defined) product pricing and Marathon has not become profitable within five (5) years of the agreement. The transaction closed on May 22, 2018 after the due diligence period, following which the Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in Common Shares of the Company if it fails to meet certain performance milestones. The Company is entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000. The Company was also given the right to nominate one director to the Marathon board of directors.

Share Exchange Agreements

On May 17, 2018, the Company entered into a Share Exchange Agreement with Marathon, Kaneh Bosm Biotechnology Inc. (n/k/a International Cannabis Corp. (OTC: KNHBF)) and certain other sellers of Marathon capital stock. Under the Share Exchange Agreement, the Company agreed to transfer 2.5 million shares in Marathon to KBB, a corporation incorporated under the laws of the Province of British Columbia and a public reporting issuer on the Canadian Securities Exchange, in exchange for 5 million shares of KBB. On July 16, 2018, the Company completed a new Share Exchange Agreement (the “New SEA”) by and among Marathon, KBB, and certain other sellers of Marathon capital stock. Pursuant to the terms of the New SEA, the Company transferred its remaining one-half interest (2.5 million shares) in Marathon to KBB. The Company received an additional five million shares of KBB. Completion of the New SEA by the Company was subject to satisfaction of various conditions precedent all of which were satisfied. The ten million shares of KBB owned by the Company constituted approximately 7% of the 141,219,108 shares of capital stock of KBB then issued and outstanding. The Company does not have the ability to exercise significant influence over KBB.

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Employees

As of December 31, 2019, our subsidiaries in Greece had 68 full-time employees in total, out of which 8 are engaged in the sales department, 2 in exports, 1 in the purchase department, 2 in the marketing department, 19 in warehouse services 10 in logistics/transportation works, 3 in pharmacy and quality assurance, 5 in the accounting department, 2 in the finance & development department, 1 in management, 3 in procurement, 3 in cleaning, 2 in administration, 6 in the call center and 1 in the IT department. Our employees are not members of any unions. We consider our relations with our employees to be good and have not experienced any work stoppages, slowdowns or other serious labor problems that have materially impeded our business operations.

As of December 31, 2019, Decahedron had three full-time employees, 1 in management, 1 in quality assurance and 1 in the warehouse.

We have a team with a significant track record in the pharmaceutical business. In order to achieve our strategic objectives, we have, and will remain, focused on hiring and retaining a highly skilled management team that has extensive experience and specific skill sets relating to the sales, selection, development and commercialization of pharmaceutical products. We intend to continue our efforts to build and expand this team as we grow our business. No assurances can be given that the Company will be able to retain any additional persons.

Product Insurance

We have insurance in place for our warehouses and the products in stock against any damage or theft, but we do not insure our products after the sale, since we are working under an Ex-works policy, and thus our clients are responsible for the transportation and the insurance of the products against any damage. In the future, we will continue to reevaluate our decision and may purchase product liability insurance to cover some of or all of our product liability risk.

Research and Development Expenditures

The Company entered into a Research & Development agreement with Doc Pharma S.A. Doc Pharma S.A is considered a related party to the Company due to the fact that the CEO of Doc Pharma is the wife of Grigorios Siokas, the Company’s CEO and principal shareholder, who also served as a principal of Doc Pharma SA in the past. Doc Pharma is a pharmaceutical manufacturer with production facilities in Athens, Greece, certified under Good Manufacturer Practices (GMP). The agreement outlines the development and contract manufacturing of Cosmos Holdings’ complete line of Nutraceutical Products. Under the agreement, Doc Pharma S.A. will provide its services to research, develop formulation, complete product registration, design product packaging, and provide market-ready products. The first sales of our own brand of nutraceuticals were posted in the fourth quarter of 2018.

Subsidiaries

As of year-end, the Company’s subsidiaries were SkyPharm S.A. based in Greece, Cosmofarm Ltd based in Greece, and Decahedron Ltd based in the United Kingdom.

Available Information

Our internet address is http://www.cosmoshold.com. We post links on our website to the following filings as soon as reasonably practicable after they are electronically filed or furnished to the SEC: annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendment to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. All such filings are available through our website free of charge. The information on our Internet website is not incorporated by reference into this Form 10-K or our other securities filings and is not a part of such filings

Information about the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330 or 1-202-551-8090. You can also access our filings through the SEC’s internet address site: www.sec.gov, under our OTCQB ticker COSM.

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Item 1A. Risk Factors

The Company is not required to provide the information called for in this item due to its status as a Smaller Reporting Company.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

The Company rents four corporate offices:

· US Office corporate office is located at 141 W. Jackson Blvd, Suite 4236, Chicago, Illinois 60604. Beginning in January 2015, the monthly rent expense is $709, which was paid through December 31, 2017. The lease expired as of May 31, 2017, however, the Company entered into a two-year amendment to that lease that commenced as of June 1, 2017 through May 31, 2019. The monthly rate from June 1, 2017 through May 31, 2018 was $709 per month and increased to $730 per month from June 1, 2018 through May 31, 2019.

· The Greece office of SkyPharm is located at 5, Agiou Georgiou Street, 57001, Pylaia, Thessaloniki, Greece. The Company has a six-year lease which commenced on September 1, 2014 at the rate of €4,325 (approximately $4,802) per month. Beginning May 2017, the Company last amended their original lease including additional square footage within this building at an additional cost of €4,675 ($5,356) per month. As a result, the total monthly lease amount is now €9,000 ($10,310) per month.

· The offices of Decahedron are located at Unit 11 Spice Green Centre, Flex Meadow, Harlow, CM19, 5TR, Essex, U.K. for which we pay approximately ₤1,908 ($2,430) per month, under a one-year amendment to a lease dated October 25, 2011, which commenced on October 25, 2016 and expires on October 24,2021.

· As of March 31, 2019, the offices of Cosmofarm were located at Herakleous 39, Neos Kosmos, Athens, Attiki, Greece, 11743. The lease of €1,400 ($1,654) per month expired on March 31, 2019. Cosmofarm has subsequently moved its principal offices to Gonata Stylianou 15, Peristeri, Attiki, Greece 12133. The Company has a ten-year lease which commenced on July 18, 2018, at the rate of €3,333 ($3,809), subject to a grace period until September 30, 2018. Rent expense did not accrue from July 18, 2018, to September 30, 2018. The Company rents additional square footage at Missonos 15-17, Neos Kosmos, Athens, Attiki, Greece, 11743. The Company has a three-year lease which commenced on May 1, 2017, at a rate of €400 ($457) per month.

Each of the above facilities is adequate for the Company’s current needs.

Item 3. Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 4. Mine Safety Disclosures

None

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PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock has been quoted through various over-the-counter systems at various times since 2009. Our common stock is currently quoted on the OTC QB under the symbol “COSM,” but there is a limited public trading market for our common stock. The liquidity of our shares on the OTC QB is limited and prices quoted may not be a reliable indication of the value of our common stock. The quotations do not reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Quarter Ended	High		Low
Year Ended December 31, 2019
March 31, 2019	$	3.95	$	2.40
June 30, 2019		3.90		2.20
September 30, 2019		3.61		2.50
December 31, 2019		3.30		2.20
Year Ended December 31, 2018
March 31, 2018		12.50		8.60
June 30, 2018		8.50		5.00
September 30, 2018		9.00		4.45
December 31, 2018		7.40		3.00

Holders of Our Common Stock

As of December 31, 2019, we had 13,225,387 shares of our common stock issued and 12,860,059 shares outstanding, held by approximately 176 stockholders of record. The number of record holders does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.

Dividends

We have not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. We intend to retain future earnings, if any, to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Our future payment of dividends will depend on our earnings, capital requirements, expansion plans, financial condition and other relevant factors that our board of directors may deem relevant. Our retained earnings deficit currently limits our ability to pay dividends.

Penny Stock

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

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The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity for our common stock should our stock ever be traded on a public market. Therefore, stockholders may have difficulty selling our securities.

Securities Authorized for Issuance under Equity Compensation Plans

We do not have any equity compensation plans.

Item 6. Selected Financial Data

A smaller reporting company is not required to provide the information required by this Item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 contained in the Private Securities Litigation Reform Act of 1995, 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.

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Presentation of Information

As used in this prospectus, the terms “we,” “us” “our” and the “Company” mean Cosmos Holdings Inc. unless the context requires otherwise. The following discussion and analysis should be read in conjunction with our audited (and unaudited) financial statements and the related notes that appear elsewhere in this prospectus. All dollar amounts in this registration statement refer to U.S. dollars unless otherwise indicated.

Overview

On September 27, 2013, the Company closed a reverse take-over transaction pursuant to which it acquired a private company whose principal activities are the trading of products, providing representation, and provision of consulting services to various industries. Pursuant to a Share Exchange Agreement between the Company and Amplerissimo Ltd. (“Amplerissimo”), a company incorporated in Cyprus, we acquired 100% of Amplerissimo’s issued and outstanding common stock. On November 14, 2013, we changed our name to Cosmos Holdings Inc. and changed our focus and business strategy to the healthcare and pharmaceutical industry.

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.

The pharmaceutical industry is highly competitive and subject to comprehensive government regulations. Many factors may significantly affect the Company’s sales of its products, including, but not limited to, efficacy, safety, price and cost-effectiveness, marketing effectiveness, product labeling, quality control and quality assurance as well as our research and development of new products.

We are currently focusing our existing operations on expanding the business of our subsidiaries, SkyPharm (Greece) and Decahedron (UK), in order to become an international pharmaceutical company. The Company’s focus will be on Branded Pharmaceuticals, Over-the-Counter (OTC) medicines, and Generic Pharmaceuticals. The Company also intends to expand into Food Supplements and targets areas where we can build and maintain a strong position. The Company has already created its own line of vitamins and food supplement products under the brand name Sky Life Premium and targets areas where it can build and maintain a strong position. The Company uses a differentiated operating model based on a lean, nimble and decentralized structure, with an emphasis on acquisitions of established companies and our ability to maintain better pharmaceutical assets than others. This operating model and the execution of our corporate strategy are designed to enable the Company to achieve sustainable growth and create added value for our shareholders. In particular, we look to enhance our pharmaceutical and over-the-counter product lines by acquiring or licensing rights to additional products and regularly evaluate selective company acquisition opportunities.

As of July 22, 2015, the Hellenic Ministry of Health and more specifically the National Organization for Medicines granted the license for the wholesale of pharmaceutical products for human use to SkyPharm. The license is valid for a period of five years and pursuant to the EU directive of (2013/C 343/01) the Company is subject to fulfill the Guidelines of the Good Distribution Practices of medical products for human use. The Company has already incorporated the methodologies, procedures, processes and resources in order to be in accordance with the guidelines of the Good Distribution Practices. In 2016, the Company leased and equipped additional office space for our subsidiary SkyPharm in Thessaloniki, Greece in order to facilitate its growing business activity. The warehouse was already equipped with the proper shelves, working tables, medicine, cold fridge and barcode machines in compliance with all regulations.

On May 20, 2016, the Company entered into a Non-Binding Memorandum of Understanding with Doc Pharma SA to purchase the company for a combination of cash and stock to be agreed upon. Doc Pharma S.A is considered a related party to the Company due to the fact that the CEO of Doc Pharma is the wife of Grigorios Siokas, the Company’s CEO and principal shareholder, who also served as a principal of Doc Pharma SA in the past. Doc Pharma is a pharmaceutical manufacturer with production facilities in Athens, Greece, certified under Good Manufacturer Practices (GMP). The company owns numerous licenses of generic medicines and uses its own network of pharmaceutical sales representatives to communicate its products with doctors. The company also trades prototype medicines, food supplements. Closing of the transaction is subject to execution of definitive exchange agreements, a full audit of Doc Pharma, satisfactory completion of due diligence of Doc Pharma, tax and legal consideration and other customary closing conditions. The Memorandum of Understanding expired on December 31, 2016, and has not been formally renewed or extended, however is being pursued.

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On November 17, 2016, Cosmos Holdings Inc. entered into a Stock Purchase Agreement (the “Decahedron SPA”) with Decahedron and the shareholders of Decahedron. The Company consummated this transaction on February 10, 2017. The terms of the Decahedron SPA provided that the Company would acquire all of the issued and outstanding shares of Decahedron. In exchange for the shares of Decahedron, the Company will issue to the Decahedron shareholders an aggregate amount of 170,000 shares of the Company’s common stock. The Decahedron SPA provided that following the closing of the transaction, the principal and majority shareholder of Decahedron, Nicholas Lazarou would be retained as a Director and COO of Decahedron with a salary of 10,000 GBP per month (approximately US $12,270).

As of October 3, 2017, the Company, entered into a Research & Development agreement with Doc Pharma S.A., a pharmaceutical manufacturer with production facilities in Athens, Greece, certified under Good Manufacturer Practices (GMP). The agreement outlines the development and contract manufacturing of Cosmos Holdings’ complete line of nutraceutical products. Under the agreement, Doc Pharma S.A. will provide its services to research, develop formulation, complete product registration, design product packaging, and provide market-ready products. Sale of food supplements by the Company commenced in September 2018. Sales of the Company’s own line started in the fourth quarter of 2018.

On November 15, 2017, the Company entered into a Securities Purchase Agreement (the “SPA”) with certain institutional investors (the “Buyers”) with which it had no prior relationship, pursuant to which the Company issued for a purchase price of $3,000,000, $3,350,000 in aggregate principal amount of Senior Convertible Notes (the “Notes”) to the Buyers, convertible into 670,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) at $5.00 per share and warrants to purchase an aggregate of 536,000 shares of Common Stock exercisable at $7.50 per share (the “Warrants”.)

On August 25, 2017, we received shareholder and board approval for a reverse stock split of our common stock on the basis of issuing one (1) share of common stock in exchange for each ten (10) shares of common stock issued and outstanding. On November 21, 2017, the reverse stock split was made affective by FINRA. On November 21, 2017, the Company effected a one-for-ten (1:10) reverse stock split whereby the Company decreased, by a ratio of one-for-ten (1:10) the number of issued and outstanding shares of Common Stock. Proportionate adjustments for the reverse stock split were made to the Company’s outstanding stock options, and warrants including all share and per-share data, for all amounts and periods presented in the consolidated financial statements. All share and per share date in this Report gave retroactive effect to the reverse stock split unless otherwise noted.

On September 4, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) and completed the financing with two institutional investors who had previously purchased $3,350,000 principal amount of senior convertible notes in November 2017 (the “November Notes”) as amended in February 2018 and September 2018. The Company issued, for a $2,000,000 purchase price, $2,233,333 in aggregate principal amount of Senior Convertible Notes (the “Notes”) convertible into 372,223 shares of Common Stock at $6.00 per share and five-year Warrants to purchase an aggregate of 357,334 shares of common stock exercisable at $7.50 per share. The Company received net proceeds of $1,845,000 after deduction of offering costs. See “Debt Obligations - Senior Convertible Notes” below.

On September 30, 2018, the Company entered into a Share Purchase Agreement (“SPA”) with Abbydale Management Limited, an unaffiliated third party incorporated in Belize. The Company sold one hundred (100%) percent of the issued share capital of its subsidiary, Amplerissimo Ltd., a limited liability company organized under the laws of Cypress, to the purchaser for a purchase price of €5,000 ($5,811). Amplerissimo had previously transferred one hundred (100%) percent of the capital stock of Sky Pharm SA to the Company. The information technology business of Amplerissimo is not a priority of the Company and the Company decided to not pursue such business.

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The Effects of COVID-19 on Our 2020 Operations

The World Health Organization (WHO) declared the coronavirus outbreak a pandemic on January 30, 2020. Since the outbreak in China in December 2019, COVID-19 has expanded its impact to Europe, where all of our operations reside as well as our employees, suppliers and customers.  To date, our operations have been affected by the following adverse risks:

Adverse Risks

·         Drug shortages due to ban of exports 

·         Problems/restrictions in supply chain 

·         Logistics delays 

·         Restrictions on employees’ ability to work 

·         Liquidity issues (AR/AP) – payment delays and new government regulations for freezing payment terms 

·         National or EU long lasting recession

Subsequent to year-end, management has identified opportunities as listed below, that could balance, at least in part, the adverse effects of COVID-19 during the fiscal year-end 2020. However, there can be no assurance that this will occur prior to a vaccine and treatment becoming effective.

Opportunities

·         Sales increase of OTC products branded 

·         Sales increase of food supplements (Vitamin D3, Vitamin C, multivitamins) 

·         Sales increase of antibacterial products and medicine masks 

·         Obtain exclusive distribution rights for detection test kits for COVID-19 

·         Governmental financing incentives related to liquidity 

·         VAT incentives (in the UK the VAT of imports is waived on medical products)

Management’s Expectations

Management believes that there could be a positive long-term outcome, which could result in an increase in sales of OTC branded products, food supplements, antibacterial products and medical masks. However, there is no guarantee of such results. Therefore, we will increase R&D as we are aiming to innovate and create new products in order to help combat against COVID-19. We have adapted our strategy in response to COVID-19 and will continue to do so, since we are expecting the impact of COVID-19 to continue for the next 18-24 months.

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What Effect Will COVID-19 Have on the Company’s Disclosure Controls

Management does not believe COVID-19 will have a significant effect on our disclosure controls as there have been no changes to date. Our operations have continued at a normal pace, at least 90% of our staff continue to work on site and those staff who are working remotely have no impact on our disclosure controls.

Acquisition - Cosmofarm Ltd.

On December 19, 2018, the Company completed the purchase of all capital stock of Cosmofarm Ltd., a pharmaceutical wholesaler based in Athens, Greece. The principal of the selling shareholder is Panagiotis Kozaris, who remained with Cosmofarm as a director and chief operating officer once it became a wholly-owned subsidiary of the Company. Grigorios Siokas, the Company’s CEO, became the new CEO of Cosmofarm. Mr. Kozaris had no prior relationship to the Company other than as an independent shareholder. The purchase price payable is €200,000 evidenced by a promissory note. Closing of the acquisition was subject to satisfactory completion of due diligence, delivery of audited and interim financial statements of Cosmofarm subject to being audited by PCAOB auditors, no material adverse change in the business or financial condition of Cosmofarm, all necessary consents and approvals to complete the acquisition have been obtained and other customary closing conditions.

Cosmofarm’s primary activity as a pharmaceutical wholesaler is the distribution of pharmaceuticals (mainly prescription), OTC products and nutraceuticals to a growing network of over 320 pharmacies and 14 wholesalers primarily located in the greater Athens, Greece region. To boost cost-efficiency and better facilitate its growing operations, the Company t relocated to a larger building in March 2019. Cosmofarm also seeks to expand its current operations automation investments by acquiring fully-integrated order management systems and additional robotic logistics over equipment.

Flexible/adaptive credit policies is a major differentiator in capturing additional pharmacies. By methodically screening clients and closely managing cash flow, Cosmofarm has been able to grow its network while keeping debt levels low. In yielding high cost-efficiency, automated warehouse management systems enables the Company to be in a position to choose to offer discounts in a growing customer network. Cosmofarm actively targets and captures pharmacies that achieve high-volume sales of OTC products and nutraceuticals which are among the fastest growing categories.

Results of Operations

Year ended December 31, 2019 versus December 31, 2018

For the year ended December 31, 2019, the Company had a net loss of $3,298,965 on revenue of $39,676,385, versus a net loss of $9,060,658 on revenue of $37,083,882, for the year ended December 31, 2018.

Revenue

Revenue during the Company’s twelve-month period ended December 31, 2019, increased by 7% as compared to revenues in the period ended December 31, 2018. This increase is mainly because of the organic growth attributed to our subsidiary, Cosmofarm, which continued the expansion of point sales even more aggressively during the year ended December 31, 2019.

Our future revenue growth will continue to be affected by various factors such as industry growth trends, including drug utilization, the introduction of new innovative brand therapies, the likely increase in the number of generic drugs that will be available over the next few years as a result of the expiration of certain drug patents held by brand-name pharmaceutical manufacturers and the rate of conversion from brand products to those generic drugs, price increases and price deflation, general economic conditions in the member states of European Union, competition within the industry, customer consolidation, changes in pharmaceutical manufacturer pricing and distribution policies and practices, increased downward pressure on government and other third party reimbursement rates to our customers, and changes in government rules and regulations.

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Cost of Goods Sold

For the twelve months ended December 31, 2019, we had direct costs of goods sold of $36,014,116 associated to cost of goods sold versus $34,675,242 from the prior fiscal year ended December 31, 2018. Cost of goods sold year over year increased by 3.9%.

Gross Profit

Gross profit for the year ended December 31, 2019 was $3,662,269 compared with the $2,408,640 for the year ended December 31, 2018. Gross profit increased by $1,253,629 or 52% from the prior fiscal year. The increase in the gross profit was primarily due to the increase of Company’s main revenue source of trading, sourcing and distribution of pharmaceutical products, as well as the launch of our own brand of nutraceuticals; SkyPremium Life.

Operating Expenses

For the year ended December 31, 2019, we had general and administrative costs of $3,523,450 and depreciation and amortization expense of $394,628 for a net operating loss of $255,809. For the year ended December 31, 2018, we had general and administrative costs of $3,593,132, depreciation and amortization expense of $43,930, for a net operating loss of $1,228,422

The approximate 8% increase in operating expenses in the year ended December 31, 2019, versus the prior year ended, is primarily due to the acquisition of Cosmofarm. Also, there is an increase of the payroll, advertisement and other operating expenses.

Interest Expenses

For the year ended December 31, 2019, we had interest expense of $1,412,465, non-cash interest expenses of $320,205 related to the fair value of warrants for services, extinguishment of debt and the amortization of debt discount and $264 of interest related to loans from related parties versus the year ending December 31, 2018 where we had interest expense of $967,824, non-cash interest expenses of $5,839,581 related to the fair value of warrants for services and the amortization of debt discount and $264 of interest related to loans from related parties.

Unrealized Foreign Currency losses

Additionally, we had an unrealized foreign currency translation loss of $49,167 for the year ended December 31, 2019 such that our net comprehensive loss for the period was $3,348,132 versus the unrealized foreign currency gain of $1,418,057 such that our net comprehensive loss for the period was $7,642,601 for the twelve months ended December 31, 2018.

Going Concern

The Company’s consolidated financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company had a net loss of $3,298,965 for the year ended December 31, 2019, and had an accumulated deficit of $19,571,610 as of December 31, 2019. The Company has not yet established an adequate ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.

In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources. Management’s plans to continue as a going concern include raising additional capital through increased sales of product and by sale of common shares. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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Liquidity and Capital Resources

As of December 31, 2019, the Company had a working capital deficit of $7,062,520 versus a working capital deficit of $3,927,074 as of December 31, 2018. This increase in the working capital deficit is primarily attributed to the Company’s operating losses in the year ending as of December 31, 2019.

As of December 31, 2019, the Company had net cash of $38,537 versus $864,343 as of December 31, 2018. For the twelve months ended December 31, 2019, net cash used in operating activities was $4,788,842 versus $1,155,306 net cash used in operating activities for the twelve months ended December 31, 2018. The Company has devoted substantially all of its cash resources to apply its investment program to expand through organic business growth and, where appropriate, the execution on selective company and license acquisitions, and incurred significant general and administrative expenses to enable it to finance and grow its business and operations.

During the twelve months period ended December 31, 2019, there was $588,929 net cash provided by investing activities versus $195,772 used in during the year ended December 31, 2018. This was primarily due to proceeds from the sale of investments offset by the purchase of fixed assets.

During the twelve months period ended December 31, 2019, there was $3,587,330 of net cash and cash equivalents provided by financing activities versus $1,988,302 provided by financing activities during the twelve months period ended December 31, 2018.

We believe that our current cash in our bank account and working capital as of December 31, 2019 will satisfy our estimated operating cash requirements for the next twelve months. However, the Company will require additional financing in fiscal year 2020 in order to continue at its expected level of operations and potential acquisitions. If the Company is unable to raise additional funds in the future on acceptable terms, or at all, it may be forced to curtail its development activities.

We anticipate using cash in our bank account as of December 31, 2019, cash generated from the operations of the Company and its operating subsidiaries and from debt or equity financing, or from loans from management, to the extent that funds are available to do so to conduct our business in the upcoming year. Management is not obligated to provide these or any other funds.

Debt Obligations

Loan Facility

On August 4, 2016, SkyPharm entered into a Loan Facility Agreement, last amended on April 18, 2018, with Synthesis Peer-To-Peer Income Fund (the “Loan Facility” and the “Lender”). As of December 31, 2018, the outstanding balance under the Loan Facility was $3,078,442 excluding interest expense, of which $136,800 has been paid. The principal balance under the Loan Facility was $$3,078,442 as of December 31, 2019. Until January 1, 2018, advances under the Loan Facility accrued interest at ten percent (10%) per annum from the applicable date of each drawdown and require quarterly interest payments. The interest rate was restated as of January 1, 2018 to four (4%) percent plus quarterly Libor Payments, plus two (2%) percent default interest on unpaid amounts in addition to the interest rate. The Loan Facility permits prepayment and is due upon the earlier of (i) 75 days following demand of the Lender; or (ii) December 31, 2021, as last amended. The Loan Facility is secured by a personal guaranty of Grigorios Siokas which is secured by a pledge of 1,000,000 shares of common stock of the Company owned by Mr. Siokas.

On April 18, 2018, SkyPharm S.A. entered into a ten-year Advisory Agreement with Synthesis Management Limited (the “Advisor”). The Advisor was retained to assist SkyPharm to secure corporate finance capital. The Advisor shall be paid €104,000 per year during the ten-year term, all of which have been pre-paid by SkyPharm for future financing services.

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Bridge Loans

On March 16, 2017 and March 20, 2017, SkyPharm entered into loan agreements with the Synthesis Peer-To Peer-Income Fund (the “Bridge Loans”). The Bridge Loans provided to SkyPharm loans of €41,590 ($50,000) and €100,000 ($120,220), respectively, during the year ended December 31, 2017. The Bridge Loans accrue interest at a rate of 10% per annum and were repayable on April 16, 2017 and April 20, 2017, respectively, together with all other amounts then accrued and unpaid. On April 16, 2017, the maturity dates were amended for no additional consideration or change in terms and conditions. The maturity dates of both loans were amended, and they matured on May 16, 2017 and May 20, 2017, respectively. Pursuant to the above described April 18, 2018 agreement and effective January 1, 2018, the Company reached an agreement with Synthesis Peer-To-Peer Income Fund such that the March 20, 2017 loan would have a fixed USD payoff amount of $106,542. As a result of this agreement the Company recorded a gain on settlement of debt of €16,667 ($19,909) related to the reduction of the USD payoff amount and an additional gain on settlement of debt of €3,950 ($4,781) related to interest that had accrued on the original amount of the loan. The Company has accrued interest expense of an aggregate total of €24,608 ($27,627) for both loans and the outstanding balances of these loans was €45,809 ($50,000) and €83,333 ($106,542), respectively, as of December 31, 2019.

On May 5, 2017, SkyPharm entered into a loan agreement with Synthesis Peer-To-Peer Income Fund for €28,901 ($34,745). The loan accrues interest at a rate of 10% per annum and matured on September 30, 2017. The Company has accrued interest expense of €5,437 ($6,104) and the outstanding balance on this loan was €31,388 ($34,745) as of December 31, 2019.

On April 18, 2018, the Company entered into an amendment pursuant to which the maturity dates for all of the above Bridge Loan advances were extended to December 31, 2021 for no additional consideration. Additionally, the interest rate was amended such that, effective January 1, 2018, the interest rate for all advances is 4% plus the 3-Month Libor rate.

Trade Facility Agreements

On April 10, 2017, Decahedron entered into a Trade Finance Facility Agreement (the “Decahedron Facility”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”). The Decahedron Facility provides the following material terms:

· The Lender will provide Decahedron a facility of up to €2,750,000 ($3,087,425) secured against Decahedron’s receivables from the sale of branded and generic pharmaceutical sales.

· The total facility will be calculated as 95% of the agreed upon value of Decahedron’s receivables.

· The term of the Decahedron Facility will be for 12 months.

· The obligations of Decahedron are guaranteed by the Company pursuant to a Cross Guarantee and Indemnity Agreement.

· The Lender has the right to make payments directly to Decahedron’s suppliers.

· The following fees should be paid in connection with the Decahedron Facility:

· 2% of the maximum principal amount as an origination fee.

· A one percent (1%) monthly fee.

The current draw on the Decahedron Facility is $0.

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On May 12, 2017, SkyPharm entered into a Trade Finance Facility Agreement (the “SkyPharm Facility”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”). The SkyPharm Facility provides the following material terms: 

· The Lender will provide SkyPharm a facility of up to €2,000,000 ($2,245,400) secured against SkyPharm’s receivables from the sale of branded and generic pharmaceutical sales. In the event that accounts receivable becomes uncollectible, the Company will be obligated to pay back the notes in full.

· The total facility will be calculated as 95% of the agreed upon value of Decahedron’s receivables.

· The term of the SkyPharm Facility will be for 12 months.

· The obligations of SkyPharm are guaranteed by the Company pursuant to a Cross Guarantee and Indemnity Agreement.

· The Lender has the right to make payments directly to SkyPharm’s suppliers.

· The following fees should be paid in connection with the SkyPharm Facility:

· 2% of the maximum principal amount as an origination fee.

· A one percent (1%) monthly fee.

On November 16, 2017, SkyPharm signed an amended agreement with Synthesis Structured Commodity Trade Finance Limited that increased the maximum aggregate facility limit from €2,000,000 ($2,245,400) to €6,000,000 ($6,736,200). All other terms of the original agreement remain the same. The Company also obtained consents from Synthesis Peer-to-Peer Income Fund in connection with obtaining the November 2017 convertible debt financing.

On May 16, 2018, SkyPharm S.A., as Commodity Buyer, entered into a Supplemental Deed of Amendment (the “Deed”) relating to the above-described SkyPharm Facility dated May 12, 2017, as amended, with Synthesis Structured Commodity Trade Finance Limited (“Synthesis”), as Loan Receivables Originator. Under the SkyPharm Facility, as amended, there was a principal balance of €5,866,910 outstanding as of March 31, 2018. SkyPharm made a payment of €1,000,000 ($1,162,200) of interest and principal on May 31, 2018 under the terms and conditions of the Deed. Additionally, the maturity date for the facility was amended such that, the full principal amount was to be repaid no later than May 31, 2021, subject to a repayment schedule to be agreed upon by SkyPharm and Synthesis. Notwithstanding that fact and the hereinafter disclosed Further Amendment on October 17, 2018, Synthesis retained the right to terminate the SkyPharm Facility at any time and demand repayment of all outstanding principal and interest in full within six (6) months from the date of notification.

The SkyPharm Facility was amended to provide, among other things:

· A listing of approved purchasers;

· To permit SkyPharm to request Synthesis to make payments under the SkyPharm Facility directly to SkyPharm so that SkyPharm can discharge its obligations to a commodity seller directly;

· To prohibit SkyPharm from entering into a commodity contract which grants more than seventy-five (75) days delay between the payment for products and receipt of the purchase price and placed other limitations on terms of commodity contracts;

· If Grigorios Siokas, CEO of Cosmos Holdings Inc. (“Cosmos”), ceases to own or control at least fifty-one (51%) percent of the shares of Cosmos, or SkyPharm ceases to be a wholly-owned subsidiary of Cosmos, either event shall constitute an Event of Default (as defined);

· The maximum aggregate amount of the SkyPharm Facility is €15,000,000, although there is no commitment for any future loans under the SkyPharm Facility;

· The interest rate on the SkyPharm Facility for: (i) all lending in U.S. dollars is the one-month LIBOR plus six (6%) percent margin; and (ii) for all lending in Euro, the one-month Euribor Rate plus six (6%) percent per annum, commencing June 1, 2018.

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The Deed is conditioned upon, among other things, execution and perfection of a Bulgarian Amended Pledge (“BAP”) having priority over the Bulgarian Pledge Accounts with Unicredit Bulbank AD; and the Approved Purchasers are to make all payments to SkyPharm directly to the BAP. On May 16, 2018, SkyPharm and Synthesis also entered into an Account Merge Agreement (the “Pledge”) as a requirement under the above-described Deed. Under the Pledge, Synthesis is to receive a first ranking securities interest in SkyPharm’s outstanding receivables under the Bulgarian bank account. During the year ended December 31, 2018, SkyPharm borrowed an additional €270,000 ($247,117) in funds. The draw on the SkyPharm Facility was €2,000,000 ($2,245,400) and $4,000,000 as of December 31, 2019 (see below), and the Company has accrued $0 and $19,834, respectively in interest expense related to this agreement.

On October 17, 2018, SkyPharm entered into a Further Amendment to Supplemental Deed with Synthesis. The outstanding principal balances under the SkyPharm Facility as of October 17, 2018 will be US$4,000,000 and €2,000,000. All accrued interest and any other fees outstanding as of October 1, 2018 were forgiven. Interest commenced on October 1, 2018 at six (6%) percent per annum plus one-month EURIBOR, when it is positive, and 6% per annum plus USD one-month LIBOR. Provided the Facility has not been terminated as of August 31, 2019, SkyPharm shall repay the principal amount in quarterly installments of €125,000 and US$150,000 commencing no later than August 31, 2019. The remaining unpaid principal shall be repaid in full with all other outstanding amounts at final maturity of August 31, 2021, subject to Synthesis’s right to terminate the facility and demand repayment of all outstanding principal and interest within six (6) months of notification. SkyPharm was required to open accounts with Varengold Bank AG no later than November 30, 2018.

The Company recorded a total debt discount of €117,338 ($137,063) in origination fees associated with these loans, which was amortized over the original terms of the agreements. Amortization of debt discount for year ended December 31, 2017 was €61,295 ($69,269). Amortization of the debt discount for the year ended December 31, 2018 was €56,043 ($66,226) and resulted in the full amortization of the debt discount.

Senior Promissory Notes executed on April 1 and 3, 2019

On April 1 and 3, 2019, the Company executed Senior Promissory Notes (the “Notes”) each in the principal amount of $250,000 payable to an unaffiliated third-party lender. The Notes bear interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The Notes mature on April 1 and 3, 2020 unless prepaid or in default. The Company may prepay the Notes within the first six (6) months by payment of unpaid interest for the first six (6) months interest and after six (6) months, with a (2%) percent ($5,000) premium on each note.

The Notes are subject to acceleration in an Event of Default (as defined in the Notes). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the Notes. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $250,000 and $250,000 on these notes and the Company had accrued $9,452 and $28,098, respectively, in interest expense.

Senior Promissory Note executed on April 9, 2019

On April 9, 2019, the Company executed a Senior Promissory Note (the “Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $500,000. The Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The Note matures on April 9, 2020 unless prepaid or in default. The Company may prepay the Note within the first six (6) months by payment of unpaid interest for the first six (6) months and after six (6) months, with a two (2%) percent ($5,000) premium.

The Note is subject to acceleration in an Event of Default (as defined in the Note). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $250,000 on this note and the Company had accrued $27,431 in interest expense.

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July 24, 2019 Senior Promissory Note

On July 24, 2019, the Company executed a Senior Promissory Note (the “July Note”) in the principal amount of $750,000 payable to an unaffiliated third-party lender who had previously loaned the Company $750,000. The funds represented by the July Note were advanced between July 19 and 24, 2019. The July Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The July Note matures on July 24, 2020 unless prepaid or in default. The Company may prepay the July Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($15,000) premium.

The July Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the July Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $750,000 on this note and the Company had accrued $49,625 in interest expense.

August 1, 2019 Senior Promissory Note

On August 1, 2019, the Company executed a Senior Promissory Note (the “August Note”) in the principal amount of $500,000 payable to an unaffiliated third-party lender who had previously loaned the Company $1,500,000. The August Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The August Note matures on August 1, 2020 unless prepaid or in default. The Company may prepay the August Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($10,000) premium.

The August Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the August Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $500,000 on this note and the Company had accrued $31,438 in interest expense.

October 23, 2019 Senior Promissory Note

On October 23, 2019, the Company executed a Senior Promissory Note (the “October Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $2,000,000. The October Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The October Note matures on October 23, 2020 unless prepaid or in default. The Company may prepay the October Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($5,000) premium.

The October Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the October Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $250,000 on this note and the Company had accrued $7,705 in interest expense.

December 6, 2019 Senior Promissory Note

On December 6, 2019, the Company executed a Senior Promissory Note (the “December Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $2,250,000. The December Note bears interest at the rate of five (5%) percent per annum, paid quarterly in arrears. The December Note matures on March 31, 2020 unless prepaid or in default. The Company may prepay the December Note after six (6) months, with a two (2%) percent ($5,000) premium.

The December Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the December Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $250,000 on this note and the Company had accrued $890 in interest expense.

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January 27, 2020 Senior Promissory Note

On January 27, 2020, the Company executed a Senior Promissory Note (the “January Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $2,500,000. The January Note bears interest at the rate of five (5%) percent per annum, paid quarterly in arrears. The January Note matures on May 15, 2020 unless in default. The Company may prepay the January Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($5,000) premium.

February 25, 2020 Senior Promissory Note

On February 25, 2020, the Company executed a Senior Promissory Note (the “February Note”) in the principal amount of $1,000,000 payable to an unaffiliated third-party lender. The February Note bears interest at the rate of eighteen (18%) percent per annum, paid quarterly in arrears. The February Note matures on April 30, 2020 unless in default.

November 15, 2017 Senior Convertible Notes

On November 15, 2017, the Company entered into a Securities Purchase Agreement (the “SPA”) with two institutional investors pursuant to which the Company issued on November 16, 2017, for a $3,000,000 purchase price, $3,350,000 in aggregate principal amount of Senior Convertible Notes (the “Notes”) convertible into 670,000 shares of common stock at $5.00 per share and five-year Warrants to purchase an aggregate of 536,000 shares of common stock exercisable at $7.50 per share. Pursuant to the above-described Third Amendment dated December 12, 2018, 536,000 warrants were exchanged for new warrants exercisable for an aggregate of 727,683 shares of common stock. The Company received net proceeds of $2,686,000 after deduction of offering costs.

On February 20, 2018, the Company entered into two separate Amendment and Exchange Agreements (“Exchange Agreements”) with the two institutional investors for new senior convertible notes (“New Notes”) in exchange for existing notes. Each New Note is identical in all material respects to the Existing Note, except that (i) the New Note shall not be convertible into shares of the Company’s common stock (the “Common Stock”) until April 20, 2018, (ii) all future cash installment payments under such New Note will be made at a redemption price equal to 112% of the applicable installment amount, (iii) the Company’s existing obligation to initially deliver pre-delivery shares of its common stock to the holder of such New Note was deferred until April 20, 2018, and (iv) at any time on or before June 20, 2018, the Company had the right, at its option, to redeem all, or any part, of the amounts then outstanding under such New Note in cash at redemption price equal to 125% of such amounts then outstanding under such New Note. The Company will repay the principal amount of the Notes in equal monthly installments beginning on January 1, 2018 and repeating on the first business day of each calendar month thereafter until February 1, 2019 (as last amended on September 27, 2018). The remaining balance was repaid on February 1, 2019. No interest shall accrue under the Notes unless and until an Event of Default (as defined) has occurred and is not cured. Eighty-five percent (85%) of any cash proceeds received by the holders of the Notes from the sale of pre-delivery shares issued as collateral shall be applied against the particular installment amount then due. The Notes are senior in right of payment to all existing and future indebtedness except Permitted Indebtedness which includes $12 million of senior secured indebtedness of the Company and its subsidiaries under the above described Synthesis loan agreements, plus defined amount of purchase money indebtedness in connection with bona fide acquisitions. A registration statement (No. 333-222061) covering one hundred fifty (150%) percent of the maximum number of shares (subject to SEC limitations) was declared effective by the SEC on May 14, 2018.

Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for this transaction of $240,000, equal to eight (8%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase eight (8%) percent of the shares of Common Stock issued or issuable in this offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors, or 53,600 shares); however, will receive eight (8%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The Warrants are exercisable six (6) months after the date of issuance, or May 16, 2018.

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September 4, 2018 Senior Convertible Notes

On September 4, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) and completed the financing with two institutional investors who had previously purchased $3,350,000 principal amount of senior convertible notes in November 2017 (the “November Notes”) as amended in February 2018 and September 2018, as set forth hereinafter. The Company issued, for a $2,000,000 purchase price, $2,233,333 in aggregate principal amount of Senior Convertible Notes (the “Notes”) convertible into 372,223 shares of common stock at $6.00 per share and five-year Warrants to purchase an aggregate of 357,334 shares of common stock exercisable at $7.50 per share. The Company received net proceeds of $1,845,000 after deduction of offering costs. On December 12, 2018, the Company entered into a Third Amendment and Exchange Agreement, pursuant to which the conversion price of the Notes was reduced to $3.478 per share solely with respect to an aggregate of $1,333,333.33 of indebtedness which was then converted. The remaining balance of $261,903 was repaid on January 1, 2019.

No interest shall accrue under the Notes unless and until an Event of Default (as defined below) has occurred and is not cured and will then accrue at 18% per annum. As of the date of this prospectus, no such event of default has occurred. Subject to the Blocker (as defined below), the Company pre-delivered up to 372,223 shares of common stock to the holders. Eighty-five percent (85%) of any cash proceeds received by the holders of the Notes from the sale of pre-delivery shares issued as collateral shall be applied against the particular installment amount then due. The Notes are pari passu in right of payment to the November Notes and senior to all existing and future indebtedness except Permitted Indebtedness which includes $12 million of senior secured indebtedness of the Company and its subsidiaries under an existing loan agreement described herein, plus defined amount of purchase money indebtedness in connection with bona fide acquisitions.

In the event of an issuance of common stock for a consideration less than the Conversion Price (other than Excluded Securities, as defined) the Conversion Price shall be reduced to the price of the dilutive issuance (the “Conversion Price”). Upon an Event of Default (as defined) regardless of whether such event has been cured, the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”). The Company valued the beneficial conversion feature at intrinsic value and has recorded $934,922 to debt discount, which will be amortized over the life of the Notes.

Events of Default, none of which have occurred as of the date of this prospectus, are defined under the Notes to include among others: (i) failure to pay principal, interest, late charges or any other amounts when due after any applicable cure period, under the Notes or any other instrument delivered in connection with the transaction; (ii) any default of at least $75,000 of indebtedness other than with respect to the Note and/or the entry of a final judgment concerning the foregoing; (iii) any bankruptcy, liquidation or other similar proceeding not dismissed within thirty (30) days of its initiation, or any voluntary bankruptcy or similar proceeding commenced by the Company or any subsidiary, or an admission in writing of its inability to pay its debts generally as they become due; (iv) the entry by a court of a decree, order, judgment or similar document in respect of the Company or any subsidiary of a voluntary or involuntary bankruptcy or similar proceeding; (v) any breach of a representation, warranty, covenant or other term or condition of any document in connection with this transaction except if curable, the breach remains uncured for two consecutive trading days; (vi) a Material Adverse Effect (as defined in the SPA) occurs; (vii) failure to meet filing and effectiveness deadlines concerning this registration statement; (viii) failure to convert the Notes or deliver underlying common stock on a timely basis; (ix) suspension from trading or listing of the common stock for five consecutive trading days; (x) failure to reserve at least 150% of the number of shares of common stock issuable upon conversion of the Notes and/or exercise of the Warrants; and (xi) any Event of Default occurs with respect to the November Notes which was exchanged in February for new notes.

The Notes provide that upon an Event of Default, the Buyers may require the Company to redeem (regardless of whether the Event of Default has been cured) all or a portion of the Notes at a redemption premium of one hundred twenty-five (125%) percent, multiplied by the greater of the conversion rate and the then current market price. The Buyers may also require redemption of the Notes upon a Change of Control (as defined) at a premium of one hundred twenty-five (125%) percent.

The Warrants have a five-year term and are exercisable into 357,334 shares of common stock beginning May 1, 2019 or six months after the issue date. The Warrants are exercisable at $7.50 per share subject to full ratchet anti-dilution protection (see above). As of the date of filing of the registration statement, there were no anti-dilution trigger events. The Warrants will be exercisable on a cashless basis if a registration statement is not effective covering the resale of the underlying Warrant Shares. The Company calculated the warrants at relative fair value of approximately $910,078, which was recognized as a discount to the Notes and is being amortized as interest expense over the remaining term of the Notes.

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Conversion of the Notes and exercise of the Warrants are each subject to a blocker provision which prevents any holder from converting or exercising, as applicable, the Notes or the Warrants, into shares of common stock if its beneficial ownership of the common stock would exceed 9.99% of the Company’s issued and outstanding common stock (each, a “Blocker”).

A registration statement (No. 333-227813), covering one hundred fifty (150%) percent of the maximum number of shares, underlying the Notes and Warrants, was declared effective by the SEC on November 1, 2018.

As a condition to the closing of the Financing, each Buyer, severally, executed a leak-out agreement (each, a “Leak-Out Agreement”) restricting such Buyer’s sale of shares of common stock underlying the Notes and Warrants on any Trading Day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s common stock. If after the closing of the Financing there is no Event of Default under the Notes, the VWAP of the Company’s common stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share; provided that the portion of the Notes subject to redemption on each Installment Date shall thereafter double.

Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent received a cash commission for this transaction of $140,000, equal to seven (7%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase seven (7%) percent of the shares of common stock issued or issuable in this offering (excluding shares of common stock issuable upon exercise of any Warrants issued to investors, or 26,056 shares); however, will receive seven (7%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The Warrants are exercisable six (6) months after the date of issuance, or March 4, 2019.

May 15, 2019 Senior Convertible Note

On May 15, 2019, the Company entered into a Securities Purchase Agreement with an institutional investor (the “Buyer”). Upon the closing of this financing, on May 17, 2019, the Company issued for a purchase price of $1,500,000 in principal amount a Senior Convertible Note (the “May 2019 Note”) to the Buyer.

The May 2019 Note provides that the Company will repay the principal amount of the May 2019 Note on the ten (10) month anniversary date of the date of issue. The maturity date was amended on March 23, 2020 to September 16, 2020. Interest at the rate of nineteen (19%) percent per annum shall be payable on the first day of each calendar month.

The May 2019 Note is convertible at any time by the Holder into 250,000 shares of common stock, par value $0.001 per share at the rate of $6.00 per share, subject to adjustment (the “Conversion Price”). Upon an Event of Default (regardless of whether such event has been cured), the Buyer may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”). The Company considered the need for the conversion feature to be bifurcated under ASC 815 and determined that it does not meet the requirements. Additionally, the Company determined the effective conversion rate under ASC 470-20 and determined that the instrument is out of the money and no beneficial conversion feature was recorded.

The May 2019 Note is senior in right of payment to all other existing and future indebtedness of the Company except Permitted Senior Indebtedness (as defined in the May 2019 Note), including $12 million of senior secured indebtedness of the Company and its subsidiaries under an existing senior loan agreement, plus defined amounts of purchase money indebtedness in connection with bona fide acquisitions.

The May 2019 Note includes customary Events of Default and provides that the Buyer may require the Company to redeem (regardless of whether the Event of Default has been cured) all or a portion of the Note at a redemption premium of one hundred twenty-five (125%) percent, multiplied by the greater of the conversion rate and the then current market price. The Buyer may also require redemption of the May 2019 Note upon a Change of Control (as defined) at a premium of one hundred twenty-five (125%) percent. The Company has the right to redeem the May 2019 Note at any time, in whole or in part, in cash at a price equal to 120% of the then outstanding conversion amount.

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Conversion of the May 2019 Note is subject to a blocker provision which prevents any holder from converting the May 2019 Note into shares of common stock if its beneficial ownership of the common stock would exceed 9.99% of the Company’s issued and outstanding common stock.

As of December 31, 2019, the Company had a principal balance $1,500,000 on the May 2019 Note and the Company had accrued $25,334 in interest expense.

Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for this transaction equal to six (6%) percent of the total gross proceeds of the offering. This 6% fee or $90,000 was recorded as debt discount along with the $30,000 in legal fees associated with the May 2019 Note. These fees will be amortized over the term of the note. For the year ended December 31, 2019, the Company has recorded amortization of $90,491.

Amendment of May 15, 2019 Senior Convertible Note

On March 23, 2020, the Company entered into a Forbearance and Amendment Agreement (the “Agreement”) with an institutional investor (the “Buyer”). The Company entered into a Securities Purchase Agreement (the “SPA”) with the Buyer on May 15, 2019, pursuant to which the Company issued a Convertible Note (the “Note”) in the principal amount of $1,500,000. The Note was due on or before March 15, 2020 and was not paid (the “Existing Default”). The Note provides that upon an Event of Default, the Buyer may, among other things, require the Company to redeem all or a portion of the Note at a redemption premium of 120%, multiplied by the product of the conversion rate ($6.00per share) and the then current market price.

The Agreement provides that the Buyer will (a) forbear (i) from taking any action with respect to the Existing Default and (ii) from issuing any demand for redemption of the Note on the basis of the Existing Default until the earlier of: (1): (September 16, 2020 (or, if earlier, such date when all amounts outstanding under the Note shall be paid in full or converted into shares of Common Stock in accordance therewith) and (2) the time of any breach by the Company of the Agreement or the occurrence of an Event of Default that is not an Existing Default (the “Forbearance Expiration Date), (b)during the Forbearance Period waive the prepayment premium to any Company Optional Redemption, and (c) during the Forbearance Period, waive the repayment in full of the Note other than the Required Payments (as defined) prior to September 16, 2020. The Scheduled Required Prepayments are $100,000 upon signing the Agreement and five (5) monthly payments thereafter aggregating $200,000 with all amounts outstanding under the Note due on September 16, 2020. In addition, there are mandatory prepayments in the event the Company completes a Subsequent Placement (as defined) or long-term debt (other than from the Buyer or from officers and directors and advisors of the Company) or factoring and purchase order indebtedness, the Company shall effect a Company Optional Redemption amount equal to 50% of the gross proceeds (less reasonable expenses of counsel and any investment bank) together with all Scheduled Required Payments.

Related Party Indebtedness

Doc Pharma S.A

On November 1, 2015, the Company entered into a €12,000 ($12,662) Loan Agreement with Doc Pharma S.A., pursuant to which Doc Pharma S.A., paid existing bills of the Company in the amount of €12,000 ($12,662), excluding the Vendor Bills. The loan bears an interest rate of 2% per annum and was due and payable in full on October 31, 2016. As of December 31, 2019, the Company had an outstanding principal balance under this note of €12,000 ($13,472) and accrued interest expense of $1,100.

Doc Pharma S.A is considered a related party to the Company due to the fact that the CEO of Doc Pharma is the wife of Grigorios Siokas, the Company’s CEO and principal shareholder, who also served as a principal of Doc Pharma SA in the past.

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Grigorios Siokas

On October 1, 2016, the Company borrowed €5,000 ($5,276) from Mr. Siokas, CEO, related to its subsidiary’s purchase of additional capital of SkyPharm. The loan is non-interest bearing and has a maturity date of October 1, 2017. During the year ending December 31, 2017, the Company borrowed an additional €1,000 ($1,202). On September 30, 2018, the debt, amounting to €6,000 ($6,973) was transferred to the third-party purchaser of Amplerissimo pursuant to the Share Purchase Agreement. As of December 31, 2018, the Company had an outstanding principal balance of $0 and no accrued interest under this loan.

During the year ended December 31, 2018, the Company borrowed €1,622,700 ($1,858,965) and $382,000 of loans payable from Grigorios Siokas and repaid €269,000 ($308,166) and $155,000 of these loans. These loans are non-interest bearing and have no maturity dates. As of December 31, 2018, the Company had an outstanding principal balance of $1,777,799, consisting of €1,353,700 ($1,550,799) and $227,000, in loans payable to Grigorios Siokas. During the year ended December 31, 2019, the Company borrowed total additional proceeds of $585,914, repaid €233,567 ($262,226) of these loans and converted $1,050,000 of these loans into 140,001 shares of common stock at a conversion rate of $7.50 per share. These loans are non-interest bearing and have no maturity dates. As of December 31, 2019, the Company had an outstanding principal balance under these loans of $1,026,264 consisting of €297,314 ($303,502) and $722,762, in loans payable to Grigorios Siokas.

On December 20, 2018, the €1,500,000 ($1,718,400) note payable, originally borrowed pursuant to a Loan Agreement with a third-party lender, dated March 16, 2018, was transferred to Grigorios Siokas. The note bears an interest rate of 4.7% per annum and has a maturity date of March 18, 2019. During the year ended December 31, 2019, the Company repaid €300,000 ($336,810) and as of December 31, 2019, the Company had an outstanding principal balance of €1,200,000 ($1,347,240) and accrued interest of €144,207 ($128,447).

On May 28, 2019, the Company entered into a Debt Exchange Agreement with Grigorios Siokas. The agreement provided for the issuance by the Company of 66,667 shares of common stock, at the rate of $7.50 per share, or an aggregate of $500,000, in exchange for $500,000 of existing loans by Mr. Siokas to the Company. The Company valued this transaction at fair value and recorded a $259,999 gain on extinguishment of related party debt to additional paid-in capital.

On June 24, 2019, the Company entered into a Debt Exchange Agreement with Grigorios Siokas. The agreement provided for the issuance by the Company of 73,334 shares of common stock, at the rate of $7.50 per share, or an aggregate of $550,000, in exchange for $550,000 of existing loans by Mr. Siokas to the Company. The Company valued this transaction at fair value and recorded a $269,126 gain on extinguishment of related party debt to additional paid-in capital.

Grigorios Siokas is the Company’s CEO and principal shareholder and is hence considered a related party to the Company.

Ourania Matsouki

During the year ended December 31, 2016, the Company borrowed €44,995 ($47,479) from Mrs. Matsouki, Grigorios Siokas’ wife and CEO of Doc Pharma. During the year ended December 31, 2017, the Company borrowed an additional €55,000 ($66,121). These loans have no formal agreement and bear no interest. As of December 31, 2017, the Company repaid the outstanding balance of €99,995 ($120,214) of these loans. During the year ended December 31, 2018, the Company borrowed an additional €30,000 ($34,368). As of December 31, 2018, the Company had repaid the outstanding balance of €30,000 ($34,368) of these loans.

