10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

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

For the transition period from ___________ to ___________

Commission file number: 000-54436

COSMOS HEALTH 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.)
5 Agiou Georgiou Str,Pilea, Thessaloniki, Greece	55438
(Address of principal executive offices)	(Zip Code)

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

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act

Title of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
Common Stock, $.001 par value	COSM	The Nasdaq Capital Market

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 ☒     No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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	☐	Accelerated filer	☐
Non-accelerated Filer	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)		Emerging growth company	☐

If an emerging growth company, indicate by check mark 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 7(a)(2)(B) of the Securities Act. ☐

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

Applicable only to Corporate Issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 13,404,204 as of November 20, 2023.

COSMOS HEALTH INC.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited).	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	37
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	47
Item 4.	Controls and Procedures.	47
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	49
Item 1A	Risk Factors.	49
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities.	49
Item 3.	Defaults Upon Senior Securities.	49
Item 4.	Mine Safety Disclosures.	49
Item 5.	Other Information.	49
Item 6.	Exhibits.	50
SIGNATURES		51

2

COSMOS HEALTH INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2023			December 31, 2022
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	2,360,604		$	20,749,683
Accounts receivable, net		25,591,342			23,084,000
Accounts receivable - related party		3,009,169			2,830,595
Marketable securities		17,532			14,881
Inventory		5,960,342			3,451,868
Loans receivable		388,693			377,038
Loans receivable - related party		423,360			427,920
Prepaid expenses and other current assets		3,047,669			1,967,527
Prepaid expenses and other current assets - related party		5,688,041			3,463,401
TOTAL CURRENT ASSETS		46,486,752			56,366,913
Property, plant and equipment, net		10,249,782			1,817,025
Goodwill and intangible assets, net		4,065,513			706,914
Loans receivable - long term portion		3,458,115			3,792,034
Loans receivable - related party - long term		3,492,720			3,851,280
Operating lease right-of-use asset		797,681			821,069
Financing lease right-of-use asset		374,949			291,762
Advances for building's acquisition		2,000,020			-
Other assets		599,847			391,624
TOTAL ASSETS	$	71,525,379		$	68,038,621
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	12,646,081		$	11,918,997
Accounts payable and accrued expenses - related party		96,905			205,360
Accrued interest		82,500			275,547
Lines of credit		5,354,752			5,758,737
Convertible notes payable, net of unamortized discount of $0 and $258,938, respectively		-			100,000
Derivative liability - convertible note		-			54,293
Notes payable		1,059,677			2,158,417
Notes payable - related party		10,796			10,912
Loans payable - related party		12,684			12,821
Taxes payable		426,377			126,855
Operating lease liability, current portion		169,500			167,393
Financing lease liability, current portion		128,529			97,097
Other current liabilities		2,597,498			862,440
TOTAL CURRENT LIABILITIES		22,585,299			21,748,869
Share settled debt obligation		-			1,554,590
Notes payable - long term portion		3,160,277			2,859,570
Operating lease liability, net of current portion		628,179			653,673
Financing lease liability, net of current portion		262,103			206,407
Other liabilities		321,367			1,358,803
TOTAL LIABILITIES		26,957,225			28,381,912
Commitments and Contingencies (see Note 14)		-			-
MEZZANINE EQUITY
Preferred stock, $0.001 par value; 100,000,000 shares authorized:
Series A preferred stock, stated value $1,000 per share, 6,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2023 and December 31, 2022; liquidation preference of $372,414		372,414			372,414
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value; 300,000,000 shares authorized; 13,068,693 shares issued and 12,982,196 outstanding as of September 30, 2023, and 10,605,412 shares issued and 10,589,915 outstanding as of December 31, 2022		13,069			10,606
Additional paid-in capital		117,791,721			112,205,952
Subscription receivable		(50,000	)		(4,750,108	)
Treasury stock, at cost, 86,497 and 15,497 shares as of September 30, 2023 and December 31, 2022, respectively		(916,958	)		(816,707	)
Accumulated deficit		(71,038,463	)		(66,232,813	)
Accumulated other comprehensive loss		(1,603,629	)		(1,132,635	)
TOTAL STOCKHOLDERS' EQUITY		44,195,740			39,284,295
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY	$	71,525,379		$	68,038,621

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

3

COSMOS HEALTH INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
REVENUE	$	12,823,797		$	12,016,098		$	37,537,003		$	38,296,402
COST OF GOODS SOLD		11,609,039			10,232,201			34,418,334			32,774,701
GROSS PROFIT		1,214,758			1,783,897			3,118,669			5,521,701
OPERATING EXPENSES
General and administrative expenses		2,573,414			1,335,033			6,662,579			3,192,137
Salaries and wages		1,252,680			576,118			3,279,803			1,675,068
Sales and marketing expenses		157,435			103,979			942,759			496,371
Depreciation and amortization expense		248,530			112,879			478,466			334,349
TOTAL OPERATING EXPENSES		4,232,059			2,128,009			11,363,607			5,697,925
LOSS FROM OPERATIONS		(3,017,301	)		(344,112	)		(8,244,938	)		(176,224	)
OTHER INCOME (EXPENSE)
Other income (expense), net		14,404			(5,431	)		(14,330	)		(60,558	)
Interest expense		(151,274	)		(517,660	)		(529,782	)		(1,722,750	)
Interest income		110,596			55,715			555,281			180,813
Non-cash interest expense		-			(295,846	)		-			(772,180	)
Gain (loss) on equity investments, net		(1,093	)		359			2,876			415
Gain on extinguishment of debt		706			-			1,911,476			1,004,124
Change in fair value of derivative liability		-			628			3,384			(6,627	)
Bargain purchase gain		-			-			1,633,842			-
Foreign currency transaction, net		(371,115	)		(468,362	)		(108,406	)		(984,401	)
TOTAL OTHER INCOME (EXPENSE), NET		(397,776	)		(1,230,597	)		3,454,341			(2,361,164	)
LOSS BEFORE INCOME TAXES		(3,415,077	)		(1,574,709	)		(4,790,597	)		(2,537,388	)
INCOME TAX EXPENSE		65,873			(398,066	)		-			(473,296	)
NET LOSS		(3,349,204	)		(1,972,775	)		(4,790,597	)		(3,010,684	)
Deemed dividend on issuance of warrants		-			-			-			(5,788,493	)
Deemed dividend on downround of warrants		(15,053	)		-			(15,053	)		(8,480,379	)
Deemed dividend on downround of preferred stock		-			-			-			(8,189,515	)
Deemed dividend on preferred stock		-			(19,607	)		-			(372,414	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS		(3,364,257	)		(1,992,382	)		(4,805,650	)		(25,841,485	)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment, net		(890,645	)		(1,029,141	)		(470,994	)		(2,463,245	)
TOTAL COMPREHENSIVE LOSS	$	(4,254,902	)		(3,021,523	)	$	(5,276,644	)	$	(28,304,730	)
BASIC NET LOSS PER SHARE	$	(0.27	)		(1.93	)	$	(0.42	)	$	(29.35	)
DILUTED NET LOSS PER SHARE	$	(0.27	)		(1.93	)	$	(0.42	)	$	(29.35	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		12,585,479			1,032,275			11,346,071			880,542
Diluted		12,585,479			1,032,275			11,346,071			880,542

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

4

COSMOS HEALTH INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND MEZZANINE EQUITY

(Unaudited)

																								Accumulated
											Additional					Treasury Stock								Other			Total
	Preferred Stock						Common Stock				Paid-in			Subscription		No. of					Accumulated			Comprehensive			Stockholders'
	No. of Shares			Value			No. of Shares		Value		Capital			Receivable		Shares		Value			Deficit			Loss			Equity
Balance at January 1, 2022		-		$	-			701,780	$	702	$	39,692,595		$	-		15,497	$	(816,707	)	$	(34,345,506	)	$	(151,621	)	$	4,379,463
Foreign currency translation adjustment, net		-			-			-		-		-			-		-		-			-			(405,229	)		(405,229	)
Adoption of ASU 2020-06		-			-			-		-		(294,000	)		-		-		-			53,248			-			(240,752	)
Issuance of Series A preferred stock, net of issuance costs of $547,700		6,000			5,452,300			-		-		-			-		-		-			-			-			-
Conversion of notes payable into shares of common stock		-			-			9,520		10		973,410			-		-		-			-			-			973,420
Cashless exercise of warrants		-			-			33,179		33		(829	)		-		-		-			-			-			-
Net income		-			-			-		-		-			-		-		-			203,347			-			203,347
Balance at March 31, 2022		6,000			5,452,300			744,479		745		40,371,176			-		15,497		(816,707	)		(34,088,911	)		(556,850	)		4,910,249
Foreign currency translation adjustment, net		-			-			-		-		-			-		-		-			-			(1,028,875	)		(1,028,875	)
Conversion of Series A preferred stock		(3,034	)		(2,427,693	)		195,689		196		2,427,497			-		-		-			-			-			2,427,693
Conversion of convertible debt		-			-			1,574		2		38,142			-		-		-			-			-			38,144
Forgiveness of related party debt		-			-			-		-		-			-		-		-			-			-			-
Restricted stock issued to a consultant		-			-			-		-		-			-		-		-			-			-			-
Cashless exercise of warrants		-			-			18,213		18		(18	)		-		-		-			-			-			-
Deemed dividend upon downround of preferred stock and warrants		-			-			-		-		16,669,894			-		-		-			(16,669,894	)		-			-
Deemed dividend on preferred stock		-			-			-		-		352,807			-		-		-			(352,807	)		-			-
Payment of deemed dividend on preferred stock		-			-			-		-		-			-		-		-			-			-			-
Stock-based compensation		-			-			-		-		24,101			-		-		-			-			-			24,101
Net loss		-			-			-		-		-			-		-		-			(1,241,256	)		-			(1,241,256	)
Balance at June 30, 2022		2,966		$	3,024,607			959,954	$	961	$	59,883,599		$	-		15,497	$	(816,707	)	$	(52,352,868	)	$	(1,585,725	)	$	5,130,056
Foreign currency translation adjustment, net		-			-			-		-		-			-		-		-			-			(1,029,141	)		(1,029,141	)
Conversion of Series A preferred stock		(1,466	)		(1,332,179	)		94,362		94		1,332,086			-		-		-			-			-			1,332,180
Stock-based compensation		-			-			300		-		3,120			-		-		-			-			-			3,120
Deemed dividend on preferred stock		-			19,607			-		-		-			-		-		-			(19,607	)		-			(19,607	)
Net loss		-			-			-		-		-			-		-		-			(1,972,775	)		-			(1,972,775	)
Balance at September 30, 2022		1,500		$	1,712,035			1,054,616	$	1,055	$	61,218,805		$	-		15,497	$	(816,707	)	$	(54,345,250	)	$	(2,614,866	)	$	3,443,833

5

									Additional					Treasury Stock
	Preferred Stock				Common Stock				Paid-in		Subscription			No. of					Accumulated			Comprehensive			Stockholders'
	No. of Shares		Value		No. of Shares		Value		Capital		Receivable			Shares		Value			Deficit			Loss			Equity
Balance at January 1, 2023		-	$	372,414		10,605,412	$	10,606	$	112,205,952	$	(4,750,108	)		15,497	$	(816,707	)	$	(66,232,813	)	$	(1,132,635	)	$	39,284,295
Foreign currency translation adjustment, net		-		-		-		-		-		-			-		-			-			336,463			336,463
Proceeds from sale of common stock		-		-		-		-		-		4,750,000			-		-			-			-			4,750,000
Shares issued in lieu of cash		-		-		15,258		15		96,873		-			-		-			-			-			96,888
Net loss		-		-		-		-		-		-			-		-			(459,863	)		-			(459,863	)
Balance at March 31, 2023		-		372,414		10,620,670		10,621		112,302,825		(108	)		15,497		(816,707	)		(66,692,676	)		(796,172	)		44,007,783
Foreign currency translation adjustment, net		-		-		-		-		-		-			-		-			-			83,188			83,188
Proceeds from sale of common stock		-		-		-		-		-		-			-		-			-			-			-
Shares issued for purchase of customer base		-		-		99,710		100		315,981		-			-		-			-			-			316,081
Shares issued for purchase of Cana		-		-		46,377		46		138,621		-			-		-			-			-			138,667
Stock-based compensation		-		-		185,000		185		104,684		-			-		-			-			-			104,869
Net loss		-		-		-		-		-		-			-		-			(981,530	)		-			(981,530	)
Balance at June 30, 2023		-	$	372,414		10,951,757	$	10,952	$	112,862,111	$	(108	)		15,497	$	(816,707	)	$	(67,674,206	)	$	(712,984	)	$	43,669,058
Foreign currency translation adjustment, net		-		-		-		-		-		-			-		-			-			(890,645	)		(890,645	)
Proceeds from sale of common stock, net of financing fees of $442,870		-		-		2,116,936		2,117		4,804,921		(49,892	)		-		-			-			-			4,757,146
Repurchase of treasury stock		-		-		-		-		-		-			71,000		(100,251	)								(100,251	)
Stock-based compensation		-		-		-		-		109,636		-			-		-			-			-			109,636
Deemed dividend		-		-		-		-		15,053		-			-		-			(15,053	)		-			-
Net loss		-		-		-		-		-		-			-		-			(3,349,204	)		-			(3,349,204	)
Balance at September 30, 2023		-	$	372,414		13,068,693	$	13,069	$	117,791,721	$	(50,000	)		86,497	$	(916,958	)	$	(71,038,463	)	$	(1,603,629	)	$	44,195,740