Dimitrios Goulielmos

On November 21, 2014, SkyPharm entered into a Loan Agreement with Dimitrios Goulielmos, former Chief Executive Officer, and a current director of the Company, pursuant to which the Company borrowed €330,000 ($401,115) from Mr. Goulielmos. The Loan bore an interest rate of 2% per annum and was due and payable in full on May 11, 2015. On November 4, 2015, €130,000 ($142,860) in principal and the related accrued interest of €733 ($806) was forgiven and the remaining balance of €200,000 will no longer accrue interest as part of the stock purchase agreement with Grigorios Siokas on November 4, 2015 referenced above. The Company repaid €146,500 in prior years. During the year ended December 31, 2019, the Company paid back an additional €40,300 ($45,245) and as of December 31, 2019, an outstanding principal balance of €13,200 ($14,820) and €0 ($0) accrued interest remains. 

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Konstantinos Vassilopoulos

During the year ended December 31, 2018, the Company borrowed and repaid an aggregate of $168,000 to Mr. Konstantinos Vassilopoulos. These loans have no formal agreement and bear no interest. As of December 31, 2018, an outstanding principal balance of $0 and $0 accrued interest remains.

Nicholaos Lazarou

Following the acquisition of Decahedron, Nicholaos Lazarou was the managing director of the Company’s UK subsidiary until June 30, 2019.

On December 19, 2017, the Company entered into a stock purchase agreement with Nicholaos Lazarou whereby for consideration of €80,000 ($94,495) the Company purchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on December 19, 2017, the date of signing, however the Company is entitled to pay the full consideration in tranches until July 2018. As of December 31, 2017, the Company has paid consideration of €28,000 ($33,073) and had an amount due to related party of €52,000 ($61,422) recorded as accounts payable related party as of December 31, 2017. The shares were returned to the Company in February 2018. During the year ended December 31, 2018, the Company repaid the remaining balance of €52,000 ($61,448) and has an amount due to related party of €0 ($0) as of December 31, 2018.

On June 18, 2018, the Company entered into a stock purchase agreement with Nicholaos Lazarou, whereby for consideration of €60,000 ($69,912) the Company repurchased 15,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 18, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until November 2018. During the year ended December 31, 2018, the Company has paid consideration of €60,000 ($70,902) and has an amount due to related party of €0 ($0) as of December 31, 2018.

On November 30, 2018, the Company entered into a stock purchase agreement with Nicholaos Lazarou, whereby for consideration of $60,000 the Company repurchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on November 30, 2018, the date of signing, however, the Company was entitled to pay the full consideration in tranches until August 2019. As of December 31, 2018, the Company had an amount due to related party of $48,683. During the year ended December 31, 2019, the Company repaid the remaining balance in the amount of $48,683.

On June 20, 2019, the Company entered into a stock purchase agreement with Nicholaos Lazarou whereby for consideration of $15,000, the Company repurchased 114,518 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 20, 2019, the date of signing. During the year ended December 31, 2019, the Company paid the $15,000 in consideration in full.

Plan of Operation in the Next Twelve Months

Specifically, our plan of operations for the next 12 months is as follows:

We are planning to develop and expand our business through organic growth and at the same level through the acquisition of carefully targeted companies that are operating in the pharmaceutical industry and would add value to our Company and its shareholders. Our organic growth would be driven by entering into new markets and areas where we can sell and distribute a more profitable series of pharmaceutical product and over the counter products and nutraceuticals. We are committed to capitalizing on sales growth opportunities by increasing our customer pipeline across the European Market and entering into countries outside the European Union.

We are also committed to pursuing various forms of business development; this can include trading, alliances, licenses, joint ventures, dispositions and acquisitions. Moreover, we hope to continue to build on our portfolio of pharmaceutical products and expand our product pipeline to generic and nutraceutical products. Thus, we plan to formulate a sound sales distribution network specializing in food supplement products.

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Our main objective is expanding the business operations of our current subsidiaries, SkyPharm and Decahedron by concentrating our efforts on becoming an international manufacturing, trading and distribution pharmaceutical company. The Company’s focus is on branded pharmaceuticals, over-the-counter (OTC) medicines, and generics, with plans to expand its food supplements and to target areas where we can build and maintain a strong position.

Through our subsidiary, Decahedron, we plan to penetrate into the English pharmaceutical market and expand our wholesale networks. We could utilize the ability of trading pharmaceutical products in and out of the English market according to the FX currency exchange rate of euro to English pounds.

We view our business development activity as an enabler of our strategies, and we seek to generate earnings growth and enhance shareholder value by pursuing a disciplined, strategic and financial approach to evaluating business development opportunities. Under these principles we assess our businesses and assets as part of our regular, ongoing portfolio review process and continue to consider trading development activities for our businesses.

The Company, in the following twelve months, intends to start its business operation within the food supplements market, as well as substantially grow its business operations within the generic pharmaceutical products market. These industries are highly competitive and may significantly affect the Company’s sales of these products, including, but not limited to, price and cost-effectiveness, marketing effectiveness, product labeling, quality control and quality assurance.

Changes in the behavior and spending patterns of purchasers of pharmaceutical and healthcare products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of doctor visits and foregoing healthcare insurance coverage, may impact the Company’s business.

In addition to expanding our product portfolio we also plan to evaluate offering our products and services to different geographical markets. We are currently focused on to our customers throughout the European Union. We plan on expanding our geographical reach to new eras outside the European Union market, although we currently have no binding agreements, commitments or contracts in any of these geographical markets. Some of the methods we will use to accomplish this are: promoting our brand and marketing our products and services through the Internet to new geographic areas, creating strategic relationships with companies in the new geographical regions, and possibly acquiring companies that operate in new geographical regions. We anticipate that we will spend $70,000 evaluating the different methods and regions to which we plan to expand. This cost is made of up primarily legal fees, consulting fees, accounting and auditing fees as well as related development expenses. We assess the foreseeable development of a target as being positive.

We expect to continue growing through expansion into adjacent products, product categories and channels, as well as through entry into new geographic markets. We evaluate potential acquisition targets based on whether they have the capacity to deliver a return on invested capital.

As to potential acquisitions, we are targeting companies that are operating primarily in the pharmaceutical sector and within the European Union boarders. SEC filing requirements are such that we will have to file audited financial statements of all our operations, including any acquired business. So, we plan that our first step in any potential acquisition process we undertake is to ascertain whether we can obtain audited financials of a company if we were to acquire them. We anticipate that we will spend approximately $500,000 to locate, conduct due diligence, and evaluate possible acquisitions. As noted above, as of the date of this report, we do not have any binding agreements, commitments, or understandings with any potential acquisition candidates.

The pharmaceutical sector offers a large growth potential within the European pharmaceutical market, if service, price and quality are strictly directed to-wards the customer requirements. We will continue to encounter the competition in the market by product, service, reliability and a high level of quality. On the procurement side we can access a wide range of supply possibilities. To minimize business risks we diversify our sources of supply all over Europe. We secure our high-quality demands through careful supplier qualification and selection as well as active suppliers’ system management.

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We assess the foreseeable development of the Company as being positive. Over the medium term we assume that we will be able to further expand our market shares. However, during the course of further organizational optimization there may be associated extraordinary additional costs.

We still see the risks for the future development in a difficult and competitive environment, increasing purchase prices and the stagnating selling price level. On the background of our financial stability we however see ourselves as being well-equipped for managing the future risks. Risks that could endanger the survival of the Company are currently not able to be identified.

We will evaluate and, where appropriate, execute on opportunities to expand our businesses through the acquisition of products and companies in areas that will serve patients and customers and that we believe will offer above average growth characteristics and attractive margins. In particular, we are looking to continue to enhance our product lines by acquiring or licensing rights to additional products and regularly evaluate selective acquisition and license opportunities. In addition, we remain committed to strategic R&D across each business unit with a particular focus on assets with inherently lower risk profiles and clearly defined governmental regulatory pathways.

Significant Equipment

We do not intend to purchase any significant equipment for the next twelve months aside from a few pieces of IT equipment. Nevertheless, we will replace essential equipment for operations if it is required within the year.

Employees

In order to achieve our strategic objectives, we have, and will remain, focused on hiring and retaining a highly skilled management team that has extensive experience and specific skill sets relating to the sales, selection, development and commercialization of pharmaceutical products. We intend to continue our efforts to build and expand this team as we grow our business. We have plans to increase the number of our employees by adding more sales people during the next twelve months.

Revenue Recognition

The Company adopted the modified retrospective adoption in accordance with ASC 606 – Revenue from Contracts with Customers, on January 1, 2018. The new guidance introduces a five-step model for recognizing revenue by applying the following steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the performance obligations are satisfied by transferring the promised goods to the customer. Once these steps are met, revenue is recognized upon delivery of the product. Adoption of ASC 606 has not changed the timing and nature of the Company’s revenue recognition and there has been no material effect on the Company’s financial statements.

Off Balance Sheet Arrangements

As of December 31, 2019, 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” in the Management Discussion and Analysis. 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.

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Foreign Currency. The Company requires translation of the Amplerissimo financial statements from euros to dollars since the reverse take-over on September 27, 2013. Assets and liabilities of all foreign operations are translated at year-end rates of exchange, and the statements of operations are translated at the average rates of exchange for the year. 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 the Republics of Cyprus, Greece and the United Kingdom of England. The corporate income tax rate in Cyprus is 12.5%, 29% in Greece, (tax losses are carried forward for five years effective January 1, 2013 (prior to 2013, losses were carried forward indefinitely) and 20% in the United Kingdom of England. 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-then-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, respectively.

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 Holdings Inc., which are applicable to future taxable income in the United States (if any). Additionally, the Company has income tax liabilities in the Republic of Cyprus. 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 the Republic of Cyprus.

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Recently Issued Accounting Pronouncements

Effective January 1, 2018, the Company adopted ASU 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” and ASU 2018-03, “Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 contained a number of changes which are applicable to the Company including the following: (1) requires equity investments to be measured at fair value with changes in fair value recognized in net income; and (2) allows equity investments without readily determinable fair values to be measured at cost less impairment, if any, plus or minus changes in observable prices (referred to as the “measurement alternative”); ASU 2018-03 also clarified certain aspects of the guidance issued in ASU 2016-01, including requiring a prospective transition approach for equity investments without readily determinable fair value in which the measurement alternative is applied. ASU 2016-01 does not apply to investments accounted for using the equity method, investments in consolidated subsidiaries, FHLB stock, and investments in low income housing tax credit projects. The ASU also eliminated the requirement to classify equity investments into different categories such as “Available-for-sale.” The adoption of this standard on did not have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability. Lessor accounting under the standard is substantially unchanged. Additional qualitative and quantitative disclosures are also required. The Company adopted the standard effective January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The Company adopted the following practical expedients and elected the following accounting policies related to this standard update:

· The option to not reassess prior conclusions related to the identification, classification and accounting for initial direct costs for leases that commenced prior to January 1, 2019.

· Short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less; and

· The option to not separate lease and non-lease components for certain equipment lease asset categories such as freight car, vehicles and work equipment.

· The package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases.

Adoption of this standard resulted in the recognition of operating lease right-of-use assets and corresponding lease liabilities of $622,765 and $538,467, respectively, on the condensed consolidated balance sheet as of January 1, 2019. The Company’s accounting for finance leases remained substantially unchanged. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 13.

Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

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Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Cosmos Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cosmos Holdings, Inc. and its subsidiaries (collectively, the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Matter

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company's auditor since 2019.

/s/ Armanino LLP

San Francisco, California

April 14, 2020

F-1

COSMOS HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31, 2019			December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	38,537		$	864,343
Accounts receivable, net		7,348,945			4,753,291
Accounts receivable - related party		1,919,043			189,760
Marketable securities		238,940			2,712,890
Inventory		3,474,220			3,202,767
Other investments		4,381			4,471
Prepaid expenses and other current assets		1,549,055			1,662,579
Prepaid expenses and other current assets - related party		5,940,124			4,957,061
Operating lease right-of-use asset		498,180			-
Financing lease right-of-use asset		167,310			-
TOTAL CURRENT ASSETS		21,178,735			18,347,162
Property and equipment, net		1,734,781			1,425,632
Goodwill and intangible assets, net		263,681			296,767
Other assets		702,439			625,392
TOTAL ASSETS	$	23,879,636		$	20,694,953
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	8,561,681		$	5,933,464
Accounts payable and accrued expenses - related party		240,302			139,556
Customer advances		247,318			1,067,200
Convertible notes payable, net of unamortized discount of $29,509 and $229,713, respectively		1,470,491			135,800
Notes payable		12,029,724			9,803,733
Notes payable - related party		1,375,532			1,793,437
Lines of credit		2,750,992			1,514,583
Loans payable - related party		1,026,264			1,775,251
Taxes payable		175,939			-
Operating lease liability, current portion		139,556			-
Financing lease liability, current portion		58,185			-
Other current liabilities		165,271			111,212
TOTAL CURRENT LIABILITIES		28,241,255			22,274,236
Share settled debt obligation		1,554,590			1,554,590
Operating lease liability, net of current portion		353,024			-
Financing lease liability, net of current portion		82,523			-
Other liabilities		109,073			183,577
TOTAL LIABILITIES		30,340,465			24,012,403
Commitments and Contingencies (see Note 13)		-			-
STOCKHOLDERS' DEFICIT:
Preferred stock, $0.001 par value; 100,000,000 shares authorized; 0 shares issued and outstanding as of December 31, 2019 and 2018, respectively		-			-
Common stock, $0.001 par value; 300,000,000 shares authorized; 13,225,387 and 13,878,757 shares issued and 12,860,059 and 13,685,067 outstanding as of December 31, 2019 and 2018, respectively		13,225			13,879
Additional paid-in capital		13,525,749			13,133,982
Treasury stock, 365,328 and 193,690 shares as of December 31, 2019 and 2018, respectively		(411,854	)		(225,494	)
Accumulated deficit		(19,571,610	)		(16,272,645	)
Accumulated other comprehensive income (loss)		(16,339	)		32,828
TOTAL STOCKHOLDERS' DEFICIT		(6,460,829	)		(3,317,450	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	23,879,636		$	20,694,953
The accompanying notes are an integral part of these consolidated financial statements.

F-2

COSMOS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	Years Ended December 31,
	2019			2018
REVENUE	$	39,676,385		$	37,083,882
COST OF GOODS SOLD		36,014,116			34,675,242
GROSS PROFIT		3,662,269			2,408,640
OPERATING EXPENSES
General and administrative expenses		3,523,450			3,593,132
Depreciation and amortization expense		394,628			43,930
TOTAL OPERATING EXPENSES		3,918,078			3,637,062
LOSS FROM OPERATIONS		(255,809	)		(1,228,422	)
OTHER INCOME (EXPENSE)
Other income, net		233,877			19,078
Interest expense - related party		(264	)		(264	)
Interest expense		(1,412,465	)		(967,824	)
Non-cash interest expense		(320,205	)		(5,839,581	)
Forgiveness of debt		-			47,717
Loss on equity investments, net		(1,220,085	)		-
Gain on exchange of equity investments, and gain on change in fair value		-			2,500,000
Gain on sale of Amplerissimo		-			146,647
Loss on extinguishment of debt		-			(1,464,698	)
Debt modification expense		-			(1,942,156	)
Foreign currency transaction loss, net		(141,199	)		(313,829	)
TOTAL OTHER EXPENSE, NET		(2,860,341	)		(7,814,910	)
LOSS BEFORE INCOME TAXES		(3,116,150	)		(9,043,332	)
INCOME TAX EXPENSE		(182,815	)		(17,326	)
NET LOSS		(3,298,965	)		(9,060,658	)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net		(49,167	)		1,418,057
TOTAL COMPREHENSIVE LOSS	$	(3,348,132	)	$	(7,642,601	)
BASIC NET INCOME (LOSS) PER SHARE	$	(0.25	)	$	(0.68	)
DILUTED NET INCOME (LOSS) PER SHARE	$	(0.25	)	$	(0.68	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		13,273,596			13,306,612
Diluted		13,273,596			13,306,612
The accompanying notes are an integral part of these consolidated financial statements.

F-3

COSMOS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

																							Other
	Preferred Stock				Common Stock						Additional			Treasury Stock									Comprehensive			Total
	No. of Shares		Amount		No. of Shares			Amount			Paid-in Capital			No. of Shares			Amount			Accumulated Deficit			Income (Loss)			Stockholders' Deficit
Balance at January 1, 2018		-		-		12,825,393		$	12,825		$	5,652,429			(138,689	)	$	(95,882	)	$	(7,211,987	)	$	(1,385,229	)	$	(3,027,844	)
Foreign currency translation adjustment, net		-		-		-			-			-			-			-			-			1,418,057			1,418,057
Stock-based compensation		-		-		-			-			242,003			-			-			-			-			242,003
Modification of debt		-		-		-			-			3,518,241			-			-			-			-			3,518,241
Conversion of convertible notes and accrued interest to common stock		-		-		1,053,364			1,054			1,718,340			-			-			-			-			1,719,394
Purchase of treasury stock from officer		-		-		-			-			-			(55,000	)		(129,612	)		-			-			(129,612	)
Relative fair value of warrants issued with convertible debt		-		-		-			-			910,078			-			-			-			-			910,078
Beneficial conversion feature discount related to convertible notes payable		-		-		-			-			934,922			-			-			-			-			934,922
Fair value of warrants issued for services		-		-		-			-			157,969			-			-			-			-			157,969
Net loss		-		-		-			-			-			-			-			(9,060,658	)		-			(9,060,658	)
Balance at December 31, 2018		-		-		13,878,757		$	13,879		$	13,133,982			(193,689	)	$	(225,494	)	$	(16,272,645	)	$	32,828		$	(3,317,450	)
Foreign currency translation adjustment, net		-		-		-			-			-			-			-			-			(49,167	)		(49,167	)
Cancellation of pre-delivery shares issued in connection with convertible debentures		-		-		(573,742	)		(574	)		574			-			-			-			-			-
Purchase of treasury stock from third party		-		-		-			-			-			(391,268	)		(845,247	)		-			-			(845,247	)
Conversion of related party debt to common stock		-		-		140,001			140			1,049,860			-			-			-			-			1,050,000
Cancellation of treasury shares		-		-		(219,629	)		(220	)		(658,667	)		219,629			658,887			-			-			-
Net loss		-		-		-			-			-			-			-			(3,298,965	)		-			(3,298,965	)
Balance at December 31, 2019		-		-		13,225,387		$	13,225		$	13,525,749			(365,328	)	$	(411,854	)	$	(19,571,610	)	$	(16,339	)	$	(6,460,829	)
The accompanying notes are an integral part of these consolidated financial statements.

F-4

COSMOS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,298,965	)	$	(9,060,658	)
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities:
Depreciation and amortization expense		234,086			43,930
Amortization of right-of-use assets		160,542			-
Amortization of debt discounts		320,205			5,681,613
Lease expense		185,540			-
Loss on extinguishment of debt		-			1,464,698
Gain on forgiveness of debt		-			(47,717	)
Loss on debt modification		-			1,942,156
Gain on sale of subsidiary		-			(146,647	)
Stock-based compensation		-			242,002
Gain on exchange of equity instruments and gain on change in fair value		-			(2,500,000	)
Fair value of warrants issued for services		-			157,969
Loss on change in fair value of equity investments		1,220,085			-
Changes in Assets and Liabilities:
Accounts receivable, net		(2,595,654	)		483,820
Accounts receivable - related party		(1,729,283	)		(18,368	)
Inventory		(271,453	)		1,431,012
Prepaid expenses and other current assets		76,773			864,925
Prepaid expenses and other current assets - related party		(983,063	)		(2,232,089	)
Other assets		(77,047	)		846,322
Accounts payable and accrued expenses		2,628,217			(332,749	)
Accounts payable and accrued expenses - related party		100,746			(296,974	)
Customer advances		(819,882	)		(125,400	)
Other current liabilities		54,059			31,116
Lease liabilities		(142,846	)		-
Taxes payable		175,939			64,885
Other liabilities		(26,841	)		(49,152	)
NET CASH USED IN OPERATING ACTIVITIES		(4,788,842	)		(1,555,306	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets		(672,789	)		(503,362	)
Proceeds from sale of investments		1,261,718			-
Cash received from acquisition		-			307,590
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		588,929			(195,772	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of convertible note payable		(365,514	)		(3,557,381	)
Proceeds from convertible note payable		1,380,000			1,845,000
Payment of related party note payable		(382,055	)		(18,330	)
Proceeds from related party note payable		-			1,718,400
Payment of note payable		(221,418	)		(1,259,804	)
Proceeds from note payable		2,500,000			403,957
Payment of related party loan		(262,226	)		(631,166	)
Proceeds from related party loan		585,915			2,408,965
Proceeds from issuance of share settled debt obligation		-			1,554,590
Payment of lines of credit		(11,098,839	)		(437,576	)
Proceeds from lines of credit		12,371,190			41,700
Payments of finance lease liability		(74,476	)		-
Purchase of treasury stock		(845,247	)		(80,053	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		3,587,330			1,988,302
Effect of exchange rate changes on cash		(213,223	)		(155,734	)
NET CHANGE IN CASH		(825,806	)		81,490
CASH AT BEGINNING OF YEAR		864,343			782,853
CASH AT END OF YEAR	$	38,537		$	864,343
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest	$	447,731		$	299,946
Income tax	$	11,605		$	-
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Cancellation of pre-delivery shares issued for conversion of convertible notes payable	$	574		$	-
Issuance of note payable related to the acquisition of Cosmofarm	$	-		$	227,912
Related party accrual for repurchase of shares of common stock	$	-		$	48,683
Proceeds due from sale of subsidiary	$	-		$	5,811
Pre-delivery shares issued for future conversion of convertible notes payable	$	-		$	1,054
Discounts related to warrants issued with convertible debentures	$	-		$	910,078
Discounts related to beneficial conversion features of convertible debentures	$	120,000		$	934,922
Conversion of convertible notes payable to common stock	$	1,050,000		$	1,719,395

 The accompanying notes are an integral part of these consolidated financial statements.

F-5

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Cosmos Holdings, Inc. (“us,” “we,” or the “Company”) is an international pharmaceutical wholesaler. The Company imports, exports and distributes brand-name and generic pharmaceuticals, over-the-counter (“OTC”) medicines, a variety of vitamins, and dietary supplements. Through December 31, 2019, we operated our business through three wholly owned subsidiaries: (i) SkyPharm S.A. (“SkyPharm”), headquartered in Thessaloniki, Greece; (ii) Decahedron Ltd. (“Decahedron”), headquartered in Harlow, United Kingdom (“UK”); and (iii) Cosmofarm Ltd. (“Cosmofarm”), headquartered in Athens, Greece. Our business is primarily comprised of cross-border sales of brand-name pharmaceutical products in the European Union (“EU”). Our cross-border pharmaceutical wholesale business serves wholesale pharmaceutical distributors and independent retail pharmacies across the EU through a network of three strategic distribution centers, as well as an additional warehousing facility. Pharmaceutical manufacturers generally implement variable pricing strategies within the EU market. Identifying and evaluating price spreads between EU member states enables us to source brand-name pharmaceuticals from countries where ex-factory prices are comparatively low and export to countries where the same products are priced higher. We remain focused on leveraging our growing purchasing scale and supplier relationships to secure discounts and provide pharmaceuticals at reduced prices and continuing to drive organic growth at attractive margins for our cross-border pharmaceutical wholesale business.

We regularly evaluate and undertake strategic initiatives to expand our distribution reach, improve our profit margins, and strengthen our competitive position. In 2018, we entered the vitamins and food supplements segment and in the fourth quarter of 2018 we posted the first sales of our own brand of nutraceuticals; SkyPremium Life. Through the December 2018 acquisition of Cosmofarm, we entered the full-line pharmaceutical wholesale distribution segment. Cosmofarm now serves approximately 370 independent retail pharmacies and 15 pharmaceutical wholesales in the greater Athens, Greece region by providing a reliable supply of brand-name and generic pharmaceuticals, OTC medicines, vitamins, and dietary supplements. We invest in technology to enhance safety, distribution and warehousing efficiency and reliability. For example, Cosmofarm operates two fully automated ROWA, a German robotic warehouse systems that ensure 0% error selection rate, accelerate order fulfillment, and yields higher cost-efficiency in our Athens distribution center.

We make use of analytics and customer feedback from our EU-wide network of wholesale pharmaceutical distributors and independent retail pharmacies to identify and evaluate which nutraceutical product codes to develop to add to our SkyPremium Life portfolio. We intend to continue to bring SkyPremium Life products to market primarily through our existing network of over 160 pharmaceutical wholesale clients and vendors and approximately 370 independent retail pharmacies in the EU. There is growing demand for vitamins and food supplements and we are committed to developing quality products and creating enhanced customer value.

We are also closely monitoring the legal framework for prescription and non-prescription derivatives of cannabis products as it develops in Europe. As the legal framework and processes are developed and implemented in each respective EU country, we will utilize our existing network to distribute both prescription and non-prescription derivatives of cannabis products to our current customer base. We currently intend to only distribute prescription and non-prescription derivatives of cannabis products to approved EU countries and not in the U.S.

We regularly evaluate acquisition targets that would allow us to expand our distribution reach and/or vertically integrate into the supply chain of the products that we currently distribute. We believe that the demand for reasonably priced medicines, delivered on time and in the highest quality is set to increase in the years to come, as the population’s life expectancy increases. With our product portfolio of patented and non-patented medicines, we contribute to the optimization of efficient medicinal care, and thereby lowering cost for health insurance funds, companies, and patients. We also believe that the demand for non-prescription wellness products such as food and dietary supplements will continue to increase as individuals are increasingly supplementing their nutritional intake.

We believe the EU pharmaceutical import/export market will continue to grow. We continue to encounter competition in the market as we grow. The competition comes in the form of level of service, reliability, and product quality. On the procurement side, we continue to expand our vendor base. In order to minimize business risks, we diversify our sources of supply. We maintain our high-quality standards by carefully selecting and qualifying our suppliers as well as actively ensuring that our suppliers meet our standard of quality control on an ongoing basis.

F-6

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

On July 22, 2015, the Hellenic Ministry of Health and more specifically the National Organization for Medicines granted SkyPharm a license for the wholesale of pharmaceutical products for human use. The license is valid for a period of five years and pursuant to the EU directive of (2013/C343/01).

Decahedron received its Wholesale Distribution Authorization for human use on November 7, 2013, 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 provision 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.

On February 2, 2019, the Hellenic Ministry of Health and the National Organization for Medicines extended the validity of Cosmofarm’s license for the wholesale of pharmaceutical products for human use for a period of five years and pursuant to the EU directive of (2013/C 343/01).

Corporate History and Structure

Cosmos Holdings, Inc. was incorporated in the State of Nevada under the name Prime Estates and Developments, Inc. on July 21, 2009. On November 14, 2013, we changed our name to Cosmos Holdings, Inc.

On September 27, 2013, the Company, closed a reverse take-over transaction by which it acquired a private company whose principal activities are the trading of products, providing representation, and provision of consulting services to various sectors. Pursuant to a Share Exchange Agreement between the Registrant and Amplerissimo Ltd., a company incorporated in Cyprus (“Amplerissimo”), the Company acquired 100% of Amplerissimo’s issued and outstanding common stock. As a result of the reverse take-over transaction, Amplerissimo became a wholly owned subsidiary of the Company.

On August 1, 2014, the Company, through its Cypriot subsidiary Amplerissimo, formed SkyPharm S.A., a Greek corporation (“SkyPharm”), a subsidiary that focuses on the trading, sourcing and distribution of pharmaceutical products.

In February 2017, the Company completed the acquisition of Decahedron Ltd., a UK corporation (“Decahedron”) consummating the transactions contemplated by the Stock Purchase Agreement, dated November 17, 2016 as amended (the “Decahedron SPA”). Pursuant to the terms of the Decahedron SPA, the shareholders of Decahedron received an aggregate of 170,000 shares of common stock of the Company (the “Stock Consideration”), which were delivered following the closing in exchange for all of the ordinary shares of Decahedron. Decahedron is a fully licensed wholesaler of pharmaceutical products and its primary activity is the distribution, import and export of pharmaceuticals. In accordance with the terms of the SPA, the principal and majority shareholder of Decahedron, Nicholas Lazarou, remained as a director and officer of Decahedron until his resignation in June 2019.

On November 21, 2017, the Company effected a one-for-ten (1:10) reverse stock split whereby the Company decreased, by a ratio of one-for-ten (1:10) the number of issued and outstanding shares of common stock. Proportional adjustments for the reverse stock split were made to the Company’s outstanding stock options, and warrants including all share and per-share data, for all amounts and periods presented in the consolidated financial statements.

On September 29, 2018, Amplerissimo transferred its remaining 22% investment in SkyPharm to the Company. The Company now holds 100% of the capital stock of SkyPharm and SkyPharm remains a 100% wholly owned subsidiary of the Company. On September 30, 2018, the Company entered into a Share Purchase Agreement with an unaffiliated third party and sold 100% of the issued capital stock of its subsidiary, Amplerissimo.

On December 19, 2018, the Company completed the purchase of all of the capital stock of Cosmofarm Ltd., a pharmaceutical wholesaler based in Athens, Greece. The principal of the selling shareholder is Panagiotis Kozaris, who remained with Cosmofarm as a director and chief operating officer once it became a wholly owned subsidiary of the Company. Grigorios Siokas, the Company’s CEO, became the new CEO of Cosmofarm. Mr. Kozaris had no prior relationship to the Company other than as an independent shareholder. The purchase price payable is €200,000 evidenced by a promissory note.

F-7

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Going Concern

The Company’s consolidated financial statements are prepared in conformity with U.S. GAAP which contemplates the continuation of the Company as a going concern. For the year ended December 31, 2019, the Company had revenue of $39,676,385, a net loss of $3,298,965 and net cash used in operations of $4,788,842. Additionally, as of December 31, 2019, the Company had an accumulated deficit of $19,571,610, a working capital deficit of $7,062,520 and stockholders’ deficit of $6,460,829. It is management’s opinion that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of this filing.

The consolidated financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of this uncertainty.

The Company has not yet established an adequate ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.

In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations, the Company will need, among other things, additional capital resources. Management’s plans to continue as a going concern include raising additional capital through increased sales of product and by sale of equity and/or debt. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described herein and eventually secure other sources of financing and attain profitable operations.

Summary of Significant Accounting Policies

Basis of Financial Statement Presentation

The accompanying consolidated financial statements have been prepared in accordance with principles generally accepted in the United States of America.

Principles of Consolidation

Our consolidated accounts include our accounts and the accounts of our wholly owned subsidiaries, SkyPharm S.A., Decahedron Ltd. and Cosmofarm Ltd. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation and Other Comprehensive Income (Loss)

The functional currency of the Company’s subsidiaries is the Euro and British Pound. For financial reporting purposes, both the Euro (“EUR”) and British Pound (“GBP”) have been translated into United States dollars ($) and/or (USD) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Equity transactions are translated at each historical transaction date spot rate. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity (deficit) as “Accumulated other comprehensive loss.” Gains and losses resulting from foreign currency transactions are included in the statements of operations and comprehensive loss as other comprehensive income (loss). There have been no significant fluctuations in the exchange rate for the conversion of EUR or GBP to USD after the balance sheet date.

F-8

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Other Comprehensive Income (Loss) for all periods presented includes only foreign currency translation gains (losses).

Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the consolidated balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency included in the consolidated results of operations as incurred.

As of December 31, 2019 and 2018, the exchange rates used to translate amounts in Euros into USD and British Pounds into USD for the purposes of preparing the consolidated financial statements were as follows:

	December 31, 2019		December 31, 2018
Exchange rate on balance sheet dates
EUR: USD exchange rate		1.1227		1.1456
GBP: USD exchange rate		1.3185		1.2734
Average exchange rate for the period
EUR: USD exchange rate		1.1194		1.1817
GBP: USD exchange rate		1.2767		1.3348

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of December 31, 2019 and December 31, 2018, there were no cash equivalents.

The Company maintains bank accounts in the United States denominated in U.S. Dollars and in the Republic of Cyprus, in Greece and in Bulgaria all of which are denominated in Euros. Additionally, the Company maintains a bank account in the United Kingdom denominated in British Pounds. For the year ended December 31, 2019, the amounts in these accounts were $14,451, $10,987 and $4,080. For the year ended December 31, 2018, the amounts in these accounts were $242,903, $203,806 and $119,357. Additionally, for the years ended December 31, 2019 and 2018, the Company had cash on hand in the amount of $52,489 and $166,350, respectively.

Reclassifications to Prior Period Financial Statements and Adjustments

Certain reclassifications have been made in the Company’s financial statements of the prior year to conform to the current year presentation. $2,500,000 in equity investment from the year ended December 31, 2018 was reclassified to marketable securities along with $212,890 from other investments resulting in marketable securities having an ending balance of $2,712,890 and other investments having an ending balance of $4,471 as of December 31, 2018. These reclassifications have no impact on previously reported net income.

Accounts Receivable, net

Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts against gross accounts receivable reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. At December 31, 2019 and 2018, the Company’s allowance for doubtful accounts was $529,252 and $540,048, respectively.

F-9

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Tax Receivables

The Company pays Value Added Tax (“VAT”) or similar taxes (“input VAT”), income taxes, and other taxes within the normal course of its business in most of the countries in which it operates related to the procurement of merchandise and/or services it acquires and/or on sales and taxable income. The Company also collects VAT or similar taxes on behalf of the government (“output VAT”) for merchandise and/or services it sells. If the output VAT exceeds the input VAT, this creates a VAT payable to the government. If the input VAT exceeds the output VAT, this creates a VAT receivable from the government. The VAT tax return is filed on a monthly basis offsetting the payables against the receivables. In observance of EU regulations for intra-EU cross-border sales, our subsidiaries in Greece, SkyPharm and Cosmofarm, do not charge VAT for sales to wholesale drug distributors registered in other European Union member states. As of December 31, 2019 and 2018, the Company had a VAT net receivable balance of $136,891 and $729,790 respectively, recorded in the consolidated balance sheet as other assets.

Inventory

Inventory is stated at the lower-of-cost or net realizable value using the weighted average cost method on a first-in-first-out basis. Inventory consists primarily of finished goods and packaging materials, i.e. packaged pharmaceutical products and the wrappers and containers they are sold in. Inventory is replaced periodically to maintain the optimum stock on hand available for immediate shipment.

The Company writes-down inventories to net realizable value based on physical condition, expiration date, current market conditions, as well as forecasted demand. The Company’s inventories are not highly susceptible to obsolescence. Many of the Company’s inventory items are eligible for return to our suppliers when pre-agreed product requirements, including, but not limited to, physical condition and expiration date, are not met.

Property and Equipment, net

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided on a straight-line basis over the useful lives (except for leasehold improvements which are depreciated over the lesser of the lease term or the useful life) of the assets as follows:

	Estimated Useful Life
Leasehold improvements and technical works		Lesser of lease term or 40 years
Vehicles		6 years
Machinery		20 years
Furniture, fixtures and equipment		5–10 years
Computers and software		3-5 years

Depreciation expense was $201,000 and $34,623 for the years ended December 31, 2019 and December 31, 2018, respectively.

Impairment of Long-Lived Assets

In accordance with ASC 360-10, Long-lived Assets, which include property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. For the years ended December 31, 2019 and 2018, the Company had no impairment of long-lived assets.

F-10

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Goodwill and Intangibles, net

The Company periodically reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically, goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology to estimate the fair value of a reporting unit. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit.

On December 19, 2018, as a result of the acquisition of Cosmofarm, the Company recorded $49,697 of goodwill.

Intangible assets with definite useful lives are recorded on the basis of cost and are amortized on a straight-line basis over their estimated useful lives. The Company uses a useful life of 5 years for an import/export license. The Company evaluates the remaining useful life of intangible assets annually to determine whether events and circumstances warrant a revision to the remaining amortization period. If the estimate of the intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over that revised remaining useful life. As of December 31, 2019, no revision to the remaining amortization period of the intangible assets was made.

Amortization expense was $33,086 and $9,307 for the years ended December 31, 2019 and 2018, respectively.

Equity Method Investment

For those investments in common stock or in-substance common stock in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, the investment is accounted for under the equity method. The Company records its share in the earnings of the investee and is included in “Equity earnings of affiliate” in the consolidated statement of operations. The Company assesses its investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable and recognizes an impairment loss to adjust the investment to its then current fair value.

Investments in Equity Securities

Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2016-01, and accordingly, investments in equity securities are accounted for at fair value with changes in fair value recognized in net income. Equity securities are classified as short-term or long-term based on the nature of the securities and their availability to meet current operating requirements. Equity securities that are readily available for use in current operations are reported as a component of current assets in the accompanying consolidated balance sheets. Equity securities that are not considered available for use in current operations would be reported as a component of long-term assets in the accompanying consolidated balance sheets. For equity securities with no readily determinable fair value, the Company elects a measurement alternative to fair value. Under this alternative, the Company measures the investments at cost, less any impairment, and adjusted for changes resulting from observable price changes in transactions for identical or similar investments of the investee. The election to use the measurement alternative is made for each eligible investment.

F-11

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

As of December 31, 2019, investments consisted of 3,000,000 shares, which traded at a closing price of $0.01 per share or a value of $33,000 of ICC International Cannabis Corp., 40,000 shares which traded at a closing price of $5.01 per share, or value of $200,290 of Diversa S.A. and 16,666 shares which traded at a closing price of $0.34 per share or value of $5,650 of National Bank of Greece. Additionally, the Company has $4,381 in equity securities of Pancreta bank, which are not publicly traded and recorded at cost. See Note 3, for additional investments in equity securities.

Fair Value Measurement

The Company applied FASB ASC 820, Fair Value Measurements and Disclosures, (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The following table presents assets that are measured and recognized at fair value as of December 31, 2019 and 2018, on a recurring basis:

	December 31, 2019						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	33,000		-		-	$	33,000
Marketable securities – Divsersa S.A.		200,290		-		-		200,290
Marketable securities – National Bank of Greece		5,650		-		-		5,650
	$	238,940					$	238,940

	December 31, 2018						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	2,500,000		-		-	$	2,500,000
Marketable securities – Divsersa S.A.		210,790		-		-		210,790
Marketable securities – National Bank of Greece		2,100		-		-		2,100
	$	2,712,890					$	2,712,890

FASB ASC 825-10-25 Fair Value Option, (“ASC 825-10-25”), expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.

F-12

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Customer Advances

The Company receives prepayments from certain customers for pharmaceutical products prior to those customers taking possession of the Company’s products. The Company records these receipts as customer advances until it has met all the criteria for recognition of revenue including passing control of the products to its customer, at such point, the Company will reduce the customer and deposits balance and credit the Company’s revenues.

Revenue Recognition

The Company adopted the modified retrospective adoption in accordance with ASC 606, Revenue from Contracts with Customers, on January 1, 2018. The new guidance introduces a five-step model for recognizing revenue by applying the following steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the performance obligations are satisfied by transferring the promised goods to the customer. Once these steps are met, revenue is recognized upon delivery of the product. Adoption of ASC 606 has not changed the timing and nature of the Company’s revenue recognition and there has been no material effect on the Company’s consolidated financial statements.

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Stock Compensation (“ASC 718”) and Staff Accounting Bulletin No. 107 (“SAB 107”) issued by the SEC in March 2005 regarding its interpretation of ASC 718. ASC 718 requires the fair value of all stock-based employee compensation awarded to employees to be recorded as an expense over the related requisite service period. The Company values any employee or non-employee stock-based compensation at fair value using the Black-Scholes Option Pricing Model.

The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASU 2018-07, Compensation-Stock Compensation.

Foreign Currency Translations and Transactions

Assets and liabilities of all foreign operations are translated at year-end rates of exchange, and the statements of operations are translated at the average rates of exchange for the year. 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 earnings.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash investments and accounts receivable.

The following tables show the number of the Company’s clients which contributed 10% or more of revenue and accounts receivable, respectively:

	Year Ended December 31,		Year Ended December 31,
	2019		2018
Number of 10% clients		0		2
Percentage of total revenue		n/a		26.49	%
Percentage of total AR		n/a		4.94	%

F-13

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

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 carry forwards. 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 of England. The corporate income tax rate is 29% in Greece (tax losses are carried forward for five years effective January 1, 2013) and 20% in United Kingdom of England. 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. At December 31, 2019 the Company has maintained a valuation allowance against all net deferred tax assets in each jurisdiction in which it is subject to income tax.

The Company periodically reviews the uncertainties and judgments related to the application of complex income tax regulations to determine income tax liabilities in several jurisdictions. The Company uses a “more likely than not” criterion for recognizing the income tax benefit of uncertain tax positions and establishing measurement criteria for income tax benefits. The Company has evaluated the impact of these positions and due to the fact that the fiscal years 2013 - 2014 are unaudited by the Greek tax authorities, a potential tax liability has been identified, which may arise from a prospective tax audit from tax authorities, based on the tax settlement note of years 2007 - 2009. The amount of the liability as of December 31, 2019 and 2018, was $79,716 and $145,504, respectively, and has been recorded as a long-term liability within the consolidated balance sheets.

Retirement and Termination Benefits

Under Greek labor law, employees are entitled to lump-sum compensation in the event of termination or retirement. The amount depends on the employee’s work experience and renumeration as of the day of termination or retirement. If an employee remains with the company until full-benefit retirement, the employee is entitled to a lump-sum equal to 40% of the compensation to be received if the employee were to be dismissed on the same day. The Company periodically reviews the uncertainties and judgements related to the application of the relevant labor law regulations to determine retirement and termination benefits obligations of its Greek subsidiaries. The Company has evaluated the impact of these regulations and has identified a potential retirement and termination benefits liability. The amount of the liability as of December 31, 2019 and December 31, 2018, was $77,170 and $23,340, respectively, and has been recorded as a long-term liability within the consolidated balance sheets.

Basic and Diluted Net Income (Loss) per Common Share

Basic income per share is calculated by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted income per share is calculated by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period and, when dilutive, potential shares from stock options and warrants to purchase common stock, using the treasury stock method. In accordance with ASC 260, Earnings Per Share, the following table reconciles basic shares outstanding to fully diluted shares outstanding.

	Years Months Ended December 31,
	2019		2018
Weighted average number of common shares outstanding Basic		13,273,596		13,306,612
Potentially dilutive common stock equivalents		42,808		257,155
Weighted average number of common and equivalent shares outstanding – Diluted		13,273,596		13,306,612

Common stock equivalents are included in the diluted income per share calculation only when option exercise prices are lower than the average market price of the common shares for the period presented.

F-14

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability. Lessor accounting under the standard is substantially unchanged. Additional qualitative and quantitative disclosures are also required. The Company adopted the standard effective January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The Company adopted the following practical expedients and elected the following accounting policies related to this standard update:

· The option to not reassess prior conclusions related to the identification, classification and accounting for initial direct costs for leases that commenced prior to January 1, 2019.

· Short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less; and

· The option to not separate lease and non-lease components for certain equipment lease asset categories such as freight car, vehicles and work equipment.

· The package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases.

Adoption of this standard resulted in the recognition of operating lease right-of-use assets and corresponding lease liabilities of $622,765 and $538,467, respectively, on the condensed consolidated balance sheet as of January 1, 2019. The Company’s accounting for finance leases remained substantially unchanged. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 13.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the measurement of goodwill by eliminating Step 2 from the current goodwill impairment test in the event that there is evidence of an impairment based on qualitative or quantitative assessments. ASU 2017-04 does not change how the goodwill impairment is identified, and the Company will continue to perform a qualitative assessment annually to determine whether the two-step impairment test is required. Until the adoption, current accounting standards require the impairment loss to be recognized under Step 2 of the impairment test. This requires the Company to calculate the implied fair value of goodwill by assigning fair value to the reporting unit’s assets and liabilities as if the reporting unit has been acquired in a business combination, then subsequently subtracting the implied goodwill from the carrying amount of the goodwill. The new standard would require the Company to determine the fair value of the reporting unit and subtract the carrying value from the fair value of the reporting unit to determine if there is an impairment. ASU 2017-04 is effective for the Company for fiscal years beginning after December 15, 2019, and early adoption is permitted. ASU 2017-04 is required to be adopted prospectively, and the adoption is effective for annual goodwill impairment tests performed in the year of adoption. The adoption of ASU No. 2017-04 is not expected to have a material effect on the Company’s consolidated financial position or the Company’s consolidated results of operations.

Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. 

NOTE 2 – ACQUISITION OF COSMOFARM, LTD.

On December 19, 2018, the Company completed the acquisition pursuant to the Cosmofarm SPA acquiring 100% of the outstanding shares of Cosmofarm, a pharmaceutical wholesaler based in Athens, Greece. Cosmofarm is a fully licensed wholesaler of pharmaceutical products and its primary activity is the sourcing, procuring, and distributing branded and generic medicines, over-the-counter (OTC) pharmaceuticals, food supplements, and medical devices. At closing, the Company acquired 100% of Cosmofarm’s outstanding shares and in exchange for a non-interest-bearing promissory note (See Note 11), due in one-year, in the amount of €200,000 ($227,000) (the “Acquisition”).

F-15

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

The Company recognized cash of $307,590 acquired in the above acquisition. The Company recognized the remaining Cosmofarm assets acquired and liabilities assumed based upon the fair value of such assets and liabilities measured as of the date of acquisition. The aggregate purchase price for Cosmofarm has been allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the acquired net tangible assets represent the intangible assets, such Cosmofarm’s tradename and customer base. The remainder of the excess has been allocated to goodwill.

The allocation of the purchase price of Cosmofarm as of December 31, 2018, is as follows: 

	Allocation
Current assets	$	6,882,286
Intangible assets		213,790
Other assets		1,519,345
Total assets acquired		8,615,421
Liabilities assumed:
Accounts payable and other current liabilities		5,111,489
Advances from customers		1,192,600
Line of credit		1,900,388
Other liabilities		232,729
Total liabilities assumed		8,437,206
Net assets acquired		178,215
Consideration:
Promissory note		227,912
Goodwill	$	49,697

The components of the acquired intangible assets were as follows:

	Amount		Useful Life (Years)
Trademark	$	36,997		5
Customer base		176,793		10
	$	213,790		-

NOTE 3 – INVESTMENTS

Distribution and Equity Agreement

On March 19, 2018, the Company entered into a Distribution and Equity Acquisition Agreement (the “Distribution and Equity Acquisition Agreement”) with Marathon Global Inc. (“Marathon”), a company incorporated in the Province of Ontario, Canada. Marathon was formed to be a global supplier of cannabis, cannabidiol (CBD) and/or any cannabis extract products, extracts, ancillaries and derivatives (collectively, the “Products”). The Company was appointed the exclusive distributor of the Products initially throughout Europe and on a non-exclusive basis wherever else lawfully permitted. The Company has no present intention to distribute any Products under this Agreement in the United States or otherwise participate in cannabis operations in the United States. The Company intends to await further clarification from the U.S. Government on cannabis regulation prior to determining whether to enter the domestic market.

The Distribution and Equity Acquisition Agreement is to remain in effect indefinitely unless Marathon fails to provide Market Competitive (as defined) product pricing and Marathon has not become profitable within five (5) years of the agreement. The transaction closed on May 22, 2018 after the due diligence period, following which the Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in common shares of the Company if it fails to meet certain performance milestones. The Company is entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000. The Company was also given the right to nominate one director to the Marathon board of directors.

F-16

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Since Marathon is a newly formed entity with no assets and no activity, the Company attributed no value to the 5 million shares in Marathon which was received as consideration for the distribution services. As described below, the Company exchanged the Marathon shares in May and July 2018.

Share Exchange Agreements

On May 17, 2018, the Company entered into a Share Exchange Agreement (the “SEA”) with Marathon, ICC International Cannabis Corp (“ICC”) formerly known as Kaneh Bosm Biotechnology Inc. (“KBB”) and certain other sellers of Marathon capital stock. Under the SEA, the Company transferred 2.5 million shares in Marathon to ICC, a corporation incorporated under the laws of the Province of British Columbia and a public reporting issuer on the Canadian Securities Exchange, in exchange for 5 million shares of ICC. The Company accounted for the exchange at fair value and recognized a gain on exchange of its investment in Marathon of $1,953,000 included in “Gains on exchange of equity investments” in the consolidated statements of operations.

On July 16, 2018, the Company completed a Share Exchange Agreement (the “New SEA”) with Marathon, ICC, and certain other sellers of Marathon capital stock whereby the Company transferred its remaining one-half interest (2.5 million shares) in Marathon to KBB for an additional 5 million shares of ICC. The Company accounted for the exchange at fair value and recognized a gain on exchange of its investment in Marathon of $2,092,200 in the year ended December 31, 2018. The ten million shares of ICC owned by the Company constituted approximately 7% of the 141,219,108 shares of capital stock of KBB then issued and outstanding. The Company does not have the ability to exercise significant influence over ICC.

The Company determined the fair value of both exchanges based on an actively quoted stock price of ICC received in exchange for the Marathon shares. The Company continues to fair value its investment in ICC with changes recognized in earnings each period and was recorded as an unrealized loss on exchange of investment during the year ended December 31, 2018 of $1,545,200 such that the net gain at the end of the period was $2,500,000. During the year ended December 31, 2019, the Company recorded an unrealized gain of $322,880. During the year ended December 31, 2019, the Company sold 7,000,000 shares for proceeds of $1,261,718. The realized losses on the equity securities sold during the year ended December 31, 2019, which are the difference between the proceeds from sales and the original cost, was $1,528,162. The value of the investments as of December 31, 2019 and 2018 was $33,000 and $2,500,000, respectively.

Since no value was attributed to the 33 1/3% equity ownership interest in Marathon received as consideration for the distribution services, the Company would receive variable consideration in future for its services under the Distribution and Equity Acquisition Agreement, if certain milestones are achieved. Refer to Note 11 for the accounting associated with the cash of CAD $2 million received upfront. Variable consideration to be received in the future upon achieving the gross sales milestones described above, is constrained as the Company estimates that it is probable that a significant reversal of revenue could occur. In assessing the constraint, the Company considered its limited experience with the Products, new geographic markets and similar transactions, which affect the Company’s ability to estimate the likelihood of a probable revenue reversal. Therefore, no revenue has been recognized for the period ended December 31, 2019. The Company will continue to reassess variable consideration at each reporting period and update the transaction price when it becomes probable that a significant revenue reversal would not occur.

As of December 31, 2019, in addition to the 3,000,000 ICC shares valued at $33,000, as noted above, marketable securities also consisted of the following: 40,000 shares, which traded at a closing price of $5.01 per share, or value of $200,290 of Diversa S.A. and 16,666 shares, which traded at a closing price of $0.34 per share or value of $5,651 of National Bank of Greece. The Company recorded a net unrealized loss on the fair value of these investments of $14,803 during the year ended December 31, 2019.

In the following table, gains/losses on equity securities sold in the period reflect the difference between proceeds from sales and the fair value of the equity security sold at the beginning of the period or the purchase date, if later.

The following table summarized the gains and losses recognized during the period ended December 31, 2019:

Net gains and losses recognized during the period on equity securities	$	(1,220,085	)
Less: Net gains and losses recognized during the period on equity securities sold during the period		158,282
Unrealized gains and losses recognized during the period on equity securities still held at the reporting date	$	(1,061,803	)

CosmoFarmacy LP

In June 2019, the Company entered into an agreement with an unaffiliated third party to incorporate CosmoFarmacy L.P. for the purpose of providing strategic management consulting services and the retail trade of pharmaceutical products, OTC and beauty products to pharmacies. CosmoFarmacy was incorporated with a 30-year term through May 31, 2049. The unaffiliated third party is the general partner (the “GP”) of the limited partnership and is responsible for management and decision-making associated with CosmoFarmacy. The initial share capital was set to EUR 150,000 which was later increased to EUR 500,000. The GP contributed the pharmacy license (the “License”) valued at EUR 350,000 (30-year term) to operate the business of CosmoFarmacy in exchange for a 70% equity ownership. The Company is a limited partner and contributed cash of EUR 150,000 for the remaining 30% equity ownership. CosmoFarmacy is not publicly traded and the Company’s investment has been recorded using the equity method of accounting. The value of the investment as of December 31, 2019, was $163,575.

During the year ended December 31, 2019, the Company recognized a cash balance of $221,457 related to its acquisition of Cosmofarm. The cash was used to purchase the investment in CosmoFarmacy described above. Since the accounting for the acquisition of Cosmofarm was completed during the year ended December 31, 2018, the Company recognized the asset through earnings and is included in other income within the condensed consolidated statement of operations for the year ended December 31, 2019.

F-17

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

NOTE 4 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consists of the following at December 31:

	2019			2018
Leasehold improvements	$	548,000		$	369,437
Vehicles		115,055			117,402
Furniture, fixtures and equipment		1,439,839			1,167,798
Computers and software		85,052			55,169
		2,187,946			1,709,806
Less: Accumulated depreciation		(453,165	)		(284,174	)
Total	$	1,734,781		$	1,425,632

NOTE 5 – INTANGIBLE ASSETS

Intangible assets consist of the following at December 31,: 

	2019			2018
License	$	50,000		$	50,000
Trade name /mark		36,997			36,997
Customer Base		176,793			176,793
		263,790			211,683
Less: Accumulated amortization		(49,806	)		(16,720	)
Subtotal		213,984			247,070
Goodwill		49,697			49,697
Total	$	263,681		$	296,767

NOTE 6 – CAPITAL STRUCTURE

Sale of Amplerissimo

On September 29, 2018, Amplerissimo transferred its remaining 22% investment in SkyPharm to the Company for a purchase price of €2,200 ($2,528). The Company now holds 100% of the capital stock of SkyPharm.