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

6

COSMOS HEALTH INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(4,790,597	)	$	(3,010,684	)
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities:
Depreciation and amortization expense		375,918			273,415
Amortization of right-of-use assets		102,549			60,934
Amortization of debt discounts and accretion of debt		-			772,180
Bad debt expense		836,300			-
Provisions for extraordinary tax charges		579,387			-
Shares issued in lieu of cash		96,888			-
Lease expense		178,893			158,406
Interest on finance leases		20,629			11,645
Stock-based compensation		214,505			27,221
Deferred income taxes		(1,923	)		490,460
Gain on extinguishment of debt		(1,911,476	)		(1,004,124	)
Bargain purchase gain		(1,633,842	)		-
Change in fair value of the derivative liability		(3,384	)		6,627
Gain on net change in fair value of equity investments		(2,876	)		(415	)
Other income		(928	)		-
Changes in assets and liabilities:
Accounts receivable		(1,960,236	)		(2,255,383	)
Accounts receivable - related party		(416,814	)		481,941
Inventory		(2,299,829	)		(1,392,884	)
Prepaid expenses and other assets		(1,856,642	)		117,498
Prepaid expenses and other current assets - related party		(2,312,324	)		(1,413,967	)
Accounts payable and accrued expenses		206,746			1,692,704
Accounts payable and accrued expenses - related party		(112,233	)		(216,456	)
Accrued interest		(194,361	)		881,347
Lease liabilities		(179,081	)		(158,788	)
Taxes payable		307,357			(101,909	)
Other current liabilities		(783,174	)		27,900
Other liabilities		(1,047,178	)		-
NET CASH USED IN OPERATING ACTIVITIES		(16,587,726	)		(4,552,332	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from loan receivable		609,455			267,205
Cash paid for the acquisition of Cana		(5,230,593	)		-
Loan receivable - related party		(168,469	)		-
Sale of fixed assets		-			12,859
Advances for building's acquisition		(1,665,000	)		-
Purchase of intangible assets		(2,678,167	)		(311,859	)
Purchase of property and equipment		(1,266,490	)		(37,137	)
NET CASH USED IN INVESTING ACTIVITIES		(10,399,264	)		(68,932	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of convertible note payable		(100,000	)		-
Payment of note payable		(1,494,867	)		(2,454,143	)
Proceeds from note payable		1,059,300			490,365
Payment of related party loan		-			(557,361	)
Proceeds from related party loan		-			973,424
Payment of lines of credit		(14,569,517	)		(16,348,941	)
Proceeds from lines of credit		14,218,787			17,206,099
Proceeds from issuance of Series A Preferred Stock		-			5,452,300
Proceeds from the issuance of common stock		9,950,037			-
Financing fees from the sale of common stock		(442,892	)		-
Payments of finance lease liability		(118,847	)		(71,172	)
Payments of financing fees		-			(212,728	)
Payments for purchase of treasury stock		(100,251	)		-
NET CASH PROVIDED BY FINANCING ACTIVITIES		8,401,750			4,477,843
Effect of exchange rate changes on cash		196,161			169,318
NET CHANGE IN CASH		(18,389,079	)		25,898
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		20,749,683			286,487
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,360,604		$	312,385
Supplemental Disclosure of Cash Flow Information
Cash paid during the year:
Interest	$	371,846		$	317,449
Income tax	$	-		$	-
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Common shares issued for acquisition of customer base	$	316,081		$	-
Common shares issued for acquisition of Cana	$	138,667		$	-
Conversion of notes payable to common stock	$	-		$	973,420
Conversion of convertible notes payable to common stock					959,025
Deemed dividend on warrants upon conversion of convertible debt	$	-		$	5,788,493
Deemed dividend on preferred stock and warrants upon trigger of downround feature	$	-		$	16,669,894
Deemed dividend upon cumulative dividend on preferred stock	$	-		$	372,414
Conversion of Series A preferred stock	$	-		$	2,427,693
Conversion of convertible debt	$	-		$	38,144

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

7

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

NOTE 1 – BASIS OF PRESENTATION

The terms “COSM,” “we,” “the Company,” “Group” and “us” as used in this report refer to Cosmos Health, Inc. The accompanying unaudited condensed consolidated balance sheet as of September 30, 2023 and unaudited condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September30, 2023 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management of COSM, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or any other period. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the financial statements for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (“Form 10-K”). The accompanying condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements filed in our Form 10-K and is included for comparison purposes in the accompanying balance sheet.

Going Concern

The Company’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplates the continuation of the Company as a going concern. For the nine-month period September 30, 2023, the Company had revenue of $37,537,003, net loss of $4,790,597 and net cash used in operations of $16,587,726. Additionally, as of September 30, 2023, the Company had positive working capital of $23,901,453, an accumulated deficit of $71,038,463, and stockholders’ equity of $44,195,740. 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 Company’s revenues are not able to sustain its operations, and concerns exist regarding the Company’s ability to meet its obligations as they become due. The Company is subject to a number of risks to those of smaller commercial companies, including dependence on key individuals and products, the difficulties inherent in the development of a commercial market, the need to obtain additional capital, competition from larger companies, and other pharmaceutical and health care companies.