During the third quarter of fiscal 2018, management approved a plan to sell its Amplerissimo and its information technology business. Amplerissimo generated revenue of €5,747,947 ($7,639,022) in fiscal 2014 through agreements with two clients. These agreements have ten-year terms, with one having commenced on January 13, 2013, and another having commenced on May 14, 2013. As a result of the strong growth of our pharmaceutical business, Amplerissimo’s business has not been a priority for Cosmos and the Company has not pursued the continuation of further significant business activities in Amplerissimo after fiscal 2015. On September 30, 2018, the Company entered into a Share Purchase Agreement “SPA” with an unaffiliated third party. The Company sold 100% of the issued capital of its subsidiary, Amplerissimo, for a purchase price of €5,000 ($5,811), which was paid on October 12, 2018. The Company has recorded a gain on the sale of Amplerissimo of $146,647. A summary of the assets and liabilities that were disposed of in the sale of Amplerissimo is provided below:

	December 31, 2018
Cash and cash equivalents	$	683
Accounts receivable		13,421
Accounts payable and accrued expenses		(8,775	)
Loans payable - related party		(9,501	)
Taxes payable		(1,423,674	)
Accumulated other comprehensive loss		1,287,010
Total liabilities extinguished		(140,836	)
Proceeds due from sale of subsidiary		(5,811	)
Gain on sale of Amplerissimo	$	(146,647	)

F-18

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Preferred Stock

The Company is authorized to issue 100 million shares of preferred stock, which have liquidation preference over the common stock and are non-voting. As of December 31, 2019 and December 31, 2018, no preferred shares have been issued.

Common Stock

The Company is authorized to issue 300 million shares of common stock. As of December 31, 2019 and December 31, 2018, the Company had 13,225,387 and 13,878,772 shares of our common stock issued and 12,860,059 and 13,705,082 shares outstanding, respectively.

On January 7, 2019 and February 5, 2019, 465,325 and 108,417, respectively, shares of common stock were cancelled, these shares were the remaining pre-delivery shares related to the convertible notes in Note 11.

Purchase of Treasury Shares

On December 19, 2017, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of €80,000 ($94,495) the Company will repurchase 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on December 19, 2017, the date of signing, however the Company is entitled to pay the full consideration in tranches until July 2018. As of December 31, 2017, the Company paid consideration of €28,000 ($33,073) and had an amount due to related party of €52,000 ($61,422). The shares were returned to the Company in February 2018. During the year ended December 31, 2018, the Company repaid the remaining balance of €52,000 ($63,446). The Company recorded a gain of $2,024 for the change in foreign currency related to this transaction.

On June 18, 2018, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of €60,000 ($69,612) the Company repurchased 15,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 18, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until November 2018. During the year ended December 31, 2018, the Company paid consideration of €60,000 ($69,178). The Company recorded a loss of $434 for the change in foreign currency related to this transaction.

On November 30, 2018, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of $60,000, the Company repurchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on November 30, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until August 2019. During the year ended December 31, 2018, the Company paid consideration of $11,317 and had a related party payable of $48,683.

On February 5, 2019, the Company entered into a Stock Purchase Agreement (the “SPA”) with an institutional noteholder. The SPA provides for the Company’s purchase of 193,408 shares of the Company’s common stock at $3.00 per share or an aggregate of $580,224. Payment was scheduled over a five-month period, subject to acceleration if the Company effects an eligible equity offering. As of December 31, 2019, the Company had made $580,224 in payments. As of the date of this filing the 193,408 shares have been transferred back to the Company and cancelled.

On February 18, 2019, the Company entered into a Stock Purchase Agreement (the “SPA”) with an institutional noteholder. The SPA provides for the Company’s purchase of 83,341 shares of the Company’s common stock at $3.00 per share or an aggregate of $250,023. Payment was scheduled over a five-month period, subject to acceleration if the Company effects an eligible equity offering. As of December 31, 2019, the Company had made $250,023 in payments. As of the date of this filing, 26,221 shares have been transferred back to the Company and subsequently cancelled. An additional 57,120 have been transferred to the Company, have not yet been cancelled and are recorded in treasury.

On June 20, 2019, the Company entered into a stock purchase agreement with a former officer and director of Decahedron, whereby for consideration of $15,000, the Company repurchased 114,518 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 20, 2019, the date of signing. During the year ended December 31, 2019, the Company paid consideration of $15,000.

F-19

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Shares Issued for Services

On May 25, 2017, the Company entered into a 20-month consulting agreement with a third-party advisory firm for consideration of 20,000 shares of the Company’s common stock. The stock was issued on May 25, 2017 and fair valued at $7.70 per share or $154,000, which will be amortized over the length of the agreement. During the year ending December 31, 2017, the Company recorded $56,138 in consulting expense related to this agreement. During the year ended December 31, 2018, an additional $92,299 in consulting expense was recorded.

Potentially Dilutive Securities

On January 1, 2018, the Company granted 25,000 options to an employee of the Company as compensation for being appointed the International Finance Manager of the Company. The options have an exercise period of four years with an exercise price of $1.00 per share. In the event that he ceases to work for the Company for any reason, he will be entitled to a pro rata portion of the annual options. The options vest monthly with 25,000 options fully vested as of December 31, 2018 (See Note 16).

No options warrants or other potentially dilutive securities other than those disclosed above have been issued as of December 31, 2019.

NOTE 7 – INCOME TAXES

The domestic and foreign components of loss before provision for income taxes were as follows:

	12/31/2019			12/31/2018
Domestic	$	(2,515,360	)	$	(8,731,677	)
Foreign		(600,790	)		(311,655	)
	$	(3,116,150	)	$	(9,043,332	)

The components of the provision for income taxes are as follows:

	12/31/2019		12/31/2018
Current tax provision
Federal	$	-	$	-
State		-		-
Foreign		182,815		17,326
Total current tax provision	$	182,815	$	17,326
Deferred tax provision
Domestic	$	-	$	-
State		-		-
Foreign
Total deferred tax provision	$	-	$	-
Total current provision	$	182,815	$	17,326

The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended December 31, 2019 and 2018 is as follows:

	12/31/2019			12/31/2018
US
Loss before income taxes	$	(3,116,150	)	$	(8,731,677	)
Taxes under statutory US tax rates	$	(654,391	)	$	(1,833,652	)
Increase (decrease) in taxes resulting from:
Increase in valuation allowance	$	1,521,175		$	554,452
Foreign tax rate differential	$	9,028		$	164,394
Permanent differences	$	94,520		$	1,628,906
Purchase price adjustments	$	-		$	25,202
Prior period adjustments	$	(713,466	)	$	(375,828	)
State taxes	$	(74,051	)	$	(146,148	)
Income tax expense	$	182,815		$	17,326

F-20

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities consist of the following:

	12/31/2019			12/31/2018
Net operating loss carryforward	$	1,270,650		$	904,877
Capital loss carryforward		801,744			-
Nonqualified stock options		184,545			187,513
Accrued expenses		7,389			-
Depreciation		2,418			1,602
Mark to market adjustment in securities		348,422			-
Total deferred tax assets		2,615,168			1,093,992
Intangibles		(10,729	)		(10,729	)
Goodwill		(14,473	)		(14,473	)
Total deferred tax liabilities		(25,202	)		(25,202	)
Valuation allowance		(2,589,966	)		(1,068,790	)
Net deferred tax assets (liabilities)	$	-		$	-

At December 31, 2019, the Company had U.S. net operating loss carry forwards of approximately $3,817,475 that may be offset against future taxable income, subject to limitation under IRC Section 382. Of the $3.8 million of Federal net operating loss carryforwards, $2.5 million begin to expire in 2031. The remaining balance of $1.3 million is limited in annual usage of 80% of current year’s taxable income, but do not have an expiration. At December 31, 2019, the Company had United Kingdom net operating loss carry forwards of approximately $1 million that may be offset against future taxable income part or all of which may not be available to offset our future taxable income in the United Kingdom should there be a change in the nature or conduct of our business in the United Kingdom within the three years subsequent to the date of our acquisition of Decahedron. No tax benefit has been reported in the December 31, 2019 or 2018 consolidated financial statements due to the uncertainty surrounding the realizability of the benefit, based on a more likely than not criteria and in consideration of available positive and negative evidence. The Company has not recorded a non-cash interest expense deferred tax asset and is currently assessing its realizability. Upon completion of the analysis, deferred tax assets will be adjusted accordingly.

The Company applied the “more-likely-than-not” recognition threshold to all tax positions taken or expected to be taken in a tax return, which resulted in no unrecognized tax benefits as of December 31, 2019 and December 31, 2018, respectively.

NOTE 8 – RELATED PARTY TRANSACTIONS

On the date of our inception, we issued 2 million shares of our common stock to our three officers and directors which were recorded at no value (offsetting increases and decreases in common stock and additional paid-in capital).

Doc Pharma S.A.

As of December 31, 2019, the Company has a prepaid balance of €2,181,780 ($2,449,484) and an accounts payable balance of €22,576 ($25,346), resulting in a net prepaid balance of €2,158,434 ($2,424,138) to Doc Pharma S.A. related to purchases of inventory. Additionally, the Company has a receivable balance of €546,240 ($613,264),.As of December 31, 2018, the Company had a prepaid balance of €1,867,239 ($2,139,109) and an accounts payable balance of €31,514 ($36,103), resulting in a net prepaid balance of €1,835,725 ($2,103,006) to Doc Pharma S.A., related to purchases of inventory. Additionally, the Company has a receivable balance and €38,323 ($43,903).

During the years ended December 31, 2019 and 2018, the Company has purchased a total of €3,095,163 ($3,464,725) and €4,596,227 ($5,431,361) of products from Doc Pharma, respectively. During the years ended December 31, 2019 and 2018 the Company had €779,919 ($873,041) and €201,645 ($238,284) revenue from Doc Pharma, respectively.

Doc Pharma S.A is considered a related party to the Company due to the fact that the CEO of Doc Pharma is the wife of Grigorios Siokas, the Company’s CEO and principal shareholder, who also served as a principal of Doc Pharma SA in the past.

Medihelm S.A

As of December 31, 2019, the Company had a prepaid balance of €3,109,147 ($3,490,639) and an accounts payable balance of £39,818 ($52,500) and €143,393 ($160,987), resulting in a net prepaid balance of $3,277,152 to Medihelm S.A. related to purchases of inventory. Additionally, the Company has a receivable balance of €1,163,070 ($1,305,779). As of December 31, 2018, the Company has a prepaid balance of €2,459,805 ($2,817,953) and an accounts payable balance of £42,065 ($53,566), resulting in a net prepaid balance of $2,764,387 to Medihelm S.A. related to purchases of inventory. Additionally, the Company has a receivable balance of €127,292 ($145,826).

F-21

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

During the years ended December 31, 2019 and 2018, SkyPharm purchased €2,332,755 ($2,611,286) and €9,564,899 ($11,302,842) of products from Medihelm, respectively, and Decahedron purchased $0 and £718,050 ($958,454) of products from Medihelm, respectively. During the years ended December 31, 2019 and 2018, SkyPharm had revenue of €945,074 ($1,057,916) and €1,055,435 ($1,247,208) from Medihelm, respectively.

Medihelm S.A. is considered a related party to the Company due to the fact that the managing director of Medihelm is the mother of Nicholaos Lazarou, who was the managing director of the Company’s UK subsidiary, Decahedron through June 2019.

Nicholaos Lazarou

Following the acquisition of Decahedron, Nicholaos Lazarou was the managing director of the Company’s UK subsidiary until June 30, 2019.

On December 19, 2017, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of €80,000 ($94,495) the Company purchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on December 19, 2017, the date of signing, however the Company is entitled to pay the full consideration in tranches until July 2018. As of December 31, 2017, the Company has paid consideration of €28,000 ($33,073) and had an amount due to related party of €52,000 ($61,422) recorded as accounts payable related party as of December 31, 2017. The shares were returned to the Company in February 2018. During the year ended December 31, 2018, the Company repaid the remaining balance of €52,000 ($61,448) and had an amount due to related party of €0 ($0) as of December 31, 2018.

On June 18, 2018, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of €60,000 ($69,912) the Company repurchased 15,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 18, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until November 2018. During the year ended December 31, 2018, the Company paid consideration of €60,000 ($70,902) and has an amount due to related party of €0 ($0) as of December 31, 2018.

On November 30, 2018, the Company entered into a stock purchase agreement with Nicholaos Lazarou, whereby for consideration of $60,000 the Company repurchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on November 30, 2018, the date of signing, however, the Company was entitled to pay the full consideration in tranches until August 2019. As of December 31, 2018, the Company had an amount due to related party of $48,683. During the year ended December 31, 2019, the Company repaid the remaining balance in the amount of $48,683.

On June 20, 2019, the Company entered into a stock purchase agreement with Nicholaos Lazarou whereby for consideration of $15,000, the Company repurchased 114,518 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 20, 2019, the date of signing. During the year ended December 31, 2019, the Company paid the $15,000 in consideration in full.

Notes Payable – Related Party

A summary of the Company’s related party notes payable during the years ended December 31, 2019 and 2018 is presented below:

	2019			2018
Beginning Balance	$	1,793,437		$	97,979
Transfer of third-party debt		-			1,718,400
Payments		(382,055	)		(18,330	)
Foreign currency translation		(35,850	)		(4,612	)
Ending Balance	$	1,375,532		$	1,793,437

F-22

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Grigorios Siokas

On December 20, 2018, the €1,500,000 ($1,718,400) note payable, originally borrowed pursuant to a Loan Agreement with a third-party lender, dated March 16, 2018, was transferred to Grigorios Siokas. The note bears an interest rate of 4.7% per annum and has a maturity date of March 18, 2019. As of December 31, 2018, the Company has an outstanding principal balance of €1,500,000 ($1,718,400) and accrued interest of €55,631 ($63,371). During the year ended December 31, 2019, the Company repaid €300,000 ($336,810) and as of December 31, 2019, the Company had an outstanding principal balance of €1,200,000 ($1,347,240) and accrued interest of €144,207 ($128,447).

Grigorios Siokas is the Company’s CEO and principal shareholder.

Dimitrios Goulielmos

On November 21, 2014, the Company entered into an agreement with Dimitrios Goulielmos, as amended on November 4, 2016. Pursuant to the amendment, this loan is non-interest bearing. During the year ended December 31, 2018, the Company repaid €16,000 ($18,330) and a principal balance of €53,500 ($61,290) remained as of December 31, 2018. During the year ended December 31, 2019, the Company repaid €40,300 ($45,245) and a principal balance of €13,200 ($14,820) remained as of December 31, 2019.

Dimitrios Goulielmos is a current director and former CEO of the Company.

DOC Pharma

On November 1, 2015, the Company entered into a €12,000 ($12,662) Loan Agreement with Doc Pharma S.A, pursuant to which Doc Pharma S.A., paid existing bills of the Company in the amount of €12,000 ($12,662), excluding the Vendor Bills. The loan bears an interest rate of 2% per annum and was due and payable in full on October 31, 2016. As of December 31, 2018, the Company has an outstanding principal balance under this note of €12,000 ($13,747) and accrued interest expense of $836. As of December 31, 2019, the Company has an outstanding principal balance of €12,000 ($13,472) and accrued interest expense of $1,100.

The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the years ended December 31, 2019 and 2018 the Company recorded losses of $35,850 and $4,612, respectively.

Loans Payable – Related Party

A summary of the Company’s related party loans payable during the years ended December 31, 2019 and 2018 is presented below:

	2019			2018
Beginning Balance	$	1,775,251		$	7,213
Proceeds		585,915			2,408,965
Payments		(262,226	)		(631,166	)
Conversion of debt		(1,050,000	)		-
Disposal of subsidiary		-			(9,501	)
Reclassification of receivable		2,547			-
Foreign currency translation		(25,223	)		(260	)
Ending Balance	$	1,026,264		$	1,775,251

Grigorios Siokas

On October 1, 2016, the Company borrowed €5,000 ($5,276) as a loan payable from Grigorios Siokas. The loan is non-interest bearing and had a maturity date of October 1, 2017. During the year ending December 31, 2017, the Company borrowed an additional €1,000 ($1,202). On September 30, 2018, the debt, amounting to €6,000 ($6,973) was transferred to the third-party purchaser of Amplerissimo pursuant to the Share Purchase Agreement. As of December 31, 2018, the Company had an outstanding principal balance of $0 and no accrued interest under this loan.

F-23

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

During the year ended December 31, 2018, the Company borrowed €1,622,700 ($1,858,965) and $382,000 of loans payable from Grigorios Siokas and repaid €269,000 ($308,166) and $155,000 of these loans. These loans are non-interest bearing and have no maturity dates. As of December 31, 2018, the Company had an outstanding principal balance of $1,777,799, consisting of €1,353,700 ($1,550,799) and $227,000, in loans payable to Grigorios Siokas. During the year ended December 31, 2019, the Company borrowed total additional proceeds of $585,914, repaid €233,567 ($262,226) of these loans and converted $1,050,000 of these loans into 140,001 shares of common stock at a conversion rate of $7.50 per share. These loans are non-interest bearing and have no maturity dates. As of December 31, 2019, the Company had an outstanding principal balance under these loans of $1,026,264 consisting of €297,314 ($303,502) and $722,762, in loans payable to Grigorios Siokas.

On May 28, 2019, the Company entered into a Debt Exchange Agreement with Grigorios Siokas. The agreement provided for the issuance by the Company of 66,667 shares of common stock, at the rate of $7.50 per share, or an aggregate of $500,000, in exchange for $500,000 of existing loans by Mr. Siokas to the Company. The Company valued this transaction at fair value and recorded a $259,999 gain on extinguishment of related party debt to additional paid-in capital.

On June 24, 2019, the Company entered into a Debt Exchange Agreement with Grigorios Siokas. The agreement provided for the issuance by the Company of 73,334 shares of common stock, at the rate of $7.50 per share, or an aggregate of $550,000, in exchange for $550,000 of existing loans by Mr. Siokas to the Company. The Company valued this transaction at fair value and recorded a $269,126 gain on extinguishment of related party debt to additional paid-in capital.

Ourania Matsouki

During the year ended December 31, 2016, the Company borrowed €44,995 ($47,479) from Mrs. Matsouki, Grigorios Siokas’ wife and CEO of Doc Pharma. During the year ended December 31, 2017, the Company borrowed an additional €55,000 ($66,121). These loans have no formal agreement and bear no interest. As of December 31, 2017, the Company paid back the outstanding balance of €99,995 ($120,214) of these loans. During the year ended December 31, 2018, the Company borrowed an additional €30,000 ($34,368). As of December 31, 2018, the Company has paid back the outstanding balance of €30,000 ($34,368) of these loans.

Konstantinos Vassilopoulos

During the year ended December 31, 2018, the Company borrowed and repaid an aggregate of $168,000 to Konstantinos Vassilopoulos, the Company’s former U.S. Finance Manager and current Administrative Officer. These loans have no formal agreement and bear no interest. As of December 31, 2018, an outstanding principal balance of $0 and $0 accrued interest remained.

The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the years ended December 31, 2019 and 2018 the Company recorded $25,223 and $260, respectively.

Except as set forth above, we have not entered into any material transactions with any director, executive officer, and promoter, beneficial owner of five percent or more of our common stock, or family members of such persons.

NOTE 9 – LINES OF CREDIT

A summary of the Company’s lines of credit during the years ended December 31, 2019 and 2018 is presented below:

	2019		2018
National	$	1,940,045	$	766,575
Alpha		810,947		461,178
Eurobank		-		286,829
Total	$	2,750,992	$	1,514,582

F-24

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

The line of credit with National Bank of Greece is being renewed annually with current interest rates of 6.00% and 4.35% on certain lines of credit. The maximum borrowing allowed was $1,684,050 and $1,374,720 at December 31, 2019 and 2018, respectively for the 6.00% line of credit. The maximum borrowing allowed was $1,122,700 at December 31, 2019 for the 4.35% lines of credit. The outstanding balance was $1,940,045 and $766,575 at December 31, 2019 and 2018, respectively.

The line of credit with Alpha Bank of Greece is renewed annually with a current interest rate of 6.00%. The maximum borrowing allowed was $1,122,700 and $687,360 at December 31, 2019 and 2018, respectively. The outstanding balance was $810,947 and $461,179 at December 31, 2019 and 2018, respectively.

The line of credit with Eurobank of Greece had an interest rate of 8.55% and a maximum borrowing allowed of $572,800 at December 31, 2018. The outstanding balance was $286,829 at December 31, 2018 and was paid back in full during the year ended December 31, 2019.

Interest expense for the year ended December 31, 2019 and 2018, was $85,090 and $32,275, respectively.

Under the agreements, the Company is required to maintain certain financial ratios and covenants. These lines of credit were assumed in the Company’s acquisition of Cosmofarm. During the years ended December 31, 2019 and 2018, the Company was in compliance with these ratios and covenants.

NOTE 10 – CONVERTIBLE DEBT

A summary of the Company’s convertible debt during the years ended December 31, 2019 and 2018 is presented below:

	2019			2018
Beginning balance notes		365,513			3,110,714
New notes		1,500,000			2,233,332
Exchange agreement and debt modification		-			344,570
Payments		(365,513	)		(3,557,381	)
Conversions		-			(1,765,721	)
Subtotal notes		1,500,000			365,513
Debt discount at year end		(29,509	)		(229,713	)
Note payable net of discount		1,470,491			135,800

November 15, 2017 Securities Purchase Agreement

On November 15, 2017, the Company entered into a Securities Purchase Agreement with institutional investors (the “Buyers”), pursuant to which the Company issued on November 16, 2017 for a purchase price of $3,000,000, $3,350,000 in aggregate principal amount of Senior Convertible Notes (the “Existing Notes”) to the Buyers, convertible into approximately 670,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at $5.00 per share and five-year warrants (the “Warrants”) to purchase an aggregate of 536,000 shares of Common Stock exercisable at $7.50 per share. The Notes contained an original issue discount of $350,000. Of the $3,000,000 purchase price, $240,000 went directly to financing costs (see below) and $74,000 went directly to legal fees such that the Company received net proceeds of $2,686,000.

F-25

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

On February 20, 2018, the Company entered into two separate Amendment and Exchange Agreements (“Exchange Agreements”) with the Buyers for new senior convertible notes (“New Notes”) in exchange for existing notes. Each New Note is identical in all material respects to the Existing Note, except that (i) the New Note was not convertible into shares of the Company’s common stock (the “Common Stock”) until April 20, 2018; (ii) all future cash installment payments under such New Note will be made at a redemption price equal to 112% of the applicable installment amount; (iii) the Company’s existing obligation to initially deliver pre-delivery shares of its common stock to the holder of such New Note was deferred until April 20, 2018; and (iv) at any time on or before June 20, 2018, the Company had the right, at its option, to redeem all, or any part, of the amounts then outstanding under such New Note in cash at a redemption price equal to 125% of such amounts then outstanding under such New Note. The Company will repay the principal amount of the Notes in equal monthly installments beginning on January 1, 2018 and repeating on the first business day of each calendar month thereafter until the fourteenth (14th) month anniversary date of issue.

On September 26, 2018, the Company entered into a second amendment which extended the maturity dates of the notes to February 1, 2019. On April 24, 2018, 670,001 pre-delivery shares were issued. On January 7, 2019 and February 5, 2019, 465,625 and 108,417 pre-delivery shares, respectively, were cancelled upon full payment of both notes. Eighty-five (85%) percent of any cash proceeds received by the holders of the Notes from the sale of pre-delivery shares issued as collateral shall be applied against the particular installment amount then due. The Notes are senior in right of payment to all existing and future indebtedness except Permitted Indebtedness which includes $12 million of senior secured indebtedness of the Company and its subsidiaries under the above described Synthesis loan agreements, plus a defined amount of purchase money indebtedness in connection with bona fide acquisitions. The Company evaluated the debt modification in accordance with ASC 470-50 and concluded that the debt qualified for debt extinguishment as the 10% cash flow test was met. As a result, the Existing Notes were written off and the New Notes were recorded at fair value as of February 20, 2018. The Company wrote off the remaining principal balance of $2,871,429 of the Existing Notes along with the remaining $2,596,838 of debt discounts related to the Existing Notes of which $1,140,711 was a reduction to additional paid-in-capital representing the intrinsic value of the existing beneficial conversion feature. The Company recorded the New Notes in the amount of $3,216,000 and a total debt discount of $3,216,000 in relation to the intrinsic value of the new beneficial conversion feature of $2,880,000 and an original issue discount of $336,000. This resulted in a net loss on extinguishment of debt in the amount of $1,464,698 and additional net equity related to the beneficial conversion feature of $1,739,289.

The New Notes were not convertible until April 18, 2018 pursuant to the February 20, 2018 amendment. Beginning April 20, 2018, the Holder may convert the New Notes into shares of Common Stock at the rate of $5.00 per share. In the event of an issuance of Common Stock for a consideration less than the Conversion Price (other than Excluded Securities, as defined) the Conversion Price shall be reduced to the price of the dilutive issuance, (the “Conversion Price”). Upon an Event of Default (as defined), the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the Volume-Weighted Average Price (as defined, the “VWAP”). The Company valued the beneficial conversion feature of the Existing Notes at intrinsic value and recorded $1,140,711 to debt discount, of which $405,743 was amortized through February 19, 2018. On February 20, 2018, the remaining debt discount was written off and the Company recorded a new debt discount as discussed above.

On December 12, 2018, the Company entered into a Third Amendment and Exchange Agreement (“Third Exchange Agreement”) with the Buyers whereby the existing 536,000 warrants issued to such investors in connection with the November 15, 2017 Securities Purchase Agreement were retired in exchange for 727,683 new warrants. Additionally, the investors agreed to convert $1,333,333 of the debt related to the September 4, 2018 Securities Purchase Agreement at a reduced conversion price of $3.478. The Company issued those 383,363 shares on December 13, 2018. The Third Exchange agreement was considered to be an inducement to conversion and accounted for in accordance with ASC 470-20. Accordingly, the Company recorded a modification expense of $1,778,952 for the year ended December 31, 2018.

The modification expense was based on the change in the fair value of the warrants and conversion feature before and after the modification using the Black-Scholes option-pricing model on the date of the modification using the following assumptions: pre-modification: (a) exercise price of $7.50 and, (b) fair value of common stock of $6, (c) expected volatility of 243.69%, (d) dividend yield of 0%, (e) risk-free rate of 2.77%, (f) expected life of 3.93 years; and post-modification (a) exercise price of $6, (b) fair value of common stock of $6, (c) expected volatility of 113.62%, (d) dividend yield of 0%, (e) risk-free rate of 2.77%, (f) expected life of 5 years.

The Warrants have a five-year term and are exercisable into 536,000 shares of Common Stock beginning May 16, 2018, which was six months after the issue date. The Warrants are exercisable at $7.50 per share subject to full ratchet anti-dilution protection. As of September 30, 2019, there were no anti-dilution trigger events. The Warrants will be exercisable on a cashless basis if a registration statement is not effective covering the resale of the underlying Warrant Shares. The Company calculated the warrants at relative fair value of $1,545,288, which was recognized as a discount to the Existing Notes of which $347,418 was amortized as interest expense through February 19, 2018. On February 20, 2018, the remaining balance was reversed due to the Exchange Agreement as discussed above.

F-26

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Conversion of the New Notes were and exercise of the Warrants are subject to a blocker provision which prevents any holder from converting or exercising, as applicable, the New Notes or the Warrants, into shares of Common Stock if its beneficial ownership of the Common Stock would exceed 4.99% (subject to adjustment not to exceed 9.99%) of the Company’s issued and outstanding Common Stock (each, a “Blocker”).

The Company filed, within thirty (30) days of the Closing, a registration statement covering one hundred fifty (150%) percent of the maximum number of shares, underlying the New Notes and Warrants pursuant to a registration rights agreement with the Buyers (the “Registration Rights Agreement”). The Post-Effective Amendment to the registration statement (No. 333-222061) was declared effective on May 14, 2018.

As a condition to the closing of the Financing, each Buyer, severally, was required to execute a leak-out agreement (each, a “Leak-Out Agreement”) restricting such Buyer’s sale of shares of Common Stock underlying the New Notes and Warrants on any Trading Day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s Common Stock. If after the closing of the Financing there is no Event of Default under the New Notes, the VWAP of the Company’s Common Stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share; provided that the portion of the New Notes subject to redemption on each Installment Date shall thereafter double.

On November 15, 2017, in connection with the $3,350,000 Securities Purchase Agreement, Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for the transaction equal to eight (8%) percent of the total gross proceeds of the offering, or $240,000 and the issuance of five-year warrants to purchase eight (8%) percent of the shares of common stock issued or issuable in this offering (excluding shares of common stock issuable upon exercise of any warrants issued to investors), or 53,600 shares; and, will receive eight (8%) percent of any cash proceeds received from the exercise of any warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The warrants are exercisable six months after the issue date or May 16, 2018 and were valued at a fair value of $386,003 which was fully expensed during the year ended December 31, 2017. The $240,000 cash commission was recorded as debt discount and was amortized over the term of the New Notes.

During the year ended December 31, 2018, there were principal conversions in the amount of $432,419 and the Company repaid principal on the New Notes in the amount of $2,680,000, such that the remaining outstanding principal balance of the New Notes as of December 31, 2018 was $103,610. The Company repaid this remaining balance in the year ended December 31, 2019.

The Company recorded a total of $3,350,000 of debt discounts related to the above Existing Notes in the year ended December 31, 2017. A total of $360,890 was amortized during the year ended December 31, 2017 and an additional $392,272 related to the debt discount of the Existing Notes was amortized through February 19, 2018. As a result of the Exchange Agreement discussed above, the debt discounts of the Existing Notes were written off and a total of $3,216,000 of debt discounts were recorded during the year ended December 31, 2018. The debt discounts are being amortized over the term of the debt. Amortization of the debt discounts of the New Notes for the year ended December 31, 2018 was $3,170,386. The additional $45,613 was amortized in the year ended December 31, 2019.

September 4, 2018 Securities Purchase Agreement

On September 4, 2018, the Company entered into a Securities Purchase Agreement with two institutional investors (the “Buyers”) pursuant to which the Company issued for a purchase price of $2,000,000, $2,233,333 in aggregate principal amount of Senior Convertible Notes (the “September 2018 Notes”) to the Buyers, convertible into 372,223 shares of the Company’s common stock, par value $.001 per share at $6.00 per share (with the exception of the conversion related to the Third Exchange Agreement), and warrants to purchase an aggregate of 357,334 shares of Common Stock exercisable at $7.50 per share (the “Warrants”). The Notes contained an original issue discount of $233,332. Of the $2,000,000 purchase price, $140,000 went directly to financing costs (see below) and $15,000 went directly to legal fees such that the Company received net proceeds of $1,845,000.

The September 2018 Notes provide that the Company will repay the principal amount of Notes in equal monthly installments including a 5% installment fee, which is recorded as interest expense, beginning on November 1, 2018 and repeating on the first business day of each calendar month thereafter until May 1, 2019. During the year ended December 31, 2018, the Company recorded $31,905 in installment fees. During the year ended December 31, 2019, the Company recorded $13,097 in installment fees.

F-27

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

The Notes were convertible at any time by the Holder into shares of Common Stock at the rate of $6.00 per share (with the exception of the conversion pursuant to the Third Exchange Agreement described below), subject to full ratchet anti-dilution adjustment (the “Conversion Price”). According to the original terms of the agreement, the Company was to pre-deliver up to 372,222 shares of common stock to the Buyers. Eighty-five percent (85%) of any cash proceeds received by the Buyers from the sale of the Pre-Delivery Shares would then be applied against the particular installment amount due on such Installment Date under the Note. The Company had three months to deliver the Pre-Delivery shares, however the debt was repaid prior to the opportunity to deliver those shares. The Registration Statement (No. 333-227813) covering 150% of the number of shares underlying the Notes and warrants was declared effective on November 1, 2018. Upon an Event of Default (regardless of whether such event has been cured), the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”). The Company valued the beneficial conversion feature of the Existing Notes at intrinsic value and recorded $934,922 to debt discount, which will be amortized over the life of the Notes.

The Warrants are exercisable into 357,334 shares of Common Stock equal to eighty (80%) percent of the number of shares of common stock the Buyers would receive if the Notes were fully converted (at an assumed price of $5.00 per share) upon the date of issuance of the Notes. The Warrants are exercisable at $7.50 per share for a five-year term commencing March 4, 2019 subject to full ratchet anti-dilution protection. The Warrants will be exercisable on a cashless basis if a registration statement is not effective covering the resale of the underlying Warrant Shares. The Company calculated the warrants at relative fair value of $910,078, which was recognized as a discount to the Notes and is being amortized as interest expense over the remaining term of the Notes.

Conversion of the Notes were and exercise of the Warrants are each subject to a blocker provision which prevents any holder from converting or exercising, as applicable, the Notes or the Warrants, into shares of common stock if its beneficial ownership of the common stock would exceed 9.99% of the Company’s issued and outstanding common stock (a “Blocker”).

As a condition to the closing of the Financing, each Buyer executed a leak-out agreement which replaced the leak-out agreements entered into in November 2017 (each, a “Leak-Out Agreement”) restricting such Buyer’s sale of shares of common stock underlying the Notes and Warrants on any trading day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s Common Stock. If after the closing of the Financing the VWAP of the Company’s common stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share; provided that the portion of the Notes subject to redemption on each Installment Date shall thereafter double.

Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for this transaction equal to seven (7%) percent of the total gross proceeds of the offering, or $140,000, and the issuance of five-year warrants to purchase seven (7%) percent of the shares of common stock issued or issuable in this offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors), or 26,056 shares; and will receive seven (7%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The warrants are exercisable six months after the issue date or March 4, 2019, at $6.00 per share and were valued at a fair value of $157,969 which was fully expensed during the year ended December 31, 2018. The $140,000 cash commission was recorded as debt discount and will be amortized over the term of the Notes.

During the year ended December 31, 2018 there were principal conversions in the amount of $1,333,333 at a conversion price of $3.478 pursuant to the Third Exchange Agreement and the Company repaid principal of $638,095, such that the remaining outstanding principal balance of the Notes as of December 31, 2018 was $261,903.

During the year ended December 31, 2019, the Company repaid the remaining principal balance in the amount of $261,903, such that the remaining outstanding principal balance of the Notes as of December 31, 2019 is zero.

F-28

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

The Company recorded a total of $2,233,332 of debt discounts related to the above Notes during the year ended December 31, 2018. The debt discounts are being amortized over the term of the debt. Amortization of the debt discounts for the year ended December 31, 2018 was $2,049,232. As a result of the final payment of the Notes, the remaining debt discount of $184,100 was amortized during the year ended December 31, 2019.

Securities Purchase Agreement executed on May 15, 2019

On May 15, 2019, the Company entered into a Securities Purchase Agreement with an institutional investor (the “Buyer”). Upon the closing of this financing, on May 17, 2019, the Company issued for a purchase price of $1,500,000 in principal amount a Senior Convertible Note (the “May 2019 Note”) to the Buyer.

The May 2019 Note provides that the Company will repay the principal amount of the May 2019 Note on or before March 15, 2020. On March 23, 2020, the maturity date was amended to September 16, 2020 (See Note 16). Interest at the rate of nineteen (19%) percent per annum shall be payable on the first day of each calendar month.

The May 2019 Note is convertible at any time by the Holder into 250,000 shares of common stock, par value $0.001 per share at the rate of $6.00 per share, subject to adjustment (the “Conversion Price”). Upon an Event of Default (regardless of whether such event has been cured), the Buyer may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”). The Company considered the need for the conversion feature to be bifurcated under ASC 815 and determined that it does not meet the requirements. Additionally, the Company determined the effective conversion rate under ASC 470-20 and determined that the instrument is out of the money and no beneficial conversion feature was recorded.

The May 2019 Note is senior in right of payment to all other existing and future indebtedness of the Company except Permitted Senior Indebtedness (as defined in the May 2019 Note), including $12 million of senior secured indebtedness of the Company and its subsidiaries under an existing senior loan agreement, plus defined amounts of purchase money indebtedness in connection with bona fide acquisitions.

The May 2019 Note includes customary Events of Default and provides that the Buyer may require the Company to redeem (regardless of whether the Event of Default has been cured) all or a portion of the Note at a redemption premium of one hundred twenty-five (125%) percent, multiplied by the greater of the conversion rate and the then current market price. The Buyer may also require redemption of the May 2019 Note upon a Change of Control (as defined) at a premium of one hundred twenty-five (125%) percent. The Company has the right to redeem the May 2019 Note at any time, in whole or in part, in cash at a price equal to 120% of the then outstanding conversion amount.

Conversion of the May 2019 Note is subject to a blocker provision which prevents any holder from converting the May 2019 Note into shares of common stock if its beneficial ownership of the common stock would exceed 9.99% of the Company’s issued and outstanding common stock.

As of December 31, 2019, the Company had a principal balance $1,500,000 on the May 2019 Note and the Company had accrued $25,334 in interest expense.

Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for this transaction equal to six (6%) percent of the total gross proceeds of the offering. This 6% fee or $90,000 was recorded as debt discount along with the $30,000 in legal fees associated with the May 2019 Note. These fees will be amortized over the term of the note. For the year ended December 31, 2019, the Company has recorded amortization of $90,491.

F-29

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

NOTE 11 – DEBT

A summary of the Company’s third-party debt during the years ended December 31, 2019 and 2018 is presented below:

December 31, 2019	Loan Facility		Bridge Loans		Trade Facility			Third Party			Total
Beginning balance	$	3,078,442	$	191,287	$	6,291,199		$	242,805		$	9,803,733
Proceeds		-		-		-			2,500,000			2,500,000
Payments		-		-		-			(227,912	)		(227,912	)
Foreign currency translation		-		-		(45,799	)		(298	)		(46,097	)
Ending Balance	$	3,078,442	$	191,287	$	6,245,400		$	2,514,595		$	12,029,724

December 31, 2018	Loan Facility			Bridge Loans			Trade Facility			Third Party			Debt Discount			Total
Beginning balance	$	3,118,442		$	204,965		$	6,728,605		$	27,651		$	(126,763	)	$	9,952,900
Proceeds		-			-			312,309			1,580,000			-			1,892,309
Payments		-			-			(1,156,700	)		(90,000	)		-			(1,246,700	)
Transfer to related party		-			-			-			(1,500,000	)		-			(1,500,000	)
Forgiveness of debt		(40,000	)		(13,678	)		-			-			-			(53,678	)
Amendment		-			-			661,645			-			-			661,645
Acquisition of Cosmofarm		-			-			-			227,912			-			227,912
Foreign currency translation		-			-			(254,660	)		(2,758	)		-			(257,418	)
Amortization		-			-			-			-			126,763			126,763
Ending Balance	$	3,078,442		$	191,287		$	6,291,199		$	242,805		$	-		$	9,803,733

On November 16, 2015, the Company entered into a Loan Agreement with Panagiotis Drakopoulos, former Director and former Chief Executive Officer, pursuant to which the Company borrowed €40,000 ($42,832) as a note payable from Mr. Drakopoulos. The note bears an interest rate of 6% per annum and was due and payable in full on November 15, 2016. As of December 31, 2018, the Company had an outstanding principal balance of €13,000 ($14,893) and accrued interest of €3,088 ($3,538). As of December 31, 2019, the Company had an outstanding principal balance of €13,000 ($14,595) and accrued interest of €4,166 ($4,677).

On January 18, 2018, the Company entered into a Loan Agreement with a third party, pursuant to which the Company borrowed €75,000 ($91,785). The note bore an interest rate of 6.5% per annum and had a maturity date of January 17, 2019. The note was secured by a personal guaranty of Grigorios Siokas. During the year ended December 31, 2018, the Company repaid the loan and the related accrued interest of €1,748 ($2,002) in full.

On April 2, 2018, the Company entered into a Loan Agreement with a third party, pursuant to which the Company borrowed €5,000 ($6,144) as a note payable. The note bears an interest rate of 4.7% per annum and has a maturity date of June 15, 2019. As of December 31, 2018, the Company repaid the loan in full. Due to the early repayment by the Company, an agreement was reached between the Company and the lender for no interest to accrue under this loan.

On December 19, 2018, pursuant to the terms of the Cosmofarm SPA (See Note 2), the Company issued a non-interest-bearing promissory note in the amount of €200,000 ($227,912). The note had a maturity date of December 19, 2019. The Company had an outstanding balance of €200,000 ($227,912) as of December 31, 2018. During the year ended December 31, 2019, the Company repaid the outstanding balance of the note.

Loan Facility Agreement

On August 4, 2016, the Company’s wholly owned subsidiary SkyPharm entered into a Loan Facility Agreement, guaranteed by Grigorios Siokas, with Synthesis Peer-To Peer-Income Fund (the “Loan Facility” the “Lender”). The Loan Facility initially provided SkyPharm with a credit facility of up to $1,292,769 (€1,225,141). Any advance under the Loan Facility accrues interest at a rate of 10% per annum and requires quarterly interest payments commencing on September 30, 2016. The amounts owed under the Loan Facility shall be repayable upon the earlier of (i) three months following the demand of the Lender; or (ii) August 31, 2018. No prepayment is permitted pursuant to the terms of the Loan Facility. The Synthesis Facility Agreement as amended is secured by a personal guaranty of Grigorios Siokas, which is secured by a pledge of 1,000,000 shares of common stock of the Company owned by Mr. Siokas.

F-30

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

On September 13, 2016, SkyPharm entered into a First Deed of Amendment with the Loan Facility increasing the maximum loan amount to $1,533,020 as a result of the Lender having advanced $240,251 (€227,629) to SkyPharm.

On March 23, 2017, SkyPharm entered into an Amended and Restated Loan Facility Agreement (the “A&R Loan Facility”), with the Loan Facility which increased the loan amount to an aggregate total of $2,664,960 (€2,216,736) as a result of the lender having advanced $174,000 (€164,898) in September 2016, $100,000 (€94,769) in October 2016, $250,000 (€236,922) in November 2016, $452,471 (€428,800) in December 2016, $155,516 (€129,360) in January 2017, $382,327 (€318,023) in July 2017 and $70,000 (€58,227) in December 2017. The A&R Loan Facility amends and restates certain provisions of the Loan Facility Agreement, dated as of August 4, 2016, by and among the same parties. Advances under the A&R Loan Facility continue to accrue interest at a rate of 10% per annum from the applicable date of each drawdown and require quarterly interest payments. The A&R Facility now permits prepayments at any time. The amounts owed under the A&R Loan Facility were repayable upon the earlier of (i) seventy-five days following the demand of the Lender; or (ii) August 31, 2018. The A&R Loan Facility is secured by a personal guaranty of Grigorios Siokas, which is secured by a pledge of 1,000,000 shares of common stock of the Company owned by Mr. Siokas (the “Pledged Shares”). The A&R Loan Facility was also amended to provide additional affirmative and negative covenants of Sky Pharm and the Guarantor during the term of loans remain outstanding, including, but not limited to, the consent of the Lender in connection with (i) the Company or any of its subsidiaries incurring any additional indebtedness; or (ii) in the event of any increase in the Company’s issued and outstanding shares of Common Stock, the Pledged Shares shall be increased to an amount equal to a minimum of ten percent (10%) of the issued and outstanding shares of the Company.

On April 18, 2018, the Company entered into an amendment with the Lender that was effective as of January 1, 2018, pursuant to which the maturity dates for all advances was extended to December 31, 2021. Additionally, the interest rate was amended such that the interest rate for all advances is 4% plus the 3-Month Libor rate. The Loan Facility also forgave €35,060 ($40,000) in fees related to the July 6, 2017 advance. As a result, the Company reduced the unamortized portion of debt discount that related to those fees and recorded a gain on debt settlement of €19,763 ($23,354).

As of December 31, 2018, the outstanding balance under the A&R Loan Facility was $3,078,442 (€2,687,187) and accrued interest expense of $414,830 (€362,107) was recorded. As of December 31, 2019, the outstanding balance under this note was $3,078,442 (€2,741,999) and accrued interest expense of $609,607 (€542,983) has been recorded.

The Company recorded a total of €155,060 ($191,034) in debt discounts related to this note in prior years. The debt discounts are being amortized over the term of the debt. As a result of the April 16, 2018 amendment, the Company reduced the unamortized debt discount by €20,237 ($20,237). The Company amortized a total of €92,661 ($114,158) in prior years. The remaining debt discount of €42,162 ($56,043) was fully amortized in the year ended December 31, 2018.

Bridge Loans

On March 16, 2017 and March 20, 2017, SkyPharm entered into loan agreements with the Synthesis Peer-To Peer-Income Fund (the “Bridge Loans”). The Bridge Loans provided to SkyPharm loans of €41,590 ($50,000) and €100,000 ($120,220), respectively, during the year ended December 31, 2017. The Bridge Loans accrue interest at a rate of 10% per annum and were repayable on April 16, 2017 and April 20, 2017, respectively, together with all other amounts then accrued and unpaid. On April 16, 2017, the maturity dates were amended for no additional consideration or change in terms and conditions. The maturity dates of both loans were amended, and they matured on May 16, 2017 and May 20, 2017, respectively. Pursuant to the April 18, 2018 agreement and effective January 1, 2018, the Company reached an agreement with Synthesis Peer-To-Peer Income Fund such that the March 20, 2017 loan would have a fixed USD payoff amount of $106,542. As a result of this agreement the Company recorded a gain on settlement of debt of €16,667 ($19,695) related to the reduction of the USD payoff amount and an additional gain on settlement of debt of €3,950 ($4,668) related to interest that had accrued on the original amount of the loan. The Company has accrued interest expense of an aggregate total of €14,715 ($16,857) for both loans and the outstanding balances of these loans was €43,645 ($50,000) and €93,001 ($106,542), respectively, as of December 31, 2018. The Company has accrued interest expense of an aggregate total of €24,608 ($27,627) for both loans and the outstanding balances of these loans was €45,809 ($50,000) and €83,333 ($106,542), respectively, as of December 31, 2019.

F-31

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

On May 5, 2017, SkyPharm entered into a loan agreement with Synthesis Peer-To-Peer Income Fund for €31,388 ($34,745). The loan accrues interest at a rate of 10% per annum and matured on September 30, 2017. The Company has accrued interest expense of €3,410 ($3,906) and the outstanding balance on this loan was €30,329 ($34,745) as of December 31, 2018. The Company has accrued interest expense of €5,437 ($6,104) and the outstanding balance on this loan was €31,388 ($34,745) as of December 31, 2019.

On April 18, 2018, the Company entered into an amendment pursuant to which the maturity dates for all of the above Bridge Loan advances were extended to December 31, 2021 for no additional consideration. Additionally, the interest rate was amended such that, effective January 1, 2018, the interest rate for all advances is 4% plus the 3-Month Libor rate.

Trade Facility Agreements

On April 10, 2017, Decahedron entered into a Trade Finance Facility Agreement (the “Decahedron Facility”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”). The Decahedron Facility provides the following material terms:

· The Lender will provide Decahedron a facility of up to €2,750,000 ($3,087,425) secured against Decahedron’s receivables from the sale of branded and generic pharmaceutical sales.

· The total facility will be calculated as 95% of the agreed upon value of Decahedron’s receivables.

· The term of the Decahedron Facility will be for 12 months.

· The obligations of Decahedron are guaranteed by the Company pursuant to a Cross Guarantee and Indemnity Agreement.

· The Lender has the right to make payments directly to Decahedron’s suppliers.

· The following fees should be paid in connection with the Decahedron Facility:

o 2% of the maximum principal amount as an origination fee.

o A one percent (1%) monthly fee.

The current draw on the Decahedron Facility is $0.

On May 12, 2017, SkyPharm entered into a Trade Finance Facility Agreement (the “SkyPharm Facility”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”). The SkyPharm Facility provides the following material terms:

· The Lender will provide SkyPharm a facility of up to €2,000,000 ($2,245,400) secured against SkyPharm’s receivables from the sale of branded and generic pharmaceutical sales. In the event that accounts receivable becomes uncollectible, the Company will be obligated to pay back the notes in full.

· The total facility will be calculated as 95% of the agreed upon value of Decahedron’s receivables.

· The term of the SkyPharm Facility will be for 12 months.

· The obligations of SkyPharm are guaranteed by the Company pursuant to a Cross Guarantee and Indemnity Agreement.

· The Lender has the right to make payments directly to SkyPharm’s suppliers.

· The following fees should be paid in connection with the SkyPharm Facility:

o 2% of the maximum principal amount as an origination fee.

o A one percent (1%) monthly fee.

F-32

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

The Company obtained consents from Synthesis Peer-to-Peer Income Fund in connection with obtaining the Lender.

On November 16, 2017, SkyPharm signed an amended agreement with Synthesis Structured Commodity Trade Finance Limited that increased the maximum aggregate facility limit from €2,000,000 ($2,291,200) to €6,000,000 ($6,736,200). All other terms of the original agreement remain the same. The Company also obtained consents from Synthesis Peer-to-Peer Income Fund in connection with obtaining the November 2017 convertible debt financing.

On May 12, 2018, the Company borrowed an additional €270,000 ($247,117) in funds.

On May 16, 2018, SkyPharm S.A., as Commodity Buyer, entered into a Supplemental Deed of Amendment (the “Deed”) relating to a Trade Finance Facility dated May 12, 2017, as amended, with Synthesis Structured Commodity Trade Finance Limited (“Synthesis”), as Loan Receivables Originator. Under the Trade Finance Facility (the “TFF”) first entered into on May 12, 2017, as amended, there was a principal balance of €5,866,910 ($5,369,678) outstanding as of March 31, 2018. SkyPharm made a payment of €1,000,000 ($1,123,600) of interest and principal on May 31, 2018 under the terms and conditions of the Deed. Additionally, the maturity date for the facility has been amended such that, the full principal amount is to be repaid no later than May 31, 2021, subject to a repayment schedule to be agreed upon by SkyPharm and Synthesis Structure Commodity Trade Finance Limited. Synthesis Structure Commodity Trade Finance Limited may extend this final repayment date at its sole discretion.

The TFF was amended to provide, among other things:

· A listing of approved purchasers;

· To permit SkyPharm to request Synthesis to make payments under the TFF directly to SkyPharm so that SkyPharm can discharge its obligations to a commodity seller directly;

· To prohibit SkyPharm from entering into a commodity contract which grants more than seventy-five (75) days delay between the payment for products and receipt of the purchase price and placed other limitations on terms of commodity contracts;

· If Grigorios Siokas, CEO of Cosmos Holdings Inc. (“Cosmos”), ceases to own or control at least fifty-one (51%) percent of the shares of Cosmos, or SkyPharm ceases to be a wholly-owned subsidiary of Cosmos, either event shall constitute an Event of Default (as defined);

· The maximum aggregate amount of the TFF is €15,000,000, although there is no commitment for any future loans under the TFF;

· The interest rate on the TFF for: (i) all lending in U.S. dollars is the one-month LIBOR plus six (6%) percent margin; and (ii) for all lending in Euro, the one-month Euribor Rate plus six (6%) percent per annum, commencing June 1, 2018.

· Synthesis is permitted to terminate the TFF at any time and demand repayment of all outstanding principal and interest in full within six (6) months from the date of notification.

The Deed is conditioned upon, among other things, execution and perfection of a Bulgarian Amended Pledge (“BAP”) having priority over the Bulgarian Pledge Accounts with Unicredit Bulbank AD; and the Approved Purchasers are to make all payments to SkyPharm directly to the BAP.

On May 16, 2018, SkyPharm and Synthesis also entered into an Account Merge Agreement (the “Pledge”) as a requirement under the above-described Deed. Under the Pledge, Synthesis is to receive a first ranking securities interest in SkyPharm’s outstanding receivables under the Bulgarian bank account.

F-33

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

On October 17, 2018, the Company entered into a further amended agreement with Synthesis whereby the current balance on the TFF as of October 1, 2018, which was €4,866,910 ($5,629,555) and related accrued interest of €453,094 ($524,094) would be split into two principal balances of Euro €2,000,000 and USD $4,000,000. Interest on the new balances commenced on October 1, 2018 at 6% per annum plus one-month Euribor, when it is positive, on the Euro balance and 6% per annum plus one-month Libor on the USD balance. The Company will repay the principal amounts of each balance beginning no later than August 31, 2018 in quarterly installments of €125,000 and US $150,000. The loan matures on August 31, 2021. The Company evaluated the amended agreement under ASC 470-50 and concluded that it did not meet the 10% cash flow test and recorded debt modification expense of $138,110.

As of December 31, 2018, the Company had principal balances of €2,000,000 ($2,291,200) and $4,000,000 under the TFF and the Company had accrued $0 and $19,834, respectively in interest expense related to this agreement. As of December 31, 2019, the Company had a principal balance of €2,000,000 ($2,245,400) and $4,000,000 under the TFF and the Company had accrued $10,000 and $12,661, respectively in interest expense related to this agreement.

The Company recorded a total debt discount of €117,338 ($137,063) in origination fees associated with these loans, which was amortized over the original terms of the agreements. The Company recorded amortization of €53,043 ($66,227) in the year ended December 31, 2018 resulting in the full amortization of debt discount as of December 31, 2018. 

Distribution and Equity Agreement

As discussed in Note 4 above, the Company entered into a Distribution and Equity Acquisition Agreement with Marathon. The Company was appointed the exclusive distributor of the Products (as defined) initially throughout Europe and on a non-exclusive basis wherever else lawfully permitted. As consideration for its services, Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in Common Shares of the Company if it fails to meet certain performance milestones. The Company is entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000.

As discussed in Note 4, the Company attributed no value to the shares received in Marathon pursuant to (a) above. In relation to the CAD $2 million cash received noted in (b) above, the Company accounted for its obligation to issue a variable number of the Company’s Common Shares as Share-settled debt obligation in accordance with ASC 480 measured at fair value or the settlement amount of $1,554,590 (CAD $2 million). If settlement were to occur on December 31, 2019, the Company would be required to issue 615,573 common shares to settle its debt obligation. The Company could be obligated to potentially issue an unlimited number of common shares to settle its Share-settled debt obligation. If such events were to occur, the Company would be required to increase its authorized share capital and since increasing the authorized share capital is within the control of the Company, as our CEO controls greater than 50% of the outstanding common stock of the Company, the original classification of equity-classified financial instruments issued by the Company were not affected.

Senior Promissory Notes executed on April 1 and 3, 2019

On April 1 and 3, 2019, the Company executed Senior Promissory Notes (the “Notes”) each in the principal amount of $250,000 payable to an unaffiliated third-party lender. The Notes bear interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The Notes matured on April 1 and 3, 2020 unless prepaid or in default. The Company is currently in discussions with the lender to extend the maturity date and is not in default. The Company may prepay the Notes within the first six (6) months by payment of unpaid interest for the first six (6) months interest and after six (6) months, with a (2%) percent ($5,000) premium on each note.

The Notes are subject to acceleration in an Event of Default (as defined in the Notes). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the Notes. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $250,000 and $250,000 on these notes and the Company had accrued $9,452 and $28,098, respectively, in interest expense.

F-34

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

Senior Promissory Note executed on April 9, 2019

On April 9, 2019, the Company executed a Senior Promissory Note (the “Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $500,000. The Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The Note matured on April 9, 2020, unless prepaid or in default. The Company is currently in discussions with the lender to extend the maturity date and is not in default. The Company may prepay the Note within the first six (6) months by payment of unpaid interest for the first six (6) months and after six (6) months, with a two (2%) percent ($5,000) premium.

The Note is subject to acceleration in an Event of Default (as defined in the Note). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $250,000 on this Note and the Company had accrued $27,431 in interest expense.

July 24, 2019 Senior Promissory Note

On July 24, 2019, the Company executed a Senior Promissory Note (the “July Note”) in the principal amount of $750,000 payable to an unaffiliated third-party lender who had previously loaned the Company $750,000. The funds represented by the July Note were advanced between July 19 and 24, 2019. The July Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The July Note matures on July 24, 2020, unless prepaid or in default. The Company may prepay the July Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($15,000) premium.

The July Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the July Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $750,000 on this note and the Company had accrued $49,625 in interest expense.

August 1, 2019 Senior Promissory Note

On August 1, 2019, the Company executed a Senior Promissory Note (the “August Note”) in the principal amount of $500,000 payable to an unaffiliated third-party lender who had previously loaned the Company $1,500,000. The August Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The August Note matures on August 1, 2020, unless prepaid or in default. The Company may prepay the August Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($10,000) premium.

The August Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the August Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $500,000 on this note and the Company had accrued $31,438 in interest expense.

October 23, 2019 Senior Promissory Note

On October 23, 2019, the Company executed a Senior Promissory Note (the “October Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $2,000,000. The October Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The October Note matures on October 23, 2020, unless prepaid or in default. The Company may prepay the October Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($5,000) premium.

The October Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the October Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $250,000 on this note and the Company had accrued $7,705 in interest expense.

F-35

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

December 6, 2019 Senior Promissory Note

On December 6, 2019, the Company executed a Senior Promissory Note (the “December Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $2,250,000. The December Note bears interest at the rate of fifteen (5%) percent per annum, paid quarterly in arrears. The December Note matured on March 31, 2020, unless prepaid or in default. The Company is currently in discussions with the lender to extend the maturity date and is not in default. The Company may prepay the December Note after six (6) months, with a two (2%) percent ($5,000) premium.

The December Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the December Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $250,000 on this note and the Company had accrued $890 in interest expense.

None of the above loans were made by any related parties.

NOTE 12 – LEASES

The Company has various lease agreements with terms up to 10 years, comprising of leases of office space. Some leases include options to purchase, terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.

The assets and liabilities from operating and finance leases are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s secured incremental borrowing rates or implicit rates, when readily determinable. Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.

The Company’s operating leases do not provide an implicit rate that can readily be determined. Therefore, we use a discount rate based on our incremental borrowing rate, which is determined using the interest rate of our long-term debt as of January 1, 2019.

The Company’s weighted-average remaining lease term relating to its operating leases is 6.65 years, with a weighted-average discount rate of 6.74%.

The Company incurred lease expense for its operating leases of $223,927 which was included in “General and administrative expenses,” for the year ended December 31, 2019.

The Company had operating cash flows used in operating leases of $185,540 for the year ended December 31, 2019. Right-of-use assets obtained in exchange for new operating lease liabilities $673,844 for the year ended December 31, 2019.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of December 31, 2019.

Maturity of Lease Liability
2020	$	167,694
2021		83,144
2022		53,890
2023		53,890
Thereafter		255,976
Total undiscounted finance lease payments	$	614,593
Less: Imputed interest		122,013
Present value of finance lease liabilities	$	492,580

The Company’s weighted-average remaining lease term relating to its finance leases is 2.87 years, with a weighted-average discount rate of 6.66%.

F-36

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s finance leases as of December 31, 2019.

Maturity of Lease Liability
2019	$	65,556
2020		44,373
2021		26,472
2022		14,685
2023		4,126
Thereafter		-
Total undiscounted finance lease payments	$	155,212
Less: Imputed interest		14,504
Present value of finance lease liabilities	$	140,708

The Company had financing cash flows used in finances leases of $74,476 for the year ended December 31, 2019.

The Company incurred interest expense on its finance leases of $10,927 which was included in “Interest expense,” for the year ended December 31, 2019. The Company incurred amortization expense on its finance leases of $160,542 which was included in “Depreciation and amortization expense,” for the year ended December 31, 2019.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Legal Matters

From time to time, the Company may be involved in litigation relating to claims arising out of the Company’s operations in the normal course of business. As of December 31, 2019 and 2018, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations. 

Intellectual Property Sale Agreement

On October 1, 2016, the Company entered into an Intellectual Property Sale Agreement with Anastasios Tsekas and Olga Parthenea Georgatsou (the “IPSA”) for the purchase of certain intellectual property rights relating to proprietary pharmaceutical formulas and any related technical information arising or related thereto (the “Intellectual Property”). The IPSA provides that the sellers shall be entitled to an aggregate of 200,000 shares of common stock of the Company, none of which have been issued to date, and issuable as follows in equal parts to each seller:

· 50,000 shares upon the successful conclusion of Preclinical Trials.

· 50,000 shares upon the conclusion of Phase I testing.

· 50,000 shares upon the conclusion of Phase II testing.

· 50,000 shares upon the conclusion of Phase III testing.

The Company has agreed to pay Anastasios Tsekas €1,500 per month until the first issuance of the shares referenced above. The Company has also agreed that in the event the Company disposes of the Intellectual Property prior to the periods referenced above, the sellers shall be entitled to the issuance of all the shares referenced above. The Company is in the process of locating a suitable lab to conduct the preclinical trial phase, which has not yet begun as of the date of filing.

Placement Agreement

On August 8, 2017, the Company entered into an agreement with a third-party placement agent (the “Agent”) who will serve as the Company’s exclusive placement agent or sole book running manager with respect to any offerings of equity or equity-linked securities as well as any debt offering with the two organizations named in the agreement (the “Offering”) for a period of 120 days. In the event that an Offering is agreed upon by the Agent and the Company, the Company shall provide payment as follows: (1) a cash commission of 6% of the total gross proceeds for two named investors (2) a cash commission of 4% of total gross proceeds from five named investors and (3) excluding the five named investors in “(2)” a cash commission equal to 8% of the total gross proceeds from the Offering and the issuance to the Agent or its designees of warrants covering 8% of the shares of common stock issued or issuable by the Company in the Offering. Additionally, the Agent will receive a cash fee of 8% payable within 5 business days, but only in the event of, the receipt by the Company of any cash proceeds from the exercise of any warrants with an expiration equal to or less than 24 months sold in the Offering. In connection with the Company’s November 16, 2017 Note offering, the Agent received a cash commission of $240,000, equal to eight (8%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase eight (8%) percent of the shares of Common Stock issued or issuable in the offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors, or 53,600 shares); however, will receive eight (8%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The Warrants are exercisable six (6) months after the date of issuance, or as of May 16, 2018.

F-37

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

In connection with the Company’s September 4, 2018 Note offering, the Agent received a cash commission for this transaction of $140,000, equal to seven (7%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase seven (7%) percent of the shares of Common Stock issued or issuable in this offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors, or 26,056 shares); however, will receive seven (7%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The Warrants are exercisable six (6) months after the date of issuance, or March 4, 2019.

Advisory Agreement

On April 18, 2018, SkyPharm S.A. entered into a ten-year Advisory Agreement with Synthesis Management Limited (the “Advisor”). The Advisor was retained to assist SkyPharm to secure corporate finance capital. The Advisor shall be paid €104,000 per year during the ten-year term.

NOTE 14 – EARNINGS PER SHARE

Basic net income (loss) per share is computed by dividing net income (loss) attributable to the Company, decreased with respect to net income or increased with respect to net loss by dividends declared on preferred stock by using the weighted-average number of common shares outstanding. The dilutive effect of incremental common shares potentially issuable under outstanding options, warrants and restricted shares is included in diluted earnings per share in 2019 and 2018 utilizing the treasury stock method. The computations of basic and diluted per share data were as follows:

	2019			2018
Numerator for Basic and Diluted Earnings Per Share:
Net loss	$	(3,298,965	)	$	(9,060,658	)
Denominator for Basic Earnings Per Share:
Weighted Average Shares		13,273,596			13,306,612
Potentially Dilutive Common Shares		-			-
Adjusted Weighted Average Shares		13,273,596			13,306,612
Basic and Diluted Net (Loss) Income per Share		(0.25	)		(0.68	)

The following table summarized the potential shares of common stock that were excluded from the computation of diluted net loss per share for the years ended December 31, 2019 and 2018 as such shares would have had an anti-dilutive effect:

	2019		2018
Common stock warrants		-		144,338
Common Stock Options		42,808		60,437
Convertible Debt		-		52,381
Total		42,808		257,155

F-38

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

NOTE 15 - STOCK OPTIONS AND WARRANTS

On January 1, 2017 the Company entered into a two-year agreement whereby the employee was granted compensation of €1,000 per month and an annual retainer of 25,000 stock options per year as compensation for being appointed the International Finance Manager of the Company. The options have an exercise period of four years with an exercise price of $1.00. In the event that he ceases to work for the Company for any reason, he will be entitled to a pro rata portion of the annual options. The options vest monthly, with a total of 25,000 options fully vested as of December 31, 2017 and December 31, 2018, respectively. The options issued in the year ended December 31, 2017 were valued at $195,307 using the Black Scholes Option Pricing Model with the following inputs: stock price on measurement date: $8.20; Exercise price: $1.00; Option term: 4 years; Computed volatility: 136.76%. The fair value of the options was amortized over a year with $195,307 expensed during the year ended December 31, 2017. The options issued during the year ended December 31, 2017 were valued at $242,002 using the Black Scholes Option Pricing Model with the following inputs: stock price on measurement date: $10.20; Exercise price: $1.00; Option term: 4 years; Computed volatility: 120.92%. The fair value of the options was amortized over a year with $242,002 expensed during the year ended December 31, 2018.

As of December 31, 2019, there were 74,000 options outstanding and 74,000 options exercisable with expiration dates commencing October 2020 and continuing through January 2022.

A summary of the Company’s option activity during the years ended December 31, 2019 and 2018 is presented below:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Options	Shares		Price		Term		Value
Balance Outstanding, December 31, 2017		49,000	$	1.49		3.19	$	-
Granted		25,000		1.00		4.00		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance Outstanding, December 31, 2018		74,000	$	1.32		2.47	$	198,000
Granted		-		-		-		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance Outstanding, December 31, 2019		74,000	$	1.32		1.47	$	64,800
Exercisable, December 31, 2019		74,000	$	1.32		1.47	$	64,800

In connection with a private placement that took place on April 7, 2017, the Company issued warrants for a total of 10,040 common shares of the Company at a 1:1 ratio for shares purchased by investors. The warrants were valued using the Black Scholes valuation model with stock prices ranging from $7.60 to $8.50, exercise price of $30.00, volatility ranging from 76.66% to 90.86% based on the Company’s stock price, an expected term of 1 year and a risk-free rate ranging from 1.07% to 1.11%. These warrants expired during the year ended December 31, 2018.

On September 4, 2018, in connection with the $2,233,333 Securities Purchase Agreement, the Company issued warrants for 357,334 common shares of the Company (See Note 16). The fair value of the warrants was determined using a Black Scholes valuation model with a stock price of $6.40, exercise price of $7.50, volatility of 111.51% based on the Company’s stock price, an expected term of 5 years and a risk free rate of 2.78%. The value of the warrants of $910,078 was recognized as interest expense during the year ended December 31, 2018. The warrants became exercisable on March 4, 2019.

F-39

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

On September 4, 2018, in connection with the $2,233,333 Securities Purchase Agreement (See Note 16), Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, was issued warrants for 26,056 common shares of the Company. The fair value of the warrants was determined using a Black Scholes valuation model with a stock price of $6.40, exercise price of $5.00, volatility of 169.29% based on the Company’s stock price, an expected term of 5 years and a risk free rate of 2.78%. The value of the warrants of $157,969 was recognized as interest expense during the year ended December 31, 2018. The warrants became exercisable on March 4, 2019.

The significant assumptions used to determine the fair values of warrants issued, using a Black-Scholes valuation model are as follows:

	2018
Market value of underlying stock	$	6.40
Volatility		111.51%-254.07	%
Expected term (in years)		5 – 5.5
Risk-free interest rate		2.77% -2.78	%
Expected dividend yield		None

A summary of the Company’s warrant activity for the years ending December 31, 2019 and 2018 is as follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Warrants	Shares			Price		Term		Value
Balance Outstanding, December 31, 2017		599,640		$	7.65		5.29	$	1,725,921
Granted		1,111,073			-		-		-
Forfeited		(536,000	)		-		-		-
Exercised		-			-		-		-
Expired		(10,040	)		-		-		-
Balance Outstanding, December 31, 2018		1,164,673		$	6.41		5.01	$	-
Granted		-			-		-		-
Forfeited		-			-		-		-
Exercised		-			-		-		-
Expired		-			-		-		-
Balance Outstanding, December 31, 2019		1,164,673		$	6.41		4.01	$	-
Exercisable, December 31, 2019		1,164,673		$	6.41		4.01	$	-

NOTE 16 – DISAGGREGATION OF REVENUE

ASC 606-10-50-5 requires that entities disclose disaggregated revenue information in categories (such as type of good or service, geography, market, type of contract, etc). ASC 606-10-55-89 explains that the extent to which an entity’s revenue is disaggregated depends on the facts and circumstances that pertain to the entity’s contracts with customers and that some entities may need to use more than one type of category to meet the objective for disaggregating revenue.

F-40

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

The Company disaggregates revenue by country to depict the nature and economic characteristics affecting revenue. The following table presents our revenue disaggregated by country for the years ended:

Country		2019	2018
Belgium	$	-	$	4,230
Croatia		22,497		-
Denmark		97,905		430,932
France		153,422		388,944
Georgia		5,301		-
Germany		6,672,511		14,783,119
Greece		26,101,316		2,970,219
Hungary		1,094,446		1,673,287
Indonesia		7,172		6,449
Ireland		467,965		1,519,746
Italy		196,044		481,141
Jordan		20,144		162,749
Libya		396,333		3,860,021
Netherlands		846,479		886,218
Poland		307,624		-
Spain		-		8,724
Turkey		24,347		-
UK		3,262,880		9,908,103
Total	$	39,676,385	$	37,083,882

NOTE 17 – SUBSEQUENT EVENTS

Farmasyn Agreement

On October 18^th, 2019, the Company entered into an agreement, effective January 2, 2020, with Farmasyn, a third-party pharmaceutical company. Pursuant to the agreement, from January 1, 2020, Farmasyn will promote, and the Company has agreed to accept, all of its customers to the Company. In addition, the Company will hire at least two of Farmasyn’s employees and will purchase all of Farmasyn’s stock at acquisition prices. The Company is evaluating the transaction under ASC 805, Business Combinations.

January 27, 2020 Senior Promissory Note

On January 27, 2020, the Company executed a Senior Promissory Note (the “January Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $2,500,000. The January Note bears interest at the rate of five (5%) percent per annum, paid quarterly in arrears. The January Note matures on May 15, 2020 unless in default. The Company may prepay the January Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($5,000) premium.

The January Note is subject to acceleration in an Event of Default (as defined). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the January Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection.

F-41

COSMOS HOLDINGS, INC.

Notes to the Consolidated Financial Statements

December 31, 2019

February 25, 2020 Senior Promissory Note

On February 25, 2020, the Company executed a Senior Promissory Note (the “February Note”) in the principal amount of $1,000,000 payable to an unaffiliated third-party lender. The February Note bears interest at the rate of eighteen (18%) percent per annum, paid quarterly in arrears. The February Note matures on April 30, 2020 unless in default.

The February Note is subject to acceleration in an Event of Default (as defined). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the February Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection.

March 23, 2020 Forbearance Agreement

On March 23, 2020, the Company entered into a Forbearance and Amendment Agreement (the “Agreement”) with an institutional investor (the “Buyer”). The Company entered into a Securities Purchase Agreement (the “SPA”) with the Buyer on May 15, 2019, pursuant to which the Company issued a Convertible Note (the “Note”) in the principal amount of $1,500,000. The Note was due on or before March 15, 2020 and was not paid (the “Existing Default”). The Note provides that upon an Event of Default, the Buyer may, among other things, require the Company to redeem all or a portion of the Note at a redemption premium of 120%, multiplied by the product of the conversion rate ($6.00per share) and the then current market price.

The Agreement provides that the Buyer will (a) forbear (i) from taking any action with respect to the Existing Default and (ii) from issuing any demand for redemption of the Note on the basis of the Existing Default until the earlier of: (1): (September 16, 2020 (or, if earlier, such date when all amounts outstanding under the Note shall be paid in full or converted into shares of Common Stock in accordance therewith) and (2) the time of any breach by the Company of the Agreement or the occurrence of an Event of Default that is not an Existing Default (the “Forbearance Expiration Date), (b)during the Forbearance Period waive the prepayment premium to any Company Optional Redemption, and (c) during the Forbearance Period, waive the repayment in full of the Note other than the Required Payments (as defined) prior to September 16, 2020. The Scheduled Required Prepayments are $100,000 upon signing the Agreement and five (5) monthly payments thereafter aggregating $200,000 with all amounts outstanding under the Note due on September 16, 2020. In addition, there are mandatory prepayments in the event the Company completes a Subsequent Placement (as defined) or long-term debt (other than from the Buyer or from officers and directors and advisors of the Company) or factoring and purchase order indebtedness, the Company shall effect a Company Optional Redemption amount equal to 50% of the gross proceeds (less reasonable expenses of counsel and any investment bank) together with all Scheduled Required Payments.

COVID-19 Diagnostic Detection Kit Exclusive Agency Agreement

On April 4, 2020, the Company entered to an agreement with a third-party manufacturer and distributor of medical products. The Company has been appointed as the Exclusive Representation Agent to promote the COVID-19 Diagnostic Detection Kit in Greece, Cyprus, England and Germany that was developed by the third party. The duration of this agreement is for two (2) years, until April 2, 2022. Under this agreement, the Company commits to place a certain amount of minimum purchase orders within the first week as well as on an ongoing basis. In addition, the prices are fixed for each product and exclude logistics costs.

The Effects of COVID-19

The World Health Organization (WHO) declared the coronavirus outbreak a pandemic on January 30, 2020. Since the outbreak in China in December 2019, COVID-19 has expanded its impact to Europe, where all of our operations reside, as well as our employees, suppliers and customers. While the disruption is currently expected to be temporary, there is considerable uncertainty around the duration of the closings and shelter-in-place orders and the ultimate impact of governmental initiatives. However, the financial impact and duration cannot be reasonably estimated at this time.

F-42

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Principal Executive Officer/Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Principal Executive Officer/Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and the Principal Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. This rule defines internal control over financial reporting as a process designed by, or under the supervision of, the Company’s Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:

· Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions;

· Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company; and

· Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

With the participation of the Chief Executive Officer/Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting. Based on this evaluation, our management has concluded that our internal control over financial reporting was not effective as of December 31, 2019, as the result of a material weakness. The material weakness results from significant deficiencies in internal control that collectively constitute a material weakness.

37

A significant deficiency is a deficiency, or combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness; yet important enough to merit attention by those responsible for oversight of the registrant’s financial reporting. We had the following material weakness at December 31, 2019:

· The Company has a lack of proper segregation of duties.

· The Company’s internal control structure lacks multiple levels of review and oversight.

Remediation of Deficiencies and Material Weaknesses

We are unable to remedy the all material weaknesses present in our internal controls until we are able to hire additional employees, so that we may then introduce checks and balances on internal controls.

We have put systems in place to deal with the revenue recognition deficiencies which include: having persuasive evidence that an arrangement exists in the form of a signed agreement, the price is fixed and determinable by having a purchase order signed by our customer and the company, written confirmation that goods or services have been delivered. The collectability aspect of revenue recognition will be met when we establish a collection history with our customers.

Limitations on the Effectiveness of Internal Controls

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting are or will be capable of preventing or detecting all errors or all fraud. Any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements, due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns may occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risk.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Changes in Internal Control Over Financial Reporting

During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

Our current directors, officers and managers are listed below. Each of our managers will serve for one year or until their respective successors are elected and qualified. Our officers serve at the pleasure of the Board. 

Name	Age	Position
Grigorios Siokas	54	CEO, CFO and Director
Dimitrios Goulielmos	52	Director
Demetrios G. Demetriades	53	Secretary and Director
John J. Hoidas	54	Director

On February 26, 2016, Dimitrios Goulielmos resigned from his positions as Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of Cosmos Holdings, Inc. (the “Company”) but retained his position as a member of the Board of Directors. His resignation is not due to any conflict with the Company. Concurrently with the acceptance of Mr. Goulielmos’ resignation, the Board of Directors appointed Grigorios Siokas to the offices of CEO and CFO and elected him to fill a vacancy and serve on the Board of Directors and as the Chairman of the Board.

Grigorios Siokas joined us as CEO, CFO and Director on February 26, 2016. He has over 15 years’ experience in the pharmaceutical industry. Since 2014, he has served as the CEO and Operations Manager of SkyPharm SA a wholly-owned subsidiary of the Company. SkyPharm SA is a pharmaceutical company located in Greece that mainly exports medicines from Greece to other European countries, such as Germany, England and Denmark. Prior to 2014, Mr. Siokas worked in a variety of sectors of the pharmaceutical industry mostly in the trading of medicines in Greece and other European countries. Additionally, since 2000 he has been a major shareholder in various pharmaceutical companies such as: Ippokratis Pharmaceuticals, (annual sales of over € 78 million); Thrakis Pharmaceuticals, (annual sales of over € 20 million); Thessalias Pharmaceuticals, (annual sales of over € 18 million); and ZED Pharma SA, (annual sales of over € 35 million). During the 1990s, Mr. Siokas founded and operated a marble wholesale import – export company in Germany. Within a period of two years he became the 4th biggest Greek marble importer in Germany. He also ran a Tour Operation with many different airlines, serving millions of customers. Grigorios Siokas has a Bachelor Degree in Geology from the Aristotle University of Thessaloniki, Greece. He received a Masters in management and finance from the University of Stuttgart and the University of Tuebigen, Germany.

Dimitrios Goulielmos joined us as CEO, CFO and Director on September 27, 2013 and resigned as an officer as of February 26, 2016 but retained his position as a Director of the Company. Since 1991, he has been principal attorney at the law firm of Goulielmos D. & Partners. He contributes to the Board the benefits of his legal, academic, and business background. Mr. Goulielmos is a fourth-generation attorney. He received his law degree with Excellency from the Aristotle University of Thessaloniki in 1988. He did post graduate studies for International transactions and Company law at Paris France and at the LSE of London, England. In 2004 he was elected Vice-president of EUROPECHE the organization that was established by the European Committee for the consultation and proposal of solutions in the sector of Community Fishery. The same year he was also elected as National representative of Hellas in the MEDISAMAK, the organization responsible for all Mediterranean countries, in the sector of Fishery. In year 2007 he was reelected as Vice-President of EUROPECHE. He is a member of the social dialogue group of ACFA, of EU on labor affairs. He is an honorary lifetime member of International Who’s Who Historical Society. Mr. Goulielmos has extensive experience in law, international deals, mergers, acquisitions, negotiations, international application of licenses, and real estate management which he will contribute to the Board.

Demetrios G. Demetriades was elected as Secretary and Director of the Company effective January 13, 2014. Since January 2003, Mr. Demetriades has been Director of Highlander Spring Trading Ltd, a trading company. From November 2000 to December 2002 he was Marketing Director of Eurolink Securities Ltd which was involved in trading in the Cyprus Stock Exchange. From January 1995 to November 2000 he was Supervising Officer of Laiki Factors Ltd a financing company. As a member of the board, Mr. Demetriades contributes the benefits of his trading, executive leadership and management experience. Mr. Demetriades will be compensated for his service from time-to-time as the Board of Directors will determine.

John J. Hoidas was appointed a Member of the Company’s Board of Directors on November 18, 2016 and he became the fourth member of the Board of Directors of the Company. Mr. Hoidas is a wealth management professional with extensive experience in the capital markets and specifically in the financing of pharmaceutical companies. He is currently the senior vice president of Uhlmann Price Securities based in Chicago. Over the previous years he achieved to raise significant amounts of capital for late stage pre-IPO companies such as Organovo (ONVO), Invivo Therapeutics (NVIV) and Matinas BioPharma (MTNB) to name a few. He has served as a broker dealer to the following firms: Kingsbury Capital Investment Advisors, Kingsbury Capital LLC, Spencer Trask Ventures.

39

Term of Office

Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

Family Relationships

There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.

Legal Proceedings

No officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:

· Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time,

· Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses),

· Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities,

· Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

· Having any government agency, administrative agency, or administrative court impose an administrative finding, order, decree, or sanction against them as a result of their involvement in any type of business, securities, or banking activity.

· Being the subject of a pending administrative proceeding related to their involvement in any type of business, securities, or banking activity.

· Having any administrative proceeding been threatened against you related to their involvement in any type of business, securities, or banking activity.

Audit Committee

We do not have a separately-designated standing audit committee. The entire Board of Directors performs the functions of an audit committee, but no written charter governs the actions of the Board when performing the functions of what would generally be performed by an audit committee, including approving the selection of our independent accountants. None of our current directors can be considered an “audit committee financial expert.” We will need to attract an individual with the qualification of an audit committee expert to our Audit Committee. At this time, we have not identified such an individual.

40

Director Independence

Our board of directors has determined that John Hoidas qualifies as an “independent board member” as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent beneficial shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by us during or with respect to the year ended December 31, 2019, the no persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act during fiscal year ended December 31, 2019.

Code of Ethics

We have adopted a Code of Ethics for Financial Executives, which includes our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our Code of Ethics has been filed as an exhibit to this Report.

Item 11. Executive Compensation

Summary Compensation Table

The table below summarizes all compensation awarded to, earned by, or paid to both to our officers and to our directors for all services rendered in all capacities to us for our fiscal year ended December 31, 2019 and 2018.

SUMMARY COMPENSATION TABLE

Name	YE 12/31	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Grigorios	2019		-		-		-		-		-		-		-		-
Siokas (1)	2018		-		-		-		-		-		-		-		-
Dimitrios	2019		-		-		-		-		-		-		-		-
Goulielmos (2)	2018		-		-		-		-		-		-		-		-
Demetrios G.	2019		-		-		-		-		-		-		-		-
Demetriades	2018		-		-		-		-		-		-		-		-

________________ 

(1)	Mr. Siokas became the Company’s Chief Executive Officer and Director of the Company in 2016. Prior to his becoming Chief Executive Officer, on April 30, 2014, the Company entered into an Exclusive Cooperation Agreement with Mr. Siokas to be the Manager of the Pharmaceutical Division of the Company. This Agreement was rescinded as of the date when Mr. Siokas became CEO in February 2016.
(2)	Mr. Goulielmos was Chief Executive Officer from September 27, 2013 until he resigned on February 26, 2016.

Narrative Disclosure to the Summary Compensation Table

There are no arrangements or plans in which we provide pension, retirement or similar benefits for executive officers.

Outstanding Equity Awards at Fiscal Year-End

The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of December 31, 2019.

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OUTSTANDING EQUITY AWARDS AT YEAR END

Option Awards

Stock Awards

Number of Securities Underlying Unexercised Options

Option Exercise

Option Expiration

No. of Shares or Units of Stock that Have Not

Market Value of Shares or Units of Stock that Have Not

Equity Incentive Plan Awards: No. of Unearned Shares, Units or Other Rights That Have Not

Name

Exercisable

Un-exercisable

Price ($)

Date

Vested (#)

Vested ($)

Vested

Grigorios Siokas

-

-

-

-

-

-

-

Dimitrios Goulielmos

-

-

-

-

-

-

-

John Hoidas

-

-

-

-

-

-

-

Demetrios G. Demetriades

-

-

-

-

-

-

-

Director Compensation

During the fiscal year ended December 31, 2019, no compensation was awarded to, earned by, or paid to our current director for services rendered in any capacities to us.

We have no formal plan for compensating our directors for their services in their capacity as directors. In the future we may grant options to our directors to purchase shares of common stock as determined by our Board of Directors or a compensation committee that may be established.

Stock Option Plans

We did not have a stock option plan as of December 31, 2019.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information regarding the beneficial ownership of our common stock as of April 12, 2020, for each of the following persons, after giving effect to the transaction under the Exchange Agreement:

· all such directors and executive officers as a group; and

· each person who is known by us to own beneficially five percent or more of our common stock prior to the change of control transaction. 

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Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. Unless otherwise indicated in the table, the persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the shareholder’s name. The percentage of class beneficially owned set forth below is based on 13,305,030 shares of common stock issued and outstanding on April 12, 2020. We calculated beneficial ownership according to Rule 13d-3 of the Securities Exchange Act of 1934, as amended as of that date (the “Exchange Act”). Shares of our Common Stock issuable upon exercise of options or warrants or conversion of Notes that are exercisable or convertible within sixty (60) days of April 12, 2020 are included as beneficially owned by the holder, but not deemed outstanding for computing the percentage of any other Stockholder for Percentage of Common Stock Beneficially Owned Immediately. Beneficial ownership generally includes voting and dispositive power with respect to securities. Unless otherwise indicated below, the persons and entities named in the table have sole voting and sole dispositive power with respect to all shares beneficially owned.

Name and Address of Beneficial Owners of Common Stock 1	Title of Class	Amount and Nature of Beneficial Ownership			% of Common Stock
Grigorios Siokas [1]	Common		7,845,639			59.0	%
Dimitrios Goulielmos [2]	Common		540,000			4.1	%
DIRECTORS AND OFFICERS			8,385,639			63.1	%
5% SHAREHOLDERS
Hudson Bay Ltd [3]			1,108,428	[4]		9.99	%

____________ 

(1)

Mr. Siokas has a voting block of 7,845,639 common shares, or 59% of the issued and outstanding common stock of the Company as of April 12, 2020.

(2)

Mr. Goulielmos is the owner of Jaron Trading Limited a company that holds 40,000 common shares. Therefore Mr. Goulielmos, in addition to the 500,000 common shares that he personally owns, he controls the 40,000 that belongs to Jaron Trading Limited. Attributing these shares to Mr. Goulielmos gives him a voting block of 540,000 shares, or 4.1% of the issued and outstanding common stock of the Company at April 12, 2020.

(3)

The address for this entity is 777 Third Avenue, 30th Floor, New York, New York 10017. Hudson Bay Capital Management, L.P., the investment manager of Hudson Bay Master Fund Ltd., has voting and investment power over these securities. Sander Gerber is the managing member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management, L.P. Each of Hudson Bay Master Fund Ltd. and Sander Gerber disclaims beneficial ownership over these securities.

(4)

As reported on Schedule 13G/A filed with the SEC on January 5, 2020, beneficial ownership of Hudson Bay Ltd. includes an aggregate of XXX shares of common stock issuable upon conversion of convertible Notes (which have since been repaid) and shares issuable upon exercise of Warrants that are held by such holder. Conversion of the Notes and exercise of the Warrants are each subject to a blocker provision which prevents any holder from converting or exercising, as applicable, the Notes or the Warrants into shares of Common Stock if its beneficial ownership of the Common Stock would exceed 9.99% of the Company’s issued and outstanding Common Stock (each, a “Blocker”).

Percentages are based on 13,305,030 shares outstanding at April 12, 2020.

Other than the shareholders listed above, we know of no other person who is the beneficial owner of more than five percent (5%) of our common stock.

43

Item 13. Certain Relationships and Related Transactions, and Director Independence

On the date of our inception, we issued 2 million shares of our common stock to our three officers and directors which were recorded at no value (offsetting increases and decreases in Common Stock and Additional Paid in Capital).

Grigorios Siokas

On October 1, 2016, the Company borrowed €5,000 ($5,276) from Mr. Siokas, CEO, related to its subsidiary’s purchase of additional capital of SkyPharm. The loan is non-interest bearing and has a maturity date of October 1, 2017. During the year ending December 31, 2017, the Company borrowed an additional €1,000 ($1,202). On September 30, 2018, the debt, amounting to €6,000 ($6,973) was transferred to the third-party purchaser of Amplerissimo pursuant to the Share Purchase Agreement. As of December 31, 2018, the Company had an outstanding principal balance of $0 and no accrued interest under this loan.

During the year ended December 31, 2016, the Company borrowed €90,500 ($95,496) as additional loans payable from Grigorios Siokas. During the year ended December 31, 2017, the Company borrowed an additional €623,621 ($749,717) and, as of December 31, 2017, the Company paid back the entire outstanding balance of the loans or €714,121 ($858,516). During the year ended December 31, 2018, the Company borrowed €1,622,700 ($1,917,545) of loans payable from Grigorios Siokas and repaid €269,000 ($317,877) of these loans. These loans are non-interest bearing and have no maturity dates. As of December 31, 2018, the Company has an outstanding principal balance of the loans or €1,353,700 ($1,550,799).

During the year ended December 31, 2018, the Company borrowed an additional $382,000 from Grigorios Siokas and repaid $155,000. These loans are non-interest bearing and have no maturity dates. As of December 31, 2018, the Company has an outstanding principal balance of $227,000 under these loans.

On December 20, 2018, the €1,500,000 ($1,718,400) note payable, originally borrowed pursuant to a Loan Agreement with a third-party lender, dated March 16, 2018, was transferred to Grigorios Siokas. The note bears an interest rate of 4.7% per annum and had a maturity date of March 18, 2019. As of December 31, 2018, the Company has an outstanding principal balance of €1,500,000 ($1,718,400) and accrued interest of €55,631 ($63,371).

During the years ended December 31, 2018 and 2017, Grigorios Siokas was paid total compensation of $0 and $250,000, respectively.

Grigorios Siokas is the Company’s CEO and principal shareholder, and is hence considered a related party to the Company.

Doc Pharma

On May 20, 2016, the Company entered into a non-binding Memorandum of Understanding (“MOU”) with DOC Pharma SA, a company controlled by Grigorios Siokas, the Company’s CEO, a director and principal shareholder. Doc Pharma SA located in Thessaloniki, Greece, is an ISO certified and licensed GDP (Good Distribution Practices) wholesaler of pharmaceutical products and GMP (Good Manufacture Practices) manufacturer of non-patent and patent medicines, Over-the-counter (OTC) medicines and Food Supplements. It is the owner of numerous licenses of generic medicines and uses its own network of pharmaceutical sales representatives to communicate its products with doctors. The Memorandum of Understanding expired on December 31, 2016, and has not been formally renewed or extended, however is being pursued. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

As of December 31, 2019, the Company had a prepaid balance of €2,181,780 ($2,449,484) and an accounts payable balance of €22,576 ($25,346), resulting in a net prepaid balance of €2,158,434 ($2,424,138) to Doc Pharma S.A. related to purchases of inventory. Additionally, the Company has a receivable balance of €546,240 ($613,264),.As of December 31, 2018, the Company had a prepaid balance of €1,867,239 ($2,139,109) and an accounts payable balance of €31,514 ($36,103), resulting in a net prepaid balance of €1,835,725 ($2,103,006) to Doc Pharma S.A., related to purchases of inventory. Additionally, the Company has a receivable balance and €38,323 ($43,903).

During the years ended December 31, 2019 and 2018, the Company purchased a total of €3,095,163 ($3,464,725) and €4,596,227 ($5,431,361) of products from Doc Pharma, respectively. During the years ended December 31, 2019 and 2018 the Company had €779,919 ($873,041) and €201,645 ($238,284) revenue from Doc Pharma, respectively.

44

On November 1, 2015, the Company entered into a €12,000 ($12,662) Loan Agreement with Doc Pharma S.A, pursuant to which Doc Pharma S.A., paid existing bills of the Company in the amount of €12,000 ($12,662), excluding the Vendor Bills. The loan bears an interest rate of 2% per annum and was due and payable in full on October 31, 2016. As of December 31, 2019, the Company had an outstanding principal balance under this note of €12,000 ($13,472) and accrued interest expense of $1,100.

On October 3, 2017, the Company, via its subsidiary SkyPharm, signed an Assignment Contract with Doc Pharma S.A. for various services that include the market analysis, research, development of formulas of products, design of product packaging, registration of products, and manufacturing of a new line of dietary supplement products. SkyPharm was given the exclusive rights to market and distribute the supplements in both the domestic Greece market and the international market, either through companies owned by the Company or third parties. Following product design and development, Doc Pharma S.A. will provide the Company with a complete dossier with all necessary data to be submitted to the National Organization for Medicines for required approvals. The total price of the project is €455,000 plus the corresponding VAT. According to this agreement, during the year ended December 31, 2018, we had an expense of €133,000 ($157,166). The total length of the contract was through December 31, 2018. The contract is subject to earlier termination upon written notice if: (i) for any reason, the marketing license for the products expires or if lifted, revoked or suspended; (ii) Doc Pharma’s production license is revoked for the category of supplements under the contract; (iii) either party breaches the contract and it is not cured within thirty (30) days of written notice to the other party; or (iv) the bankruptcy or similar proceedings by one of the parties.

Doc Pharma S.A is considered a related party to the Company due to the fact that the CEO of Doc Pharma is the wife of Grigorios Siokas, the Company’s CEO and principal shareholder, who also served as a principal of Doc Pharma SA in the past.

Medihelm

As of December 31, 2019, the Company had a prepaid balance of €3,109,147 ($3,490,639) and an accounts payable balance of £39,818 ($52,500) and €143,393 ($160,987), resulting in a net prepaid balance of $3,277,152 to Medihelm S.A. related to purchases of inventory. Additionally, the Company has a receivable balance of €1,163,070 ($1,305,779). As of December 31, 2018, the Company had a prepaid balance of €2,459,805 ($2,817,953) and an accounts payable balance of £42,065 ($53,566), resulting in a net prepaid balance of $2,764,387 to Medihelm S.A. related to purchases of inventory. Additionally, the Company has a receivable balance of €127,292 ($145,826).

During the years ended December 31, 2019 and 2018, SkyPharm purchased €2,332,755 ($2,611,286) and €9,564,899 ($11,302,842) of products from Medihelm, respectively, and Decahedron purchased $0 and £718,050 ($958,454) of products from Medihelm, respectively. During the years ended December 31, 2019 and 2018, SkyPharm had revenue of €945,074 ($1,057,916) and €1,055,435 ($1,247,208) from Medihelm, respectively.

Medihelm S.A. is considered a related party to the Company due to the fact that the managing director of Medihelm is the mother of Nicholaos Lazarou, the managing director of the Company’s UK subsidiary, Decahedron.

Konstantinos Vassilopoulos

During the year ended December 31, 2018, the Company borrowed and repaid an aggregate of $168,000 to Mr. Konstantinos Vassilopoulos. These loans have no formal agreement and bear no interest. As of December 31, 2018, an outstanding principal balance of $0 and $0 accrued interest remains.

Ourania Matsouki

During the year ended December 31, 2016, the Company borrowed €44,995 ($47,479) from Mrs. Matsouki, Grigorios Siokas’ wife and CEO of Doc Pharma. During the year ended December 31, 2017, the Company borrowed an additional €55,000 ($66,121). These loans have no formal agreement and bear no interest. As of December 31, 2017, the Company repaid the outstanding balance of €99,995 ($120,214) of these loans. During the year ended December 31, 2018, the Company borrowed an additional €30,000 ($34,368). As of December 31, 2018, the Company had repaid the outstanding balance of €30,000 ($34,368) of these loans.

45

Dimitrios Goulielmos

On November 21, 2014, SkyPharm entered into a Loan Agreement with Dimitrios Goulielmos, former Chief Executive Officer, and a current director of the Company, pursuant to which the Company borrowed €330,000 ($401,115) from Mr. Goulielmos. The Loan bore an interest rate of 2% per annum and was due and payable in full on May 11, 2015. On November 4, 2015, €130,000 ($142,860) in principal and the related accrued interest of €733 ($806) was forgiven and the remaining balance of €200,000 will no longer accrue interest as part of the stock purchase agreement with Grigorios Siokas on November 4, 2015 referenced above. The Company repaid €146,500 in prior years. During the year ended December 31, 2019, the Company paid back an additional €40,300 ($45,245) and as of December 31, 2019, an outstanding principal balance of €13,200 ($14,820) and €0 ($0) accrued interest remains. 

Dimitrios Goulielmos is a current director and former CEO of the Company, and is hence considered a related party to the Company.

Nikolaos Lazarou

In connection with the Decahedron SPA, on February 9, 2017, Decahedron, Medihelm S.A. and Nikolaos Lazarou entered into a liability transfer agreement whereby the loan previously provided Decahedron by Mr. Lazarou prior to the acquisition would be cancelled in exchange for Mr. Lazarou’s personal assumption of approximately £172,310 ($233,118) owed to Medihelm S.A., a creditor of Decahedron.

Following the acquisition of Decahedron, Nicholaos Lazarou was the managing director of the Company’s UK subsidiary until June 30, 2019.

On December 19, 2017, the Company entered into a stock purchase agreement with Nicholaos Lazarou whereby for consideration of €80,000 ($94,495) the Company purchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on December 19, 2017, the date of signing, however the Company is entitled to pay the full consideration in tranches until July 2018. As of December 31, 2017, the Company has paid consideration of €28,000 ($33,073) and had an amount due to related party of €52,000 ($61,422) recorded as accounts payable related party as of December 31, 2017. The shares were returned to the Company in February 2018. During the year ended December 31, 2018, the Company repaid the remaining balance of €52,000 ($61,448) and has an amount due to related party of €0 ($0) as of December 31, 2018.

On June 18, 2018, the Company entered into a stock purchase agreement with Nicholaos Lazarou, whereby for consideration of €60,000 ($69,912) the Company repurchased 15,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 18, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until November 2018. During the year ended December 31, 2018, the Company has paid consideration of €60,000 ($70,902) and has an amount due to related party of €0 ($0) as of December 31, 2018.

On November 30, 2018, the Company entered into a stock purchase agreement with Nicholaos Lazarou, whereby for consideration of $60,000 the Company repurchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on November 30, 2018, the date of signing, however, the Company was entitled to pay the full consideration in tranches until August 2019. As of December 31, 2018, the Company had an amount due to related party of $48,683. During the year ended December 31, 2019, the Company repaid the remaining balance in the amount of $48,683.

On June 20, 2019, the Company entered into a stock purchase agreement with Nicholaos Lazarou whereby for consideration of $15,000, the Company repurchased 114,518 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 20, 2019, the date of signing. During the year ended December 31, 2019, the Company paid the $15,000 in consideration in full.

Except as set forth above, we have not entered into any material transactions with any director, executive officer, and promoter, beneficial owner of five percent or more of our common stock, or family members of such persons.

46

Item 14. Principal Accountant Fees and Services

On January 18, 2019, the Company’s Board of Directors approved the engagement of Armanino LLP (“Armanino”) as the Company’s new Independent Certified Public Accountants, and the Company entered into an engagement agreement with Armanino on January 18, 2019. Armanino performed the audit of the Company’s consolidated financial statements for the fiscal years ended December 31, 2019 and December 31, 2018 and issued the audit report in this Annual Report.

The following table presents: (1) estimated fees for professional audit services rendered by Armanino for the audit of our annual financial statements and for other services for the year ended December 31, 2019; and (2) fees for professional audit services rendered by MB for the audit of our annual financial statements and for other services for the years ended December 31, 2019 and 2018.

Financial Statements for the Year Ended	Audit Services		Audit Related Fees		Tax Fees		Other Fees
December 31, 2019
ARMANINO LLP	$	75,000		-		-		-
December 31, 2018
ARMANINO LLP	$	50,000		-		-		-

As defined by the SEC, (i) “audit fees” are fees for professional services rendered by our principal accountant for the audit of our annual financial statements and review of financial statements included in our Form 10-K, or for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years; (ii) “audit-related fees” are fees for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “audit fees;” (iii) “tax fees” are fees for professional services rendered by our principal accountant for tax compliance, tax advice, and tax planning; and (iv) “all other fees” are fees for products and services provided by our principal accountant, other than the services reported under “audit fees,” “audit-related fees,” and “tax fees.”

Audit Fees for the fiscal years ended December 31, 2019 and 2018 were for professional services rendered for the audits and quarterly reviews of the financial statements of the Company, consents, and other assistance required to complete the year-end audit of the financial statements.

As the Company does not have a formal audit committee, the services described above were not approved by the audit committee under the de minimus exception provided by Rule 2-01(c)(7)(i)(C) under Regulation

S-X.Further, as the Company does not have a formal audit committee, the Company does not have audit committee pre-approval policies and procedures. However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.

47

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit No.	Document Description
2.1	Share Exchange Agreement by and among Prime Estates and Developments Inc. and Amplerissimo dated September 27, 2013 (25)
3.1	Articles of Incorporation of the Registrant dated November 14, 2013 (1)
3.2	Certificate of Amendment to Articles of Incorporation of the Registrant filed on October 11, 2017 (13)
3.3	Bylaws of the Registrant (1)
4.1	Form of Securities Purchase Agreement dated November 15, 2017 by and among Cosmos Holdings Inc. and the Buyers listed (14)
4.2	Form of Senior Convertible Note (14)
4.3	Form of Warrant to Purchase Common Stock (14)
4.4	Form of Leak-Out Agreement (14)
4.5	Form of Registration Rights Agreement (14)
4.6	Form of Amendment and Exchange Agreement (22)
4.7	Form of Senior Convertible Note (22)
4.8	Common Stock Purchase Warrant issued to Roth Capital Partners (21)
4.9	Securities Purchase Agreement dated September 4, 2018, by and among Cosmos Holdings Inc. and the Buyers listed (26)
4.10	Senior Convertible Note dated September 4, 2017 issued to Hudson Bay Master Fund (26)
4.11	Senior Convertible Note dated September 4, 2018 issued to Alto Opportunity Master Fund, SPC-Segregated Master Portfolio B (26)
4.12	Warrant dated September 4, 2018 issued to Hudson Bay Master Fund (26)
4.13	Warrant dated September 4, 2018 issued to Alto Opportunity Master Fund, SPC-Segregated Master Portfolio B (26)
4.14	Registration Rights Agreement dated September 4, 2018 (26)
4.15	Leak-Out Agreement dated September 4, 2018 between Cosmos Holdings Inc. and Hudson Bay Master Fund (26)
4.16	Leak-Out Agreement dated September 4, 2018 between Cosmos Holdings Inc. and Alto Opportunity Master Fund, SPC-Segregated Master Portfolio B (26)
4.17	Common Stock Purchase Warrant dated September 4, 2017 issued to Roth Capital Partners LLC (26)
4.18	Form of Second Amendment and Exchange Agreement (31)
4.19	Form of Senior Convertible Note (31)

48

10.1	Exclusive Cooperation Agreement, dated April 30, 2014, by and between the Registrant and Grigorios Siokas (2)
10.2	Advisory Board Member Consulting Agreement, dated as of January 3, 2017, by and between the Company and Orestes Varvitsiotes (3)
10.3	Stock Purchase Agreement, dated November 4, 2015, by and between Grigorios Siokas and Dimitrios S. Goulielmos (4)
10.4	Loan Facility Agreement, dated as of August 4, 2016, by and among SkyPharm S/A, Grigorios Siokas, as Guarantor and Synthesis Peer to Peer Income Fund. (5)
10.5	Pledge Agreement, by and between Grigorios Siokas and Synthesis Peer-to Peer Income Fund (5)
10.6	First Deed of Amendment relating to Loan Facility Agreement, dated as of August 4, 2016, by and among Sky Pharm S.A., as Borrower, Grigorios Siokas, as Guarantor and Synthesis Peer-to Peer Income Fund (6)
10.7	Intellectual Property Sale Agreement, dated as of October 1, 2016, by and among the Company, Anastasios Tsekas and Olga Parthenea Georgatsou (7)
10.8	Employment Agreement, dated as of October 1, 2016, by and between the Company and Konstantinos Vassilopoulos (7)
10.9	Stock Purchase Agreement, dated as of November 16, 2016, by and among Company, MediHelm Pharmaceutical Wholesellers SA, Konstantinos Metsovitis and Eleni Metsovitis (8)
10.10	Stock Purchase Agreement, dated as of November 17, 2016, by and among the Company, Decahedron Ltd. and Nikolaos Lazarou (9)
10.11	Amendment to the Stock Purchase Agreement, dated as of February 9, 2017 by and among the Company, Decahedron Ltd., Nikolaos Lazarou, Vasiliki Kappou, Misel Kappou (10)
10.12	Amended and Restating Loan Facility Agreement, dated as of March 23, 2017, by and among SkyPharm S.A., as Borrower, Grigorios Siokas, as Guarantor and Synthesis Peer-to Peer Income Fund, as Lender (11)
10.13	Trade Finance Facility Offer Letter, dated as of April 10, 2017, by and between Decahedron Ltd. and Synthesis Structured Commodity Trade Finance Limited. (12)
10.14	Trade Finance Facility Agreement, dated as of April 10, 2017, by and between Decahedron Ltd. and Synthesis Structured Commodity Trade Finance Limited. (12)
10.15	Cross Guarantee and Indemnity Agreement, dated as of April 10, 2017, by and among Cosmos Holdings Inc., Decahedron Ltd. and Synthesis Structured Commodity Trade Finance Limited. (12)
10.16	Security Assignment of Receivables and other Contractual Rights, dated as of April 10, 2017, by and between Decahedron Ltd. and Synthesis Structured Commodity Trade Finance Limited. (12)
10.17	Trade Finance Facility Agreement, dated May 12, 2017 by and between SkyPharm S.A and Synthesis Structured Commodity Finance Limited. (15)
10.18	Cross Guarantee and Indemnity Agreement dated May 12, 2017 by and between SkyPharm S.A., as Commodity Buyer, Cosmos Holdings Inc. as Guartor and Synthesis Structured Commodity Trade Finance Limited (15)

 

49

10.19	Security Assignment of Receivables and other Contractual Rights, dated May 12, 2017 by and between SkyPharm S.A and Synthesis Structured Commodity Trade Finance Limited (15)
10.20	Termination Agreement dated February 26, 2016, to Exclusive Cooperation Agreement dated as of April 30, 2014 (24)
10.21	Exclusive Cooperation Agreement, dated April 30, 2014, by and between the Company and Grigorios Siokas (2)
10.22	Assignment Contract dated October 3, 2017 by and between SkyPharm S.A. and DOC Pharma S.A. (40)
10.23	Loan Agreement dated November 21, 2014 by and between SkyPharm S.A. and Dimitrios S. Goulielmos (17)
10.24	Loan Agreement dated December 29, 2014 by and between the Registrant and Dimitrios S. Goulielmos (18)
10.25	Loan Agreement dated March 27, 2015 by and between the Registrant and Dimitrios S. Goulielmos (19)
10.26	Stock Purchase Agreement dated November 4, 2015 by and between Grigorios Siokas and Dimitrios S. Goulielmos (20)
10.27	Liability Transfer Agreement dated February 9, 2017 by and among Decahedron Ltd., MediHelm S.A. and Nikolaos Lazarou (40)
10.28	Distribution and Equity Acquisition Agreement Effective as of March 19, 2018 by and between Cosmos Holdings, Inc. and Marathon Global Inc. (23)
10.29	First Amendment to Share Exchange Agreement dated May 24, 2018 (27)
10.30	Stock Purchase Agreement dated as of June 23, 2018 by and among Cosmofarm Ltd., Deepdae Holdings Ltd. and Cosmos Holdings Inc. (28)
10.31	Share Exchange Agreement dated as of June 26, 2018 with Marathon Global Inc. (29)
10.32	Share Purchase Agreement dated September 30, 2018 by and between Cosmos Holdings Inc. and Abbydale Management Ltd. (41)
10.33	Further Amendment dated October 17, 2018 to Supplemental Deed dated May 16, 2018 by and among SkyPharm S.A., Cosmos Holdings Inc. and Synthesis Structured Commodity Trade Finance Limited (32)
10.34	Form of Third Amendment and Exchange Agreement (33)
10.35	Form of Exchange Warrant (33)
10.36	Form of Leak-Out Agreement (33)
10.37	Amendment dated as of December 19, 2018 to Stock Purchase Agreement dated as of June 23, 2018 by and among Cosmofarm Ltd., Deepdae Holding Ltd. and Cosmos Holdings Inc. (34)
10.38	Promissory Note dated December 19, 2018 from Cosmos Holdings Inc. to Deepdae Holding Ltd. (34)
10.39	Stock Purchase Agreement dated as of February 5, 2019 (36)
10.40	Stock Purchase Agreement dated as of February 18, 2019 (37)

   

50

10.41	Amendment dated as of December 19, 2018 to Stock Purchase Agreement dated as of June 23, 2018 by and among Cosmofarm Ltd., Deepdae Holding Ltd. and Cosmos Holdings Inc. filed with Form 8-K on December 20, 2018 (34)
10.42	Promissory Note dated December 19, 2018 from Cosmos Holdings Inc. to Deepdae Holding Ltd. filed with Form 8-K on December 20, 2018 (34)
10.43	Form of Senior Promissory Note (39)
10.44	Form of Guaranty Agreement (39)
10.45	Form of Securities Purchase Agreement by and Among Cosmos Holdings Inc and the Buyer (42)
10.46	Form of Senior Convertible Note (42)
10.47	Debt Exchange Agreement dated May 28, 2019 (43)
10.48	Debt Exchange Agreement dated June 24,2019 (44)
10.49	Form of Forbearance and Amendment Agreement (45)
14.1	Code of Ethics (30)
16.1	Letter from Malone Bailey LLP dated January 23, 2019 (35)
21	List of Subsidiaries*
31.1*	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

101.INS	XBRL Instance Document***
101.SCH	XBRL Taxonomy Extension Schema Document***
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document***
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document***
101.LAB	XBRL Taxonomy Extension Label Linkbase Document***
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document***
101	Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.***

_____________ 

*	Filed with this Report
***	To be filed by amendment
(1)	Incorporated by reference to the Registration Statement on Form S-1 (File No. 333-162597) filed by the Registrant on October 20, 2009.
(2)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on May 1, 2014.
(3)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on January 9, 2017.
(4)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on November 9, 2015.