Management evaluated the above conditions which raise substantial doubt about the Company’s ability to continue as a going concern to determine if it can meet its obligations for the subsequent twelve months from the date of this filing. Management considered its ability to access future capital, curtail expenses if needed, expand product lines, and acquire new products.

Management’s plans include expansion of brand name products to the market, expanding the current product portfolio, and evaluating acquisition targets to expand distribution. Furthermore, the Company intends to vertically integrate the supply chain distribution network. Finally, the Company plans to access the capital markets further in order to raise additional funds through equity offerings as well as receive proceeds from the exercise of its existing warrants during the following 3 months. 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.

Considering the above, management is of the view that substantial doubt exists for the Company’s ability to continue as a going concern. 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.

NOTE 2 – ORGANIZATION AND NATURE OF THE BUSINESS

Cosmos Health Inc. and its subsidiaries are an international healthcare group headquartered in Thessaloniki, Greece. The Group is engaged in the nutraceuticals sector through its own proprietary lines of products “Sky Premium Life” and “Mediterranation”. The Company is operating in the pharmaceutical sector as well, through the provision of a broad line of branded generics and OTC medications. In addition, the group is involved in the healthcare distribution sector through its subsidiaries in Greece and the UK, serving retail pharmacies and wholesale distributors. The Company is strategically focusing on the research and development (“R&D”) of novel patented nutraceuticals (Intellectual Property) and specialized root extracts as well as on the R&D of proprietary complex generics and innovative OTC products. The Company has developed a global distribution platform and is currently expanding throughout Europe, Asia and North America. The Company has offices and distribution centers in Thessaloniki and Athens, Greece and Harlow, UK.

The Company was incorporated in the State of Nevada under the name Prime Estates and Developments, Inc. on July 21, 2009, and on November 29, 2022, we changed our name to Cosmos Health Inc. Through its acquisition of Amplerissimo Ltd, on September 27, 2013, the Company changed its principal activities into trading of products, providing representation, and provision of consulting services to various sectors. On August 1, 2014, the Company formed SkyPharm S.A., a Greek Company (“SkyPharm”), a subsidiary that focuses on the trading, sourcing and export of nutraceutical and pharmaceutical products. In February 2017, the Company acquired Decahedron Ltd., a UK Company (“Decahedron”) which is a fully licensed second-generation wholesaler specializing in imports and exports of generics and OTC pharmaceutical products within the European Economic Area ( the “EEA”) and distributor of Sky Premium Life nutraceutical products in the UK. On December 19, 2018, the Company acquired Cosmofarm, a pharmaceutical wholesaler specializing in the distribution and export of pharmaceutical products through its extensive pharmacies network.

Acquisition Accounting

ZipDoctor

On April 3, 2023, the Company completed the acquisition of ZipDoctor Inc. (“ZipDoctor”), a telehealth company for a total sum of $150,000 in cash and $8,788 in fees. The Company accounted for the acquisition as an asset acquisition in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations, ("ASC 805") and recorded $158,788 as an intangible asset related to the technology platform acquired.

Bikas

On June 15, 2023, Cosmos Health Inc. entered into an Assignment and Assumption Agreement (the “Agreement”) with Ioannis Bikas O.E., a Greek Company, (“Bikas”). Bikas is owner of a pharmaceutical distribution network in Greece and agreed to sell to the Company their distribution network and customer base. The purchase price of the network was €100,000 ($109,330) of cash, and €300,000 ($316,081) of the Company’s stock. The Company issued 99,710 shares of common stock related to the acquisition of the customer base, based on the fair value of the stock on acquisition date. The Company accounted for the acquisition as an asset acquisition in accordance with ASC 805 and recorded $425,411 as an intangible asset related to the customer base acquired.

8

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Buildings Acquisitions

On April 24, 2023, the Company purchased a building for a total sum of $1,054,872 in cash. The Company accounted for the acquisition as an asset acquisition in accordance with ASC 805 and recorded the cost of the building as "Property, plant and equipment" on the condensed consolidated balance sheets.

On January 6, 2023, the Company agreed to purchase land and building located in Montreal, Canada from a third-party vendor. The total purchase price amounts to $3,950,000 and the closing date of the agreement based on the amendment signed on July 19, 2023, is December 31, 2023. As of September 30, 2023, the Company has made prepayments of $2,000,020 classified as "Advances for building's acquisition” on the Company’s condensed consolidated balance sheets.

.

Cana

On June 30, 2023, the Company acquired CANA Pharmaceutical Laboratories, S.A. (“Cana”) for €800,000 ($873,600) in cash and 46,377 shares of common stock, with fair value of $138,667 as of the date of acquisition. Moreover, on February 28, 2023, the Company had signed a Secured Promissory Note with Cana, whereby Cana borrowed the sum of €4,100,000 ($4,457,520), included in the total consideration of $5,469,787. The Company accounted for the acquisition as a business acquisition in accordance with ASC 805. The fair value of Cana assets acquired, and liabilities assumed was based upon management’s estimates assisted by an independent third-party valuation firm. The fixed assets of Cana (which included land, building & machinery) were valued as of December 31, 2022 and the Company believes that nothing has materially changed between such date and the acquisition date (June 30, 2023). The following table summarizes the preliminary allocation of purchase price of the acquisition:

Consideration
Cash	$	5,331,120
Fair value of common stock issued		138,667
Fair value of total consideration transferred	$	5,469,787
Recognized amounts of identifiable assets acquired
Financial assets	$	1,796,911
Inventory		297,340
Property, plant and equipment		7,682,411
Identifiable intangible assets		562,200
Financial liabilities		(3,235,233	)
Total identifiable net assets	$	7,103,629
Bargain purchase gain	$	1,633,842

Revenue for the 3- month period ended September 30, 2023	$	91,056
Loss for the 3- month period ended September 30, 2023	$	(604,790	)

During the prior year period, Cana had minimal operations as it was in financial difficulties and seeking for an investor.