51

(5)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on August 16, 2016.
(6)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on September 16, 2016.
(7)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on October 5, 2016.
(8)	Incorporated by reference to the Current Report on Form 8-K dated as of November 16, 2016 filed by the Registrant on November 22, 2016.
(9)	Incorporated by reference to the Current Report on Form 8-K dated as of November 17, 2016 filed by the Registrant on November 22, 2016.
(10)	Incorporated by reference to the Current Report on Form 8-K/A filed by the Registrant on February 13, 2017.
(11)	Incorporated by reference to the Current Report on Form 8-K/A filed by the Registrant on March 28, 2017.
(12)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on April 14, 2017.
(13)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant in October 11, 2017.
(14)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on November 16, 2017.
(15)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on May 18, 2017.
(16)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on April 1, 2014.
(17)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on November 26, 2014.
(18)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on January 5, 2015.
(19)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on March 31, 2015.
(20)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on November 9, 2015.
(21)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on December 27, 2017.
(22)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on February 21, 2018.
(23)	Incorporated by reference to the Current Report on Form 8-K filed by the Registrant on March 19, 2018.
(24)	Incorporated by reference to Registration Statement on Form S-1/A (No. 333-222061) filed by the Registrant on January 22, 2018.
(25)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on October 3, 2013.
(26)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on September 5, 2018.
(27)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on May 31, 2018.
(28)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on June 26, 2018.

52

(29)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on July 19, 2018.
(30)	Incorporated by reference to the filing of the Annual Report on Form 10-K filed by the Registrant on April 17, 2018.
(31)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on September 27, 2018.
(32)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on October 19, 2018.
(33)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on December 13, 2018.
(34)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on December 21, 2018.
(35)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on January 25, 2019.
(36)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on February 6, 2019.
(37)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on February 19, 2019.
(38)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on March 7, 2019.
(39)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on April 4, 2019.
(40)	Incorporated by reference to Registration Statement on Form S-1/A (No. 333-222061) filed by the Registrant on January 31, 2018.
(41)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on October 4, 2018.
(42)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on May 16, 2019
(43)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on May 28, 2019.
(44)	Incorporated by reference to the filing of the Current Report on Form 8-K filed by the Registrant on June 25, 2019.
(45)	Incorporated by reference to the filing of the Current Report on Form 8-Kfiled by the Registrant on March 23, 2020.
**	XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

Item 16. Form 10-K Summary

None.

53

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Cosmos Holdings Inc.
Date: April 14, 2020	By:	/s/ Grigorios Siokas
		Grigorios Siokas
		Chief Executive Officer (Principal Executive Officer, Acting Principal Financial Officer and Acting Principal Accounting Officer )

In accordance with the Exchange Act, this report has been duly signed by the following persons on behalf of the Company and in the capacities and on the dates indicated.

Signatures	Title	Date
/s/ Grigorios Siokas	Chief Executive Officer	April 14, 2020
Grigorios Siokas	(Principal Executive Officer, Acting Principal Financial Officer and Acting Principal Accounting Officer) and Director
/s/ Dimitrios Goulielmos	Director	April 14, 2020
Dimitrios Goulielmos
/s/ Demetrios G. Demetriades	Secretary and Director	April 14, 2020
Demetrios G. Demetriades
/s/ John J. Hoidas	Director	April 14, 2020
John J. Hoidas

54

EX-21

EXHIBIT 21

SUBSIDIARIES

Name	Jurisdiction	Ownership
Cosmofarm Ltd.	Greece		100	%
SkyPharm, S.A.	Greece		100	%
Decahedron Ltd.	United Kingdom		100	%

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Grigorios Siokas, certify that:

1.	I have reviewed this report on Form 10-K of Cosmos Holdings Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	Cosmos Holdings Inc.
Date: April 14, 2020	By:	/s/ Grigorios Siokas
		Grigorios Siokas
		Principal Executive Officer, Acting Principal Financial Officer and Acting Principal Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned hereby certifies that the Annual Report on Form 10-K for the year ended December 31, 2019 of Cosmos Holdings Inc. (the “Company”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	Cosmos Holdings Inc.
Date: April 14, 2020	By:	/s/ Grigorios Siokas
		Grigorios Siokas
		Principal Executive Officer, Acting Principal Financial Officer and Acting Principal Accounting Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Cosmos Holdings Inc. and will be retained by Cosmos Holdings Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

PROPERTY, PLANT AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2019

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net

	2019			2018
Leasehold improvements	$	548,000		$	369,437
Vehicles		115,055			117,402
Furniture, fixtures and equipment		1,439,839			1,167,798
Computers and software		85,052			55,169
		2,187,946			1,709,806
Less: Accumulated depreciation		(453,165	)		(284,174	)
Total	$	1,734,781		$	1,425,632

XML

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2019

EARNINGS PER SHARE

NOTE 14 - EARNINGS PER SHARE

Basic net income (loss) per share is computed by dividing net income (loss) attributable to the Company, decreased with respect to net income or increased with respect to net loss by dividends declared on preferred stock by using the weighted-average number of common shares outstanding. The dilutive effect of incremental common shares potentially issuable under outstanding options, warrants and restricted shares is included in diluted earnings per share in 2019 and 2018 utilizing the treasury stock method. The computations of basic and diluted per share data were as follows:

	2019			2018
Numerator for Basic and Diluted Earnings Per Share:
Net loss	$	(3,298,965	)	$	(9,060,658	)
Denominator for Basic Earnings Per Share:
Weighted Average Shares		13,273,596			13,306,612
Potentially Dilutive Common Shares		-			-
Adjusted Weighted Average Shares		13,273,596			13,306,612
Basic and Diluted Net (Loss) Income per Share		(0.25	)		(0.68	)

The following table summarized the potential shares of common stock that were excluded from the computation of diluted net loss per share for the years ended December 31, 2019 and 2018 as such shares would have had an anti-dilutive effect:

	2019		2018
Common stock warrants		-		144,338
Common Stock Options		42,808		60,437
Convertible Debt		-		52,381
Total		42,808		257,155

XML

ORGANIZATION AND NATURE OF BUSINESS (Policies)

12 Months Ended

Dec. 31, 2019

ORGANIZATION AND NATURE OF BUSINESS (Policies)

Basis of Financial Statement Presentation

The accompanying consolidated financial statements have been prepared in accordance with principles generally accepted in the United States of America.

Principles of Consolidation

Our consolidated accounts include our accounts and the accounts of our wholly owned subsidiaries, SkyPharm S.A., Decahedron Ltd. and Cosmofarm Ltd. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation and Other Comprehensive Income (Loss)

The functional currency of the Company’s subsidiaries is the Euro and British Pound. For financial reporting purposes, both the Euro (“EUR”) and British Pound (“GBP”) have been translated into United States dollars ($) and/or (USD) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Equity transactions are translated at each historical transaction date spot rate. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity (deficit) as “Accumulated other comprehensive loss.” Gains and losses resulting from foreign currency transactions are included in the statements of operations and comprehensive loss as other comprehensive income (loss). There have been no significant fluctuations in the exchange rate for the conversion of EUR or GBP to USD after the balance sheet date.

Other Comprehensive Income (Loss) for all periods presented includes only foreign currency translation gains (losses).

Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the consolidated balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency included in the consolidated results of operations as incurred.

As of December 31, 2019 and 2018, the exchange rates used to translate amounts in Euros into USD and British Pounds into USD for the purposes of preparing the consolidated financial statements were as follows:

	December 31, 2019		December 31, 2018
Exchange rate on balance sheet dates
EUR: USD exchange rate		1.1227		1.1456
GBP: USD exchange rate		1.3185		1.2734
Average exchange rate for the period
EUR: USD exchange rate		1.1194		1.1817
GBP: USD exchange rate		1.2767		1.3348

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of December 31, 2019 and December 31, 2018, there were no cash equivalents.

The Company maintains bank accounts in the United States denominated in U.S. Dollars and in the Republic of Cyprus, in Greece and in Bulgaria all of which are denominated in Euros. Additionally, the Company maintains a bank account in the United Kingdom denominated in British Pounds. For the year ended December 31, 2019, the amounts in these accounts were $14,451, $10,987 and $4,080. For the year ended December 31, 2018, the amounts in these accounts were $242,903, $203,806 and $119,357. Additionally, for the years ended December 31, 2019 and 2018, the Company had cash on hand in the amount of $52,489 and $166,350, respectively.

Reclassifications to Prior Period Financial Statements and Adjustments

Certain reclassifications have been made in the Company’s financial statements of the prior year to conform to the current year presentation. $2,500,000 in equity investment from the year ended December 31, 2018 was reclassified to marketable securities along with $212,890 from other investments resulting in marketable securities having an ending balance of $2,712,890 and other investments having an ending balance of $4,471 as of December 31, 2018. These reclassifications have no impact on previously reported net income.

Account Receivable, net

Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts against gross accounts receivable reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. At December 31, 2019 and 2018, the Company’s allowance for doubtful accounts was $529,252 and $540,048, respectively.

Tax Receivables

The Company pays Value Added Tax (“VAT”) or similar taxes (“input VAT”), income taxes, and other taxes within the normal course of its business in most of the countries in which it operates related to the procurement of merchandise and/or services it acquires and/or on sales and taxable income. The Company also collects VAT or similar taxes on behalf of the government (“output VAT”) for merchandise and/or services it sells. If the output VAT exceeds the input VAT, this creates a VAT payable to the government. If the input VAT exceeds the output VAT, this creates a VAT receivable from the government. The VAT tax return is filed on a monthly basis offsetting the payables against the receivables. In observance of EU regulations for intra-EU cross-border sales, our subsidiaries in Greece, SkyPharm and Cosmofarm, do not charge VAT for sales to wholesale drug distributors registered in other European Union member states. As of December 31, 2019 and 2018, the Company had a VAT net receivable balance of $136,891 and $729,790 respectively, recorded in the consolidated balance sheet as other assets.

Inventory

Inventory is stated at the lower-of-cost or net realizable value using the weighted average cost method on a first-in-first-out basis. Inventory consists primarily of finished goods and packaging materials, i.e. packaged pharmaceutical products and the wrappers and containers they are sold in. Inventory is replaced periodically to maintain the optimum stock on hand available for immediate shipment.

The Company writes-down inventories to net realizable value based on physical condition, expiration date, current market conditions, as well as forecasted demand. The Company’s inventories are not highly susceptible to obsolescence. Many of the Company’s inventory items are eligible for return to our suppliers when pre-agreed product requirements, including, but not limited to, physical condition and expiration date, are not met.

Property and Equipment, net

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided on a straight-line basis over the useful lives (except for leasehold improvements which are depreciated over the lesser of the lease term or the useful life) of the assets as follows:

	Estimated Useful Life
Leasehold improvements and technical works		Lesser of lease term or 40 years
Vehicles		6 years
Machinery		20 years
Furniture, fixtures and equipment		5–10 years
Computers and software		3-5 years

Depreciation expense was $201,000 and $34,623 for the years ended December 31, 2019 and December 31, 2018, respectively.

Impairment of Long-Lived Assets

In accordance with ASC 360-10, Long-lived Assets, which include property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. For the years ended December 31, 2019 and 2018, the Company had no impairment of long-lived assets.

Goodwill and Intangibles, net

The Company periodically reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically, goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology to estimate the fair value of a reporting unit. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit.

On December 19, 2018, as a result of the acquisition of Cosmofarm, the Company recorded $49,697 of goodwill.

Intangible assets with definite useful lives are recorded on the basis of cost and are amortized on a straight-line basis over their estimated useful lives. The Company uses a useful life of 5 years for an import/export license. The Company evaluates the remaining useful life of intangible assets annually to determine whether events and circumstances warrant a revision to the remaining amortization period. If the estimate of the intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over that revised remaining useful life. As of December 31, 2019, no revision to the remaining amortization period of the intangible assets was made.

Amortization expense was $33,086 and $9,307 for the years ended December 31, 2019 and 2018, respectively.

Equity Method Investment

For those investments in common stock or in-substance common stock in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, the investment is accounted for under the equity method. The Company records its share in the earnings of the investee and is included in “Equity earnings of affiliate” in the consolidated statement of operations. The Company assesses its investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable and recognizes an impairment loss to adjust the investment to its then current fair value.

Investments in Equity Securities

Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2016-01, and accordingly, investments in equity securities are accounted for at fair value with changes in fair value recognized in net income. Equity securities are classified as short-term or long-term based on the nature of the securities and their availability to meet current operating requirements. Equity securities that are readily available for use in current operations are reported as a component of current assets in the accompanying consolidated balance sheets. Equity securities that are not considered available for use in current operations would be reported as a component of long-term assets in the accompanying consolidated balance sheets. For equity securities with no readily determinable fair value, the Company elects a measurement alternative to fair value. Under this alternative, the Company measures the investments at cost, less any impairment, and adjusted for changes resulting from observable price changes in transactions for identical or similar investments of the investee. The election to use the measurement alternative is made for each eligible investment.

As of December 31, 2019, investments consisted of 3,000,000 shares, which traded at a closing price of $0.01 per share or a value of $33,000 of ICC International Cannabis Corp., 40,000 shares which traded at a closing price of $5.01 per share, or value of $200,290 of Diversa S.A. and 16,666 shares which traded at a closing price of $0.34 per share or value of $5,650 of National Bank of Greece. Additionally, the Company has $4,381 in equity securities of Pancreta bank, which are not publicly traded and recorded at cost. See Note 3, for additional investments in equity securities.

Fair Value Measurement

The Company applied FASB ASC 820, Fair Value Measurements and Disclosures, (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The following table presents assets that are measured and recognized at fair value as of December 31, 2019 and 2018, on a recurring basis:

	December 31, 2019						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	33,000		-		-	$	33,000
Marketable securities – Divsersa S.A.		200,290		-		-		200,290
Marketable securities – National Bank of Greece		5,650		-		-		5,650
	$	238,940					$	238,940

	December 31, 2018						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	2,500,000		-		-	$	2,500,000
Marketable securities – Divsersa S.A.		210,790		-		-		210,790
Marketable securities – National Bank of Greece		2,100		-		-		2,100
	$	2,712,890					$	2,712,890

FASB ASC 825-10-25 Fair Value Option, (“ASC 825-10-25”), expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.

Customer Advances

The Company receives prepayments from certain customers for pharmaceutical products prior to those customers taking possession of the Company’s products. The Company records these receipts as customer advances until it has met all the criteria for recognition of revenue including passing control of the products to its customer, at such point, the Company will reduce the customer and deposits balance and credit the Company’s revenues.

Revenue Recognition

The Company adopted the modified retrospective adoption in accordance with ASC 606, Revenue from Contracts with Customers, on January 1, 2018. The new guidance introduces a five-step model for recognizing revenue by applying the following steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the performance obligations are satisfied by transferring the promised goods to the customer. Once these steps are met, revenue is recognized upon delivery of the product. Adoption of ASC 606 has not changed the timing and nature of the Company’s revenue recognition and there has been no material effect on the Company’s consolidated financial statements.

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Stock Compensation (“ASC 718”) and Staff Accounting Bulletin No. 107 (“SAB 107”) issued by the SEC in March 2005 regarding its interpretation of ASC 718. ASC 718 requires the fair value of all stock-based employee compensation awarded to employees to be recorded as an expense over the related requisite service period. The Company values any employee or non-employee stock-based compensation at fair value using the Black-Scholes Option Pricing Model.

The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASU 2018-07, Compensation-Stock Compensation.

Foreign Currency Translations and Transactions

Assets and liabilities of all foreign operations are translated at year-end rates of exchange, and the statements of operations are translated at the average rates of exchange for the year. 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 earnings.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash investments and accounts receivable.

The following tables show the number of the Company’s clients which contributed 10% or more of revenue and accounts receivable, respectively:

	Year Ended December 31,		Year Ended December 31,
	2019		2018
Number of 10% clients		0		2
Percentage of total revenue		n/a		26.49	%
Percentage of total AR		n/a		4.94	%

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 carry forwards. 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 of England. The corporate income tax rate is 29% in Greece (tax losses are carried forward for five years effective January 1, 2013) and 20% in United Kingdom of England. 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. At December 31, 2019 the Company has maintained a valuation allowance against all net deferred tax assets in each jurisdiction in which it is subject to income tax.

The Company periodically reviews the uncertainties and judgments related to the application of complex income tax regulations to determine income tax liabilities in several jurisdictions. The Company uses a “more likely than not” criterion for recognizing the income tax benefit of uncertain tax positions and establishing measurement criteria for income tax benefits. The Company has evaluated the impact of these positions and due to the fact that the fiscal years 2013 - 2014 are unaudited by the Greek tax authorities, a potential tax liability has been identified, which may arise from a prospective tax audit from tax authorities, based on the tax settlement note of years 2007 - 2009. The amount of the liability as of December 31, 2019 and 2018, was $79,716 and $145,504, respectively, and has been recorded as a long-term liability within the consolidated balance sheets.

Retirement and Termination Benefits

Under Greek labor law, employees are entitled to lump-sum compensation in the event of termination or retirement. The amount depends on the employee’s work experience and renumeration as of the day of termination or retirement. If an employee remains with the company until full-benefit retirement, the employee is entitled to a lump-sum equal to 40% of the compensation to be received if the employee were to be dismissed on the same day. The Company periodically reviews the uncertainties and judgements related to the application of the relevant labor law regulations to determine retirement and termination benefits obligations of its Greek subsidiaries. The Company has evaluated the impact of these regulations and has identified a potential retirement and termination benefits liability. The amount of the liability as of December 31, 2019 and December 31, 2018, was $77,170 and $23,340, respectively, and has been recorded as a long-term liability within the consolidated balance sheets.

Basic and Diluted Net Income (Loss) per Common Share

Basic income per share is calculated by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted income per share is calculated by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period and, when dilutive, potential shares from stock options and warrants to purchase common stock, using the treasury stock method. In accordance with ASC 260, Earnings Per Share, the following table reconciles basic shares outstanding to fully diluted shares outstanding.

	Years Months Ended December 31,
	2019		2018
Weighted average number of common shares outstanding Basic		13,273,596		13,306,612
Potentially dilutive common stock equivalents		42,808		257,155
Weighted average number of common and equivalent shares outstanding – Diluted		13,273,596		13,306,612

Common stock equivalents are included in the diluted income per share calculation only when option exercise prices are lower than the average market price of the common shares for the period presented.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability. Lessor accounting under the standard is substantially unchanged. Additional qualitative and quantitative disclosures are also required. The Company adopted the standard effective January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The Company adopted the following practical expedients and elected the following accounting policies related to this standard update:

· The option to not reassess prior conclusions related to the identification, classification and accounting for initial direct costs for leases that commenced prior to January 1, 2019.

· Short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less; and

· The option to not separate lease and non-lease components for certain equipment lease asset categories such as freight car, vehicles and work equipment.

· The package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases.

Adoption of this standard resulted in the recognition of operating lease right-of-use assets and corresponding lease liabilities of $622,765 and $538,467, respectively, on the condensed consolidated balance sheet as of January 1, 2019. The Company’s accounting for finance leases remained substantially unchanged. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 13.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the measurement of goodwill by eliminating Step 2 from the current goodwill impairment test in the event that there is evidence of an impairment based on qualitative or quantitative assessments. ASU 2017-04 does not change how the goodwill impairment is identified, and the Company will continue to perform a qualitative assessment annually to determine whether the two-step impairment test is required. Until the adoption, current accounting standards require the impairment loss to be recognized under Step 2 of the impairment test. This requires the Company to calculate the implied fair value of goodwill by assigning fair value to the reporting unit’s assets and liabilities as if the reporting unit has been acquired in a business combination, then subsequently subtracting the implied goodwill from the carrying amount of the goodwill. The new standard would require the Company to determine the fair value of the reporting unit and subtract the carrying value from the fair value of the reporting unit to determine if there is an impairment. ASU 2017-04 is effective for the Company for fiscal years beginning after December 15, 2019, and early adoption is permitted. ASU 2017-04 is required to be adopted prospectively, and the adoption is effective for annual goodwill impairment tests performed in the year of adoption. The adoption of ASU No. 2017-04 is not expected to have a material effect on the Company’s consolidated financial position or the Company’s consolidated results of operations.

Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. 

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ORGANIZATION AND NATURE OF BUSINESS (Details Narrative) - USD ($)	1 Months Ended	12 Months Ended
	Nov. 21, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 19, 2018	Sep. 30, 2018	Sep. 29, 2018	Jan. 01, 2018	Feb. 10, 2017	Sep. 27, 2013
State or country of incorporation		Nevada
Cash equivalents		$ 52,489	$ 166,350
Date of incorporation		Jul. 21, 2009
Equity investment			2,500,000
Reverse stock split, description	the Company effected a one-for-ten (1:10) reverse stock split whereby the Company decreased, by a ratio of one-for-ten (1:10) the number of issued and outstanding shares of Common Stock.
Other investments			212,890
Revenue		$ 39,676,385	37,083,882
Other investments, ending balance			4,471
Marketable securities			2,712,890
Net loss		(3,298,965)	(9,060,658)
Value added tax receivable		136,891	729,790
Right-of-use assets		622,765
Lease liabilities		538,467
Working capital deficit		(7,062,520)
Accumulated deficit		(19,571,610)	(16,272,645)
TOTAL STOCKHOLDERS' DEFICIT		(6,460,829)	(3,317,450)				$ (3,027,844)
Allowance for doubtful accounts		529,252	540,048
Depreciation expense		201,000	34,623
Amortization of intangible assets		33,086	9,307
Goodwill				$ 49,697
NET CASH USED IN OPERATING ACTIVITIES		(4,788,842)	(1,555,306)
Long-term liability		79,716	145,504
Potential retirement and termination benefits liability		$ 77,170	23,340
Promissory note purchase price				227,000
Promissory Note [Member]
Promissory note purchase price				$ 200,000
Import/export license [Member]
Estimated Useful Life		5 years
United Kingdom [Member]
Cash equivalents		$ 4,080	119,357
Cyprus Greece and Bulgaria [Member]
Cash equivalents		10,987	203,806
United States [Member]
Cash equivalents		14,451	242,903
Greece [Member]
Revenue		$ 26,101,316	2,970,219
Income tax rate		29.00%
United Kingdom of England [Member]
Income tax rate		20.00%
Amplerissimo Ltd [Member]
Equity ownership percentage									100.00%
Ownership interest sold					100.00%
Pancreta bank [Member]
Equity method investment shares acquired, value		$ 4,381
SkyPharm [Member]
Revenue		1,057,916	$ 1,247,208
Equity ownership percentage						100.00%
Percentage of ownership interest transferred to company by Amplerissimo						22.00%
Institutional Noteholder [Member] | Stock Purchase Agreement [Member]
Common stock shares reserved								170,000
Diversa S.A. [Member]
Equity method investment shares acquired, value		$ 200,290
Equity method investment shares acquired, shares		40,000
Closing price		$ 5.01
National Bank of Greece [Member]
Equity method investment shares acquired, value		$ 5,650
Equity method investment shares acquired, shares		16,666
Closing price		$ 0.34
ICC International Cannabis Corp [Member]
Equity method investment shares acquired, value		$ 33,000
Equity method investment shares acquired, shares		3,000,000
Closing price		$ 0.01

XML

ORGANIZATION AND NATURE OF BUSINESS (Details 1)	12 Months Ended
	Dec. 31, 2019
Furniture, fixtures and equipment [Member] | Minimum [Member]
Estimated Useful Life	5 years
Furniture, fixtures and equipment [Member] | Maximum [Member]
Estimated Useful Life	10 years
Computers and software [Member] | Minimum [Member]
Estimated Useful Life	3 years
Computers and software [Member] | Maximum [Member]
Estimated Useful Life	5 years
Leasehold improvements and technical works [Member]
Estimated Useful Life	40 years
Machinery [Member]
Estimated Useful Life	20 years
Vehicles [Member]
Estimated Useful Life	6 years

XML

INVESTMENTS (Details)	12 Months Ended
	Dec. 31, 2019 USD ($)
INVESTMENTS (Tables)
Net gains and losses recognized during the period on equity securities	$ (1,220,085)
Less: Net gains and losses recognized during the period on equity securities sold during the period	158,282
Unrealized gains and losses recognized during the period on equity securities still held at the reporting date	$ (1,061,803)

XML

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	1 Months Ended						12 Months Ended
	Jun. 24, 2019	Jun. 20, 2019	May 28, 2019	Nov. 30, 2018	Jun. 18, 2018	Dec. 19, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 20, 2018	Dec. 31, 2017	Sep. 30, 2018	Dec. 31, 2016	Jul. 21, 2009
Repayment of related party							$ (382,055)	$ (18,330)
Related party accrual for repurchase of shares of common stock								48,683
Revenue							$ 39,676,385	$ 37,083,882
Shares issued							13,225,387	13,878,757
MediHelm S.A. One [Member]
Accounts payable balance							$ 160,987
MediHelm S.A. [Member]
Accounts payable balance							52,500	53,566
Accounts receivable balance							1,305,779	145,826
Prepaid balance							3,490,639	2,817,953
Net prepaid balance							3,277,152	2,764,387
Officers and directors [Member]
Shares issued													2,000,000
Decahedron [Member]
Payments to acquire businesses							0	958,454
Konstantinos Vassilopoulos [Member]
Borrowing								168,000
Outstanding principal balance								0
Foreign currency translation							(25,223)	(260)
Accrued interest								0
Ourania Matsouki [Member]
Borrowing								34,368		66,121		47,479
Outstanding principal balance								34,368		120,214
Grigorios Siokas Four [Member]
Borrowing							722,762	227,000
Grigorios Siokas Three [Member]
Borrowing							303,502	1,550,799
Outstanding principal balance							1,026,264	1,777,799
Additional proceeds from debt							508,084
Repayment of loans							$ 262,226
Gain on extinguishment of related party debt	$ 269,126		$ 259,999
Debt instrument conversion price	$ 7.50		$ 7.50				$ 7.50
Debt instrument converted amount shares issued	73,334		66,667				140,001
Debt instrument converted amount	$ 550,000		$ 500,000				$ 1,050,000
Grigorios Siokas One [Member]
Borrowing								1,858,965
Repayment of loans								308,166
Grigorios Siokas Two [Member]
Borrowing								382,000
Repayment of loans								155,000
DOC Pharma S.A. [Member]
Payments to acquire businesses							3,464,725	5,431,361
Accounts payable balance							25,346	36,103
Accounts receivable balance							613,264	43,903
Prepaid balance							2,449,484	2,139,109
Net prepaid balance							2,424,138	2,103,006
Revenue							873,041	238,284
Dimitrios Goulielmos [Member]
Outstanding principal balance							14,820	61,290
Repayment of loans							45,245	18,330
Grigorios Siokas [Member]
Borrowing									$ 1,718,400
Outstanding principal balance							1,347,240	1,718,400
Accrued interest							128,447	63,371
Repayment of loans							$ 336,810
Debt instrument converted amount shares issued	73,334		66,667				140,001
Interest rate									4.70%
Maturity date									Mar. 18, 2019
Grigorios Siokas [Member] | October 1, 2016 [Member]
Borrowing							$ 5,276			1,202
Outstanding principal balance								0
Maturity date							Oct. 01, 2017
Debt outstanding amount											$ 6,973
SkyPharm [Member]
Payments to acquire businesses							2,611,286	11,302,842
Revenue							1,057,916	1,247,208
Officer And Director [Member]
Purchase of treasury stock, shares		114,518
Consideration for shares		$ 15,000					$ 15,000
Tranche [Member]
Purchase of treasury stock from officer										33,073
Related party accrual for repurchase of shares of common stock										61,422
Tranche 1 [Member]
Purchase of treasury stock from officer								63,446
Due to related party								0
Purchase of treasury stock from officer								61,448
Stock Purchase Agreement [Member] | Director [Member]
Purchase of treasury stock, shares				20,000	15,000	20,000
Purchase of treasury stock from officer				$ 60,000	$ 69,612	$ 94,495
Stock Purchase Agreement [Member] | Nicholaos Lazarou [Member]
Purchase of treasury stock, shares					15,000	20,000
Purchase of treasury stock from officer					$ 69,912	$ 94,495
Due to related party								48,683
Repayment of related party							48,683
Loan Agreement [Member] | DOC Pharma S.A. [Member]
Accrued interest							1,034
Debt outstanding amount							13,086
Loan Agreement [Member] | DOC Pharma S.A. [Member] | November 1, 2015 [Member]
Outstanding principal balance							13,472	13,747
Accrued interest							1,100	836
Loan payable							12,662
Payment made for existing bills							$ 12,662
Interest rate							2.00%
Foreign currency translation							$ (35,850)	(4,612)
Tranche 2 [Member]
Purchase of treasury stock from officer								69,178
Due to related party								0
Purchase of treasury stock from officer								$ 70,902

XML

INVESTMENTS

12 Months Ended

Dec. 31, 2019

INVESTMENTS

NOTE 3 - INVESTMENTS

Distribution and Equity Agreement

On March 19, 2018, the Company entered into a Distribution and Equity Acquisition Agreement (the “Distribution and Equity Acquisition Agreement”) with Marathon Global Inc. (“Marathon”), a company incorporated in the Province of Ontario, Canada. Marathon was formed to be a global supplier of cannabis, cannabidiol (CBD) and/or any cannabis extract products, extracts, ancillaries and derivatives (collectively, the “Products”). The Company was appointed the exclusive distributor of the Products initially throughout Europe and on a non-exclusive basis wherever else lawfully permitted. The Company has no present intention to distribute any Products under this Agreement in the United States or otherwise participate in cannabis operations in the United States. The Company intends to await further clarification from the U.S. Government on cannabis regulation prior to determining whether to enter the domestic market.

The Distribution and Equity Acquisition Agreement is to remain in effect indefinitely unless Marathon fails to provide Market Competitive (as defined) product pricing and Marathon has not become profitable within five (5) years of the agreement. The transaction closed on May 22, 2018 after the due diligence period, following which the Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in common shares of the Company if it fails to meet certain performance milestones. The Company is entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000. The Company was also given the right to nominate one director to the Marathon board of directors.

Since Marathon is a newly formed entity with no assets and no activity, the Company attributed no value to the 5 million shares in Marathon which was received as consideration for the distribution services. As described below, the Company exchanged the Marathon shares in May and July 2018.

Share Exchange Agreements

On May 17, 2018, the Company entered into a Share Exchange Agreement (the “SEA”) with Marathon, ICC International Cannabis Corp (“ICC”) formerly known as Kaneh Bosm Biotechnology Inc. (“KBB”) and certain other sellers of Marathon capital stock. Under the SEA, the Company transferred 2.5 million shares in Marathon to ICC, a corporation incorporated under the laws of the Province of British Columbia and a public reporting issuer on the Canadian Securities Exchange, in exchange for 5 million shares of ICC. The Company accounted for the exchange at fair value and recognized a gain on exchange of its investment in Marathon of $1,953,000 included in “Gains on exchange of equity investments” in the consolidated statements of operations.

On July 16, 2018, the Company completed a Share Exchange Agreement (the “New SEA”) with Marathon, ICC, and certain other sellers of Marathon capital stock whereby the Company transferred its remaining one-half interest (2.5 million shares) in Marathon to KBB for an additional 5 million shares of ICC. The Company accounted for the exchange at fair value and recognized a gain on exchange of its investment in Marathon of $2,092,200 in the year ended December 31, 2018. The ten million shares of ICC owned by the Company constituted approximately 7% of the 141,219,108 shares of capital stock of KBB then issued and outstanding. The Company does not have the ability to exercise significant influence over ICC.

The Company determined the fair value of both exchanges based on an actively quoted stock price of ICC received in exchange for the Marathon shares. The Company continues to fair value its investment in ICC with changes recognized in earnings each period and was recorded as an unrealized loss on exchange of investment during the year ended December 31, 2018 of $1,545,200 such that the net gain at the end of the period was $2,500,000. During the year ended December 31, 2019, the Company recorded an unrealized gain of $322,880 During the year ended December 31, 2019, the Company sold 7,000,000 shares for proceeds of $1,261,718. The realized losses on the equity securities sold during the year ended December 31, 2019, which are the difference between the proceeds from sales and the original cost, was $1,528,162. The value of the investments as of December 31, 2019 and 2018 was $33,000 and $2,500,000, respectively.

Since no value was attributed to the 33 1/3% equity ownership interest in Marathon received as consideration for the distribution services, the Company would receive variable consideration in future for its services under the Distribution and Equity Acquisition Agreement, if certain milestones are achieved. Refer to Note 11 for the accounting associated with the cash of CAD $2 million received upfront. Variable consideration to be received in the future upon achieving the gross sales milestones described above, is constrained as the Company estimates that it is probable that a significant reversal of revenue could occur. In assessing the constraint, the Company considered its limited experience with the Products, new geographic markets and similar transactions, which affect the Company’s ability to estimate the likelihood of a probable revenue reversal. Therefore, no revenue has been recognized for the period ended December 31, 2019. The Company will continue to reassess variable consideration at each reporting period and update the transaction price when it becomes probable that a significant revenue reversal would not occur.

As of December 31, 2019, in addition to the 3,000,000 ICC shares valued at $33,000, as noted above, marketable securities also consisted of the following: 40,000 shares, which traded at a closing price of $5.01 per share, or value of $200,290 of Diversa S.A. and 16,666 shares, which traded at a closing price of $0.34 per share or value of $5,651 of National Bank of Greece. The Company recorded a net unrealized loss on the fair value of these investments of $14,803 during the year ended December 31, 2019.

In the following table, gains/losses on equity securities sold in the period reflect the difference between proceeds from sales and the fair value of the equity security sold at the beginning of the period or the purchase date, if later.

The following table summarized the gains and losses recognized during the period ended December 31, 2019:

Net gains and losses recognized during the period on equity securities	$	(1,220,085	)
Less: Net gains and losses recognized during the period on equity securities sold during the period		158,282
Unrealized gains and losses recognized during the period on equity securities still held at the reporting date	$	(1,061,803	)

CosmoFarmacy LP

In June 2019, the Company entered into an agreement with an unaffiliated third party to incorporate CosmoFarmacy L.P. for the purpose of providing strategic management consulting services and the retail trade of pharmaceutical products, OTC and beauty products to pharmacies. CosmoFarmacy was incorporated with a 30-year term through May 31, 2049. The unaffiliated third party is the general partner (the “GP”) of the limited partnership and is responsible for management and decision-making associated with CosmoFarmacy. The initial share capital was set to EUR 150,000 which was later increased to EUR 500,000. The GP contributed the pharmacy license (the “License”) valued at EUR 350,000 (30-year term) to operate the business of CosmoFarmacy in exchange for a 70% equity ownership. The Company is a limited partner and contributed cash of EUR 150,000 for the remaining 30% equity ownership. CosmoFarmacy is not publicly traded and the Company’s investment has been recorded using the equity method of accounting. The value of the investment as of December 31, 2019, was $163,575.

During the year ended December 31, 2019, the Company recognized a cash balance of $221,457 related to its acquisition of Cosmofarm. The cash was used to purchase the investment in CosmoFarmacy described above. Since the accounting for the acquisition of Cosmofarm was completed during the year ended December 31, 2018, the Company recognized the asset through earnings and is included in other income within the condensed consolidated statement of operations for the year ended December 31, 2019.

XML

CONVERTIBLE DEBT (Details Narrative) - USD ($)				1 Months Ended				12 Months Ended
	Dec. 13, 2018	Dec. 12, 2018	Sep. 04, 2018	Jun. 17, 2019	Feb. 20, 2018	Feb. 19, 2018	Nov. 15, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	May 17, 2019	Feb. 05, 2019	Jan. 07, 2019	Apr. 24, 2018
Convertible notes payable, principal amount									$ 2,680,000
Fair Value of Warrants								$ 157,969
Common stock, par value								$ 0.001	$ 0.001
Debt discount										3,350,000
Amortization of debt discount						$ 392,272		$ 320,205	5,681,613	360,890
Loss on extinguishment of debt									1,464,698
Outstanding principal balance									$ 103,610
Shares issued								13,225,387	13,878,757
Beneficial conversion feature								$ 120,000	$ 934,922
Related Party Debt									1,718,400
Debt modification expense									(1,942,156)
Convertible Notes [Member]
Debt discount									2,233,332
Amortization of debt discount									2,049,232
Outstanding principal balance								261,903
Beneficial conversion feature									$ 1,333,333
Conversion price									$ 3.478
Placement agent [Member] | Roth Capital Partners, LLC [Member]
Fair Value of Warrants			$ 157,969
Amortization of debt discount								$ 184,100
Proceeds from issuance of warrants			$ 140,000
Debt instrument maturity date			Mar. 04, 2019
Interest Rate								5.00%
Maturity period			5 years
Terms of Blocker Provision			Will receive seven (7%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months.
Installment fees								$ 13,097
Placement agent [Member] | Warrants [Member] | Roth Capital Partners, LLC [Member]
Debt original issue discount			$ 140,000
Common stock shares issuable upon conversion of debt/convertible securities			26,056
Warrants exercise price			$ 6.00
Convertible Notes [Member] | September 2018 [Member]
Interest Rate								5.00%	5.00%
Installment fees								$ 13,097	$ 31,905
Event of Default Interest rate								18.00%
Convertible Notes [Member] | Third Exchange Agreement [Member]
Convertible notes payable, principal amount								$ 638,095
Securities Purchase Agreement [Member] | InstitutionalInvestor [Member]
Convertible notes payable, principal amount											$ 1,500,000
Common stock, par value											$ 0.001
Customary events of default, description				The May 2019 Note includes customary Events of Default and provides that the Buyer may require the Company to redeem (regardless of whether the Event of Default has been cured) all or a portion of the Note at a redemption premium of one hundred twenty-five (125%) percent, multiplied by the greater of the conversion rate and the then current market price. The Buyer may also require redemption of the May 2019 Note upon a Change of Control (as defined) at a premium of one hundred twenty-five (125%) percent. The Company has the right to redeem the May 2019 Note at any time, in whole or in part, in cash at a price equal to 120% of the then outstanding conversion amount.
Legal fees				$ 30,000
Conversion price											$ 6.00
Lines of credit								1,500,000
Common stock shares issuable upon conversion of debt/convertible securities											250,000
Accrued interest								25,334
Amortization of interest expense								$ 90,491
Debt convertible conversion description				Conversion of the May 2019 Note is subject to a blocker provision which prevents any holder from converting the May 2019 Note into shares of common stock if its beneficial ownership of the common stock would exceed 9.99% of the Company’s issued and outstanding common stock.
Interest Rate				19.00%
Cash commission description								Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for this transaction equal to six (6%) percent of the total gross proceeds of the offering. This 6% fee or $90,000 was recorded as debt discount along with the $30,000 in legal fees associated with the May 2019 Note.
Securities Purchase Agreement [Member] | Warrants [Member]
Fair Value of Warrants			$ 910,078		$ 1,545,288
Common stock, par value			$ 6.00				$ 5.00
Conditional proceeds from sale of common stock under the agreement			$ 20,000
Proceeds from issuance of warrants							$ 2,686,000
Legal fees							$ 74,000
Debt instrument maturity date			Mar. 01, 2019
Exercise price			7.50
Debt original issue discount			$ 233,332
Common stock shares issuable upon conversion of debt/convertible securities			357,334		536,000		536,000
Amortization of interest expense					$ 347,418
Debt convertible conversion description			The Notes and Warrants on any trading day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s Common Stock. If after the closing of the Financing the VWAP of the Company’s common stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share;
Maturity period			5 years		5 years		5 years
Warrants exercise price					$ 7.50		$ 7.50
Terms of Blocker Provision			The Notes or the Warrants, into shares of common stock if its beneficial ownership of the common stock would exceed 9.99% of the Company’s issued and outstanding common stock (a “Blocker”).		A blocker provision which prevents any holder from converting or exercising, as applicable, the New Notes or the Warrants, into shares of Common Stock if its beneficial ownership of the Common Stock would exceed 4.99% (subject to adjustment not to exceed 9.99%) of the Company’s issued and outstanding Common Stock (each, a “Blocker”).
Expected volatility			111.51%
Risk-free rate			2.78%
Expected life			5 years
Securities Purchase Agreement [Member] | Warrants [Member] | Roth Capital Partners, LLC [Member]
Common stock shares issuable upon conversion of debt/convertible securities			26,056
Expected volatility			169.29%
Risk-free rate			2.78%
Expected life			5 years
Securities Purchase Agreement [Member] | Leak-out Agreement [Member] | Warrants [Member]
Convertible notes payable, principal amount							$ 3,350,000		432,419
Fair Value of Warrants										386,003
Debt discount										$ 240,000
Shares issued							53,600
Terms of agreement					As a condition to the closing of the Financing, each Buyer, severally, was required to execute a leak-out agreement (each, a “Leak-Out Agreement”) restricting such Buyer’s sale of shares of Common Stock underlying the New Notes and Warrants on any Trading Day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s Common Stock. If after the closing of the Financing there is no Event of Default under the New Notes, the VWAP of the Company’s Common Stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share; provided that the portion of the New Notes subject to redemption on each Installment Date shall thereafter double.
Conditional proceeds from sale of common stock under the agreement					$ 20,000
Terms of commission to placement agent							placement agent, received a cash commission for the transaction equal to eight (8%) percent of the total gross proceeds of the offering, or $240,000 and the issuance of five-year warrants to purchase eight (8%) percent of the shares of common stock issued or issuable in this offering (excluding shares of common stock issuable upon exercise of any warrants issued to investors), or 53,600 shares; and, will receive eight (8%) percent of any cash proceeds received from the exercise of any warrants sold in the offering with an expiration equal to or less than twenty-four (24) months.
Securities Purchase Agreement [Member] | Registration Rights Agreement [Member] | Warrants [Member]
Terms of agreement					The Company filed, within thirty (30) days of the Closing, a registration statement covering one hundred fifty (150%) percent of the maximum number of shares, underlying the New Notes and Warrants pursuant to a registration rights agreement with the Buyers (the “Registration Rights Agreement”).
Debt instrument maturity date					Feb. 01, 2019
Securities Purchase Agreement [Member] | Institutional investors [Member] | September 2018 Notes [Member]
Convertible notes payable, principal amount			$ 2,233,333
Common stock, par value			$ 0.001
Common stock shares issuable upon conversion of debt/convertible securities			372,223
Proceeds from issuance of warrants			$ 1,845,000
Legal fees			$ 15,000
Debt instrument maturity date			May 01, 2019
Purchase price charged to financing costs			$ 140,000
Purchase price of financing cost			$ 2,000,000
Exercise price			7.50
Common stock shares issuable upon conversion of debt/convertible securities			372,222
Securities Purchase Agreement [Member] | Holder [Member] | September 2018 Notes [Member]
Common stock, par value			$ 6.00
Event of default conversion price, description			Upon an Event of Default (regardless of whether such event has been cured), the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”).
Customary events of default, description			The Note at a redemption premium of one hundred twenty-five (125%) percent, multiplied by the greater of the conversion rate and the then current market price. The Buyer may also require redemption of the May 2019 Note upon a Change of Control (as defined) at a premium of one hundred twenty-five (125%) percent. The Company has the right to redeem the May 2019 Note at any time, in whole or in part, in cash at a price equal to 120% of the then outstanding conversion amount.
Per-delivery shares issued			372,222
Debt instrument maturity date			Nov. 01, 2018
Debt original issue discount			$ 934,922
Securities Purchase Agreement [Member] | Senior Convertible Note 1 [Member] | Institutional investors [Member]
Convertible notes payable, principal amount							$ 3,000,000
Securities Purchase Agreement [Member] | Senior Convertible Note 2 [Member] | Institutional investors [Member]
Convertible notes payable, principal amount							$ 3,350,000
Securities Purchase Agreement [Member] | Senior Convertible Notes [Member]
Common stock, par value							$ 0.001
Purchase price charged to financing costs							$ 240,000
Purchase price of financing cost							3,000,000
Debt original issue discount							$ 350,000
Common stock shares issuable upon conversion of debt/convertible securities							670,000
Exchange Agreements [Member] | Senior Convertible Notes [Member]
Convertible notes payable, principal amount					$ 2,871,429
Common stock, par value					$ 5.00
Debt discount					$ 2,596,838
Convertible debt, description					The Company evaluated the debt modification in accordance with ASC 470-50 and concluded that the debt qualified for debt extinguishment as the 10% cash flow test was met.
Event of default conversion price, description					Upon an Event of Default (as defined), the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the Volume-Weighted Average Price (as defined, the “VWAP”).
Customary events of default, description					The Notes include customary Events of Default and provide that the Buyers may require the Company to redeem (regardless of whether the Event of Default has been cured) all or a portion of the Notes at a redemption premium of one hundred twenty-five (125%) percent, multiplied by the greater of the conversion rate and the then current market price. The Buyers may also require redemption of the Notes upon a Change of Control (as defined) at a premium of one hundred twenty-five (125%) percent.
Existing note description					(i) the New Note shall not be convertible into shares of the Company’s common stock (the “Common Stock”) until April 20, 2018, (ii) all future cash installment payments under such New Note will be made at a redemption price equal to 112% of the applicable installment amount, (iii) the Company’s existing obligation to initially deliver pre-delivery shares of its common stock to the holder of such New Note was deferred until April 20, 2018, and (iv) at any time on or before June 20, 2018, the Company had the right, at its option, to redeem all, or any part, of the amounts then outstanding under such New Note in cash at redemption price equal to 125% of such amounts then outstanding under such New Note.
Cash proceeds received by holders					85.00%
Additional paid in capital					$ 1,140,711
Aggregate indebtedness					12,000,000
Per-delivery shares issued												108,417	465,625	670,001
Exchange Agreements [Member] | New Notes [Member]
Convertible notes payable, principal amount					3,216,000
Debt discount					3,216,000	1,140,711			3,216,000
Amortization of debt discount						$ 405,743		$ 45,613	3,170,386
Loss on extinguishment of debt					1,464,698
Beneficial conversion feature					2,880,000
Debt original issue discount					336,000
Adjustments to beneficial conversion feature and issue of debt discount					$ 1,739,289
Third Amendment and Exchange Agreements [Member]
Convertible notes payable, principal amount								$ 261,903	261,903
Exercise price		6.00
Repayment of principal									$ 638,095
Warrants retired		536,000
Conversion price									$ 3.478
Third Amendment and Exchange Agreements [Member] | Post-modification [Member]
Exercise price		6
Dividend yield		0.00%
Fair value of common stock		$ 6
Expected volatility		113.62%
Risk-free rate		2.77%
Expected life		5 years
Third Amendment and Exchange Agreements [Member] | Pre-modification [Member]
Exercise price		7.50
Dividend yield		0.00%
Fair value of common stock		$ 6
Expected volatility		243.69%
Risk-free rate		2.77%
Expected life		3 years 11 months 4 days
Third Amendment and Exchange Agreements [Member] | September 4, 2018 Securities Purchase Agreement [Member]
Conversion price		$ 3.478
Related Party Debt		$ 1,333,333
Debt modification expense	$ 1,778,952
Common stock issued	383,363
Third Amendment and Exchange Agreements [Member] | November 15, 2017 Securities Purchase Agreement [Member]
Debt instrument maturity date		Dec. 11, 2023
Warrants issued		727,683

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2019	Apr. 14, 2020	Jun. 30, 2019
Document And Entity Information
Entity Registrant Name	Cosmos Holdings Inc.
Entity Central Index Key	0001474167
Document Type	10-K
Amendment Flag	false
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Well Known Seasoned Issuer	No
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Dec. 31, 2019
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2019
Entity Common Stock Shares Outstanding		13,305,030
Entity Public Float			$ 14,636,141
EntityFileNumber	000-54436
EntityAddressAddressLine1	141 West Jackson Blvd
EntityAddressAddressLine2	Suite 4236
EntityAddressPostalZipCode	60604
EntityTaxIdentificationNumber	270611758
EntityAddressCityOrTown	Chicago
LocalPhoneNumber	536-3102
CityAreaCode	312
EntityAddressStateOrProvince	ILLINOIS

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($)	Total	Preferred Stock	Common Stock	Treasury Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)
Balance, shares at Jan. 01, 2018			12,825,393	(138,689)
Balance, amount at Jan. 01, 2018	$ (3,027,844)		$ 12,825	$ (95,882)	$ 5,652,429	$ (7,211,987)	$ (1,385,229)
Foreign currency translation adjustment, net	1,418,057						1,418,057
Stock-based compensation	242,003				242,003
Modification of debt	3,518,241				3,518,241
Conversion of convertible notes and accrued interest to common stock, shares			1,053,364
Conversion of convertible notes and accrued interest to common stock, amount	1,719,394		$ 1,054		1,718,340
Purchase of treasury stock from officer, shares				(55,000)
Purchase of treasury stock from officer, amount	(129,612)			$ (129,612)
Relative fair value of warrants issued with convertible debt	910,078				910,078
Beneficial conversion feature discount related to convertible notes payable	934,922				934,922
Fair value of warrants issued for services	157,969				157,969
Net loss	(9,060,658)					(9,060,658)
Balance, shares at Dec. 31, 2018			13,878,757	(193,689)
Balance, amount at Dec. 31, 2018	(3,317,450)		$ 13,879	$ (225,494)	13,133,982	(16,272,645)	32,828
Foreign currency translation adjustment, net	(49,167)						(49,167)
Net loss	(3,298,965)					(3,298,965)
Cancellation of pre-delivery shares issued in connection with convertible debentures, shares			(573,742)
Cancellation of pre-delivery shares issued in connection with convertible debentures, amount			$ (574)		574
Purchase of treasury stock from third party, shares				(391,268)
Purchase of treasury stock from third party, amount	(845,247)			$ (845,247)
Conversion of related party debt to common stock, shares			140,001
Conversion of related party debt to common stock, amount	1,050,000		$ 140		1,049,860
Cancellation of treasury shares, shares			(219,629)	219,629
Cancellation of treasury shares, amount			$ (220)	$ 658,887	(658,667)
Balance, shares at Dec. 31, 2019			13,225,387	(365,328)
Balance, amount at Dec. 31, 2019	$ (6,460,829)		$ 13,225	$ (411,854)	$ 13,525,749	$ (19,571,610)	$ (16,339)

XML

INCOME TAXES (Details 3) - USD ($)	Dec. 31, 2019	Dec. 31, 2018	Dec. 19, 2018
Intangibles	$ 263,790	$ 211,683
Goodwill			$ 49,697
Deferred Income Taxes [Member]
Net operating loss carryforward	1,270,650	904,877
Capital loss carryforward	801,744
Nonqualified Stock Options	184,545	187,513
Accrued expenses	7,389
Depreciation	2,418	1,602
Mark to market adjustment to securities	348,422
Total Deferred tax assets	2,615,168	1,093,992
Intangibles	(10,729)	(10,729)
Goodwill	(14,473)	(14,473)
Total Deferred tax liabilities	(25,202)	(25,202)
Valuation allowance	(2,589,906)	(1,068,790)
Net deferred tax assets (liabilities)

XML

INVESTMENTS (Details Narrative)	1 Months Ended	6 Months Ended	12 Months Ended
	Jul. 16, 2018 USD ($) shares	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2019 EUR (€) shares	Dec. 31, 2019 CAD ($) shares	Dec. 31, 2018 USD ($)	May 17, 2018 shares
Equity interest acquired, percentage			100.00%
Cash received with accounting associated			$ 2,000,000
Marketable securities						$ 2,712,890
Gain on exchange of investment						(2,500,000)
Marathon Global Inc [Member]
Gain on exchange of investment			1,953,000
Kaneh Bosm Biotechnology Inc [Member] | Share Exchange Agreement [Member]
Transfer of shares | shares							2,500,000
Kaneh Bosm Biotechnology Inc [Member] | Share Exchange Agreement [Member] | Canadian Securities Exchange [Member]
Exchange of shares | shares							5,000,000
Share exchange agreement [Member] | ICC [Member]
Additional shares issued value			33,000
Equity method investment shares acquired | shares	5,000,000
Description for ownership percentage	The ten million shares of ICC owned by the Company constitute approximately 7% of the 141,219,108 shares of capital stock of KBB then issued and outstanding
Loss on sale of equity investments			$ 1,528,162
Additional shares issued | shares			3,000,000
Equity investment			$ 33,000			2,500,000
Common stock shares sold during the period | shares			7,000,000	7,000,000	7,000,000
Proceeds from sold of common shares			$ 1,261,718
Unrealized loss on exchange of investment						1,545,200
Unrealized gain net			$ 322,880			$ 2,500,000
Share exchange agreement [Member] | Marathon Global Inc [Member]
Shares of Marathon transferred by company to KBB | shares	2,500,000
Gain on exchange of investment	$ 2,092,200
Distribution and Equity Acquisition Agreement [Member] | Marathon Global Inc [Member]
Equity interest acquiredpercentage, description			33 1/3% equity ownership interest	33 1/3% equity ownership interest	33 1/3% equity ownership interest	33 1/3% equity ownership interest
Cash received upon repayment for purchase common stock					$ 2,000,000
Distribution and Equity Acquisition Agreement [Member] | Marathon Global Inc [Member] | Gross Sales One [Member]
Cash received upon gross sales					2,750,000
Gross sales					13,000,000
Distribution and Equity Acquisition Agreement [Member] | Marathon Global Inc [Member] | Gross Sales [Member]
Cash received upon gross sales					2,750,000
Gross sales					$ 6,500,000
Marketable securities - Divsersa S.A. [Member]
Closing price of shares | $ / shares			$ 5.01
Shares issued as marketable securities | shares			40,000
Marketable securities - National Bank of Greece [Member]
Closing price of shares | $ / shares			$ 0.34
Marketable securities			$ 5,651
Shares issued as marketable securities | shares			16,666
Cosmo Farmacy LP [Member]
Cash recognized by acquisition			$ 221,457
Investement			$ 163,575
Initial share capital				€ 150,000
Initial share capital increased				500,000
Pharmacy license value				€ 350,000
Maturity period of license			30 years	30 years	30 years
Ownership equity		70.00%
cash contributed to limited partner				€ 150,000
Equity ownership remaining		30.00%

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CAPITAL STRUCTURE (Details Narrative) - USD ($)			1 Months Ended							12 Months Ended
	Feb. 05, 2019	Jan. 07, 2019	Jun. 20, 2019	Feb. 18, 2019	Nov. 30, 2018	Sep. 29, 2018	Jun. 18, 2018	Dec. 19, 2017	May 25, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Common stock, shares, outstanding										12,860,059	13,685,067
Common stock, shares issued										13,225,387	13,878,757
Common stock shares authorized										300,000,000	300,000,000	300,000,000
Preferred stock shares authorized										100,000,000	100,000,000	100,000,000
Cancellation of pre-delivery shares issued in connection with convertible debentures	108,417	465,325
Common stock value										$ 13,225	$ 13,879
Related party accrual for repurchase of shares of common stock											48,683
Gain on sale of Amplerissimo											146,647
Revenue										39,676,385	37,083,882
SkyPharm [Member]
Purchase price						$ 2,528
Ownership percentage						100.00%
Percentage of ownership interest transferred to company by amplerissimo						22.00%
Revenue										1,057,916	$ 1,247,208
Amplerissimo Ltd [Member] | Fiscal 2018 [Member]
Revenue										$ 7,639,022
Stock Purchase Agreement [Member] | Institutional Noteholder [Member]
Common stock, shares purchased	193,408
Cancellation and transfer of shares										193,408
Payment made against shares purchased										$ 580,224
Common stock, purchase price	$ 3.00
Aggregate common stock value	$ 580,224
Stock Purchase Agreement [Member] | Institutional Noteholder One [Member]
Common stock, shares purchased				83,341
Cancellation and transfer of shares										26,221
Treasury stock, shares transferred										57,120
Payment made against shares purchased										$ 250,023
Common stock, purchase price				$ 3.00
Aggregate common stock value				$ 250,023
Stock Purchase Agreement [Member] | Former Officer and Director [Member]
Repurchased of common shares			114,518
Consideration paid against shares			$ 15,000							15,000
Consulting agreement [Member]
Common stock, shares issued									20,000
Commencing agreement date									May 25, 2017
Consulting agreement period									20 months
Common stock value									$ 154,000
Price per share									$ 7.70
Consultant charges									$ 56,138
Consulting expense yet to be recognized									$ 92,299
Tranche [Member]
Purchase of treasury stock from officer												$ 33,073
Related party accrual for repurchase of shares of common stock												61,422
Tranche 1 [Member]
Purchase of treasury stock from officer											$ 63,446
Gain/Loss of change in foreign currency											2,024
Tranche 2 [Member]
Purchase of treasury stock from officer											69,178
Gain/Loss of change in foreign currency											$ 434
Share purchase agreement [Member] | Amplerissimo Ltd [Member] | Fiscal 2018 [Member]
Purchase price										5,811
Gain on sale of Amplerissimo										146,647
Director [Member] | Stock Purchase Agreement [Member]
Purchase of treasury stock from officer					$ 60,000		$ 69,612	$ 94,495
Purchase of treasury stock, shares					20,000		15,000	20,000
Employee [Member] | Potentially dilutive securities [Member] | On January 1, 2018 [Member]
Stock options granted										25,000
Exercise period										4 years
Exercise price										$ 1.00
Stock options vested										25,000

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STOCK OPTIONS AND WARRANTS (Details 2) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Placeholder Line Item. Please replace
Warrants [Member]
Number of Shares
Number of Shares Outstanding, Beginning	$ 1,164,673	$ 599,640
Granted		1,111,073
Forfeited		(536,000)
Exercised
Expired		(10,040)
Number of Shares Outstanding, Ending	$ 1,164,673	$ 1,164,673
Number of Shares Exercisable	1,164,673
Weighted Average Exercise Price
Weighted Average Exercise Price Outstanding, Beginning	$ 6.41	$ 7.65
Granted
Forfeited
Exercised
Expired
Weighted Average Exercise Price Outstanding, Ending	6.41	$ 6.41
Weighted Average Exercise Price Exercisable	$ 6.41
Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term Outstanding, Beginning	5 years 4 days	5 years 3 months 15 days
Weighted Average Remaining Contractual Term Outstanding, Ending	4 years 4 days	5 years 4 days
Weighted Average Remaining Contractual Term Exercisable	4 years 4 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value Outstanding, Beginning Balance		$ 1,725,921
Granted
Forfeited
Exercised
Expired
Aggregate Intrinsic Value Outstanding, Ending Balance
Aggregate Intrinsic Value Exercisable

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EARNINGS PER SHARE (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Numerator for Basic and Diluted Earnings Per Share:
Net loss	$ (3,298,965)	$ (9,060,658)
Denominator for Basic Earnings Per Share:
Weighted Average Shares	13,273,596	13,306,612
Potentially Dilutive Common Shares
Adjusted Weighted Average Shares	13,273,596	13,306,612
Basic and Diluted Net (Loss) Income per Share	$ (0.25)	$ (0.68)

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CAPITAL STRUCTURE

12 Months Ended

Dec. 31, 2019

CAPITAL STRUCTURE

NOTE 6 - CAPITAL STRUCTURE

Sale of Amplerissimo

On September 29, 2018, Amplerissimo transferred its remaining 22% investment in SkyPharm to the Company for a purchase price of €2,200 ($2,528). The Company now holds 100% of the capital stock of SkyPharm.