Basis of Financial Statement Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Principles of Consolidation

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

9

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Transactions in and Translations of Foreign Currency

The functional currency for the Greek subsidiaries of the Company (CANA Laboratories, Cosmofarm S.A. and SkyPharm SA) is EURO (€) and for the UK subsidiary (Decahedron Ltd) is GBP (£). ZipDoctor Inc is a U.S. based entity. As a result, the financial statements of the subsidiaries (except for ZipDoctor Inc) have been translated from the local currency into U.S. dollars using (i) year-end exchange rates for balance sheet accounts, and (ii) average exchange rates for the reporting period for all income statements accounts. Foreign currency translations gains and losses are reported as a separate component of the condensed consolidated statements of changes in stockholders’ equity and mezzanine equity.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP 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.

The Effects of War in the Ukraine

On February 24, 2022, Russian forces launched significant military action against Ukraine. There continues to be sustained conflict and disruption in the region, which is expected to endure for the foreseeable future. We do not conduct any commercial transactions with either Ukraine or Russia and the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. Such political issues and conflicts could have a material adverse effect on our results of operations and financial condition if they escalate in areas in which we do business. In addition, changes in and adverse actions by governments in foreign markets in which we do business could have a material adverse effect on our results of operations and financial condition.

Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments, which amends the requirement on the measurement and recognition of expected credit losses for financial assets held. Furthermore, amendments ASU 2019-10 and ASU 2019-11 provided additional clarification for implementing ASU 2016-13. ASU 2016-13 is effective for the Company beginning January 1, 2023, with early adoption permitted. The Company adopted the standard on January 1, 2023, and the standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures. The Company is exposed to credit losses primarily through sales to its customers and the loans that it has provided. The Company assesses each customer’s/ borrower ability to pay, and a credit loss estimate by conducting a credit review which includes consideration of established credit rating, or an internal assessment of the customer’s creditworthiness based on an analysis of their payment history when a credit rating is not available. The Company monitors credit exposure through active review of customer balances. The Company’s expected loss methodology for accounts receivable is developed through consideration of factors including, but not limited to, historical collection experience, current customer credit ratings, current customer financial condition, current and future economic and market conditions, and age of the receivables. Charges related to credit losses are included in “General and administrative expenses” and are recorded in the period that the outstanding receivables are determined to be doubtful. Account balances are written-off against the allowance when they are deemed uncollectible.

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.

The Company maintains bank accounts in the United States denominated in U.S. Dollars, in Greece denominated in Euros, U.S. Dollars and Great Britain Pounds (British Pounds Sterling), and in Bulgaria denominated in Euros. The Company also maintains bank accounts in the United Kingdom, denominated in Euros and Great Britain Pounds (British Pounds Sterling).

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. As of September 30, 2023 and December 31, 2022, the Company’s allowance for doubtful accounts was $7,735,425 and $6,987,301, respectively.

Tax Receivable

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 September 30, 2023 and December 31, 2022, the Company had a VAT net prepaid expenses balance of $456,788 and VAT, net payable $79,373, respectively, recorded in the condensed consolidated balance sheet as “Prepaid expenses and other current assets” and “Accounts payable and accrued expenses”, respectively.

10

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Inventory

Inventory is stated at the lower-of-cost or net realizable value using the weighted average FIFO method. Inventory consists primarily of finished goods and packaging materials, i.e., packaged pharmaceutical products and the wrappers and containers they are sold in. A periodic inventory system is maintained by 100% count. 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, Plant and Equipment, net

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated 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
Buildings	25-30 years
Vehicles	6 years
Machinery	20 years
Furniture, fixtures and equipment	5–10 years
Computers and software	3-5 years

Depreciation expense was $124,910 and $83,214 for the three months ended September 30, 2023 and 2022, respectively and $237,479 and $248,670 for the nine months ended September 30, 2023 and 2022, respectively.

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. First, under step 0, we determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Following, if step 0 fails, 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.

11

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

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 has estimated a useful life of 10 years for its pharmaceutical and nutraceutical product licenses, customers base, and IT platform. The Company has also estimated a useful life of 5 years for its tradenames. 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 September30, 2023, no revision to the remaining amortization period of the intangible assets was made.

Amortization expense was $88,168 and $36,982 for the three months ended September 30, 2023 and 2022, respectively and $138,438 and $53,389 for the nine months ended September 30, 2023 and 2022, respectively.

Impairment of Long-Lived Assets

In accordance with ASC 360-10, Long-lived Assets, property, plant 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.

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 will record its share in the earnings of the investee and will include it within the condensed 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 (see Note 3).

Investments in Equity Securities

Investments in equity securities are accounted for at fair value with changes in fair value recognized in net income (loss). 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 condensed 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 condensed 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 September 30, 2023, investments consisted of (i) 3,000,000 shares, which traded at a closing price of $0 per share or a value of $0 of ICC International Cannabis Corp and (ii) 16,666 shares which traded at a closing price of $0.53 per share or value of $9,419 of National Bank of Greece. Additionally, the Company has $8,113 in equity securities of Pancreta Bank, which are revalued annually.  

12

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Fair Value Measurement

The Company applies ASC Topic 820, Fair Value Measurement, (“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 tables presents assets that are measured and recognized at fair value as of September 30, 2023 and December 31, 2022, on a recurring basis:

	September 30, 2023						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – Pancreta Bank	$	8,113		-		-	$	8,113
Marketable securities – National Bank of Greece		9,419		-		-		9,419
	$	17,532					$	17,532

	December 31, 2022						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – Pancreta Bank	$	8,200		-		-	$	8,200
Marketable securities – National Bank of Greece		6,681		-		-		6,681
	$	14,881					$	14,881

In addition, 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.

13

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Derivative Instruments

Derivative financial instruments are recorded in the accompanying condensed consolidated balance sheets at fair value in accordance with ASC Topic 815, Derivatives and Hedging. When the Company enters into a financial instrument such as a debt or equity agreement (the “host contract”), the Company assesses whether the economic characteristics of any embedded features are clearly and closely related to the primary economic characteristics of the remainder of the host contract. When it is determined that (i) an embedded feature possesses economic characteristics that are not clearly and closely related to the primary economic characteristics of the host contract, and (ii) a separate, stand-alone instrument with the same terms would meet the definition of a financial derivative instrument, then the embedded feature is bifurcated from the host contract and accounted for as a derivative instrument. The estimated fair value of the derivative feature is recorded in the accompanying condensed consolidated balance sheets separately from the carrying value of the host contract. Subsequent changes in the estimated fair value of derivatives are recorded as a gain or loss in the Company’s condensed consolidated statements of operations and comprehensive loss.

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 advances balance and credit the Company’s revenues.

Revenue Recognition

In accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), the Company uses 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, including the constraint on variable consideration, (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 transfer of the product to the customer.

Commencing from January 1, 2023, and pursuant to the agreement with Medihelm, the exclusive distributor of the Company’s own proprietary line of nutraceuticals, the Company considers the transaction price to be variable and records an estimate of the transaction price, subject to the constraint for variable consideration. The Company is basing the change in transaction price with the exclusive distributor through assessment of significant overdue receivables from the exclusive distributor, which the Company reassesses each reporting period. Through this assessment, the Company applied the “expected value” model under ASC 606-10-32-5 and had applied specific constraints to revenue due from the customer at the end of each reporting period. Following the application of the “expected value” model, the Company deferred an amount of $317,129 and recorded it against the sales to Medihelm for the nine-month period ended September 30, 2023. The Company does not consider that sales to any other customer include a variable component as of September 30, 2023.

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC Topic 718, Compensation - Stock Compensation (“ASC 718”) and Staff Accounting Bulletin No. 107 (“SAB 107”) 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-Improvements to Nonemployee Share-Based Payment Accounting.”

14

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Foreign Currency Translation and Transactions

Assets and liabilities of all foreign operations are translated at period-end rates of exchange, and amounts included in the accompanying condensed statements of operations and comprehensive income (loss) are translated at the average rates of exchange for the period. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders’ equity (deficit) 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 other income (expense) in the condensed consolidated statements of operations and comprehensive income (loss).

Income Taxes

The Company accounts for income taxes under the asset and liability method, as required by the accounting standard for income taxes ASC Topic 740, Income Taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company is liable for income taxes in Greece and the United Kingdom The corporate income tax rate is 22% in Greece and 19% in the United Kingdom. Losses may also be subject to limitation under certain rules regarding change of ownership.

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

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 judgments 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.

Basic and Diluted Net 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.

The following table summarizes potential common shares that were excluded as their effect is anti-dilutive:

	September 30, 2023		September 30, 2022
Warrants		6,124,412		434,501
Options		-		-
Convertible Notes		-		15,535
Total		6,124,412		450,036

15

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

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.

Reclassifications to Prior Period Financial Statements and Adjustments

Certain reclassifications have been made in the Company’s financial statements of the prior period to correct an immaterial classification error.  As of December 31, 2022, $322,010 was reclassified from “Other assets” to “Accounts receivable, net”.

Recent Accounting Pronouncements

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 condensed consolidated financial statements. 

NOTE 3 – EQUITY METHOD INVESTMENTS

Distribution and Equity Agreement

On March 19, 2018, the Company entered into a 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 intended to await further clarification from the U.S. Government on cannabis regulation prior to determining whether to enter the domestic market.

The above 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 failed to meet certain performance milestones. The Company was 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 was 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.

The Distribution and Equity Acquisition Agreement was 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. On March 20, 2023, the Company sent a termination notice, to Marathon, which became effective on April 19, 2023 as a result of Marathon’s failure to satisfy these conditions. The Company had accounted for its obligation to issue a variable number of the Company’s Common Shares as Share-settled debt obligation in accordance with ASC Topic 480, Distinguishing Liabilities from Equity ("ASC 480"), which was measured at fair value or the settlement amount of $1,554,590 (CAD $2 million). Due to termination of the Equity agreement, the Company recorded a gain on extinguishment of debt of $1,554,590 due to the write-off of the share settled debt obligation, for the nine-month period ended September 30, 2023.

CosmoFarmacy LP

In September 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, and OTC 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 ($163,080) which was later increased to EUR 500,000 ($543,600). 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 ($163,080) 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 September 30, 2023 and December 31, 2022, was $158,760 and $160,470, respectively, and is included in “Other assets” on the Company’s condensed consolidated balance sheets. 

16

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

NOTE 4 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consists of the following:

	September 30, 2023			December 31, 2022
Land	$	3,397,575		$	-
Buildings and improvements		4,761,344			-
Leasehold improvements		3,482			502,882
Vehicles		264,355			107,976
Furniture, fixtures and equipment		2,571,063			1,945,207
Computers and software		143,760			138,783
		11,141,579			2,694,848
Less: Accumulated depreciation and amortization		(891,797	)		(877,823	)
Total	$	10,249,782		$	1,817,025

NOTE 5 – GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill and intangible assets, net consist of the following at:

	September 30, 2023			December 31, 2022
License	$	3,356,913		$	643,204
Trade name / mark		392,197			36,997
Customer base		602,204			176,793
		4,351,314			856,994
Less: Accumulated amortization		(335,498	)		(199,777	)
Subtotal		4,015,816			657,217
Goodwill		49,697			49,697
Total	$	4,065,513		$	706,914

At September 30, 2023, the estimated aggregate amortization expense for intangible assets subject to amortization for each of the five succeeding fiscal years is as follows:

Year	Amount
2023	$	103,193
2024		398,636
2025		398,709
2026		398,709
2027		398,709
Thereafter		1,962,661
Total amortization	$	3,660,616

17

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

NOTE 6 – LOAN RECEIVABLE

On October 30, 2021, the Company entered into an agreement for a ten-year loan with Medihelm S.A. to memorialize €4,284,521 ($4,849,221) of the prepayments the Company had made. The prepayments to Medihelm S.A. had been made in accordance with the parallel export business, through which Medihelm supplied and would supply SkyPharm S.A. with branded pharmaceuticals. This business is no longer in place for the Company and thus the Company entered into this agreement with Medihelm S.A. in order for the outstanding amount to be settled. Interest is calculated at a rate of 5.5% per annum on a 360-day basis. Under the terms of the agreement, the Company is to receive 120 equal payments over the term of the loan. As of December 31, 2022, the Company had a short-term receivable balance of $377,038 and a long-term receivable balance of $3,792,034 under this loan. During the nine months ended September 30, 2023, the Company received €262,507 ($277,838) in principal payments such that as of September 30, 2023, the Company had a short-term receivable balance of $388,693 and a long-term receivable balance of $3,458,115 under this loan. The Company also received €132,581 ($140,324) in interest payments during the nine months ended September 30, 2023.

NOTE 7 – INCOME TAXES

The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company had no U.S. taxable income for the nine months ended September 30, 2023 and 2022.