During the third quarter of fiscal 2018, management approved a plan to sell its Amplerissimo and its information technology business. Amplerissimo generated revenue of €5,747,947 ($7,639,022) in fiscal 2014 through agreements with two clients. These agreements have ten-year terms, with one having commenced on January 13, 2013, and another having commenced on May 14, 2013. As a result of the strong growth of our pharmaceutical business, Amplerissimo’s business has not been a priority for Cosmos and the Company has not pursued the continuation of further significant business activities in Amplerissimo after fiscal 2015. On September 30, 2018, the Company entered into a Share Purchase Agreement “SPA” with an unaffiliated third party. The Company sold 100% of the issued capital of its subsidiary, Amplerissimo, for a purchase price of €5,000 ($5,811), which was paid on October 12, 2018. The Company has recorded a gain on the sale of Amplerissimo of $146,647. A summary of the assets and liabilities that were disposed of in the sale of Amplerissimo is provided below:

	December 31, 2018
Cash and cash equivalents	$	683
Accounts receivable		13,421
Accounts payable and accrued expenses		(8,775	)
Loans payable - related party		(9,501	)
Taxes payable		(1,423,674	)
Accumulated other comprehensive loss		1,287,010
Total liabilities extinguished		(140,836	)
Proceeds due from sale of subsidiary		(5,811	)
Gain on sale of Amplerissimo	$	(146,647	)

Preferred Stock

The Company is authorized to issue 100 million shares of preferred stock, which have liquidation preference over the common stock and are non-voting. As of December 31, 2019 and December 31, 2018, no preferred shares have been issued.

Common Stock

The Company is authorized to issue 300 million shares of common stock. As of December 31, 2019 and December 31, 2018, the Company had 13,225,387 and 13,878,772 shares of our common stock issued and 12,860,059 and 13,705,082 shares outstanding, respectively.

On January 7, 2019 and February 5, 2019, 465,325 and 108,417, respectively, shares of common stock were cancelled, these shares were the remaining pre-delivery shares related to the convertible notes in Note 11.

Purchase of Treasury Shares

On December 19, 2017, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of €80,000 ($94,495) the Company will repurchase 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on December 19, 2017, the date of signing, however the Company is entitled to pay the full consideration in tranches until July 2018. As of December 31, 2017, the Company paid consideration of €28,000 ($33,073) and had an amount due to related party of €52,000 ($61,422). The shares were returned to the Company in February 2018. During the year ended December 31, 2018, the Company repaid the remaining balance of €52,000 ($63,446). The Company recorded a gain of $2,024 for the change in foreign currency related to this transaction.

On June 18, 2018, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of €60,000 ($69,612) the Company repurchased 15,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 18, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until November 2018. During the year ended December 31, 2018, the Company paid consideration of €60,000 ($69,178). The Company recorded a loss of $434 for the change in foreign currency related to this transaction.

On November 30, 2018, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of $60,000, the Company repurchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on November 30, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until August 2019. During the year ended December 31, 2018, the Company paid consideration of $11,317 and had a related party payable of $48,683.

On February 5, 2019, the Company entered into a Stock Purchase Agreement (the “SPA”) with an institutional noteholder. The SPA provides for the Company’s purchase of 193,408 shares of the Company’s common stock at $3.00 per share or an aggregate of $580,224. Payment was scheduled over a five-month period, subject to acceleration if the Company effects an eligible equity offering. As of December 31, 2019, the Company had made $580,224 in payments. As of the date of this filing the 193,408 shares have been transferred back to the Company and cancelled.

On February 18, 2019, the Company entered into a Stock Purchase Agreement (the “SPA”) with an institutional noteholder. The SPA provides for the Company’s purchase of 83,341 shares of the Company’s common stock at $3.00 per share or an aggregate of $250,023. Payment was scheduled over a five-month period, subject to acceleration if the Company effects an eligible equity offering. As of December 31, 2019, the Company had made $250,023 in payments. As of the date of this filing, 26,221 shares have been transferred back to the Company and subsequently cancelled. An additional 57,120 have been transferred to the Company, have not yet been cancelled and are recorded in treasury.

On June 20, 2019, the Company entered into a stock purchase agreement with a former officer and director of Decahedron, whereby for consideration of $15,000, the Company repurchased 114,518 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 20, 2019, the date of signing. During the year ended December 31, 2019, the Company paid consideration of $15,000.

Shares Issued for Services

On May 25, 2017, the Company entered into a 20-month consulting agreement with a third-party advisory firm for consideration of 20,000 shares of the Company’s common stock. The stock was issued on May 25, 2017 and fair valued at $7.70 per share or $154,000, which will be amortized over the length of the agreement. During the year ending December 31, 2017, the Company recorded $56,138 in consulting expense related to this agreement. During the year ended December 31, 2018, an additional $92,299 in consulting expense was recorded.

Potentially Dilutive Securities

On January 1, 2018, the Company granted 25,000 options to an employee of the Company as compensation for being appointed the International Finance Manager of the Company. The options have an exercise period of four years with an exercise price of $1.00 per share. In the event that he ceases to work for the Company for any reason, he will be entitled to a pro rata portion of the annual options. The options vest monthly with 25,000 options fully vested as of December 31, 2018 (See Note 16).

No options warrants or other potentially dilutive securities other than those disclosed above have been issued as of December 31, 2019.

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CONVERTIBLE DEBT

12 Months Ended

Dec. 31, 2019

CONVERTIBLE DEBT

NOTE 10 - CONVERTIBLE DEBT

A summary of the Company’s convertible debt during the years ended December 31, 2019 and 2018 is presented below:

	2019			2018
Beginning balance notes		365,513			3,110,714
New notes		1,500,000			2,233,332
Exchange agreement and debt modification		-			344,570
Payments		(365,513	)		(3,557,381	)
Conversions		-			(1,765,721	)
Subtotal notes		1,500,000			365,513
Debt discount at year end		(29,509	)		(229,713	)
Note payable net of discount		1,470,491			135,800

November 15, 2017 Securities Purchase Agreement

On November 15, 2017, the Company entered into a Securities Purchase Agreement with institutional investors (the “Buyers”), pursuant to which the Company issued on November 16, 2017 for a purchase price of $3,000,000, $3,350,000 in aggregate principal amount of Senior Convertible Notes (the “Existing Notes”) to the Buyers, convertible into approximately 670,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at $5.00 per share and five-year warrants (the “Warrants”) to purchase an aggregate of 536,000 shares of Common Stock exercisable at $7.50 per share. The Notes contained an original issue discount of $350,000. Of the $3,000,000 purchase price, $240,000 went directly to financing costs (see below) and $74,000 went directly to legal fees such that the Company received net proceeds of $2,686,000.

On February 20, 2018, the Company entered into two separate Amendment and Exchange Agreements (“Exchange Agreements”) with the Buyers for new senior convertible notes (“New Notes”) in exchange for existing notes. Each New Note is identical in all material respects to the Existing Note, except that (i) the New Note was not convertible into shares of the Company’s common stock (the “Common Stock”) until April 20, 2018; (ii) all future cash installment payments under such New Note will be made at a redemption price equal to 112% of the applicable installment amount; (iii) the Company’s existing obligation to initially deliver pre-delivery shares of its common stock to the holder of such New Note was deferred until April 20, 2018; and (iv) at any time on or before June 20, 2018, the Company had the right, at its option, to redeem all, or any part, of the amounts then outstanding under such New Note in cash at a redemption price equal to 125% of such amounts then outstanding under such New Note. The Company will repay the principal amount of the Notes in equal monthly installments beginning on January 1, 2018 and repeating on the first business day of each calendar month thereafter until the fourteenth (14th) month anniversary date of issue.

On September 26, 2018, the Company entered into a second amendment which extended the maturity dates of the notes to February 1, 2019. On April 24, 2018, 670,001 pre-delivery shares were issued. On January 7, 2019 and February 5, 2019, 465,625 and 108,417 pre-delivery shares, respectively, were cancelled upon full payment of both notes. Eighty-five (85%) percent of any cash proceeds received by the holders of the Notes from the sale of pre-delivery shares issued as collateral shall be applied against the particular installment amount then due. The Notes are senior in right of payment to all existing and future indebtedness except Permitted Indebtedness which includes $12 million of senior secured indebtedness of the Company and its subsidiaries under the above described Synthesis loan agreements, plus a defined amount of purchase money indebtedness in connection with bona fide acquisitions. The Company evaluated the debt modification in accordance with ASC 470-50 and concluded that the debt qualified for debt extinguishment as the 10% cash flow test was met. As a result, the Existing Notes were written off and the New Notes were recorded at fair value as of February 20, 2018. The Company wrote off the remaining principal balance of $2,871,429 of the Existing Notes along with the remaining $2,596,838 of debt discounts related to the Existing Notes of which $1,140,711 was a reduction to additional paid-in-capital representing the intrinsic value of the existing beneficial conversion feature. The Company recorded the New Notes in the amount of $3,216,000 and a total debt discount of $3,216,000 in relation to the intrinsic value of the new beneficial conversion feature of $2,880,000 and an original issue discount of $336,000. This resulted in a net loss on extinguishment of debt in the amount of $1,464,698 and additional net equity related to the beneficial conversion feature of $1,739,289.

The New Notes were not convertible until April 18, 2018 pursuant to the February 20, 2018 amendment. Beginning April 20, 2018, the Holder may convert the New Notes into shares of Common Stock at the rate of $5.00 per share. In the event of an issuance of Common Stock for a consideration less than the Conversion Price (other than Excluded Securities, as defined) the Conversion Price shall be reduced to the price of the dilutive issuance, (the “Conversion Price”). Upon an Event of Default (as defined), the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the Volume-Weighted Average Price (as defined, the “VWAP”). The Company valued the beneficial conversion feature of the Existing Notes at intrinsic value and recorded $1,140,711 to debt discount, of which $405,743 was amortized through February 19, 2018. On February 20, 2018, the remaining debt discount was written off and the Company recorded a new debt discount as discussed above.

On December 12, 2018, the Company entered into a Third Amendment and Exchange Agreement (“Third Exchange Agreement”) with the Buyers whereby the existing 536,000 warrants issued to such investors in connection with the November 15, 2017 Securities Purchase Agreement were retired in exchange for 727,683 new warrants. Additionally, the investors agreed to convert $1,333,333 of the debt related to the September 4, 2018 Securities Purchase Agreement at a reduced conversion price of $3.478. The Company issued those 383,363 shares on December 13, 2018. The Third Exchange agreement was considered to be an inducement to conversion and accounted for in accordance with ASC 470-20. Accordingly, the Company recorded a modification expense of $1,778,952 for the year ended December 31, 2018.

The modification expense was based on the change in the fair value of the warrants and conversion feature before and after the modification using the Black-Scholes option-pricing model on the date of the modification using the following assumptions: pre-modification: (a) exercise price of $7.50 and, (b) fair value of common stock of $6, (c) expected volatility of 243.69%, (d) dividend yield of 0%, (e) risk-free rate of 2.77%, (f) expected life of 3.93 years; and post-modification (a) exercise price of $6, (b) fair value of common stock of $6, (c) expected volatility of 113.62%, (d) dividend yield of 0%, (e) risk-free rate of 2.77%, (f) expected life of 5 years.

The Warrants have a five-year term and are exercisable into 536,000 shares of Common Stock beginning May 16, 2018, which was six months after the issue date. The Warrants are exercisable at $7.50 per share subject to full ratchet anti-dilution protection. As of September 30, 2019, there were no anti-dilution trigger events. The Warrants will be exercisable on a cashless basis if a registration statement is not effective covering the resale of the underlying Warrant Shares. The Company calculated the warrants at relative fair value of $1,545,288, which was recognized as a discount to the Existing Notes of which $347,418 was amortized as interest expense through February 19, 2018. On February 20, 2018, the remaining balance was reversed due to the Exchange Agreement as discussed above.

Conversion of the New Notes were and exercise of the Warrants are subject to a blocker provision which prevents any holder from converting or exercising, as applicable, the New Notes or the Warrants, into shares of Common Stock if its beneficial ownership of the Common Stock would exceed 4.99% (subject to adjustment not to exceed 9.99%) of the Company’s issued and outstanding Common Stock (each, a “Blocker”).

The Company filed, within thirty (30) days of the Closing, a registration statement covering one hundred fifty (150%) percent of the maximum number of shares, underlying the New Notes and Warrants pursuant to a registration rights agreement with the Buyers (the “Registration Rights Agreement”). The Post-Effective Amendment to the registration statement (No. 333-222061) was declared effective on May 14, 2018.

As a condition to the closing of the Financing, each Buyer, severally, was required to execute a leak-out agreement (each, a “Leak-Out Agreement”) restricting such Buyer’s sale of shares of Common Stock underlying the New Notes and Warrants on any Trading Day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s Common Stock. If after the closing of the Financing there is no Event of Default under the New Notes, the VWAP of the Company’s Common Stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share; provided that the portion of the New Notes subject to redemption on each Installment Date shall thereafter double.

On November 15, 2017, in connection with the $3,350,000 Securities Purchase Agreement, Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for the transaction equal to eight (8%) percent of the total gross proceeds of the offering, or $240,000 and the issuance of five-year warrants to purchase eight (8%) percent of the shares of common stock issued or issuable in this offering (excluding shares of common stock issuable upon exercise of any warrants issued to investors), or 53,600 shares; and, will receive eight (8%) percent of any cash proceeds received from the exercise of any warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The warrants are exercisable six months after the issue date or May 16, 2018 and were valued at a fair value of $386,003 which was fully expensed during the year ended December 31, 2017. The $240,000 cash commission was recorded as debt discount and was amortized over the term of the New Notes.

During the year ended December 31, 2018, there were principal conversions in the amount of $432,419 and the Company repaid principal on the New Notes in the amount of $2,680,000, such that the remaining outstanding principal balance of the New Notes as of December 31, 2018 was $103,610. The Company repaid this remaining balance in the year ended December 31, 2019.

The Company recorded a total of $3,350,000 of debt discounts related to the above Existing Notes in the year ended December 31, 2017. A total of $360,890 was amortized during the year ended December 31, 2017 and an additional $392,272 related to the debt discount of the Existing Notes was amortized through February 19, 2018. As a result of the Exchange Agreement discussed above, the debt discounts of the Existing Notes were written off and a total of $3,216,000 of debt discounts were recorded during the year ended December 31, 2018. The debt discounts are being amortized over the term of the debt. Amortization of the debt discounts of the New Notes for the year ended December 31, 2018 was $3,170,386. The additional $45,613 was amortized in the year ended December 31, 2019.

September 4, 2018 Securities Purchase Agreement

On September 4, 2018, the Company entered into a Securities Purchase Agreement with two institutional investors (the “Buyers”) pursuant to which the Company issued for a purchase price of $2,000,000, $2,233,333 in aggregate principal amount of Senior Convertible Notes (the “September 2018 Notes”) to the Buyers, convertible into 372,223 shares of the Company’s common stock, par value $.001 per share at $6.00 per share (with the exception of the conversion related to the Third Exchange Agreement), and warrants to purchase an aggregate of 357,334 shares of Common Stock exercisable at $7.50 per share (the “Warrants”). The Notes contained an original issue discount of $233,332. Of the $2,000,000 purchase price, $140,000 went directly to financing costs (see below) and $15,000 went directly to legal fees such that the Company received net proceeds of $1,845,000.

The September 2018 Notes provide that the Company will repay the principal amount of Notes in equal monthly installments including a 5% installment fee, which is recorded as interest expense, beginning on November 1, 2018 and repeating on the first business day of each calendar month thereafter until May 1, 2019. During the year ended December 31, 2018, the Company recorded $31,905 in installment fees. During the year ended December 31, 2019, the Company recorded $13,097 in installment fees.

The Notes were convertible at any time by the Holder into shares of Common Stock at the rate of $6.00 per share (with the exception of the conversion pursuant to the Third Exchange Agreement described below), subject to full ratchet anti-dilution adjustment (the “Conversion Price”). According to the original terms of the agreement, the Company was to pre-deliver up to 372,222 shares of common stock to the Buyers. Eighty-five percent (85%) of any cash proceeds received by the Buyers from the sale of the Pre-Delivery Shares would then be applied against the particular installment amount due on such Installment Date under the Note. The Company had three months to deliver the Pre-Delivery shares, however the debt was repaid prior to the opportunity to deliver those shares. The Registration Statement (No. 333-227813) covering 150% of the number of shares underlying the Notes and warrants was declared effective on November 1, 2018. Upon an Event of Default (regardless of whether such event has been cured), the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”). The Company valued the beneficial conversion feature of the Existing Notes at intrinsic value and recorded $934,922 to debt discount, which will be amortized over the life of the Notes.

The Warrants are exercisable into 357,334 shares of Common Stock equal to eighty (80%) percent of the number of shares of common stock the Buyers would receive if the Notes were fully converted (at an assumed price of $5.00 per share) upon the date of issuance of the Notes. The Warrants are exercisable at $7.50 per share for a five-year term commencing March 4, 2019 subject to full ratchet anti-dilution protection. The Warrants will be exercisable on a cashless basis if a registration statement is not effective covering the resale of the underlying Warrant Shares. The Company calculated the warrants at relative fair value of $910,078, which was recognized as a discount to the Notes and is being amortized as interest expense over the remaining term of the Notes.

Conversion of the Notes were and exercise of the Warrants are each subject to a blocker provision which prevents any holder from converting or exercising, as applicable, the Notes or the Warrants, into shares of common stock if its beneficial ownership of the common stock would exceed 9.99% of the Company’s issued and outstanding common stock (a “Blocker”).

As a condition to the closing of the Financing, each Buyer executed a leak-out agreement which replaced the leak-out agreements entered into in November 2017 (each, a “Leak-Out Agreement”) restricting such Buyer’s sale of shares of common stock underlying the Notes and Warrants on any trading day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s Common Stock. If after the closing of the Financing the VWAP of the Company’s common stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share; provided that the portion of the Notes subject to redemption on each Installment Date shall thereafter double.

Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for this transaction equal to seven (7%) percent of the total gross proceeds of the offering, or $140,000, and the issuance of five-year warrants to purchase seven (7%) percent of the shares of common stock issued or issuable in this offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors), or 26,056 shares; and will receive seven (7%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The warrants are exercisable six months after the issue date or March 4, 2019, at $6.00 per share and were valued at a fair value of $157,969 which was fully expensed during the year ended December 31, 2018. The $140,000 cash commission was recorded as debt discount and will be amortized over the term of the Notes.

During the year ended December 31, 2018 there were principal conversions in the amount of $1,333,333 at a conversion price of $3.478 pursuant to the Third Exchange Agreement and the Company repaid principal of $638,095, such that the remaining outstanding principal balance of the Notes as of December 31, 2018 was $261,903.

During the year ended December 31, 2019, the Company repaid the remaining principal balance in the amount of $261,903, such that the remaining outstanding principal balance of the Notes as of December 31, 2019 is zero.

The Company recorded a total of $2,233,332 of debt discounts related to the above Notes during the year ended December 31, 2018. The debt discounts are being amortized over the term of the debt. Amortization of the debt discounts for the year ended December 31, 2018 was $2,049,232. As a result of the final payment of the Notes, the remaining debt discount of $184,100 was amortized during the year ended December 31, 2019.

Securities Purchase Agreement executed on May 15, 2019

On May 15, 2019, the Company entered into a Securities Purchase Agreement with an institutional investor (the “Buyer”). Upon the closing of this financing, on May 17, 2019, the Company issued for a purchase price of $1,500,000 in principal amount a Senior Convertible Note (the “May 2019 Note”) to the Buyer.

The May 2019 Note provides that the Company will repay the principal amount of the May 2019 Note on or before March 15, 2020. On March 23, 2020, the maturity date was amended to September 16, 2020 (See Note 16). Interest at the rate of nineteen (19%) percent per annum shall be payable on the first day of each calendar month.

The May 2019 Note is convertible at any time by the Holder into 250,000 shares of common stock, par value $0.001 per share at the rate of $6.00 per share, subject to adjustment (the “Conversion Price”). Upon an Event of Default (regardless of whether such event has been cured), the Buyer may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”). The Company considered the need for the conversion feature to be bifurcated under ASC 815 and determined that it does not meet the requirements. Additionally, the Company determined the effective conversion rate under ASC 470-20 and determined that the instrument is out of the money and no beneficial conversion feature was recorded.

The May 2019 Note is senior in right of payment to all other existing and future indebtedness of the Company except Permitted Senior Indebtedness (as defined in the May 2019 Note), including $12 million of senior secured indebtedness of the Company and its subsidiaries under an existing senior loan agreement, plus defined amounts of purchase money indebtedness in connection with bona fide acquisitions.

The May 2019 Note includes customary Events of Default and provides that the Buyer may require the Company to redeem (regardless of whether the Event of Default has been cured) all or a portion of the Note at a redemption premium of one hundred twenty-five (125%) percent, multiplied by the greater of the conversion rate and the then current market price. The Buyer may also require redemption of the May 2019 Note upon a Change of Control (as defined) at a premium of one hundred twenty-five (125%) percent. The Company has the right to redeem the May 2019 Note at any time, in whole or in part, in cash at a price equal to 120% of the then outstanding conversion amount.

Conversion of the May 2019 Note is subject to a blocker provision which prevents any holder from converting the May 2019 Note into shares of common stock if its beneficial ownership of the common stock would exceed 9.99% of the Company’s issued and outstanding common stock.

As of December 31, 2019, the Company had a principal balance $1,500,000 on the May 2019 Note and the Company had accrued $25,334 in interest expense.

Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for this transaction equal to six (6%) percent of the total gross proceeds of the offering. This 6% fee or $90,000 was recorded as debt discount along with the $30,000 in legal fees associated with the May 2019 Note. These fees will be amortized over the term of the note. For the year ended December 31, 2019, the Company has recorded amortization of $90,491.

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DEBT (Tables)

12 Months Ended

Dec. 31, 2019

DEBT (Tables)

Summary of debt

December 31, 2019	Loan Facility		Bridge Loans		Trade Facility			Third Party			Total
Beginning balance	$	3,078,442	$	191,287	$	6,291,199		$	242,805		$	9,803,733
Proceeds		-		-		-			2,500,000			2,500,000
Payments		-		-		-			(227,912	)		(227,912	)
Foreign currency translation		-		-		(45,799	)		(298	)		(46,097	)
Ending Balance	$	3,078,442	$	191,287	$	6,245,400		$	2,514,595		$	12,029,724

December 31, 2018	Loan Facility			Bridge Loans			Trade Facility			Third Party			Debt Discount			Total
Beginning balance	$	3,118,442		$	204,965		$	6,728,605		$	27,651		$	(126,763	)	$	9,952,900
Proceeds		-			-			312,309			1,580,000			-			1,892,309
Payments		-			-			(1,156,700	)		(90,000	)		-			(1,246,700	)
Transfer to related party		-			-			-			(1,500,000	)		-			(1,500,000	)
Forgiveness of debt		(40,000	)		(13,678	)		-			-			-			(53,678	)
Amendment		-			-			661,645			-			-			661,645
Acquisition of Cosmofarm		-			-			-			227,912			-			227,912
Foreign currency translation		-			-			(254,660	)		(2,758	)		-			(257,418	)
Amortization		-			-			-			-			126,763			126,763
Ending Balance	$	3,078,442		$	191,287		$	6,291,199		$	242,805		$	-		$	9,803,733

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

INCOME TAXES (Tables)

Schedule of income before income tax domestic and foreign

	12/31/2019			12/31/2018
Domestic	$	(2,515,360	)	$	(8,731,677	)
Foreign		(600,790	)		(311,655	)
	$	(3,116,150	)	$	(9,043,332	)

Schedule of provision for income taxes

	12/31/2019		12/31/2018
Current tax provision
Federal	$	-	$	-
State		-		-
Foreign		182,815		17,326
Total current tax provision	$	182,815	$	17,326
Deferred tax provision
Domestic	$	-	$	-
State		-		-
Foreign
Total deferred tax provision	$	-	$	-
Total current provision	$	182,815	$	17,326

Summary of U.S. federal statutory rate

	12/31/2019			12/31/2018
US
Loss before income taxes	$	(3,116,150	)	$	(8,731,677	)
Taxes under statutory US tax rates	$	(654,391	)	$	(1,833,652	)
Increase (decrease) in taxes resulting from:
Increase in valuation allowance	$	1,521,175		$	554,452
Foreign tax rate differential	$	9,028		$	164,394
Permanent differences	$	94,520		$	1,628,906
Purchase price adjustments	$	-		$	25,202
Prior period adjustments	$	(713,466	)	$	(375,828	)
State taxes	$	(74,051	)	$	(146,148	)
Income tax expense	$	182,815		$	17,326

Significant components of deferred tax assets and liabilities

	12/31/2019			12/31/2018
Net operating loss carryforward	$	1,270,650		$	904,877
Capital loss carryforward		801,744			-
Nonqualified stock options		184,545			187,513
Accrued expenses		7,389			-
Depreciation		2,418			1,602
Mark to market adjustment in securities		348,422			-
Total deferred tax assets		2,615,168			1,093,992
Intangibles		(10,729	)		(10,729	)
Goodwill		(14,473	)		(14,473	)
Total deferred tax liabilities		(25,202	)		(25,202	)
Valuation allowance		(2,589,966	)		(1,068,790	)
Net deferred tax assets (liabilities)	$	-		$	-

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DISAGGREGATION OF REVENUE (Tables)

12 Months Ended

Dec. 31, 2019

DISAGGREGATION OF REVENUE (Tables)

Revenue disaggregated by country

Country		2019	2018
Belgium	$	-	$	4,230
Croatia		22,497		-
Denmark		97,905		430,932
France		153,422		388,944
Georgia		5,301		-
Germany		6,672,511		14,783,119
Greece		26,101,316		2,970,219
Hungary		1,094,446		1,673,287
Indonesia		7,172		6,449
Ireland		467,965		1,519,746
Italy		196,044		481,141
Jordan		20,144		162,749
Libya		396,333		3,860,021
Netherlands		846,479		886,218
Poland		307,624		-
Spain		-		8,724
Turkey		24,347		-
UK		3,262,880		9,908,103
Total	$	39,676,385	$	37,083,882

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PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Property plant and equipment	$ 2,187,946	$ 1,709,806
Less: Accumulated depreciation	(453,165)	(284,174)
Total	1,734,781	1,425,632
Computers and software [Member]
Property plant and equipment	85,052	55,169
Vehicles [Member]
Property plant and equipment	115,055	117,402
Leasehold Improvements [Member]
Property plant and equipment	548,000	369,437
Furniture, fixtures and equipment [Member]
Property plant and equipment	$ 1,439,839	$ 1,167,798

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INCOME TAXES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Loss before provision for income taxes	$ (3,116,150)	$ (9,043,332)
Domestic [Member]
Loss before provision for income taxes	(2,515,360)	(8,731,677)
Foreign [Member]
Loss before provision for income taxes	$ (600,790)	$ (311,655)

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INCOME TAXES (Details Narrative)	12 Months Ended
	Dec. 31, 2019 USD ($)
Federal Statutory Income Tax Rate, description	Subject to limitation under IRC Section 382. Of the $3.8 million of Federal net operating loss carryforwards, $2.5 million begin to expire in 2031. The remaining balance of $1.3 million is limited in annual usage of 80% of current year’s taxable income, but do not have an expiration.
Net operating loss carry forward	$ 3,800,000
United Kingdom [Member]
Net operating loss carry forward	1,000,000
United States [Member]
Net operating loss carry forward	$ 3,817,475
Expiry	2031
Federal [Member]
Net operating loss carry forward	$ 2,500,000

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STOCK OPTIONS AND WARRANTS (Details 1)	12 Months Ended
	Dec. 31, 2018 $ / shares
Market value of underlying stock	$ 6.40
Minimum [Member]
Volatility	111.51%
Expected term (in years)	5 years
Risk-free interest rate	2.77%
Maximum [Member]
Volatility	254.07%
Expected term (in years)	5 years 6 months
Risk-free interest rate	2.78%

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COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)			1 Months Ended	12 Months Ended
	Sep. 04, 2018	Aug. 08, 2017	Nov. 16, 2017	Dec. 31, 2019	Mar. 23, 2017
Private Placement [Member]
Commitments and contingencies description		(1) a cash commission of 6% of the total gross proceeds for two named investors (2) a cash commission of 4% of total gross proceeds from five named investors and (3) excluding the five named investors in “(2)” a cash commission equal to 8% of the total gross proceeds from the Offering and the issuance to the Agent or its designees of warrants covering 8% of the shares of common stock issued or issuable by the Company in the Offering. Additionally, the Agent will receive a cash fee of 8% payable within 5 business days, but only in the event of, the receipt by the Company of any cash proceeds from the exercise of any warrants with an expiration equal to or less than 24 months sold in the Offering.
Cash commission description	In connection with the Company’s September 4, 2018 Note offering, the Agent received a cash commission for this transaction of $140,000, equal to seven (7%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase seven (7%) percent of the shares of common stock issued or issuable in this offering (excluding shares of common stock issuable upon exercise of any warrants issued to investors, or 26,056 shares); however, will receive seven (7%) percent of any cash proceeds received from the exercise of any warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The warrants are exercisable six (6) months after the date of issuance, or March 4, 2019.		In connection with the Company’s November 16, 2017 Note offering, the Agent received a cash commission of $240,000, equal to eight (8%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase eight (8%) percent of the shares of common stock issued or issuable in the offering (excluding shares of common stock issuable upon exercise of any warrants issued to investors, or 53,600 shares); however, will receive eight (8%) percent of any cash proceeds received from the exercise of any warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The warrants are exercisable six (6) months after the date of issuance, or as of May 16, 2018.
SkyPharm [Member] | Second amendment to loan facility agreement [Member]
Common stock shares issuable upon conversion of debt/convertible securities					1,000,000
Intellectual property sale agreement [Member] | Anastasios Tsekas and Olga Parthenea Georgatsou [Member] | On October 1, 2016 [Member]
Operating lease periodic payment				$ 1,500
Common stock shares issuable upon conversion of debt/convertible securities				200,000
Intellectual property sale agreement [Member] | Anastasios Tsekas and Olga Parthenea Georgatsou [Member] | On October 1, 2016 [Member] | Conclusion of Preclinical Trials [Member]
Common stock shares issuable upon conversion of debt/convertible securities				50,000
Intellectual property sale agreement [Member] | Anastasios Tsekas and Olga Parthenea Georgatsou [Member] | On October 1, 2016 [Member] | conclusion of Phase I testing [Member]
Common stock shares issuable upon conversion of debt/convertible securities				50,000
Intellectual property sale agreement [Member] | Anastasios Tsekas and Olga Parthenea Georgatsou [Member] | On October 1, 2016 [Member] | Conclusion of Phase III testing [Member]
Common stock shares issuable upon conversion of debt/convertible securities				50,000
Intellectual property sale agreement [Member] | Anastasios Tsekas and Olga Parthenea Georgatsou [Member] | On October 1, 2016 [Member] | Conclusion of Phase II testing [Member]
Common stock shares issuable upon conversion of debt/convertible securities				50,000
Advisory Agreement [Member] | SkyPharm [Member] | April 18, 2018 [Member]
Term of operating lease				10 years
Annually operating lease amount				$ 104,000

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INCOME TAXES

12 Months Ended

Dec. 31, 2019

INCOME TAXES

NOTE 7 - INCOME TAXES

The domestic and foreign components of loss before provision for income taxes were as follows:

	12/31/2019			12/31/2018
Domestic	$	(2,515,360	)	$	(8,731,677	)
Foreign		(600,790	)		(311,655	)
	$	(3,116,150	)	$	(9,043,332	)

The components of the provision for income taxes are as follows:

	12/31/2019		12/31/2018
Current tax provision
Federal	$	-	$	-
State		-		-
Foreign		182,815		17,326
Total current tax provision	$	182,815	$	17,326
Deferred tax provision
Domestic	$	-	$	-
State		-		-
Foreign
Total deferred tax provision	$	-	$	-
Total current provision	$	182,815	$	17,326

The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended December 31, 2019 and 2018 is as follows:

	12/31/2019			12/31/2018
US
Loss before income taxes	$	(3,116,150	)	$	(8,731,677	)
Taxes under statutory US tax rates	$	(654,391	)	$	(1,833,652	)
Increase (decrease) in taxes resulting from:
Increase in valuation allowance	$	1,521,175		$	554,452
Foreign tax rate differential	$	9,028		$	164,394
Permanent differences	$	94,520		$	1,628,906
Purchase price adjustments	$	-		$	25,202
Prior period adjustments	$	(713,466	)	$	(375,828	)
State taxes	$	(74,051	)	$	(146,148	)
Income tax expense	$	182,815		$	17,326

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities consist of the following:

	12/31/2019			12/31/2018
Net operating loss carryforward	$	1,270,650		$	904,877
Capital loss carryforward		801,744			-
Nonqualified stock options		184,545			187,513
Accrued expenses		7,389			-
Depreciation		2,418			1,602
Mark to market adjustment in securities		348,422			-
Total deferred tax assets		2,615,168			1,093,992
Intangibles		(10,729	)		(10,729	)
Goodwill		(14,473	)		(14,473	)
Total deferred tax liabilities		(25,202	)		(25,202	)
Valuation allowance		(2,589,966	)		(1,068,790	)
Net deferred tax assets (liabilities)	$	-		$	-

At December 31, 2019, the Company had U.S. net operating loss carry forwards of approximately $3,817,475 that may be offset against future taxable income, subject to limitation under IRC Section 382. Of the $3.8 million of Federal net operating loss carryforwards, $2.5 million begin to expire in 2031. The remaining balance of $1.3 million is limited in annual usage of 80% of current year’s taxable income, but do not have an expiration. At December 31, 2019, the Company had United Kingdom net operating loss carry forwards of approximately $1 million that may be offset against future taxable income part or all of which may not be available to offset our future taxable income in the United Kingdom should there be a change in the nature or conduct of our business in the United Kingdom within the three years subsequent to the date of our acquisition of Decahedron. No tax benefit has been reported in the December 31, 2019 or 2018 consolidated financial statements due to the uncertainty surrounding the realizability of the benefit, based on a more likely than not criteria and in consideration of available positive and negative evidence. The Company has not recorded a non-cash interest expense deferred tax asset and is currently assessing its realizability. Upon completion of the analysis, deferred tax assets will be adjusted accordingly.

The Company applied the “more-likely-than-not” recognition threshold to all tax positions taken or expected to be taken in a tax return, which resulted in no unrecognized tax benefits as of December 31, 2019 and December 31, 2018, respectively.

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DEBT

12 Months Ended

Dec. 31, 2019

DEBT

NOTE 11 - DEBT

A summary of the Company’s third-party debt during the years ended December 31, 2019 and 2018 is presented below:

December 31, 2019	Loan Facility		Bridge Loans		Trade Facility			Third Party			Total
Beginning balance	$	3,078,442	$	191,287	$	6,291,199		$	242,805		$	9,803,733
Proceeds		-		-		-			2,500,000			2,500,000
Payments		-		-		-			(227,912	)		(227,912	)
Foreign currency translation		-		-		(45,799	)		(298	)		(46,097	)
Ending Balance	$	3,078,442	$	191,287	$	6,245,400		$	2,514,595		$	12,029,724

December 31, 2018	Loan Facility			Bridge Loans			Trade Facility			Third Party			Debt Discount			Total
Beginning balance	$	3,118,442		$	204,965		$	6,728,605		$	27,651		$	(126,763	)	$	9,952,900
Proceeds		-			-			312,309			1,580,000			-			1,892,309
Payments		-			-			(1,156,700	)		(90,000	)		-			(1,246,700	)
Transfer to related party		-			-			-			(1,500,000	)		-			(1,500,000	)
Forgiveness of debt		(40,000	)		(13,678	)		-			-			-			(53,678	)
Amendment		-			-			661,645			-			-			661,645
Acquisition of Cosmofarm		-			-			-			227,912			-			227,912
Foreign currency translation		-			-			(254,660	)		(2,758	)		-			(257,418	)
Amortization		-			-			-			-			126,763			126,763
Ending Balance	$	3,078,442		$	191,287		$	6,291,199		$	242,805		$	-		$	9,803,733

On November 16, 2015, the Company entered into a Loan Agreement with Panagiotis Drakopoulos, former Director and former Chief Executive Officer, pursuant to which the Company borrowed €40,000 ($42,832) as a note payable from Mr. Drakopoulos. The note bears an interest rate of 6% per annum and was due and payable in full on November 15, 2016. As of December 31, 2018, the Company had an outstanding principal balance of €13,000 ($14,893) and accrued interest of €3,088 ($3,538). As of December 31, 2019, the Company had an outstanding principal balance of €13,000 ($14,595) and accrued interest of €4,166 ($4,677).

On January 18, 2018, the Company entered into a Loan Agreement with a third party, pursuant to which the Company borrowed €75,000 ($91,785). The note bore an interest rate of 6.5% per annum and had a maturity date of January 17, 2019. The note was secured by a personal guaranty of Grigorios Siokas. During the year ended December 31, 2018, the Company repaid the loan and the related accrued interest of €1,748 ($2,002) in full.

On April 2, 2018, the Company entered into a Loan Agreement with a third party, pursuant to which the Company borrowed €5,000 ($6,144) as a note payable. The note bears an interest rate of 4.7% per annum and has a maturity date of June 15, 2019. As of December 31, 2018, the Company repaid the loan in full. Due to the early repayment by the Company, an agreement was reached between the Company and the lender for no interest to accrue under this loan.

On December 19, 2018, pursuant to the terms of the Cosmofarm SPA (See Note 2), the Company issued a non-interest-bearing promissory note in the amount of €200,000 ($227,912). The note had a maturity date of December 19, 2019. The Company had an outstanding balance of €200,000 ($227,912) as of December 31, 2018. During the year ended December 31, 2019, the Company repaid the outstanding balance of the note.

Loan Facility Agreement

On August 4, 2016, the Company’s wholly owned subsidiary SkyPharm entered into a Loan Facility Agreement, guaranteed by Grigorios Siokas, with Synthesis Peer-To Peer-Income Fund (the “Loan Facility” the “Lender”). The Loan Facility initially provided SkyPharm with a credit facility of up to $1,292,769 (€1,225,141). Any advance under the Loan Facility accrues interest at a rate of 10% per annum and requires quarterly interest payments commencing on September 30, 2016. The amounts owed under the Loan Facility shall be repayable upon the earlier of (i) three months following the demand of the Lender; or (ii) August 31, 2018. No prepayment is permitted pursuant to the terms of the Loan Facility. The Synthesis Facility Agreement as amended is secured by a personal guaranty of Grigorios Siokas, which is secured by a pledge of 1,000,000 shares of common stock of the Company owned by Mr. Siokas.

On September 13, 2016, SkyPharm entered into a First Deed of Amendment with the Loan Facility increasing the maximum loan amount to $1,533,020 as a result of the Lender having advanced $240,251 (€227,629) to SkyPharm.

On March 23, 2017, SkyPharm entered into an Amended and Restated Loan Facility Agreement (the “A&R Loan Facility”), with the Loan Facility which increased the loan amount to an aggregate total of $2,664,960 (€2,216,736) as a result of the lender having advanced $174,000 (€164,898) in September 2016, $100,000 (€94,769) in October 2016, $250,000 (€236,922) in November 2016, $452,471 (€428,800) in December 2016, $155,516 (€129,360) in January 2017, $382,327 (€318,023) in July 2017 and $70,000 (€58,227) in December 2017. The A&R Loan Facility amends and restates certain provisions of the Loan Facility Agreement, dated as of August 4, 2016, by and among the same parties. Advances under the A&R Loan Facility continue to accrue interest at a rate of 10% per annum from the applicable date of each drawdown and require quarterly interest payments. The A&R Facility now permits prepayments at any time. The amounts owed under the A&R Loan Facility were repayable upon the earlier of (i) seventy-five days following the demand of the Lender; or (ii) August 31, 2018. The A&R Loan Facility is secured by a personal guaranty of Grigorios Siokas, which is secured by a pledge of 1,000,000 shares of common stock of the Company owned by Mr. Siokas (the “Pledged Shares”). The A&R Loan Facility was also amended to provide additional affirmative and negative covenants of Sky Pharm and the Guarantor during the term of loans remain outstanding, including, but not limited to, the consent of the Lender in connection with (i) the Company or any of its subsidiaries incurring any additional indebtedness; or (ii) in the event of any increase in the Company’s issued and outstanding shares of Common Stock, the Pledged Shares shall be increased to an amount equal to a minimum of ten percent (10%) of the issued and outstanding shares of the Company.

On April 18, 2018, the Company entered into an amendment with the Lender that was effective as of January 1, 2018, pursuant to which the maturity dates for all advances was extended to December 31, 2021. Additionally, the interest rate was amended such that the interest rate for all advances is 4% plus the 3-Month Libor rate. The Loan Facility also forgave €35,060 ($40,000) in fees related to the July 6, 2017 advance. As a result, the Company reduced the unamortized portion of debt discount that related to those fees and recorded a gain on debt settlement of €19,763 ($23,354).

As of December 31, 2018, the outstanding balance under the A&R Loan Facility was $3,078,442 (€2,687,187) and accrued interest expense of $414,830 (€362,107) was recorded. As of December 31, 2019, the outstanding balance under this note was $3,078,442 (€2,741,999) and accrued interest expense of $609,607 (€542,983) has been recorded.

The Company recorded a total of €155,060 ($191,034) in debt discounts related to this note in prior years. The debt discounts are being amortized over the term of the debt. As a result of the April 16, 2018 amendment, the Company reduced the unamortized debt discount by €20,237 ($20,237). The Company amortized a total of €92,661 ($114,158) in prior years. The remaining debt discount of €42,162 ($56,043) was fully amortized in the year ended December 31, 2018.

Bridge Loans

On March 16, 2017 and March 20, 2017, SkyPharm entered into loan agreements with the Synthesis Peer-To Peer-Income Fund (the “Bridge Loans”). The Bridge Loans provided to SkyPharm loans of €41,590 ($50,000) and €100,000 ($120,220), respectively, during the year ended December 31, 2017. The Bridge Loans accrue interest at a rate of 10% per annum and were repayable on April 16, 2017 and April 20, 2017, respectively, together with all other amounts then accrued and unpaid. On April 16, 2017, the maturity dates were amended for no additional consideration or change in terms and conditions. The maturity dates of both loans were amended, and they matured on May 16, 2017 and May 20, 2017, respectively. Pursuant to the April 18, 2018 agreement and effective January 1, 2018, the Company reached an agreement with Synthesis Peer-To-Peer Income Fund such that the March 20, 2017 loan would have a fixed USD payoff amount of $106,542. As a result of this agreement the Company recorded a gain on settlement of debt of €16,667 ($19,695) related to the reduction of the USD payoff amount and an additional gain on settlement of debt of €3,950 ($4,668) related to interest that had accrued on the original amount of the loan. The Company has accrued interest expense of an aggregate total of €14,715 ($16,857) for both loans and the outstanding balances of these loans was €43,645 ($50,000) and €93,001 ($106,542), respectively, as of December 31, 2018. The Company has accrued interest expense of an aggregate total of €24,608 ($27,627) for both loans and the outstanding balances of these loans was €45,809 ($50,000) and €83,333 ($106,542), respectively, as of December 31, 2019.

On May 5, 2017, SkyPharm entered into a loan agreement with Synthesis Peer-To-Peer Income Fund for €31,388 ($34,745). The loan accrues interest at a rate of 10% per annum and matured on September 30, 2017. The Company has accrued interest expense of €3,410 ($3,906) and the outstanding balance on this loan was €30,329 ($34,745) as of December 31, 2018. The Company has accrued interest expense of €5,437 ($6,104) and the outstanding balance on this loan was €31,388 ($34,745) as of December 31, 2019.

On April 18, 2018, the Company entered into an amendment pursuant to which the maturity dates for all of the above Bridge Loan advances were extended to December 31, 2021 for no additional consideration. Additionally, the interest rate was amended such that, effective January 1, 2018, the interest rate for all advances is 4% plus the 3-Month Libor rate.

Trade Facility Agreements

On April 10, 2017, Decahedron entered into a Trade Finance Facility Agreement (the “Decahedron Facility”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”). The Decahedron Facility provides the following material terms:

· The Lender will provide Decahedron a facility of up to €2,750,000 ($3,087,425) secured against Decahedron’s receivables from the sale of branded and generic pharmaceutical sales.

· The total facility will be calculated as 95% of the agreed upon value of Decahedron’s receivables.

· The term of the Decahedron Facility will be for 12 months.

· The obligations of Decahedron are guaranteed by the Company pursuant to a Cross Guarantee and Indemnity Agreement.

· The Lender has the right to make payments directly to Decahedron’s suppliers.

· The following fees should be paid in connection with the Decahedron Facility:

o 2% of the maximum principal amount as an origination fee.

o A one percent (1%) monthly fee.

The current draw on the Decahedron Facility is $0.

On May 12, 2017, SkyPharm entered into a Trade Finance Facility Agreement (the “SkyPharm Facility”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”). The SkyPharm Facility provides the following material terms:

· The Lender will provide SkyPharm a facility of up to €2,000,000 ($2,245,400) secured against SkyPharm’s receivables from the sale of branded and generic pharmaceutical sales. In the event that accounts receivable becomes uncollectible, the Company will be obligated to pay back the notes in full.

· The total facility will be calculated as 95% of the agreed upon value of Decahedron’s receivables.

· The term of the SkyPharm Facility will be for 12 months.

· The obligations of SkyPharm are guaranteed by the Company pursuant to a Cross Guarantee and Indemnity Agreement.

· The Lender has the right to make payments directly to SkyPharm’s suppliers.

· The following fees should be paid in connection with the SkyPharm Facility:

o 2% of the maximum principal amount as an origination fee.

o A one percent (1%) monthly fee.

The Company obtained consents from Synthesis Peer-to-Peer Income Fund in connection with obtaining the Lender.

On November 16, 2017, SkyPharm signed an amended agreement with Synthesis Structured Commodity Trade Finance Limited that increased the maximum aggregate facility limit from €2,000,000 ($2,291,200) to €6,000,000 ($6,736,200). All other terms of the original agreement remain the same. The Company also obtained consents from Synthesis Peer-to-Peer Income Fund in connection with obtaining the November 2017 convertible debt financing.

On May 12, 2018, the Company borrowed an additional €270,000 ($247,117) in funds.

On May 16, 2018, SkyPharm S.A., as Commodity Buyer, entered into a Supplemental Deed of Amendment (the “Deed”) relating to a Trade Finance Facility dated May 12, 2017, as amended, with Synthesis Structured Commodity Trade Finance Limited (“Synthesis”), as Loan Receivables Originator. Under the Trade Finance Facility (the “TFF”) first entered into on May 12, 2017, as amended, there was a principal balance of €5,866,910 ($5,369,678) outstanding as of March 31, 2018. SkyPharm made a payment of €1,000,000 ($1,123,600) of interest and principal on May 31, 2018 under the terms and conditions of the Deed. Additionally, the maturity date for the facility has been amended such that, the full principal amount is to be repaid no later than May 31, 2021, subject to a repayment schedule to be agreed upon by SkyPharm and Synthesis Structure Commodity Trade Finance Limited. Synthesis Structure Commodity Trade Finance Limited may extend this final repayment date at its sole discretion.

The TFF was amended to provide, among other things:

· A listing of approved purchasers;

· To permit SkyPharm to request Synthesis to make payments under the TFF directly to SkyPharm so that SkyPharm can discharge its obligations to a commodity seller directly;

· To prohibit SkyPharm from entering into a commodity contract which grants more than seventy-five (75) days delay between the payment for products and receipt of the purchase price and placed other limitations on terms of commodity contracts;

· If Grigorios Siokas, CEO of Cosmos Holdings Inc. (“Cosmos”), ceases to own or control at least fifty-one (51%) percent of the shares of Cosmos, or SkyPharm ceases to be a wholly-owned subsidiary of Cosmos, either event shall constitute an Event of Default (as defined);

· The maximum aggregate amount of the TFF is €15,000,000, although there is no commitment for any future loans under the TFF;

· The interest rate on the TFF for: (i) all lending in U.S. dollars is the one-month LIBOR plus six (6%) percent margin; and (ii) for all lending in Euro, the one-month Euribor Rate plus six (6%) percent per annum, commencing June 1, 2018.

· Synthesis is permitted to terminate the TFF at any time and demand repayment of all outstanding principal and interest in full within six (6) months from the date of notification.

The Deed is conditioned upon, among other things, execution and perfection of a Bulgarian Amended Pledge (“BAP”) having priority over the Bulgarian Pledge Accounts with Unicredit Bulbank AD; and the Approved Purchasers are to make all payments to SkyPharm directly to the BAP.

On May 16, 2018, SkyPharm and Synthesis also entered into an Account Merge Agreement (the “Pledge”) as a requirement under the above-described Deed. Under the Pledge, Synthesis is to receive a first ranking securities interest in SkyPharm’s outstanding receivables under the Bulgarian bank account.

On October 17, 2018, the Company entered into a further amended agreement with Synthesis whereby the current balance on the TFF as of October 1, 2018, which was €4,866,910 ($5,629,555) and related accrued interest of €453,094 ($524,094) would be split into two principal balances of Euro €2,000,000 and USD $4,000,000. Interest on the new balances commenced on October 1, 2018 at 6% per annum plus one-month Euribor, when it is positive, on the Euro balance and 6% per annum plus one-month Libor on the USD balance. The Company will repay the principal amounts of each balance beginning no later than August 31, 2018 in quarterly installments of €125,000 and US $150,000. The loan matures on August 31, 2021. The Company evaluated the amended agreement under ASC 470-50 and concluded that it did not meet the 10% cash flow test and recorded debt modification expense of $138,110.

As of December 31, 2018, the Company had principal balances of €2,000,000 ($2,291,200) and $4,000,000 under the TFF and the Company had accrued $0 and $19,834, respectively in interest expense related to this agreement. As of December 31, 2019, the Company had a principal balance of €2,000,000 ($2,245,400) and $4,000,000 under the TFF and the Company had accrued $10,000 and $12,661, respectively in interest expense related to this agreement.

The Company recorded a total debt discount of €117,338 ($137,063) in origination fees associated with these loans, which was amortized over the original terms of the agreements. The Company recorded amortization of €53,043 ($66,227) in the year ended December 31, 2018 resulting in the full amortization of debt discount as of December 31, 2018.

Distribution and Equity Agreement

As discussed in Note 4 above, the Company entered into a Distribution and Equity Acquisition Agreement with Marathon. The Company was appointed the exclusive distributor of the Products (as defined) initially throughout Europe and on a non-exclusive basis wherever else lawfully permitted. As consideration for its services, Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in Common Shares of the Company if it fails to meet certain performance milestones. The Company is entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000.

As discussed in Note 4, the Company attributed no value to the shares received in Marathon pursuant to (a) above. In relation to the CAD $2 million cash received noted in (b) above, the Company accounted for its obligation to issue a variable number of the Company’s Common Shares as Share-settled debt obligation in accordance with ASC 480 measured at fair value or the settlement amount of $1,554,590 (CAD $2 million). If settlement were to occur on December 31, 2019, the Company would be required to issue 615,573 common shares to settle its debt obligation. The Company could be obligated to potentially issue an unlimited number of common shares to settle its Share-settled debt obligation. If such events were to occur, the Company would be required to increase its authorized share capital and since increasing the authorized share capital is within the control of the Company, as our CEO controls greater than 50% of the outstanding common stock of the Company, the original classification of equity-classified financial instruments issued by the Company were not affected.

Senior Promissory Notes executed on April 1 and 3, 2019

On April 1 and 3, 2019, the Company executed Senior Promissory Notes (the “Notes”) each in the principal amount of $250,000 payable to an unaffiliated third-party lender. The Notes bear interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The Notes matured on April 1 and 3, 2020 unless prepaid or in default. The Company is currently in discussions with the lender to extend the maturity date and is not in default. The Company may prepay the Notes within the first six (6) months by payment of unpaid interest for the first six (6) months interest and after six (6) months, with a (2%) percent ($5,000) premium on each note.

The Notes are subject to acceleration in an Event of Default (as defined in the Notes). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the Notes. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $250,000 and $250,000 on these notes and the Company had accrued $9,452 and $28,098, respectively, in interest expense.

Senior Promissory Note executed on April 9, 2019

On April 9, 2019, the Company executed a Senior Promissory Note (the “Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $500,000. The Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The Note matured on April 9, 2020, unless prepaid or in default. The Company is currently in discussions with the lender to extend the maturity date and is not in default. The Company may prepay the Note within the first six (6) months by payment of unpaid interest for the first six (6) months and after six (6) months, with a two (2%) percent ($5,000) premium.

The Note is subject to acceleration in an Event of Default (as defined in the Note). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $250,000 on this Note and the Company had accrued $27,431 in interest expense.

July 24, 2019 Senior Promissory Note

On July 24, 2019, the Company executed a Senior Promissory Note (the “July Note”) in the principal amount of $750,000 payable to an unaffiliated third-party lender who had previously loaned the Company $750,000. The funds represented by the July Note were advanced between July 19 and 24, 2019. The July Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The July Note matures on July 24, 2020, unless prepaid or in default. The Company may prepay the July Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($15,000) premium.

The July Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the July Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $750,000 on this note and the Company had accrued $49,625 in interest expense.

August 1, 2019 Senior Promissory Note

On August 1, 2019, the Company executed a Senior Promissory Note (the “August Note”) in the principal amount of $500,000 payable to an unaffiliated third-party lender who had previously loaned the Company $1,500,000. The August Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The August Note matures on August 1, 2020, unless prepaid or in default. The Company may prepay the August Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($10,000) premium.

The August Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the August Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $500,000 on this note and the Company had accrued $31,438 in interest expense.

October 23, 2019 Senior Promissory Note

On October 23, 2019, the Company executed a Senior Promissory Note (the “October Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $2,000,000. The October Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The October Note matures on October 23, 2020, unless prepaid or in default. The Company may prepay the October Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($5,000) premium.

The October Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the October Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $250,000 on this note and the Company had accrued $7,705 in interest expense.

December 6, 2019 Senior Promissory Note

On December 6, 2019, the Company executed a Senior Promissory Note (the “December Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $2,250,000. The December Note bears interest at the rate of fifteen (5%) percent per annum, paid quarterly in arrears. The December Note matured on March 31, 2020, unless prepaid or in default. The Company is currently in discussions with the lender to extend the maturity date and is not in default. The Company may prepay the December Note after six (6) months, with a two (2%) percent ($5,000) premium.

The December Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the December Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2019, the Company had a principal balance $250,000 on this note and the Company had accrued $890 in interest expense.

None of the above loans were made by any related parties.

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STOCK OPTIONS AND WARRANTS (Tables)

12 Months Ended

Dec. 31, 2019

STOCK OPTIONS AND WARRANTS (Tables)

Schedule of option activity during the year

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Options	Shares		Price		Term		Value
Balance Outstanding, December 31, 2017		49,000	$	1.49		3.19	$	-
Granted		25,000		1.00		4.00		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance Outstanding, December 31, 2018		74,000	$	1.32		2.47	$	198,000
Granted		-		-		-		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance Outstanding, December 31, 2019		74,000	$	1.32		1.47	$	64,800
Exercisable, December 31, 2019		74,000	$	1.32		1.47	$	64,800

Significant assumptions of fair values of warrants

	2018
Market value of underlying stock	$	6.40
Volatility		111.51%-254.07	%
Expected term (in years)		5 – 5.5
Risk-free interest rate		2.77% -2.78	%
Expected dividend yield		None

Summary of warrant activity during the year

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Warrants	Shares			Price		Term		Value
Balance Outstanding, December 31, 2017		599,640		$	7.65		5.29	$	1,725,921
Granted		1,111,073			-		-		-
Forfeited		(536,000	)		-		-		-
Exercised		-			-		-		-
Expired		(10,040	)		-		-		-
Balance Outstanding, December 31, 2018		1,164,673		$	6.41		5.01	$	-
Granted		-			-		-		-
Forfeited		-			-		-		-
Exercised		-			-		-		-
Expired		-			-		-		-
Balance Outstanding, December 31, 2019		1,164,673		$	6.41		4.01	$	-
Exercisable, December 31, 2019		1,164,673		$	6.41		4.01	$	-

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CONVERTIBLE DEBT (Tables)

12 Months Ended

Dec. 31, 2019

CONVERTIBLE DEBT (Tables)

Summary of convertible debt

	2019			2018
Beginning balance notes		365,513			3,110,714
New notes		1,500,000			2,233,332
Exchange agreement and debt modification		-			344,570
Payments		(365,513	)		(3,557,381	)
Conversions		-			(1,765,721	)
Subtotal notes		1,500,000			365,513
Debt discount at year end		(29,509	)		(229,713	)
Note payable net of discount		1,470,491			135,800

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CAPITAL STRUCTURE (Tables)

12 Months Ended

Dec. 31, 2019

CAPITAL STRUCTURE (Tables)

Summary of assets and liabilities

	December 31, 2018
Cash and cash equivalents	$	683
Accounts receivable		13,421
Accounts payable and accrued expenses		(8,775	)
Loans payable - related party		(9,501	)
Taxes payable		(1,423,674	)
Accumulated other comprehensive loss		1,287,010
Total liabilities extinguished		(140,836	)
Proceeds due from sale of subsidiary		(5,811	)
Gain on sale of Amplerissimo	$	(146,647	)

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STOCK OPTIONS AND WARRANTS

12 Months Ended

Dec. 31, 2019

STOCK OPTIONS AND WARRANTS

NOTE 15 - STOCK OPTIONS AND WARRANTS

On January 1, 2017 the Company entered into a two-year agreement whereby the employee was granted compensation of €1,000 per month and an annual retainer of 25,000 stock options per year as compensation for being appointed the International Finance Manager of the Company. The options have an exercise period of four years with an exercise price of $1.00. In the event that he ceases to work for the Company for any reason, he will be entitled to a pro rata portion of the annual options. The options vest monthly, with a total of 25,000 options fully vested as of December 31, 2017 and December 31, 2018, respectively. The options issued in the year ended December 31, 2017 were valued at $195,307 using the Black Scholes Option Pricing Model with the following inputs: stock price on measurement date: $8.20; Exercise price: $1.00; Option term: 4 years; Computed volatility: 136.76%. The fair value of the options was amortized over a year with $195,307 expensed during the year ended December 31, 2017. The options issued during the year ended December 31, 2017 were valued at $242,002 using the Black Scholes Option Pricing Model with the following inputs: stock price on measurement date: $10.20; Exercise price: $1.00; Option term: 4 years; Computed volatility: 120.92%. The fair value of the options was amortized over a year with $242,002 expensed during the year ended December 31, 2018.

As of December 31, 2019, there were 74,000 options outstanding and 74,000 options exercisable with expiration dates commencing October 2020 and continuing through January 2022.

A summary of the Company’s option activity during the years ended December 31, 2019 and 2018 is presented below:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Options	Shares		Price		Term		Value
Balance Outstanding, December 31, 2017		49,000	$	1.49		3.19	$	-
Granted		25,000		1.00		4.00		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance Outstanding, December 31, 2018		74,000	$	1.32		2.47	$	198,000
Granted		-		-		-		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance Outstanding, December 31, 2019		74,000	$	1.32		1.47	$	64,800
Exercisable, December 31, 2019		74,000	$	1.32		1.47	$	64,800

In connection with a private placement that took place on April 7, 2017, the Company issued warrants for a total of 10,040 common shares of the Company at a 1:1 ratio for shares purchased by investors. The warrants were valued using the Black Scholes valuation model with stock prices ranging from $7.60 to $8.50, exercise price of $30.00, volatility ranging from 76.66% to 90.86% based on the Company’s stock price, an expected term of 1 year and a risk-free rate ranging from 1.07% to 1.11%. These warrants expired during the year ended December 31, 2018.

On September 4, 2018, in connection with the $2,233,333 Securities Purchase Agreement, the Company issued warrants for 357,334 common shares of the Company (See Note 16). The fair value of the warrants was determined using a Black Scholes valuation model with a stock price of $6.40, exercise price of $7.50, volatility of 111.51% based on the Company’s stock price, an expected term of 5 years and a risk free rate of 2.78%. The value of the warrants of $910,078 was recognized as interest expense during the year ended December 31, 2018. The warrants became exercisable on March 4, 2019.

On September 4, 2018, in connection with the $2,233,333 Securities Purchase Agreement (See Note 16), Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, was issued warrants for 26,056 common shares of the Company. The fair value of the warrants was determined using a Black Scholes valuation model with a stock price of $6.40, exercise price of $5.00, volatility of 169.29% based on the Company’s stock price, an expected term of 5 years and a risk free rate of 2.78%. The value of the warrants of $157,969 was recognized as interest expense during the year ended December 31, 2018. The warrants became exercisable on March 4, 2019.

The significant assumptions used to determine the fair values of warrants issued, using a Black-Scholes valuation model are as follows:

	2018
Market value of underlying stock	$	6.40
Volatility		111.51%-254.07	%
Expected term (in years)		5 – 5.5
Risk-free interest rate		2.77% -2.78	%
Expected dividend yield		None

A summary of the Company’s warrant activity for the years ending December 31, 2019 and 2018 is as follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Warrants	Shares			Price		Term		Value
Balance Outstanding, December 31, 2017		599,640		$	7.65		5.29	$	1,725,921
Granted		1,111,073			-		-		-
Forfeited		(536,000	)		-		-		-
Exercised		-			-		-		-
Expired		(10,040	)		-		-		-
Balance Outstanding, December 31, 2018		1,164,673		$	6.41		5.01	$	-
Granted		-			-		-		-
Forfeited		-			-		-		-
Exercised		-			-		-		-
Expired		-			-		-		-
Balance Outstanding, December 31, 2019		1,164,673		$	6.41		4.01	$	-
Exercisable, December 31, 2019		1,164,673		$	6.41		4.01	$	-

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ORGANIZATION AND NATURE OF BUSINESS (Tables)

12 Months Ended

Dec. 31, 2019

ORGANIZATION AND NATURE OF BUSINESS (Tables)

Schedule of foreign exchange rates

	December 31, 2019		December 31, 2018
Exchange rate on balance sheet dates
EUR: USD exchange rate		1.1227		1.1456
GBP: USD exchange rate		1.3185		1.2734
Average exchange rate for the period
EUR: USD exchange rate		1.1194		1.1817
GBP: USD exchange rate		1.2767		1.3348

Property and equipment

	Estimated Useful Life
Leasehold improvements and technical works		Lesser of lease term or 40 years
Vehicles		6 years
Machinery		20 years
Furniture, fixtures and equipment		5–10 years
Computers and software		3-5 years

Measured and recognized at fair value

	December 31, 2019						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	33,000		-		-	$	33,000
Marketable securities – Divsersa S.A.		200,290		-		-		200,290
Marketable securities – National Bank of Greece		5,650		-		-		5,650
	$	238,940					$	238,940

	December 31, 2018						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	2,500,000		-		-	$	2,500,000
Marketable securities – Divsersa S.A.		210,790		-		-		210,790
Marketable securities – National Bank of Greece		2,100		-		-		2,100
	$	2,712,890					$	2,712,890

Schedule of contribution towards revenue and account receivable

	Year Ended December 31,		Year Ended December 31,
	2019		2018
Number of 10% clients		0		2
Percentage of total revenue		n/a		26.49	%
Percentage of total AR		n/a		4.94	%

Basic and Diluted Net Loss per Common Share

	Years Months Ended December 31,
	2019		2018
Weighted average number of common shares outstanding Basic		13,273,596		13,306,612
Potentially dilutive common stock equivalents		42,808		257,155
Weighted average number of common and equivalent shares outstanding – Diluted		13,273,596		13,306,612

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INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2019

INTANGIBLE ASSETS (Tables)

Intangible assets

	2019			2018
License	$	50,000		$	50,000
Trade name /mark		36,997			36,997
Customer Base		176,793			176,793
		263,790			211,683
Less: Accumulated amortization		(49,806	)		(16,720	)
Subtotal		213,984			247,070
Goodwill		49,697			49,697
Total	$	263,681		$	296,767

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ACQUISITION OF COSMOFARM, LTD. (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 19, 2018
Cash received from acquisition	$ 307,590
Promissory note purchase price		$ 227,000
Business acquisition outstanding percentage	100.00%
Cosmofarm SPA [Member]
Business acquisition outstanding percentage		100.00%

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ORGANIZATION AND NATURE OF BUSINESS (Details 4) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
ORGANIZATION AND NATURE OF BUSINESS (Details 4)
Weighted average number of common shares outstanding Basic	13,273,596	13,306,612
Potentially dilutive common stock equivalents	42,808	257,155
Weighted average number of common and equivalent shares outstanding - Diluted	13,273,596	13,306,612

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ORGANIZATION AND NATURE OF BUSINESS (Details)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
EURO [Member]
Exchange rate on balance sheet dates
USD exchange rate	1.1227	1.1456
Average exchange rate for the period
USD average exchange rate	1.1194	1.1817
GBP [Member]
Exchange rate on balance sheet dates
USD exchange rate	1.3185	1.2734
Average exchange rate for the period
USD average exchange rate	1.2767	1.3348

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
REVENUE	$ 39,676,385	$ 37,083,882
COST OF GOODS SOLD	36,014,116	34,675,242
GROSS PROFIT	3,662,269	2,408,640
OPERATING EXPENSES
General and administrative expenses	3,523,450	3,593,132
Depreciation and amortization expense	394,628	43,930
TOTAL OPERATING EXPENSES	3,918,078	3,637,062
LOSS FROM OPERATIONS	(255,809)	(1,228,422)
OTHER INCOME (EXPENSE)
Other income, net	233,877	19,078
Interest expense - related party	(264)	(264)
Interest expense	(1,412,465)	(967,824)
Non-cash interest expense	(320,205)	(5,839,581)
Forgiveness of debt		47,717
Loss on equity investments, net	(1,220,085)
Gain on exchange of equity investments, and gain on change in fair value		2,500,000
Gain on sale of Amplerissimo		146,647
Loss on extinguishment of debt		(1,464,698)
Debt modification expense		(1,942,156)
Foreign currency transaction loss, net	(141,199)	(313,829)
TOTAL OTHER EXPENSE, NET	(2,860,341)	(7,814,910)
LOSS BEFORE INCOME TAXES	(3,116,150)	(9,043,332)
INCOME TAX EXPENSE	(182,815)	(17,326)
NET LOSS	(3,298,965)	(9,060,658)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net	(49,167)	1,418,057
TOTAL COMPREHENSIVE LOSS	$ (3,348,132)	$ (7,642,601)
BASIC NET INCOME (LOSS) PER SHARE	$ (0.25)	$ (0.68)
DILUTED NET INCOME (LOSS) PER SHARE	$ (0.25)	$ (0.68)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic	13,273,596	13,306,612
Diluted	13,273,596	13,306,612

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LINES OF CREDIT (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Line of credit	$ 2,750,992	$ 1,514,582
Eurobank [Member]
Lines of credit		286,829
Alpha [Member]
Lines of credit	810,947	461,178
National [Member]
Lines of credit	$ 1,940,045	$ 766,575

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ACQUISITION OF COSMOFARM, LTD.

12 Months Ended

Dec. 31, 2019

ACQUISITION OF COSMOFARM, LTD.

NOTE 2 - ACQUISITION OF COSMOFARM, LTD.

On December 19, 2018, the Company completed the acquisition pursuant to the Cosmofarm SPA acquiring 100% of the outstanding shares of Cosmofarm, a pharmaceutical wholesaler based in Athens, Greece. Cosmofarm is a fully licensed wholesaler of pharmaceutical products and its primary activity is the sourcing, procuring, and distributing branded and generic medicines, over-the-counter (OTC) pharmaceuticals, food supplements, and medical devices. At closing, the Company acquired 100% of Cosmofarm’s outstanding shares and in exchange for a non-interest-bearing promissory note (See Note 11), due in one-year, in the amount of €200,000 ($227,000) (the “Acquisition”).

The Company recognized cash of $307,590 acquired in the above acquisition. The Company recognized the remaining Cosmofarm assets acquired and liabilities assumed based upon the fair value of such assets and liabilities measured as of the date of acquisition. The aggregate purchase price for Cosmofarm has been allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the acquired net tangible assets represent the intangible assets, such Cosmofarm’s tradename and customer base. The remainder of the excess has been allocated to goodwill.

The allocation of the purchase price of Cosmofarm as of December 31, 2018, is as follows:

	Allocation
Current assets	$	6,882,286
Intangible assets		213,790
Other assets		1,519,345
Total assets acquired		8,615,421
Liabilities assumed:
Accounts payable and other current liabilities		5,111,489
Advances from customers		1,192,600
Line of credit		1,900,388
Other liabilities		232,729
Total liabilities assumed		8,437,206
Net assets acquired		178,215
Consideration:
Promissory note		227,912
Goodwill	$	49,697

The components of the acquired intangible assets were as follows:

	Amount		Useful Life (Years)
Trademark	$	36,997		5
Customer base		176,793		10
	$	213,790		-

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DEBT (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Beginning balance loans	$ 9,803,733	$ 9,952,900
Proceeds	2,500,000	1,892,309
Payments	(227,912)	(1,246,700)
Transfer to related party		(1,500,000)
Forgiveness of debt		(53,678)
Amendment		661,645
Acquisition of Cosmofarm		227,912
Foreign currency translation	(46,097)	(257,418)
Amortization		126,763
Ending balance loans	12,029,724	9,803,733
Trade Facility [Member]
Proceeds		312,309
Beginning balance loans	6,291,199	6,728,605
Transfer to related party
Forgiveness of debt
Amendment		661,645
Acquisition of Cosmofarm
Foreign currency translation	(45,799)	(254,660)
Amortization
Ending balance loans	6,245,400	6,291,199
Debt Discount [Member]
Proceeds
Transfer to related party
Forgiveness of debt
Amendment
Acquisition of Cosmofarm
Beginning balance loans		(126,763)
Payments
Foreign currency translation
Amortization		126,763
Ending balance loans
Third Party [Member]
Proceeds		1,580,000
Transfer to related party		(1,500,000)
Forgiveness of debt
Amendment
Acquisition of Cosmofarm		227,912
Amortization
Payments	(227,912)
Beginning balance loans	242,805	27,651
Foreign currency translation	(298)	(2,758)
Ending balance loans	2,514,595	242,805
Bridge Loans [Member]
Proceeds
Payments
Beginning balance loans	191,287	204,965
Transfer to related party
Forgiveness of debt		(13,678)
Amendment
Acquisition of Cosmofarm
Foreign currency translation
Amortization
Ending balance loans	191,287	191,287
Loan Facility [Member]
Proceeds
Payments
Beginning balance loans	3,078,442	3,118,442
Transfer to related party
Forgiveness of debt		(40,000)
Amendment
Acquisition of Cosmofarm
Foreign currency translation
Amortization
Ending balance loans	$ 3,078,442	$ 3,078,442

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EARNINGS PER SHARE (Details 1) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Excluded from computation of diluted net loss per share	42,808	257,155
Convertible Debt [Member]
Excluded from computation of diluted net loss per share		52,381
Options [Member]
Excluded from computation of diluted net loss per share	42,808	60,437
Warrants [Member]
Excluded from computation of diluted net loss per share		144,338

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Convertible notes payable, principal amount		$ 2,680,000
Subsequent Event [Member] | Senior Promissory Notes [Member] | March 23, 2020 Forbearance Agreement [Member]
Convertible notes payable, principal amount	$ 1,500,000
Maturity date, description	The Note was due on or before March 15, 2020 and was not paid (the “Existing Default”).
Redemption premium percentage	120.00%
Conversion price per share	$ 6.00
Agreement redemption description	(1): (September 16, 2020 (or, if earlier, such date when all amounts outstanding under the Note shall be paid in full or converted into shares of Common Stock in accordance therewith) and (2) the time of any breach by the Company of the Agreement or the occurrence of an Event of Default that is not an Existing Default (the “Forbearance Expiration Date), (b)during the Forbearance Period waive the prepayment premium to any Company Optional Redemption, and (c) during the Forbearance Period, waive the repayment in full of the Note other than the Required Payments (as defined) prior to September 16, 2020. The Scheduled Required Prepayments are $100,000 upon signing the Agreement and five (5) monthly payments thereafter aggregating $200,000 with all amounts outstanding under the Note due on September 16, 2020. In addition, there are mandatory prepayments in the event the Company completes a Subsequent Placement (as defined) or long-term debt (other than from the Buyer or from officers and directors and advisors of the Company) or factoring and purchase order indebtedness, the Company shall effect a Company Optional Redemption amount equal to 50% of the gross proceeds (less reasonable expenses of counsel and any investment bank) together with all Scheduled Required Payments.
Subsequent Event [Member] | Senior Promissory Notes [Member] | On January 27, 2020 [Member]
Convertible notes payable, principal amount	$ 250,000
Maturity date, description	The Note matures on May 15, 2020 unless prepaid or in default.
Interest rate	5.00%
Description for the payment of installments	The Company may prepay the Note within the first six (6) months by payment of unpaid interest for the first six (6) months and after six (6) months, with a two (2%) percent ($5,000) premium.
Subsequent Event [Member] | Senior Promissory Notes [Member] | On Febuary 25, 2020 [Member]
Convertible notes payable, principal amount	$ 100,000
Maturity date, description	The February Note matures on April 30, 2020 unless in default.
Interest rate	18.00%

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LEASES (Details 1)	Dec. 31, 2019 USD ($)
LEASES (Details 1)
2019	$ 65,556
2020	44,373
2021	26,472
2022	14,685
2023	4,126
Thereafter
Total undiscounted finance lease payments	155,212
Less: Imputed interest	14,504
Present value of finance lease liabilities	$ 140,708

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STOCK OPTIONS AND WARRANTS (Details Narrative)			12 Months Ended
	Sep. 04, 2018 USD ($) $ / shares shares	Apr. 07, 2017 $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2019 EUR (€) shares	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Feb. 20, 2018 shares	Nov. 15, 2017 shares
Amortization expense | $			$ 394,628		$ 43,930
Minimum [Member]
Option/warrant term					5 years
Volatility rate					111.51%
Risk-free interest rate					2.77%
Maximum [Member]
Option/warrant term					5 years 6 months
Volatility rate					254.07%
Risk-free interest rate					2.78%
Options [Member]
Granted					$ 1.00
Number of Shares Outstanding, Beginning | shares			74,000	74,000
Number of Shares Exercisable | shares			74,000	74,000
Warrants [Member]
Granted
Warrants [Member] | Private Placement [Member]
Exercise price		$ 30.00
Option/warrant term		1 year
Common stock shares issuable upon conversion of debt/convertible securities | shares		10,040
Warrants issued ratio description		1:1 ratio for shares
Warrants [Member] | Private Placement [Member] | Minimum [Member]
Stock price		$ 7.60
Volatility rate		76.66%
Risk-free interest rate		1.07%
Warrants [Member] | Private Placement [Member] | Maximum [Member]
Stock price		$ 8.50
Volatility rate		90.86%
Risk-free interest rate		1.11%
Warrants [Member] | Securities Purchase Agreement [Member]
Stock price	$ 6.40
Exercise price	$ 7.50
Option/warrant term	5 years
Volatility rate	111.51%
Common stock shares issuable upon conversion of debt/convertible securities | shares	357,334						536,000	536,000
Risk-free interest rate	2.78%
Common stock value issuable under agreement | $	$ 2,233,333
Warrants exercisable period	Mar. 04, 2019
Interest expenses | $					$ 910,078
Warrants [Member] | Securities Purchase Agreement [Member] | Roth Capital Partners, LLC [Member]
Stock price	$ 6.40
Exercise price	$ 5.00
Option/warrant term	5 years
Volatility rate	169.29%
Common stock shares issuable upon conversion of debt/convertible securities | shares	26,056
Risk-free interest rate	2.78%
Common stock value issuable under agreement | $	$ 2,233,333
Warrants exercisable period	Mar. 04, 2019
Interest expenses | $					$ 157,969
Institutional investors [Member] | September 2018 Notes [Member] | Securities Purchase Agreement [Member]
Common stock shares issuable upon conversion of debt/convertible securities | shares	372,222
Placement agent [Member] | Warrants [Member] | Roth Capital Partners, LLC [Member]
Common stock shares issuable upon conversion of debt/convertible securities | shares	26,056
Employee [Member] | On January 1, 2017 [Member] | Stock Option [Member]
Exercise period					4 years
Granted					$ 1.00
Stock options/warrants value | $					$ 242,002	$ 195,307
Stock price					$ 10.20
Exercise price					$ 1.00
Option/warrant term					4 years	4 years
Volatility rate					120.92%	136.76%
Stock option periodic vesting | shares					25,000
Frequency of periodic vesting			Monthly	Monthly
Consideration under agreement				€ 1,000
Share based compensation as annual retainer | shares			25,000
Employee [Member] | January 1, 2017 [Member] | Stock Option [Member]
Stock price						$ 8.20
Exercise price						$ 1.00
Stock option periodic vesting | shares						25,000
Employee [Member] | Potentially dilutive securities [Member] | On January 1, 2017 [Member]
Exercise period					4 years
International Finance Manager [Member] | Stock Option [Member]
Amortization expense | $					$ 242,002	$ 195,307

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CAPITAL STRUCTURE (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash and cash equivalents	$ 38,537	$ 864,343
Accumulated other comprehensive loss	(16,339)	32,828
Gain on sale of Amplerissimo		146,647
Amplerissimo [Member]
Cash and cash equivalents		683
Accounts receivable		13,421
Accounts payable and accrued expenses		(8,775)
Loans payable - related party		(9,501)
Taxes payable		(1,423,674)
Accumulated other comprehensive loss		1,287,010
Total liabilities extinguished		(140,836)
Proceeds due from sale of subsidiary		(5,811)
Gain on sale of Amplerissimo		$ (146,647)

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INCOME TAXES (Details 2) - US [Member] - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Loss before income taxes	$ (3,116,150)	$ (8,731,677)
Taxes under statutory US tax rates	(654,391)	(1,833,652)
Increase (decrease) in taxes resulting from:
Increase in valuation allowance	1,521,175	554,452
Foreign tax rate differential	9,028	164,394
Permanent differences	94,520	1,628,906
Purchase price adjustments		25,202
Prior period adjustments	(713,466)	(375,828)
State taxes	(74,051)	(146,148)
Income tax expense	$ 182,815	$ 17,326

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LEASES (Tables)

12 Months Ended

Dec. 31, 2019

LEASES (Tables)

Summary of operating leases

Maturity of Lease Liability
2020	$	167,694
2021		83,144
2022		53,890
2023		53,890
Thereafter		255,976
Total undiscounted finance lease payments	$	614,593
Less: Imputed interest		122,013
Present value of finance lease liabilities	$	492,580

Maturity of Lease Liability
2019	$	65,556
2020		44,373
2021		26,472
2022		14,685
2023		4,126
Thereafter		-
Total undiscounted finance lease payments	$	155,212
Less: Imputed interest		14,504
Present value of finance lease liabilities	$	140,708

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RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2019

RELATED PARTY TRANSACTIONS

Summary of related party notes payable

	2019			2018
Beginning Balance	$	1,793,437		$	97,979
Transfer of third-party debt		-			1,718,400
Payments		(382,055	)		(18,330	)
Foreign currency translation		(35,850	)		(4,612	)
Ending Balance	$	1,375,532		$	1,793,437

Summary of related party loans payable

	2019			2018
Beginning Balance	$	1,775,251		$	7,213
Proceeds		585,915			2,408,965
Payments		(262,226	)		(631,166	)
Conversion of debt		(1,050,000	)		-
Disposal of subsidiary		-			(9,501	)
Reclassification of receivable		2,547			-
Foreign currency translation		(25,223	)		(260	)
Ending Balance	$	1,026,264		$	1,775,251

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2019

COMMITMENTS AND CONTINGENCIES

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Legal Matters

From time to time, the Company may be involved in litigation relating to claims arising out of the Company’s operations in the normal course of business. As of December 31, 2019 and 2018, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations. 

Intellectual Property Sale Agreement

On October 1, 2016, the Company entered into an Intellectual Property Sale Agreement with Anastasios Tsekas and Olga Parthenea Georgatsou (the “IPSA”) for the purchase of certain intellectual property rights relating to proprietary pharmaceutical formulas and any related technical information arising or related thereto (the “Intellectual Property”). The IPSA provides that the sellers shall be entitled to an aggregate of 200,000 shares of common stock of the Company, none of which have been issued to date, and issuable as follows in equal parts to each seller:

· 50,000 shares upon the successful conclusion of Preclinical Trials.

· 50,000 shares upon the conclusion of Phase I testing.

· 50,000 shares upon the conclusion of Phase II testing.

· 50,000 shares upon the conclusion of Phase III testing.

The Company has agreed to pay Anastasios Tsekas €1,500 per month until the first issuance of the shares referenced above. The Company has also agreed that in the event the Company disposes of the Intellectual Property prior to the periods referenced above, the sellers shall be entitled to the issuance of all the shares referenced above. The Company is in the process of locating a suitable lab to conduct the preclinical trial phase, which has not yet begun as of the date of filing.

Placement Agreement

On August 8, 2017, the Company entered into an agreement with a third-party placement agent (the “Agent”) who will serve as the Company’s exclusive placement agent or sole book running manager with respect to any offerings of equity or equity-linked securities as well as any debt offering with the two organizations named in the agreement (the “Offering”) for a period of 120 days. In the event that an Offering is agreed upon by the Agent and the Company, the Company shall provide payment as follows: (1) a cash commission of 6% of the total gross proceeds for two named investors (2) a cash commission of 4% of total gross proceeds from five named investors and (3) excluding the five named investors in “(2)” a cash commission equal to 8% of the total gross proceeds from the Offering and the issuance to the Agent or its designees of warrants covering 8% of the shares of common stock issued or issuable by the Company in the Offering. Additionally, the Agent will receive a cash fee of 8% payable within 5 business days, but only in the event of, the receipt by the Company of any cash proceeds from the exercise of any warrants with an expiration equal to or less than 24 months sold in the Offering. In connection with the Company’s November 16, 2017 Note offering, the Agent received a cash commission of $240,000, equal to eight (8%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase eight (8%) percent of the shares of Common Stock issued or issuable in the offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors, or 53,600 shares); however, will receive eight (8%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The Warrants are exercisable six (6) months after the date of issuance, or as of May 16, 2018.

In connection with the Company’s September 4, 2018 Note offering, the Agent received a cash commission for this transaction of $140,000, equal to seven (7%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase seven (7%) percent of the shares of Common Stock issued or issuable in this offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors, or 26,056 shares); however, will receive seven (7%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The Warrants are exercisable six (6) months after the date of issuance, or March 4, 2019.

Advisory Agreement

On April 18, 2018, SkyPharm S.A. entered into a ten-year Advisory Agreement with Synthesis Management Limited (the “Advisor”). The Advisor was retained to assist SkyPharm to secure corporate finance capital. The Advisor shall be paid €104,000 per year during the ten-year term.

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INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2019

INTANGIBLE ASSETS

NOTE 5 - INTANGIBLE ASSETS

Intangible assets consist of the following at December 31,:

	2019			2018
License	$	50,000		$	50,000
Trade name /mark		36,997			36,997
Customer Base		176,793			176,793
		263,790			211,683
Less: Accumulated amortization		(49,806	)		(16,720	)
Subtotal		213,984			247,070
Goodwill		49,697			49,697
Total	$	263,681		$	296,767

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LINES OF CREDIT

12 Months Ended

Dec. 31, 2019

LINES OF CREDIT

NOTE 9 - LINES OF CREDIT

A summary of the Company’s lines of credit during the years ended December 31, 2019 and 2018 is presented below:

	2019		2018
National	$	1,940,045	$	766,575
Alpha		810,947		461,178
Eurobank		-		286,829
Total	$	2,750,992	$	1,514,582

The line of credit with National Bank of Greece is being renewed annually with current interest rates of 6.00% and 4.35% on certain lines of credit. The maximum borrowing allowed was $1,684,050 and $1,374,720 at December 31, 2019 and 2018, respectively for the 6.00% line of credit. The maximum borrowing allowed was $1,122,700 at December 31, 2019 for the 4.35% lines of credit. The outstanding balance was $1,940,045 and $766,575 at December 31, 2019 and 2018, respectively.

The line of credit with Alpha Bank of Greece is renewed annually with a current interest rate of 6.00%. The maximum borrowing allowed was $1,122,700 and $687,360 at December 31, 2019 and 2018, respectively. The outstanding balance was $810,947 and $461,179 at December 31, 2019 and 2018, respectively.

The line of credit with Eurobank of Greece had an interest rate of 8.55% and a maximum borrowing allowed of $572,800 at December 31, 2018. The outstanding balance was $286,829 at December 31, 2018 and was paid back in full during the year ended December 31, 2019.

Interest expense for the year ended December 31, 2019 and 2018, was $85,090 and $32,275, respectively.

Under the agreements, the Company is required to maintain certain financial ratios and covenants. These lines of credit were assumed in the Company’s acquisition of Cosmofarm. During the years ended December 31, 2019 and 2018, the Company was in compliance with these ratios and covenants.

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2019

SUBSEQUENT EVENTS

NOTE 17 - SUBSEQUENT EVENTS

Farmasyn Agreement

On October 18^th, 2019, the Company entered into an agreement, effective January 2, 2020, with Farmasyn, a third-party pharmaceutical company. Pursuant to the agreement, from January 1, 2020, Farmasyn will promote, and the Company has agreed to accept, all of its customers to the Company. In addition, the Company will hire at least two of Farmasyn’s employees and will purchase all of Farmasyn’s stock at acquisition prices. The Company is evaluating the transaction under ASC 805, Business Combinations.

January 27, 2020 Senior Promissory Note

On January 27, 2020, the Company executed a Senior Promissory Note (the “January Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $2,500,000. The January Note bears interest at the rate of five (5%) percent per annum, paid quarterly in arrears. The January Note matures on May 15, 2020 unless in default. The Company may prepay the January Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($5,000) premium.

The January Note is subject to acceleration in an Event of Default (as defined). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the January Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection.

February 25, 2020 Senior Promissory Note

On February 25, 2020, the Company executed a Senior Promissory Note (the “February Note”) in the principal amount of $1,000,000 payable to an unaffiliated third-party lender. The February Note bears interest at the rate of eighteen (18%) percent per annum, paid quarterly in arrears. The February Note matures on April 30, 2020 unless in default.

The February Note is subject to acceleration in an Event of Default (as defined). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the February Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection.

March 23, 2020 Forbearance Agreement

On March 23, 2020, the Company entered into a Forbearance and Amendment Agreement (the “Agreement”) with an institutional investor (the “Buyer”). The Company entered into a Securities Purchase Agreement (the “SPA”) with the Buyer on May 15, 2019, pursuant to which the Company issued a Convertible Note (the “Note”) in the principal amount of $1,500,000. The Note was due on or before March 15, 2020 and was not paid (the “Existing Default”). The Note provides that upon an Event of Default, the Buyer may, among other things, require the Company to redeem all or a portion of the Note at a redemption premium of 120%, multiplied by the product of the conversion rate ($6.00per share) and the then current market price.

The Agreement provides that the Buyer will (a) forbear (i) from taking any action with respect to the Existing Default and (ii) from issuing any demand for redemption of the Note on the basis of the Existing Default until the earlier of: (1): (September 16, 2020 (or, if earlier, such date when all amounts outstanding under the Note shall be paid in full or converted into shares of Common Stock in accordance therewith) and (2) the time of any breach by the Company of the Agreement or the occurrence of an Event of Default that is not an Existing Default (the “Forbearance Expiration Date), (b)during the Forbearance Period waive the prepayment premium to any Company Optional Redemption, and (c) during the Forbearance Period, waive the repayment in full of the Note other than the Required Payments (as defined) prior to September 16, 2020. The Scheduled Required Prepayments are $100,000 upon signing the Agreement and five (5) monthly payments thereafter aggregating $200,000 with all amounts outstanding under the Note due on September 16, 2020. In addition, there are mandatory prepayments in the event the Company completes a Subsequent Placement (as defined) or long-term debt (other than from the Buyer or from officers and directors and advisors of the Company) or factoring and purchase order indebtedness, the Company shall effect a Company Optional Redemption amount equal to 50% of the gross proceeds (less reasonable expenses of counsel and any investment bank) together with all Scheduled Required Payments.

COVID-19 Diagnostic Detection Kit Exclusive Agency Agreement

On April 4, 2020, the Company entered to an agreement with a third-party manufacturer and distributor of medical products. The Company has been appointed as the Exclusive Representation Agent to promote the COVID-19 Diagnostic Detection Kit in Greece, Cyprus, England and Germany that was developed by the third party. The duration of this agreement is for two (2) years, until April 2, 2022. Under this agreement, the Company commits to place a certain amount of minimum purchase orders within the first week as well as on an ongoing basis. In addition, the prices are fixed for each product and exclude logistics costs.

The Effects of COVID-19

The World Health Organization (WHO) declared the coronavirus outbreak a pandemic on January 30, 2020. Since the outbreak in China in December 2019, COVID-19 has expanded its impact to Europe, where all of our operations reside, as well as our employees, suppliers and customers. While the disruption is currently expected to be temporary, there is considerable uncertainty around the duration of the closings and shelter-in-place orders and the ultimate impact of governmental initiatives. However, the financial impact and duration cannot be reasonably estimated at this time.

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INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2019

INVESTMENTS (Tables)

Summary the gains and losses

Net gains and losses recognized during the period on equity securities	$	(1,220,085	)
Less: Net gains and losses recognized during the period on equity securities sold during the period		158,282
Unrealized gains and losses recognized during the period on equity securities still held at the reporting date	$	(1,061,803	)

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CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2019	Dec. 31, 2018
CURRENT ASSETS:
Cash and cash equivalents	$ 38,537	$ 864,343
Accounts receivable, net	7,348,945	4,753,291
Accounts receivable - related party	1,919,043	189,760
Marketable securities	238,940	2,712,890
Inventory	3,474,220	3,202,767
Other investments	4,381	4,471
Prepaid expenses and other current assets	1,549,055	1,662,579
Prepaid expenses and other current assets - related party	5,940,124	4,957,061
Operating lease right-of-use asset	498,180
Financing lease right-of-use asset	167,310
TOTAL CURRENT ASSETS	21,178,735	18,347,162
Property and equipment, net	1,734,781	1,425,632
Goodwill and intangible assets, net	263,681	296,767
Other assets	702,439	625,392
TOTAL ASSETS	23,879,636	20,694,953
CURRENT LIABILITIES:
Accounts payable and accrued expenses	8,561,681	5,933,464
Accounts payable and accrued expenses - related party	240,302	139,556
Customer advances	247,318	1,067,200
Convertible notes payable, net of unamortized discount of $29,509 and $229,713, respectively	1,470,491	135,800
Notes payable	12,029,724	9,803,733
Notes payable - related party	1,375,532	1,793,437
Lines of credit	2,750,992	1,514,583
Loans payable - related party	1,026,264	1,775,251
Taxes payable	175,939
Operating lease liability, current portion	139,556
Financing lease liability, current portion	58,185
Other current liabilities	165,271	111,212
TOTAL CURRENT LIABILITIES	28,241,255	22,274,236
Share settled debt obligation	1,554,590	1,554,590
Operating lease liability, net of current portion	353,024
Financing lease liability, net of current portion	82,523
Other liabilities	109,073	183,577
TOTAL LIABILITIES	30,340,465	24,012,403
Commitments and Contingencies (see Note 13)
STOCKHOLDERS' DEFICIT:
Preferred stock, $0.001 par value; 100,000,000 shares authorized; 0 shares issued and outstanding as of December 31, 2019 and 2018, respectively
Common stock, $0.001 par value; 300,000,000 shares authorized; 13,225,387 and 13,878,757 shares issued and 12,860,059 and 13,685,067 outstanding as of December 31, 2019 and 2018, respectively	13,225	13,879
Additional paid-in capital	13,525,749	13,133,982
Treasury stock, 365,328 and 193,690 shares as of December 31, 2019 and 2018, respectively	(411,854)	(225,494)
Accumulated deficit	(19,571,610)	(16,272,645)
Accumulated other comprehensive income (loss)	(16,339)	32,828
TOTAL STOCKHOLDERS' DEFICIT	(6,460,829)	(3,317,450)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 23,879,636	$ 20,694,953

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LEASES (Details)	Dec. 31, 2019 USD ($)
LEASES (Details)
2020	$ 167,694
2021	83,144
2022	53,890
2023	53,890
Thereafter	255,976
Total undiscounted finance lease payments	614,593
Less: Imputed interest	122,013
Present value of finance lease liabilities	$ 492,580

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (3,298,965)	$ (9,060,658)
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities:
Depreciation and amortization expense	234,086	43,930
Amortization of right-of-use assets	160,542
Amortization of debt discounts	320,205	5,681,613
Lease expense	185,540
Loss on extinguishment of debt		1,464,698
Gain on forgiveness of debt		(47,717)
Loss on debt modification		1,942,156
Gain on sale of subsidiary		(146,647)
Stock-based compensation		242,002
Gain on exchange of equity instruments and gain on change in fair value		$ (2,500,000)
Fair value of warrants issued for services		157,969
Loss on change in fair value of equity investments	$ 1,220,085
Changes in Assets and Liabilities:
Accounts receivable, net	(2,595,654)	483,820
Accounts receivable - related party	(1,729,283)	(18,368)
Inventory	(271,453)	1,431,012
Prepaid expenses and other current assets	76,773	864,925
Prepaid expenses and other current assets - related party	(983,063)	(2,232,089)
Other assets	(77,047)	846,322
Accounts payable and accrued expenses	2,628,217	(332,749)
Accounts payable and accrued expenses - related party	100,746	(296,974)
Customer advances	(819,882)	(125,400)
Other current liabilities	54,059	31,116
Lease liabilities	(142,846)
Taxes payable	175,939	64,885
Other liabilities	(26,841)	(49,152)
NET CASH USED IN OPERATING ACTIVITIES	(4,788,842)	(1,555,306)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets	(672,789)	(503,362)
Proceeds from sale of investments	1,261,718
Cash received from acquisition		307,590
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	588,929	(195,772)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of convertible note payable	(365,514)	(3,557,381)
Proceeds from convertible note payable	1,380,000	1,845,000
Payment of related party note payable	(382,055)	(18,330)
Proceeds from related party note payable		1,718,400
Payment of note payable	(221,418)	(1,259,804)
Proceeds from note payable	2,500,000	403,957
Payment of related party loan	(262,226)	(631,166)
Proceeds from related party loan	585,915	2,408,965
Proceeds from issuance of share settled debt obligation		1,554,590
Payment of lines of credit	(11,098,839)	(437,576)
Proceeds from lines of credit	12,371,190	41,700
Payments of finance lease liability	(74,476)
Purchase of treasury stock	(845,247)	(80,053)
NET CASH PROVIDED BY FINANCING ACTIVITIES	3,587,330	1,988,302
Effect of exchange rate changes on cash	(213,223)	(155,734)
NET CHANGE IN CASH	(825,806)	81,490
CASH AT BEGINNING OF YEAR	864,343	782,853
CASH AT END OF YEAR	$ 38,537	$ 864,343
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest	$ 447,731	$ 299,946
Income tax	11,605
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Cancellation of pre-delivery shares issued for conversion of convertible notes payable	574
Issuance of note payable related to the acquisition of Cosmofarm		227,912
Related party accrual for repurchase of shares of common stock		48,683
Proceeds due from sale of subsidiary		$ 5,811
Pre-delivery shares issued for future conversion of convertible notes payable		1,054
Discounts related to warrants issued with convertible debentures		910,078
Discounts related to beneficial conversion features of convertible debentures	$ 120,000	$ 934,922
Conversion of convertible notes payable to common stock	$ 1,050,000	$ 1,719,395

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RELATED PARTY TRANSACTIONS (Details 1) - Loans Payable - Related Party [Member] - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Beginning Balance	$ 1,775,251	$ 7,213
Proceeds	585,915	2,408,965
Payments	(262,226)	(631,166)
Conversion of debt	(1,050,000)
Disposal of subsidiary		(9,501)
Reclassification of receivable	2,547
Foreign currency translation	(25,223)	(260)
Ending Balance	$ 1,026,264	$ 1,775,251

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CONVERTIBLE DEBT (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
CONVERTIBLE DEBT (Details)
Beginning balance notes	$ 365,513	$ 3,110,714
New notes	1,500,000	2,233,332
Exchange agreement and debt modification		344,570
Payments	(365,513)	(3,557,381)
Conversions		(1,765,721)
Subtotal notes	1,500,000	365,513
Debt discount at year end	(29,509)	(229,713)
Note payable net of discount	$ 1,470,491	$ 135,800

XML

ACQUISITION OF COSMOFARM, LTD. (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018	Dec. 19, 2018	Dec. 31, 2017
Current assets	$ 21,178,735	$ 18,347,162
Intangible assets	263,681	296,767
Other assets	702,439	625,392
Total assets acquired	23,879,636	20,694,953
Liabilities assumed:
Accounts payable and other current liabilities	8,561,681	5,933,464
Advances from customers	247,318	1,067,200
Total liabilities assumed	30,340,465	24,012,403
Consideration:
Promissory note		2,680,000
Goodwill			$ 49,697
Cosmofarm [Member]
Current assets		6,882,286
Intangible assets		213,790
Other assets		1,519,345
Total assets acquired		8,615,421
Liabilities assumed:
Accounts payable and other current liabilities		5,111,489
Advances from customers		1,192,600
Line of credit		1,900,388
Other liabilities		232,729
Total liabilities assumed		8,437,206
Net assets acquired		178,215
Consideration:
Promissory note		227,912
Goodwill		$ 49,697

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ORGANIZATION AND NATURE OF BUSINESS (Details 2) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Fair value of assets and liabilities	$ 238,940	$ 2,712,890
Marketable securities - ICC International Cannabis Corp. [Member]
Fair value of assets and liabilities	33,000	2,500,000
Marketable securities - Divsersa S.A. [Member]
Fair value of assets and liabilities	200,290	210,790
Marketable securities - National Bank of Greece [Member]
Fair value of assets and liabilities	5,650	2,100
Level 1 [Member]
Fair value of assets and liabilities	238,940	2,712,890
Level 1 [Member] | Marketable securities - ICC International Cannabis Corp. [Member]
Fair value of assets and liabilities	33,000	2,500,000
Level 1 [Member] | Marketable securities - Divsersa S.A. [Member]
Fair value of assets and liabilities	200,290	210,790
Level 1 [Member] | Marketable securities - National Bank of Greece [Member]
Fair value of assets and liabilities	5,650	2,100
Level 2 [Member]
Fair value of assets and liabilities
Level 2 [Member] | Marketable securities - ICC International Cannabis Corp. [Member]
Fair value of assets and liabilities
Level 2 [Member] | Marketable securities - Divsersa S.A. [Member]
Fair value of assets and liabilities
Level 2 [Member] | Marketable securities - National Bank of Greece [Member]
Fair value of assets and liabilities
Level 3 [Member]
Fair value of assets and liabilities
Level 3 [Member] | Marketable securities - ICC International Cannabis Corp. [Member]
Fair value of assets and liabilities
Level 3 [Member] | Marketable securities - Divsersa S.A. [Member]
Fair value of assets and liabilities
Level 3 [Member] | Marketable securities - National Bank of Greece [Member]
Fair value of assets and liabilities

XML

DISAGGREGATION OF REVENUE

12 Months Ended

Dec. 31, 2019

DISAGGREGATION OF REVENUE

NOTE 16 - DISAGGREGATION OF REVENUE

ASC 606-10-50-5 requires that entities disclose disaggregated revenue information in categories (such as type of good or service, geography, market, type of contract, etc). ASC 606-10-55-89 explains that the extent to which an entity’s revenue is disaggregated depends on the facts and circumstances that pertain to the entity’s contracts with customers and that some entities may need to use more than one type of category to meet the objective for disaggregating revenue.