The Company’s Greece subsidiaries are governed by the income tax laws of Greece. The corporate tax rate in Greece is 22% on income reported in the statutory financial statements after appropriate tax adjustments.

The Company’s United Kingdom subsidiaries are governed by the income tax laws of the United Kingdom. The corporate tax rate in the United Kingdom is 25% on income reported in the statutory financial statements after appropriate tax adjustments.

As of September 30, 2023 and 2022, the Company’s effective tax rate differs from the U.S. federal statutory tax rate primarily due to a valuation allowance recorded against net deferred tax assets in in the United States and the United Kingdom.

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. As of September 30, 2023 and December 31, 2022, the Company has maintained a valuation allowance against all net deferred tax assets in the United States, Greece, and the UK.

For the three and nine months ended September 30, 2023, and 2022, the Company has recorded tax benefit (expense) in any jurisdiction where it is subject to income tax, in the amount of $0 and $473,296 respectively, on the condensed consolidated statements of operation and comprehensive loss.

NOTE 8 – CAPITAL STRUCTURE

Preferred Stock

The Company is authorized to issue 100 million shares of preferred stock, of which 6,000,000 are designated as Series A convertible preferred stock. The preferred stock has a liquidation preference over the common stock and is non-voting. As of September 30, 2023 and December 31, 2022, all Series A convertible preferred stock had been converted and no preferred shares were issued and outstanding.

18

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Major Rights & Preferences of Series A Preferred Stock

On and effective October 4, 2021, the Company amended and restated its articles of incorporation (the “Amended and Restated Articles”) and filed a certificate of designation (the “COD”) for its Series A Preferred Stock (the “Series A Preferred Stock”) with the State of Nevada. The Amended and Restated Articles allow the Company’s Board of Directors the authority to authorize the issuance of preferred stock from time to time in one or more classes or series by resolution. On February 23, 2022, the Company filed Correction No. 1 to the COD. On July 28, 2022, the Company filed an Amendment to the COD with the State of Nevada to allow a holder to waive application of the Beneficial Ownership Limitation with respect to the conversion of Series A Preferred Stock.

The Series A Preferred Stock was initially convertible into the Company’s common stock as determined by dividing the number of shares of Series A Preferred Stock to be converted by the lower of (i) $75.00 or (ii) 80% of the average volume weighted average price for the Company’s common stock for the five (5) trading days immediately following the effectiveness of the registration statement concerning the shares (the “Conversion Price”). On June 14, 2022, the Conversion Price was reset to $15.54 per share.

Each holder was entitled to receive dividends in shares of Series A Preferred Stock or cash determined based on the stated value of each Series A Preferred Stock at the dividend rate of 8.0% per year. As of September 30, 2023 and December 31, 2022, the cumulative accrued dividend has been recorded as mezzanine equity in the amount of $372,414. The Company had not issued shares of Series A Preferred Stock or cash for the accrued dividends as of September 30, 2023.

On February 28, 2022, the Company entered into a securities purchase agreement, or the Purchase Agreement, with certain investors and an insider for a private placement of the Company’s securities (the “Private Placement”).

The Private Placement consisted of the sale of 6,000 shares of the Company’s Series A Convertible Preferred Stock, or the Series A Shares, at a price of $1,000 per share, and 80,000 warrants to purchase shares of common stock, or the Warrants, for aggregate gross proceeds of approximately $6 million. The Warrants were initially exercisable to purchase shares of common stock at $82.50 per share, or 110% of the Series A Shares initial conversion price and will expire five and one-half years following the initial exercise date of the Warrants. The Company determined that the 80,000 warrants were additional value being distributed to the preferred stockholders and presented the warrants’ fair value of $5,788,493 as a deemed dividend on issuance of warrants in the condensed consolidated statements of operations and comprehensive loss. The warrants were valued using the Black-Scholes option pricing model with the following terms: a) exercise price of $82.50, b) common stock fair value of $85.50, c) volatility of 118%, d) discount rate of 1.71%, e) term of 5.50 years and f) dividend rate of 0%.

The closing of the Private Placement occurred on February 28, 2022. As a condition to the closing of the sale, the Company’s common stock received conditional approval for listing and trading on the Nasdaq Capital Market and commenced trading on February 28, 2022, under the trading symbol, COSM. Concurrent with the issuance of the Series A Shares, the Company executed a registration rights agreement (the “Registration Rights Agreement”) to register the resale of the shares of common stock issuable upon conversion of the Series A Shares and the shares of common stock issuable upon exercise of the warrants issued in connection with the Series A Shares. The Company was required to file its initial registration statement within 45 days following February 28, 2022. The effectiveness date was required to be 60 days after February 28, 2022, or 75 days following the SEC’s full review, and any additional registration statements that may be required are to be filed within 20 days following the date required by the SEC. The Company failed to timely file its initial registration statement and thus paid each holder 2% of the subscription amount in cash.

Treasury stock

As of September 30, 2023 and December 31, 2022, the Company held 86,497 and 15,497, respectively, shares of our common stock at a cost of $917,159 and $816,707, respectively. Shares of our common stock that are repurchased are classified as treasury stock pending future use and reduce the number of shares outstanding used in calculating earnings per share. Cosmos may repurchase shares from time to time through open market purchases in accordance with applicable securities laws and other restrictions. The Company repurchased 71,000 shares of our common stock for $100,452 during the three and nine months ended September 30, 2023. No repurchases took place during the three and nine months ended September 30, 2022.

19

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

On January 24, 2023 the Company announced that its Board of Directors has approved a share repurchase program with authorization to purchase up to $3 million of its common stock. Cosmos may repurchase shares from time to time through open market purchases in accordance with applicable securities laws and other restrictions.

Mezzanine Equity

The Series A Shares were recorded at its initial net carrying value in the amount of $5,452,300. The Series A Shares were recorded as mezzanine equity in accordance with ASC 480 as the Company was potentially obligated to issue a variable number of shares at a fixed price known at inception and there was no maximum number of shares that could potentially be issued upon conversion. In this instance, cash settlement would have been presumed. Immediately upon effectiveness of the registration statement registering for resale of all the common stock issuable under the Series A Shares, all outstanding Series A Shares were automatically converted into common stock.