The Company disaggregates revenue by country to depict the nature and economic characteristics affecting revenue. The following table presents our revenue disaggregated by country for the years ended:

Country		2019	2018
Belgium	$	-	$	4,230
Croatia		22,497		-
Denmark		97,905		430,932
France		153,422		388,944
Georgia		5,301		-
Germany		6,672,511		14,783,119
Greece		26,101,316		2,970,219
Hungary		1,094,446		1,673,287
Indonesia		7,172		6,449
Ireland		467,965		1,519,746
Italy		196,044		481,141
Jordan		20,144		162,749
Libya		396,333		3,860,021
Netherlands		846,479		886,218
Poland		307,624		-
Spain		-		8,724
Turkey		24,347		-
UK		3,262,880		9,908,103
Total	$	39,676,385	$	37,083,882

XML

ACQUISITION OF COSMOFARM, LTD (Tables)

12 Months Ended

Dec. 31, 2019

ACQUISITION OF COSMOFARM, LTD (Tables)

Unaudited allocation of purchase price

	Allocation
Current assets	$	6,882,286
Intangible assets		213,790
Other assets		1,519,345
Total assets acquired		8,615,421
Liabilities assumed:
Accounts payable and other current liabilities		5,111,489
Advances from customers		1,192,600
Line of credit		1,900,388
Other liabilities		232,729
Total liabilities assumed		8,437,206
Net assets acquired		178,215
Consideration:
Promissory note		227,912
Goodwill	$	49,697

Intangible assets

	Amount		Useful Life (Years)
Trademark	$	36,997		5
Customer base		176,793		10
	$	213,790		-

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RELATED PARTY TRANSACTIONS (Details) - Notes Payable - Related Party [Member] - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Beginning Balance	$ 1,793,437	$ 97,979
Transfer of third-party debt		1,718,400
Payments	(382,055)	(18,330)
Foreign currency translation	(35,850)	(4,612)
Ending Balance	$ 1,375,532	$ 1,793,437

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LINES OF CREDIT (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Interest expense	$ (1,412,465)	$ (967,824)
Line of Credit [Member]
Interest expense	85,090	32,275
Line of Credit [Member] | National Bank of Greece One [Member]
Borrowing	$ 1,684,050	$ 1,374,720
Percentages of line of credit	6.00%
Interest rate	6.00%	4.35%
Lines of credit	$ 1,940,045	$ 766,576
Line of Credit [Member] | National Bank of Greece Two [Member]
Borrowing	$ 1,122,700
Percentages of line of credit	4.35%
Line of Credit [Member] | Eurobank Bank of Greece [Member]
Borrowing		$ 572,800
Interest rate		8.55%
Lines of credit		$ 286,829
Line of Credit [Member] | Alpha Bank of Greece [Member]
Borrowing	$ 1,122,700	687,360
Interest rate	6.00%
Lines of credit	$ 810,947	$ 461,179

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
CURRENT LIABILITIES:
Convertible notes payable, net of unamortized discount	$ 29,509	$ 229,713
STOCKHOLDERS' DEFICIT:
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares, outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	13,225,387	13,878,757
Common stock, shares, outstanding	12,860,059	13,685,067
Treasury Stock	365,328	193,690

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DEBT (Details Narrative) - USD ($)								1 Months Ended												3 Months Ended	12 Months Ended
	Dec. 06, 2019	May 12, 2018	May 12, 2017	May 05, 2017	Apr. 10, 2017	Mar. 16, 2017	Aug. 04, 2016	Oct. 23, 2019	Jun. 24, 2019	May 28, 2019	Dec. 19, 2018	Oct. 17, 2018	May 31, 2018	Apr. 02, 2018	Feb. 19, 2018	Jan. 18, 2018	Mar. 23, 2017	Mar. 20, 2017	Nov. 16, 2015	Sep. 30, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 20, 2018	Dec. 31, 2017	Mar. 31, 2018	Nov. 16, 2017	Jul. 31, 2017	Jan. 31, 2017	Dec. 31, 2016	Nov. 30, 2016	Oct. 31, 2016	Sep. 30, 2016	Sep. 13, 2016
Accured interest expense																					$ (1,412,465)	$ (967,824)
Convertible notes payable, principal amount																						2,680,000
Amortization of debt discount															$ 392,272						320,205	5,681,613		360,890
Debt discount																								3,350,000
Debt modification expense																						(1,942,156)
Cash received																						307,590
TFF [Member]
Short term debt borrowing capacity																					$ 15,000,000
Libor rate description																					(i) all lending in U.S. dollars is the one-month LIBOR plus six (6%) percent margin; and (ii) for all lending in Euro, the one-month Euribor Rate plus six (6%) percent per annum, commencing June 1, 2018
CEO [Member]
Percentage of wholly-owned subsidiary shares																					51.00%
Trade Facility [Member]
Lines of credit																									$ 5,866,910
Payment of interest and principal													$ 1,123,600
Loan facility agreement [Member]
Debt discount																					$ 191,034	56,043
Unamortized debt discount																					$ 20,237	114,158
Marathon [Member]
Shares issued for settlement of debt																					615,573
Distribution and equity acquisition agreement, description																					As consideration for its services, Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in Common Shares of the Company if it fails to meet certain performance milestones. The Company is entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000.
Settlement amount																					$ 1,554,590
Cash received																					2,000,000
Synthesis facility agreement [Member] | TFF [Member]
Accrued interest												$ 524,094
Lines of credit												$ 5,629,555
Description for amendment to agreement under ASU 470-50												The Company evaluated the amended agreement under ASC 470-50 and concluded that it did not meet the 10% cash flow test and recorded debt modification expense of $138,110
Debt modification expense												$ 138,110
Synthesis facility agreement [Member] | TFF [Member] | Principal balance 1 [Member]
Maturity date												Aug. 31, 2021
Accrued interest																					10,000	0
Debt split, balance												$ 2,000,000									2,245,400	2,291,200
Interest rate description												6% per annum plus one-month Euribor, when it is positive, on the Euro balance
Repayment of debt, periodic payments												$ 125,000
Frequency of periodic payments												Quarterly
Synthesis facility agreement [Member] | TFF [Member] | Principal balance 2 [Member]
Maturity date												Aug. 31, 2021
Accrued interest																					12,661	19,834
Debt split, balance												$ 4,000,000									$ 4,000,000	4,000,000
Interest rate description												6% per annum plus one month Libor on the USD balance
Repayment of debt, periodic payments												$ 150,000
Frequency of periodic payments												Quarterly
On April 18, 2018 [Member]
Maturity date																					Dec. 31, 2021
Accrued interest																					$ 609,607	414,830
Lines of credit																					3,078,442	3,078,442
Gain on debt settlement																					$ 23,354
Libor rate description																					Additionally the interest rate was amended such that the interest rate for all advances is 4% plus the 3-Month Libor rate
Loan Facility July 6, 2017 [Member]
Fees forgiven related to advance																					$ 40,000
Grigorios Siokas [Member]
Interest rate																							4.70%
Accrued interest																					$ 128,447	63,371
Interest rate									750.00%	750.00%											750.00%
Shares issued for settlement of debt									73,334	66,667											140,001
Grigorios Siokas [Member] | Synthesis facility agreement [Member] | Loan facility agreement [Member]
Common stock shares issuable upon conversion of debt/convertible securities							10,000,000
SkyPharm [Member] | Trade Facility [Member]
Short term debt borrowing capacity			$ 2,245,400
Lines of credit													$ 5,369,678
Description for the repayment			The total facility will be calculated as 95% of the agreed upon value of Decahedrons receivables.
Term of credit facility			12 months
Credit facility origination fee, percentage			2.00%
Monthly credit fee, percentage			1.00%
Proceeds from debt		$ 247,117
SkyPharm [Member] | Trade Facility [Member] | Minimum [Member]
Short term debt borrowing capacity																										$ 2,291,200
SkyPharm [Member] | Trade Facility [Member] | Maximum [Member]
Short term debt borrowing capacity																										$ 6,736,200
SkyPharm [Member] | Amendment to loan facility agreement [Member]
Short term debt borrowing capacity																																	$ 1,533,020
Lines of credit																																	$ 240,251
SkyPharm [Member] | Bridge Loans [Member]
Maturity date				Sep. 30, 2017		Apr. 16, 2017												Apr. 20, 2017
Interest rate				10.00%		10.00%												10.00%
Short term debt borrowing capacity				$ 34,745		$ 50,000												$ 120,220			$ 50,000
Accrued interest						14,138												16,857			27,627
Lines of credit						$ 50,000												$ 106,542			106,542
Amended maturity date						May 16, 2017												May 20, 2017
Gain on debt settlement																		$ 19,695
Additional gain on settlement of debt																		4,668
Loan fixed payoff amount																		$ 106,542
SkyPharm [Member] | Second amendment to loan facility agreement [Member]
Maturity date																	Aug. 04, 2016
Interest rate																	10.00%
Short term debt borrowing capacity																	$ 2,664,960							70,000			$ 382,327	$ 155,516	$ 452,471	$ 250,000	$ 100,000	$ 174,000
Accrued interest																								221,657
Lines of credit																								3,117,287
Debt discount																								42,149					$ 126,624
Description for the repayment																	The amounts owed under the Loan Facility shall be repayable upon the earlier of (i) seventy five days following the demand of the Lender; or (ii) August 31, 2018
Common stock shares issuable upon conversion of debt/convertible securities																	1,000,000
SkyPharm [Member] | Loan facility agreement [Member]
Interest rate							10.00%
Short term debt borrowing capacity							$ 1,292,769
Description for the repayment							The amounts owed under the Loan Facility were repayable upon the earlier of (i) three months following the demand of the lender; or (ii) August 31, 2018. No prepayment is permitted pursuant to the terms of the Loan Facility
SkyPharm [Member] | Decahedron [Member] | Trade Facility [Member]
Short term debt borrowing capacity					$ 3,087,425
Description for the repayment					The total facility will be calculated as 95% of the agreed upon value of Decahedrons receivables
Term of credit facility					12 months
Credit facility origination fee, percentage					2.00%
Monthly credit fee, percentage					1.00%
SkyPharm [Member] | May 5 2017 [Member] | Bridge Loans [Member]
Accrued interest																					5,043	3,906
Lines of credit																					34,745	34,745
SkyPharm [Member] | MediHelm S.A. [Member]
Amortization of debt discount																					66,227			$ 69,269
Origination fees																					137,063
DOC Pharma S.A. [Member] | Loan agreement [Member]
Accrued interest																					1,034
Lines of credit																					$ 13,086
DOC Pharma S.A. [Member] | On November 1, 2015 [Member] | Loan agreement [Member]
Interest rate																					2.00%
Panagiotis Drakopoulos [Member] | Loan agreement [Member]
Maturity date											Dec. 19, 2019			Jun. 15, 2019		Jan. 17, 2019			Nov. 15, 2016
Interest rate														4.70%		6.50%			6.00%
Short term debt borrowing capacity											$ 227,912			$ 6,144		$ 91,785			$ 42,832
Accrued interest																					$ 4,677	3,538
Lines of credit																					14,595	14,893
Accured interest of loan																						2,002
Outstanding balance of promissory notes																						227,912
Senior Promissory Notes [Member] | August 1, 2019 [Member]
Description for the payment of installments																					The Company may prepay the August Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($10,000) premium.
Maturity date																					Aug. 01, 2020
Convertible notes payable, principal amount																					$ 500,000
Accrued interest																					12,534
Loans payable																					$ 1,500,000
Interest rate																					15.00%
Senior Promissory Notes [Member] | Subsequent Event [Member] | July 24, 2019 [Member]
Accured interest expense																					$ 49,625
Maturity date																					Jul. 24, 2020
Convertible notes payable, principal amount																					$ 750,000
Due to related party																					$ 750,000
Senior Promissory Notes [Member] | Subsequent Event [Member] | October 23, 2019 [Member]
Description for the payment of installments																					The Company may prepay the October Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($5,000) premium.
Maturity date																					Oct. 23, 2020
Convertible notes payable, principal amount																					$ 250,000
Loans payable																					$ 2,000,000
Interest rate																					15.00%
Senior Promissory Notes [Member] | Unaffiliated Third Party [Member] | December 6, 2019 [Member]
Accured interest expense																				$ (156,362)	$ 890
Description for the payment of installments	The Company is currently in discussions with the lender to extend the maturity date and is not in default. The Company may prepay the December Note after six (6) months, with a two (2%) percent ($5,000) premium.
Maturity date	Mar. 31, 2020			Sep. 30, 2017		Apr. 16, 2017												Apr. 20, 2017
Interest rate	5.00%			10.00%		10.00%												10.00%
Short term debt borrowing capacity	$ 2,250,000			$ 34,745		$ 50,000												$ 120,220
Convertible notes payable, principal amount	$ 250,000																				$ 250,000
Senior Promissory Notes [Member] | Unaffiliated Third Party [Member] | October 23, 2019 [Member]
Description for the payment of installments								The Company may prepay the October Note within the first six (6) months by payment of unpaid interest for the first six (6) months and, after six (6) months, with a two (2%) percent ($5,000) premium.
Maturity date				Sep. 30, 2017		Apr. 16, 2017		Oct. 23, 2020										Apr. 20, 2017
Interest rate				10.00%		10.00%		15.00%										10.00%
Short term debt borrowing capacity				$ 34,745		$ 50,000		$ 2,000,000										$ 120,220
Convertible notes payable, principal amount								$ 250,000													250,000
Accrued interest						$ 14,138												$ 16,857			$ 7,705
Senior Promissory Notes [Member] | Unaffiliated Third Party [Member] | April 1, 2019 [Member]
Maturity date																					Apr. 01, 2020
Interest rate																					15.00%
Convertible notes payable, principal amount																					$ 250,000
Accrued interest																					0
Lines of credit																					$ 250,000
Repayment of debt description																					The Company may prepay the Notes within the first six (6) months by payment of unpaid interest for the first six (6) months interest and after six (6) months, with a (2%) percent ($5,000) premium on each note.
Senior Promissory Notes [Member] | Unaffiliated Third Party [Member] | April 3, 2019 [Member]
Accured interest expense																				$ (156,362)
Maturity date																					Apr. 03, 2020
Interest rate																					15.00%
Convertible notes payable, principal amount																					$ 250,000
Accrued interest																					28,098
Lines of credit																					$ 250,000
Repayment of debt description																					The Company may prepay the Notes within the first six (6) months by payment of unpaid interest for the first six (6) months interest and after six (6) months, with a (2%) percent ($5,000) premium on each note.
Senior Promissory Notes [Member] | Unaffiliated Third Party [Member] | April 9, 2019 [Member]
Maturity date																					Apr. 09, 2020
Interest rate																					15.00%
Convertible notes payable, principal amount																					$ 250,000
Accrued interest																					27,431
Lines of credit																					$ 250,000
Repayment of debt description																					The Company may prepay the Note within the first six (6) months by payment of unpaid interest for the first six (6) months and after six (6) months, with a two (2%) percent ($5,000) premium.
Due from related party																					$ 500,000

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ORGANIZATION AND NATURE OF BUSINESS

12 Months Ended

Dec. 31, 2019

ORGANIZATION AND NATURE OF BUSINESS

NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

Cosmos Holdings, Inc. (“us,” “we,” or the “Company”) is an international pharmaceutical wholesaler. The Company imports, exports and distributes brand-name and generic pharmaceuticals, over-the-counter (“OTC”) medicines, a variety of vitamins, and dietary supplements. Through December 31, 2019, we operated our business through three wholly owned subsidiaries: (i) SkyPharm S.A. (“SkyPharm”), headquartered in Thessaloniki, Greece; (ii) Decahedron Ltd. (“Decahedron”), headquartered in Harlow, United Kingdom (“UK”); and (iii) Cosmofarm Ltd. (“Cosmofarm”), headquartered in Athens, Greece. Our business is primarily comprised of cross-border sales of brand-name pharmaceutical products in the European Union (“EU”). Our cross-border pharmaceutical wholesale business serves wholesale pharmaceutical distributors and independent retail pharmacies across the EU through a network of three strategic distribution centers, as well as an additional warehousing facility. Pharmaceutical manufacturers generally implement variable pricing strategies within the EU market. Identifying and evaluating price spreads between EU member states enables us to source brand-name pharmaceuticals from countries where ex-factory prices are comparatively low and export to countries where the same products are priced higher. We remain focused on leveraging our growing purchasing scale and supplier relationships to secure discounts and provide pharmaceuticals at reduced prices and continuing to drive organic growth at attractive margins for our cross-border pharmaceutical wholesale business.

We regularly evaluate and undertake strategic initiatives to expand our distribution reach, improve our profit margins, and strengthen our competitive position. In 2018, we entered the vitamins and food supplements segment and in the fourth quarter of 2018 we posted the first sales of our own brand of nutraceuticals; SkyPremium Life. Through the December 2018 acquisition of Cosmofarm, we entered the full-line pharmaceutical wholesale distribution segment. Cosmofarm now serves approximately 370 independent retail pharmacies and 15 pharmaceutical wholesales in the greater Athens, Greece region by providing a reliable supply of brand-name and generic pharmaceuticals, OTC medicines, vitamins, and dietary supplements. We invest in technology to enhance safety, distribution and warehousing efficiency and reliability. For example, Cosmofarm operates two fully automated ROWA, a German robotic warehouse systems that ensure 0% error selection rate, accelerate order fulfillment, and yields higher cost-efficiency in our Athens distribution center.

We make use of analytics and customer feedback from our EU-wide network of wholesale pharmaceutical distributors and independent retail pharmacies to identify and evaluate which nutraceutical product codes to develop to add to our SkyPremium Life portfolio. We intend to continue to bring SkyPremium Life products to market primarily through our existing network of over 160 pharmaceutical wholesale clients and vendors and approximately 370 independent retail pharmacies in the EU. There is growing demand for vitamins and food supplements and we are committed to developing quality products and creating enhanced customer value.

We are also closely monitoring the legal framework for prescription and non-prescription derivatives of cannabis products as it develops in Europe. As the legal framework and processes are developed and implemented in each respective EU country, we will utilize our existing network to distribute both prescription and non-prescription derivatives of cannabis products to our current customer base. We currently intend to only distribute prescription and non-prescription derivatives of cannabis products to approved EU countries and not in the U.S.

We regularly evaluate acquisition targets that would allow us to expand our distribution reach and/or vertically integrate into the supply chain of the products that we currently distribute. We believe that the demand for reasonably priced medicines, delivered on time and in the highest quality is set to increase in the years to come, as the population’s life expectancy increases. With our product portfolio of patented and non-patented medicines, we contribute to the optimization of efficient medicinal care, and thereby lowering cost for health insurance funds, companies, and patients. We also believe that the demand for non-prescription wellness products such as food and dietary supplements will continue to increase as individuals are increasingly supplementing their nutritional intake.

We believe the EU pharmaceutical import/export market will continue to grow. We continue to encounter competition in the market as we grow. The competition comes in the form of level of service, reliability, and product quality. On the procurement side, we continue to expand our vendor base. In order to minimize business risks, we diversify our sources of supply. We maintain our high-quality standards by carefully selecting and qualifying our suppliers as well as actively ensuring that our suppliers meet our standard of quality control on an ongoing basis.

On July 22, 2015, the Hellenic Ministry of Health and more specifically the National Organization for Medicines granted SkyPharm a license for the wholesale of pharmaceutical products for human use. The license is valid for a period of five years and pursuant to the EU directive of (2013/C343/01).

Decahedron received its Wholesale Distribution Authorization for human use on November 7, 2013, 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 provision 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.

On February 2, 2019, the Hellenic Ministry of Health and the National Organization for Medicines extended the validity of Cosmofarm’s license for the wholesale of pharmaceutical products for human use for a period of five years and pursuant to the EU directive of (2013/C 343/01).

Corporate History and Structure

Cosmos Holdings, Inc. was incorporated in the State of Nevada under the name Prime Estates and Developments, Inc. on July 21, 2009. On November 14, 2013, we changed our name to Cosmos Holdings, Inc.

On September 27, 2013, the Company, closed a reverse take-over transaction by which it acquired a private company whose principal activities are the trading of products, providing representation, and provision of consulting services to various sectors. Pursuant to a Share Exchange Agreement between the Registrant and Amplerissimo Ltd., a company incorporated in Cyprus (“Amplerissimo”), the Company acquired 100% of Amplerissimo’s issued and outstanding common stock. As a result of the reverse take-over transaction, Amplerissimo became a wholly owned subsidiary of the Company.

On August 1, 2014, the Company, through its Cypriot subsidiary Amplerissimo, formed SkyPharm S.A., a Greek corporation (“SkyPharm”), a subsidiary that focuses on the trading, sourcing and distribution of pharmaceutical products.

In February 2017, the Company completed the acquisition of Decahedron Ltd., a UK corporation (“Decahedron”) consummating the transactions contemplated by the Stock Purchase Agreement, dated November 17, 2016 as amended (the “Decahedron SPA”). Pursuant to the terms of the Decahedron SPA, the shareholders of Decahedron received an aggregate of 170,000 shares of common stock of the Company (the “Stock Consideration”), which were delivered following the closing in exchange for all of the ordinary shares of Decahedron. Decahedron is a fully licensed wholesaler of pharmaceutical products and its primary activity is the distribution, import and export of pharmaceuticals. In accordance with the terms of the SPA, the principal and majority shareholder of Decahedron, Nicholas Lazarou, remained as a director and officer of Decahedron until his resignation in June 2019.

On November 21, 2017, the Company effected a one-for-ten (1:10) reverse stock split whereby the Company decreased, by a ratio of one-for-ten (1:10) the number of issued and outstanding shares of common stock. Proportional adjustments for the reverse stock split were made to the Company’s outstanding stock options, and warrants including all share and per-share data, for all amounts and periods presented in the consolidated financial statements.

On September 29, 2018, Amplerissimo transferred its remaining 22% investment in SkyPharm to the Company. The Company now holds 100% of the capital stock of SkyPharm and SkyPharm remains a 100% wholly owned subsidiary of the Company. On September 30, 2018, the Company entered into a Share Purchase Agreement with an unaffiliated third party and sold 100% of the issued capital stock of its subsidiary, Amplerissimo.

On December 19, 2018, the Company completed the purchase of all of the capital stock of Cosmofarm Ltd., a pharmaceutical wholesaler based in Athens, Greece. The principal of the selling shareholder is Panagiotis Kozaris, who remained with Cosmofarm as a director and chief operating officer once it became a wholly owned subsidiary of the Company. Grigorios Siokas, the Company’s CEO, became the new CEO of Cosmofarm. Mr. Kozaris had no prior relationship to the Company other than as an independent shareholder. The purchase price payable is €200,000 evidenced by a promissory note.

Going Concern

The Company’s consolidated financial statements are prepared in conformity with U.S. GAAP which contemplates the continuation of the Company as a going concern. For the year ended December 31, 2019, the Company had revenue of $39,676,385, a net loss of $3,298,965 and net cash used in operations of $4,788,842. Additionally, as of December 31, 2019, the Company had an accumulated deficit of $19,571,610, a working capital deficit of $7,062,520 and stockholders’ deficit of $6,460,829. It is management’s opinion that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of this filing.

The consolidated financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of this uncertainty.

The Company has not yet established an adequate ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.

In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations, the Company will need, among other things, additional capital resources. Management’s plans to continue as a going concern include raising additional capital through increased sales of product and by sale of equity and/or debt. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described herein and eventually secure other sources of financing and attain profitable operations.

Summary of Significant Accounting Policies

Basis of Financial Statement Presentation

The accompanying consolidated financial statements have been prepared in accordance with principles generally accepted in the United States of America.

Principles of Consolidation

Our consolidated accounts include our accounts and the accounts of our wholly owned subsidiaries, SkyPharm S.A., Decahedron Ltd. and Cosmofarm Ltd. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation and Other Comprehensive Income (Loss)

The functional currency of the Company’s subsidiaries is the Euro and British Pound. For financial reporting purposes, both the Euro (“EUR”) and British Pound (“GBP”) have been translated into United States dollars ($) and/or (USD) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Equity transactions are translated at each historical transaction date spot rate. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity (deficit) as “Accumulated other comprehensive loss.” Gains and losses resulting from foreign currency transactions are included in the statements of operations and comprehensive loss as other comprehensive income (loss). There have been no significant fluctuations in the exchange rate for the conversion of EUR or GBP to USD after the balance sheet date.

Other Comprehensive Income (Loss) for all periods presented includes only foreign currency translation gains (losses).

Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the consolidated balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency included in the consolidated results of operations as incurred.

As of December 31, 2019 and 2018, the exchange rates used to translate amounts in Euros into USD and British Pounds into USD for the purposes of preparing the consolidated financial statements were as follows:

	December 31, 2019		December 31, 2018
Exchange rate on balance sheet dates
EUR: USD exchange rate		1.1227		1.1456
GBP: USD exchange rate		1.3185		1.2734
Average exchange rate for the period
EUR: USD exchange rate		1.1194		1.1817
GBP: USD exchange rate		1.2767		1.3348

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of December 31, 2019 and December 31, 2018, there were no cash equivalents.

The Company maintains bank accounts in the United States denominated in U.S. Dollars and in the Republic of Cyprus, in Greece and in Bulgaria all of which are denominated in Euros. Additionally, the Company maintains a bank account in the United Kingdom denominated in British Pounds. For the year ended December 31, 2019, the amounts in these accounts were $14,451, $10,987 and $4,080. For the year ended December 31, 2018, the amounts in these accounts were $242,903, $203,806 and $119,357. Additionally, for the years ended December 31, 2019 and 2018, the Company had cash on hand in the amount of $52,489 and $166,350, respectively.

Reclassifications to Prior Period Financial Statements and Adjustments

Certain reclassifications have been made in the Company’s financial statements of the prior year to conform to the current year presentation. $2,500,000 in equity investment from the year ended December 31, 2018 was reclassified to marketable securities along with $212,890 from other investments resulting in marketable securities having an ending balance of $2,712,890 and other investments having an ending balance of $4,471 as of December 31, 2018. These reclassifications have no impact on previously reported net income.

Accounts Receivable, net

Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts against gross accounts receivable reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. At December 31, 2019 and 2018, the Company’s allowance for doubtful accounts was $529,252 and $540,048, respectively.

Tax Receivables

The Company pays Value Added Tax (“VAT”) or similar taxes (“input VAT”), income taxes, and other taxes within the normal course of its business in most of the countries in which it operates related to the procurement of merchandise and/or services it acquires and/or on sales and taxable income. The Company also collects VAT or similar taxes on behalf of the government (“output VAT”) for merchandise and/or services it sells. If the output VAT exceeds the input VAT, this creates a VAT payable to the government. If the input VAT exceeds the output VAT, this creates a VAT receivable from the government. The VAT tax return is filed on a monthly basis offsetting the payables against the receivables. In observance of EU regulations for intra-EU cross-border sales, our subsidiaries in Greece, SkyPharm and Cosmofarm, do not charge VAT for sales to wholesale drug distributors registered in other European Union member states. As of December 31, 2019 and 2018, the Company had a VAT net receivable balance of $136,891 and $729,790 respectively, recorded in the consolidated balance sheet as other assets.

Inventory

Inventory is stated at the lower-of-cost or net realizable value using the weighted average cost method on a first-in-first-out basis. Inventory consists primarily of finished goods and packaging materials, i.e. packaged pharmaceutical products and the wrappers and containers they are sold in. Inventory is replaced periodically to maintain the optimum stock on hand available for immediate shipment.

The Company writes-down inventories to net realizable value based on physical condition, expiration date, current market conditions, as well as forecasted demand. The Company’s inventories are not highly susceptible to obsolescence. Many of the Company’s inventory items are eligible for return to our suppliers when pre-agreed product requirements, including, but not limited to, physical condition and expiration date, are not met.

Property and Equipment, net

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided on a straight-line basis over the useful lives (except for leasehold improvements which are depreciated over the lesser of the lease term or the useful life) of the assets as follows:

	Estimated Useful Life
Leasehold improvements and technical works		Lesser of lease term or 40 years
Vehicles		6 years
Machinery		20 years
Furniture, fixtures and equipment		5–10 years
Computers and software		3-5 years

Depreciation expense was $201,000 and $34,623 for the years ended December 31, 2019 and December 31, 2018, respectively.

Impairment of Long-Lived Assets

In accordance with ASC 360-10, Long-lived Assets, which include property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. For the years ended December 31, 2019 and 2018, the Company had no impairment of long-lived assets.

Goodwill and Intangibles, net

The Company periodically reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically, goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology to estimate the fair value of a reporting unit. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit.

On December 19, 2018, as a result of the acquisition of Cosmofarm, the Company recorded $49,697 of goodwill.

Intangible assets with definite useful lives are recorded on the basis of cost and are amortized on a straight-line basis over their estimated useful lives. The Company uses a useful life of 5 years for an import/export license. The Company evaluates the remaining useful life of intangible assets annually to determine whether events and circumstances warrant a revision to the remaining amortization period. If the estimate of the intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over that revised remaining useful life. As of December 31, 2019, no revision to the remaining amortization period of the intangible assets was made.

Amortization expense was $33,086 and $9,307 for the years ended December 31, 2019 and 2018, respectively.

Equity Method Investment

For those investments in common stock or in-substance common stock in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, the investment is accounted for under the equity method. The Company records its share in the earnings of the investee and is included in “Equity earnings of affiliate” in the consolidated statement of operations. The Company assesses its investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable and recognizes an impairment loss to adjust the investment to its then current fair value.

Investments in Equity Securities

Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2016-01, and accordingly, investments in equity securities are accounted for at fair value with changes in fair value recognized in net income. Equity securities are classified as short-term or long-term based on the nature of the securities and their availability to meet current operating requirements. Equity securities that are readily available for use in current operations are reported as a component of current assets in the accompanying consolidated balance sheets. Equity securities that are not considered available for use in current operations would be reported as a component of long-term assets in the accompanying consolidated balance sheets. For equity securities with no readily determinable fair value, the Company elects a measurement alternative to fair value. Under this alternative, the Company measures the investments at cost, less any impairment, and adjusted for changes resulting from observable price changes in transactions for identical or similar investments of the investee. The election to use the measurement alternative is made for each eligible investment.

As of December 31, 2019, investments consisted of 3,000,000 shares, which traded at a closing price of $0.01 per share or a value of $33,000 of ICC International Cannabis Corp., 40,000 shares which traded at a closing price of $5.01 per share, or value of $200,290 of Diversa S.A. and 16,666 shares which traded at a closing price of $0.34 per share or value of $5,650 of National Bank of Greece. Additionally, the Company has $4,381 in equity securities of Pancreta bank, which are not publicly traded and recorded at cost. See Note 3, for additional investments in equity securities.

Fair Value Measurement

The Company applied FASB ASC 820, Fair Value Measurements and Disclosures, (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The following table presents assets that are measured and recognized at fair value as of December 31, 2019 and 2018, on a recurring basis:

	December 31, 2019						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	33,000		-		-	$	33,000
Marketable securities – Divsersa S.A.		200,290		-		-		200,290
Marketable securities – National Bank of Greece		5,650		-		-		5,650
	$	238,940					$	238,940

	December 31, 2018						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	2,500,000		-		-	$	2,500,000
Marketable securities – Divsersa S.A.		210,790		-		-		210,790
Marketable securities – National Bank of Greece		2,100		-		-		2,100
	$	2,712,890					$	2,712,890

FASB ASC 825-10-25 Fair Value Option, (“ASC 825-10-25”), expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.

Customer Advances

The Company receives prepayments from certain customers for pharmaceutical products prior to those customers taking possession of the Company’s products. The Company records these receipts as customer advances until it has met all the criteria for recognition of revenue including passing control of the products to its customer, at such point, the Company will reduce the customer and deposits balance and credit the Company’s revenues.

Revenue Recognition

The Company adopted the modified retrospective adoption in accordance with ASC 606, Revenue from Contracts with Customers, on January 1, 2018. The new guidance introduces a five-step model for recognizing revenue by applying the following steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the performance obligations are satisfied by transferring the promised goods to the customer. Once these steps are met, revenue is recognized upon delivery of the product. Adoption of ASC 606 has not changed the timing and nature of the Company’s revenue recognition and there has been no material effect on the Company’s consolidated financial statements.

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Stock Compensation (“ASC 718”) and Staff Accounting Bulletin No. 107 (“SAB 107”) issued by the SEC in March 2005 regarding its interpretation of ASC 718. ASC 718 requires the fair value of all stock-based employee compensation awarded to employees to be recorded as an expense over the related requisite service period. The Company values any employee or non-employee stock-based compensation at fair value using the Black-Scholes Option Pricing Model.

The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASU 2018-07, Compensation-Stock Compensation.

Foreign Currency Translations and Transactions

Assets and liabilities of all foreign operations are translated at year-end rates of exchange, and the statements of operations are translated at the average rates of exchange for the year. 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 earnings.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash investments and accounts receivable.

The following tables show the number of the Company’s clients which contributed 10% or more of revenue and accounts receivable, respectively:

	Year Ended December 31,		Year Ended December 31,
	2019		2018
Number of 10% clients		0		2
Percentage of total revenue		n/a		26.49	%
Percentage of total AR		n/a		4.94	%

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 carry forwards. 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 of England. The corporate income tax rate is 29% in Greece (tax losses are carried forward for five years effective January 1, 2013) and 20% in United Kingdom of England. 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. At December 31, 2019 the Company has maintained a valuation allowance against all net deferred tax assets in each jurisdiction in which it is subject to income tax.

The Company periodically reviews the uncertainties and judgments related to the application of complex income tax regulations to determine income tax liabilities in several jurisdictions. The Company uses a “more likely than not” criterion for recognizing the income tax benefit of uncertain tax positions and establishing measurement criteria for income tax benefits. The Company has evaluated the impact of these positions and due to the fact that the fiscal years 2013 - 2014 are unaudited by the Greek tax authorities, a potential tax liability has been identified, which may arise from a prospective tax audit from tax authorities, based on the tax settlement note of years 2007 - 2009. The amount of the liability as of December 31, 2019 and 2018, was $79,716 and $145,504, respectively, and has been recorded as a long-term liability within the consolidated balance sheets.

Retirement and Termination Benefits

Under Greek labor law, employees are entitled to lump-sum compensation in the event of termination or retirement. The amount depends on the employee’s work experience and renumeration as of the day of termination or retirement. If an employee remains with the company until full-benefit retirement, the employee is entitled to a lump-sum equal to 40% of the compensation to be received if the employee were to be dismissed on the same day. The Company periodically reviews the uncertainties and judgements related to the application of the relevant labor law regulations to determine retirement and termination benefits obligations of its Greek subsidiaries. The Company has evaluated the impact of these regulations and has identified a potential retirement and termination benefits liability. The amount of the liability as of December 31, 2019 and December 31, 2018, was $77,170 and $23,340, respectively, and has been recorded as a long-term liability within the consolidated balance sheets.

Basic and Diluted Net Income (Loss) per Common Share

Basic income per share is calculated by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted income per share is calculated by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period and, when dilutive, potential shares from stock options and warrants to purchase common stock, using the treasury stock method. In accordance with ASC 260, Earnings Per Share, the following table reconciles basic shares outstanding to fully diluted shares outstanding.

	Years Months Ended December 31,
	2019		2018
Weighted average number of common shares outstanding Basic		13,273,596		13,306,612
Potentially dilutive common stock equivalents		42,808		257,155
Weighted average number of common and equivalent shares outstanding – Diluted		13,273,596		13,306,612

Common stock equivalents are included in the diluted income per share calculation only when option exercise prices are lower than the average market price of the common shares for the period presented.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability. Lessor accounting under the standard is substantially unchanged. Additional qualitative and quantitative disclosures are also required. The Company adopted the standard effective January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The Company adopted the following practical expedients and elected the following accounting policies related to this standard update:

· The option to not reassess prior conclusions related to the identification, classification and accounting for initial direct costs for leases that commenced prior to January 1, 2019.

· Short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less; and

· The option to not separate lease and non-lease components for certain equipment lease asset categories such as freight car, vehicles and work equipment.

· The package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases.

Adoption of this standard resulted in the recognition of operating lease right-of-use assets and corresponding lease liabilities of $622,765 and $538,467, respectively, on the condensed consolidated balance sheet as of January 1, 2019. The Company’s accounting for finance leases remained substantially unchanged. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 13.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the measurement of goodwill by eliminating Step 2 from the current goodwill impairment test in the event that there is evidence of an impairment based on qualitative or quantitative assessments. ASU 2017-04 does not change how the goodwill impairment is identified, and the Company will continue to perform a qualitative assessment annually to determine whether the two-step impairment test is required. Until the adoption, current accounting standards require the impairment loss to be recognized under Step 2 of the impairment test. This requires the Company to calculate the implied fair value of goodwill by assigning fair value to the reporting unit’s assets and liabilities as if the reporting unit has been acquired in a business combination, then subsequently subtracting the implied goodwill from the carrying amount of the goodwill. The new standard would require the Company to determine the fair value of the reporting unit and subtract the carrying value from the fair value of the reporting unit to determine if there is an impairment. ASU 2017-04 is effective for the Company for fiscal years beginning after December 15, 2019, and early adoption is permitted. ASU 2017-04 is required to be adopted prospectively, and the adoption is effective for annual goodwill impairment tests performed in the year of adoption. The adoption of ASU No. 2017-04 is not expected to have a material effect on the Company’s consolidated financial position or the Company’s consolidated results of operations.

Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.

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ACQUISITION OF COSMOFARM, LTD. (Details 1)	12 Months Ended
	Dec. 31, 2019 USD ($)
Acquired intangible assets	$ 213,790
Trademark [Member]
Acquired intangible assets	$ 36,997
Acquired intangible assets, Useful Life (Years)	5 years
Customer base [Member]
Acquired intangible assets	$ 176,793
Acquired intangible assets, Useful Life (Years)	10 years

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ORGANIZATION AND NATURE OF BUSINESS (Details 3) - integer	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
ORGANIZATION AND NATURE OF BUSINESS (Details 3)
Number of 10% clients	0	2
Percentage of total revenue		26.49%
Percentage of total AR		4.94%

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DISAGGREGATION OF REVENUE (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenue	$ 39,676,385	$ 37,083,882
Greece [Member]
Revenue	26,101,316	2,970,219
Libya [Member]
Revenue	396,333	3,860,021
Belgium [Member]
Revenue		4,230
Croatia [Member]
Revenue	22,497
Denmark [Member]
Revenue	97,905	430,932
France [Member]
Revenue	153,422	388,944
Georgia [Member]
Revenue	5,301
Germany [Member]
Revenue	6,672,511	14,783,119
Hungary [Member]
Revenue	1,094,446	1,673,287
Indonesia [Member]
Revenue	7,172	6,449
Ireland [Member]
Revenue	467,965	1,519,746
Italy [Member]
Revenue	196,044	481,141
Jordan [Member]
Revenue	20,144	162,749
Netherlands [Member]
Revenue	846,479	886,218
Poland [Member]
Revenue	307,624
Spain [Member]
Revenue		8,724
Turkey [Member]
Revenue	24,347
UK [Member]
Revenue	$ 3,262,880	$ 9,908,103

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STOCK OPTIONS AND WARRANTS (Details) - Stock Options [Member] - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Number of Shares
Number of Shares Outstanding, Beginning	74,000	49,000
Granted		25,000
Forfeited
Exercised
Expired
Number of Shares Outstanding, Ending	74,000	74,000
Number of Shares Exercisable	74,000
Weighted Average Exercise Price
Weighted Average Exercise Price Outstanding, Beginning	$ 1.32	$ 1.49
Granted		1.00
Forfeited
Exercised
Expired
Weighted Average Exercise Price Outstanding, Ending	1.32	$ 1.32
Weighted Average Exercise Price Exercisable	$ 1.32
Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term Outstanding, Beginning	2 years 5 months 19 days	3 years 2 months 9 days
Granted		4 years
Weighted Average Remaining Contractual Term Outstanding, Ending	1 year 5 months 19 days	2 years 5 months 19 days
Weighted Average Remaining Contractual Term Exercisable	1 year 5 months 19 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value Outstanding, Beginning	$ 198,000
Granted
Forfeited
Exercised
Expired
Aggregate Intrinsic Value Outstanding, Ending	64,800	$ 198,000
Aggregate Intrinsic Value Exercisable	$ 64,800

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LEASES (Details Details Narrative)	12 Months Ended
	Dec. 31, 2019 USD ($)
LEASES (Details Details Narrative)
Operating lease, term of agreements	The Company has various lease agreements with terms up to 10 years, comprising of leases of office space. Some leases include options to purchase, terminate or extend for one or more years.
Operating lease, weighted average remaining lease term	6 years 7 months 24 days
Operating lease, weighted average discount rate	6.74%
Operating lease expense	$ 223,927
Operating lease, cash flows	185,540
Operating lease liabilities	$ 673,844
Finance lease, weighted average remaining lease term	2 years 10 months 13 days
Finance lease, weighted average discount rate	6.66%
Operating lease cash flows used in finance lease	$ 74,476
Finance lease, interest expense	10,927
Finance lease, amortization expense	$ 160,542

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INTANGIBLE ASSETS (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Intangible assets	$ 263,790	$ 211,683
Less: Accumulated Amortization	(49,806)	(16,720)
Subtotal	213,984	247,070
Goodwill	49,697	49,697
Total	263,681	296,767
Trade Name / Mark [Member]
Intangible assets	36,997	36,997
Customer Base [Member]
Intangible assets	176,793	176,793
License [Member]
Intangible assets	$ 50,000	$ 50,000

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INCOME TAXES (Details 1) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Current tax provision
Federal
State
Foreign	182,815	17,326
Total current tax provision	182,815	17,326
Deferred tax provision
Domestic
State
Foreign
Total deferred tax provision
Total current provision	$ 182,815	$ 17,326

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EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2019

EARNINGS PER SHARE

Summary of earning per share

	2019			2018
Numerator for Basic and Diluted Earnings Per Share:
Net loss	$	(3,298,965	)	$	(9,060,658	)
Denominator for Basic Earnings Per Share:
Weighted Average Shares		13,273,596			13,306,612
Potentially Dilutive Common Shares		-			-
Adjusted Weighted Average Shares		13,273,596			13,306,612
Basic and Diluted Net (Loss) Income per Share		(0.25	)		(0.68	)

Summary of potential shares

	2019		2018
Common stock warrants		-		144,338
Common Stock Options		42,808		60,437
Convertible Debt		-		52,381
Total		42,808		257,155

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LINES OF CREDIT (Tables)

12 Months Ended

Dec. 31, 2019

LINES OF CREDIT (Tables)

Summary of lines of credit

	2019		2018
National	$	1,940,045	$	766,575
Alpha		810,947		461,178
Eurobank		-		286,829
Total	$	2,750,992	$	1,514,582

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PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2019

PROPERTY, PLANT AND EQUIPMENT

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consists of the following at December 31:

	2019			2018
Leasehold improvements	$	548,000		$	369,437
Vehicles		115,055			117,402
Furniture, fixtures and equipment		1,439,839			1,167,798
Computers and software		85,052			55,169
		2,187,946			1,709,806
Less: Accumulated depreciation		(453,165	)		(284,174	)
Total	$	1,734,781		$	1,425,632

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2019

RELATED PARTY TRANSACTIONS

NOTE 8 - RELATED PARTY TRANSACTIONS

On the date of our inception, we issued 2 million shares of our common stock to our three officers and directors which were recorded at no value (offsetting increases and decreases in common stock and additional paid-in capital).

Doc Pharma S.A.

As of December 31, 2019, the Company has a prepaid balance of €2,181,780 ($2,449,484) and an accounts payable balance of €22,576 ($25,346), resulting in a net prepaid balance of €2,158,434 ($2,424,138) to Doc Pharma S.A. related to purchases of inventory. Additionally, the Company has a receivable balance of €546,240 ($613,264),.As of December 31, 2018, the Company had a prepaid balance of €1,867,239 ($2,139,109) and an accounts payable balance of €31,514 ($36,103), resulting in a net prepaid balance of €1,835,725 ($2,103,006) to Doc Pharma S.A., related to purchases of inventory. Additionally, the Company has a receivable balance and €38,323 ($43,903).

During the years ended December 31, 2019 and 2018, the Company has purchased a total of €3,095,163 ($3,464,725) and €4,596,227 ($5,431,361) of products from Doc Pharma, respectively. During the years ended December 31, 2019 and 2018 the Company had €779,919 ($873,041) and €201,645 ($238,284) revenue from Doc Pharma, respectively.

Doc Pharma S.A is considered a related party to the Company due to the fact that the CEO of Doc Pharma is the wife of Grigorios Siokas, the Company’s CEO and principal shareholder, who also served as a principal of Doc Pharma SA in the past.

Medihelm S.A

As of December 31, 2019, the Company had a prepaid balance of €3,109,147 ($3,490,639) and an accounts payable balance of £39,818 ($52,500) and €143,393 ($160,987), resulting in a net prepaid balance of $3,277,152 to Medihelm S.A. related to purchases of inventory. Additionally, the Company has a receivable balance of €1,163,070 ($1,305,779). As of December 31, 2018, the Company has a prepaid balance of €2,459,805 ($2,817,953) and an accounts payable balance of £42,065 ($53,566), resulting in a net prepaid balance of $2,764,387 to Medihelm S.A. related to purchases of inventory. Additionally, the Company has a receivable balance of €127,292 ($145,826).

During the years ended December 31, 2019 and 2018, SkyPharm purchased €2,332,755 ($2,611,286) and €9,564,899 ($11,302,842) of products from Medihelm, respectively, and Decahedron purchased $0 and £718,050 ($958,454) of products from Medihelm, respectively. During the years ended December 31, 2019 and 2018, SkyPharm had revenue of €945,074 ($1,057,916) and €1,055,435 ($1,247,208) from Medihelm, respectively.

Medihelm S.A. is considered a related party to the Company due to the fact that the managing director of Medihelm is the mother of Nicholaos Lazarou, who was the managing director of the Company’s UK subsidiary, Decahedron through June 2019.

Nicholaos Lazarou

Following the acquisition of Decahedron, Nicholaos Lazarou was the managing director of the Company’s UK subsidiary until June 30, 2019.

On December 19, 2017, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of €80,000 ($94,495) the Company purchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on December 19, 2017, the date of signing, however the Company is entitled to pay the full consideration in tranches until July 2018. As of December 31, 2017, the Company has paid consideration of €28,000 ($33,073) and had an amount due to related party of €52,000 ($61,422) recorded as accounts payable related party as of December 31, 2017. The shares were returned to the Company in February 2018. During the year ended December 31, 2018, the Company repaid the remaining balance of €52,000 ($61,448) and had an amount due to related party of €0 ($0) as of December 31, 2018.

On June 18, 2018, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of €60,000 ($69,912) the Company repurchased 15,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 18, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until November 2018. During the year ended December 31, 2018, the Company paid consideration of €60,000 ($70,902) and has an amount due to related party of €0 ($0) as of December 31, 2018.

On November 30, 2018, the Company entered into a stock purchase agreement with Nicholaos Lazarou, whereby for consideration of $60,000 the Company repurchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on November 30, 2018, the date of signing, however, the Company was entitled to pay the full consideration in tranches until August 2019. As of December 31, 2018, the Company had an amount due to related party of $48,683. During the year ended December 31, 2019, the Company repaid the remaining balance in the amount of $48,683.

On June 20, 2019, the Company entered into a stock purchase agreement with Nicholaos Lazarou whereby for consideration of $15,000, the Company repurchased 114,518 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 20, 2019, the date of signing. During the year ended December 31, 2019, the Company paid the $15,000 in consideration in full.

Notes Payable – Related Party

A summary of the Company’s related party notes payable during the years ended December 31, 2019 and 2018 is presented below:

	2019			2018
Beginning Balance	$	1,793,437		$	97,979
Transfer of third-party debt		-			1,718,400
Payments		(382,055	)		(18,330	)
Foreign currency translation		(35,850	)		(4,612	)
Ending Balance	$	1,375,532		$	1,793,437

Grigorios Siokas

On December 20, 2018, the €1,500,000 ($1,718,400) note payable, originally borrowed pursuant to a Loan Agreement with a third-party lender, dated March 16, 2018, was transferred to Grigorios Siokas. The note bears an interest rate of 4.7% per annum and has a maturity date of March 18, 2019. As of December 31, 2018, the Company has an outstanding principal balance of €1,500,000 ($1,718,400) and accrued interest of €55,631 ($63,371). During the year ended December 31, 2019, the Company repaid €300,000 ($336,810) and as of December 31, 2019, the Company had an outstanding principal balance of €1,200,000 ($1,347,240) and accrued interest of €144,207 ($128,447).

Grigorios Siokas is the Company’s CEO and principal shareholder.

Dimitrios Goulielmos

On November 21, 2014, the Company entered into an agreement with Dimitrios Goulielmos, as amended on November 4, 2016. Pursuant to the amendment, this loan is non-interest bearing. During the year ended December 31, 2018, the Company repaid €16,000 ($18,330) and a principal balance of €53,500 ($61,290) remained as of December 31, 2018. During the year ended December 31, 2019, the Company repaid €40,300 ($45,245) and a principal balance of €13,200 ($14,820) remained as of December 31, 2019.

Dimitrios Goulielmos is a current director and former CEO of the Company.

DOC Pharma

On November 1, 2015, the Company entered into a €12,000 ($12,662) Loan Agreement with Doc Pharma S.A, pursuant to which Doc Pharma S.A., paid existing bills of the Company in the amount of €12,000 ($12,662), excluding the Vendor Bills. The loan bears an interest rate of 2% per annum and was due and payable in full on October 31, 2016. As of December 31, 2018, the Company has an outstanding principal balance under this note of €12,000 ($13,747) and accrued interest expense of $836. As of December 31, 2019, the Company has an outstanding principal balance of €12,000 ($13,472) and accrued interest expense of $1,100.

The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the years ended December 31, 2019 and 2018 the Company recorded losses of $35,850 and $4,612, respectively.

Loans Payable – Related Party

A summary of the Company’s related party loans payable during the years ended December 31, 2019 and 2018 is presented below:

	2019			2018
Beginning Balance	$	1,775,251		$	7,213
Proceeds		585,915			2,408,965
Payments		(262,226	)		(631,166	)
Conversion of debt		(1,050,000	)		-
Disposal of subsidiary		-			(9,501	)
Reclassification of receivable		2,547			-
Foreign currency translation		(25,223	)		(260	)
Ending Balance	$	1,026,264		$	1,775,251

Grigorios Siokas

On October 1, 2016, the Company borrowed €5,000 ($5,276) as a loan payable from Grigorios Siokas. The loan is non-interest bearing and had a maturity date of October 1, 2017. During the year ending December 31, 2017, the Company borrowed an additional €1,000 ($1,202). On September 30, 2018, the debt, amounting to €6,000 ($6,973) was transferred to the third-party purchaser of Amplerissimo pursuant to the Share Purchase Agreement. As of December 31, 2018, the Company had an outstanding principal balance of $0 and no accrued interest under this loan.

During the year ended December 31, 2018, the Company borrowed €1,622,700 ($1,858,965) and $382,000 of loans payable from Grigorios Siokas and repaid €269,000 ($308,166) and $155,000 of these loans. These loans are non-interest bearing and have no maturity dates. As of December 31, 2018, the Company had an outstanding principal balance of $1,777,799, consisting of €1,353,700 ($1,550,799) and $227,000, in loans payable to Grigorios Siokas. During the year ended December 31, 2019, the Company borrowed total additional proceeds of $585,914, repaid €233,567 ($262,226) of these loans and converted $1,050,000 of these loans into 140,001 shares of common stock at a conversion rate of $7.50 per share. These loans are non-interest bearing and have no maturity dates. As of December 31, 2019, the Company had an outstanding principal balance under these loans of $1,026,264 consisting of €297,314 ($303,502) and $722,762, in loans payable to Grigorios Siokas.

On May 28, 2019, the Company entered into a Debt Exchange Agreement with Grigorios Siokas. The agreement provided for the issuance by the Company of 66,667 shares of common stock, at the rate of $7.50 per share, or an aggregate of $500,000, in exchange for $500,000 of existing loans by Mr. Siokas to the Company. The Company valued this transaction at fair value and recorded a $259,999 gain on extinguishment of related party debt to additional paid-in capital.

On June 24, 2019, the Company entered into a Debt Exchange Agreement with Grigorios Siokas. The agreement provided for the issuance by the Company of 73,334 shares of common stock, at the rate of $7.50 per share, or an aggregate of $550,000, in exchange for $550,000 of existing loans by Mr. Siokas to the Company. The Company valued this transaction at fair value and recorded a $269,126 gain on extinguishment of related party debt to additional paid-in capital.

Ourania Matsouki

During the year ended December 31, 2016, the Company borrowed €44,995 ($47,479) from Mrs. Matsouki, Grigorios Siokas’ wife and CEO of Doc Pharma. During the year ended December 31, 2017, the Company borrowed an additional €55,000 ($66,121). These loans have no formal agreement and bear no interest. As of December 31, 2017, the Company paid back the outstanding balance of €99,995 ($120,214) of these loans. During the year ended December 31, 2018, the Company borrowed an additional €30,000 ($34,368). As of December 31, 2018, the Company has paid back the outstanding balance of €30,000 ($34,368) of these loans.

Konstantinos Vassilopoulos

During the year ended December 31, 2018, the Company borrowed and repaid an aggregate of $168,000 to Konstantinos Vassilopoulos, the Company’s former U.S. Finance manager and current Administrative Officer. These loans have no formal agreement and bear no interest. As of December 31, 2018, an outstanding principal balance of $0 and $0 accrued interest remained.

The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the years ended December 31, 2019 and 2018 the Company recorded $25,223 and $260, respectively.

Except as set forth above, we have not entered into any material transactions with any director, executive officer, and promoter, beneficial owner of five percent or more of our common stock, or family members of such persons.

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LEASES

12 Months Ended

Dec. 31, 2019

LEASES

NOTE 12 - LEASES

The Company has various lease agreements with terms up to 10 years, comprising of leases of office space. Some leases include options to purchase, terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.

The assets and liabilities from operating and finance leases are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s secured incremental borrowing rates or implicit rates, when readily determinable. Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.

The Company’s operating leases do not provide an implicit rate that can readily be determined. Therefore, we use a discount rate based on our incremental borrowing rate, which is determined using the interest rate of our long-term debt as of January 1, 2019.

The Company’s weighted-average remaining lease term relating to its operating leases is 6.65 years, with a weighted-average discount rate of 6.74%.

The Company incurred lease expense for its operating leases of $223,927 which was included in “General and administrative expenses,” for the year ended December 31, 2019.

The Company had operating cash flows used in operating leases of $185,540 for the year ended December 31, 2019. Right-of-use assets obtained in exchange for new operating lease liabilities $673,844 for the year ended December 31, 2019.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of December 31, 2019.

Maturity of Lease Liability
2020	$	167,694
2021		83,144
2022		53,890
2023		53,890
Thereafter		255,976
Total undiscounted finance lease payments	$	614,593
Less: Imputed interest		122,013
Present value of finance lease liabilities	$	492,580

The Company’s weighted-average remaining lease term relating to its finance leases is 2.87 years, with a weighted-average discount rate of 6.66%.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s finance leases as of December 31, 2019.

Maturity of Lease Liability
2019	$	65,556
2020		44,373
2021		26,472
2022		14,685
2023		4,126
Thereafter		-
Total undiscounted finance lease payments	$	155,212
Less: Imputed interest		14,504
Present value of finance lease liabilities	$	140,708

The Company had financing cash flows used in finances leases of $74,476 for the year ended December 31, 2019.

The Company incurred interest expense on its finance leases of $10,927 which was included in “Interest expense,” for the year ended December 31, 2019. The Company incurred amortization expense on its finance leases of $160,542 which was included in “Depreciation and amortization expense,” for the year ended December 31, 2019.