As of December 31, 2022, 6,000 of the Series A Shares had been converted into 386,588 shares of common stock in accordance with the terms of the agreements and thus an amount of $5,452,300 was reclassified from mezzanine equity to common stock and additional paid-in capital, in the aggregate.  

Common Stock

The Company is authorized to issue 300 million shares of common stock. As of September 30, 2023 and December 31, 2022, the Company had 13,068,693 and 10,605,412 shares of our common stock issued, respectively, and 12,982,196 and 10,589,915 shares outstanding, respectively.

Issuance of common stock

During the nine months ended September 30, 2023 the Company issued 15,258 shares of common stock to a consultant for services rendered. The shares were valued and expensed in the amount of $96,888 on the date of issuance and are separately presented in the condensed consolidated statement of changes in stockholders’ equity and mezzanine equity as “Shares issued in lieu of cash” for the three and nine month period ended September 30, 2023.

On April 3, 2023, the Company issued 185,000 shares of unvested common stock to employees, officers and directors under the Company’s Equity Incentive Plan. These shares vest in two tranches, 1) 50% vesting on October 2, 2023, and 2) 50% vesting on October 2, 2024. The Company valued these shares on April 3, 2023 in the amount of $653,050 which is being amortized over the vesting period. During the three and nine months ended September 30, 2023, the Company had recorded $214,505 and 109,636, respectively, of stock-based compensation expense related to the shares issued, which is included in "General and administrative expense" on the accompanying consolidated condensed statements of operations and comprehensive loss. As of September 30, 2023, the unamortized stock-based compensation for the 185,000 shares of common stock was $438,545, which will be amortized through October 2, 2024.

On June 15, 2023, the Company issued 99,710 shares of common stock related to the acquisition of the customer base of Bikas. The fair value of these shares at the acquisition date was $316,081, which was included in the purchase price (see Note 1).

On June 30, 2023, the Company issued 46,377 shares of common stock related to the acquisition of the Cana. The fair value of these shares at the acquisition date was $138,667, which was included in the purchase price of Cana (see Note 1). 

On July 20, 2023, the Company entered into a Securities Purchase Agreement with three investors to issue and sell in the aggregate 1,401,163 shares of common stock, 715,323 pre-funded warrants at an exercise price of $0.01 per share in lieu of common stock, and warrants to purchase 1,935,484 warrants at an exercise price of $2.75 per share of common stock. The 1,935,484 warrants expire on January 1, 2029. The common stock and warrants were sold together at the unit price of $2.75 per share, raised gross proceeds of approximately $5,250,000, and incurred financing fees of approximately $443,000. The Company issued 2,116,936 shares of common stock which were recorded in the amount of $4,757,146 on the Company’s consolidated statements of changes in stockholders’ equity and mezzanine equity.

20

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

The July 20, 2023 Securities Purchase Agreement triggered a downround provision for 782,610 previously issued warrants.  The Company recorded a deemed dividend in the amount of $15,053, which was calculated using the black-scholes option pricing model with the following assumptions: a) exercise prices of $11.00 before repricing and $2.75 after repricing, b) common stock fair value of $1.89, c) volatility of 253.1% before repricing and 2347.7% after repricing, d) discount rate of 4.265% before repricing and 4.03% after repricing, e) terms of 4.42 years before repricing and 5.51 years after repricing and f) dividend rate of 0%.

During the nine months ended September 30, 2022, the Company issued 300 shares of common stock for services rendered and recorded $3,120 of compensation expense in relations to the services.

Debt Conversions

During the nine month period ended September 30, 2022, the Company issued 9,520 shares of common stock upon the conversion of $1,190,000 of notes payable. The Company recorded $973,420 as a capital contribution and an increase in equity related to the conversion of the $1,190,000 reduced by $216,580 recorded as a gain upon extinguishment of debt upon modification. The $216,580 gain upon extinguishment was determined using the fair value of the Company of $102.25 per share at the extinguishment commitment date.

During the nine month period ended September 30, 2022, the Company issued 1,574 shares of common stock upon the conversion of $38,144 of convertible debt.

Exercise of Warrants

During the nine month period ended September 30, 2022, the Company issued 51,391 shares of common stock upon the cashless exercise of 139,527 warrant shares.

NOTE 9 – RELATED PARTY TRANSACTIONS

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 S.A. in the past.

Prepaid expenses and other current assets – related party

As of September 30, 2023, and December 31, 2022, the Company had a prepaid balance of $5,493,826 and $3,320,345, respectively, to Doc Pharma related to purchases of inventory.

Accounts payable and accrued expenses - related party

As of September 30, 2023, and December 31, 2022, the Company had an accounts payable balance to Doc Pharma of $1,536 and $201,991, respectively.

Accounts receivable - related party

Additionally, the Company had a receivable balance of $1,981,814 and $2,070,570 from Doc Pharma S.A as of September 30, 2023, and December 31, 2022, respectively.

21

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Sales and Purchases

During the three months ended September 30, 2023 and 2022, the Company purchased a total of $456,948 and $412,216 of products from Doc Pharma S.A., respectively. During the three months ended September 30, 2023 and 2022, the Company had $40,885 and $401,179 revenue from Doc Pharma, respectively.

During the nine months ended September 30, 2023 and 2022, the Company purchased a total of $1,057,621 and $1,672,002 of products from Doc Pharma S.A., respectively. During the nine months ended September 30, 2023 and 2022, the Company had $43,287 and $819,896 revenue from Doc Pharma, respectively.

Other Agreements

On October 10, 2020, the Company entered into a contract manufacturer outsourcing (“CMO”) agreement with Doc Pharma whereby Doc Pharma is responsible for the development and manufacturing of pharmaceutical products and nutritional supplements according to the Company’s specifications based on strict pharmaceutical standards and good manufacturing practice (“GMP”) protocols as the National Organization for Medicines requires. The Company has the exclusive ownership rights for trading and distribution of its own branded nutritional supplements named “Sky Premium Life^®”. The duration of the agreement is for five years, however, either party may terminate the agreement at any time giving six-months advance notice. Doc Pharma is exclusively responsible for supplying the raw materials and packaging required to manufacture the final product. However, they are not responsible for potential delays that may arise, concerning their import. Doc Pharma is also obligated to store the raw and packaging materials. The delivery of raw and packaging materials should be purchased at least 30 and 25 days, respectively, before the delivery date of the final product. The Manufacturer solely delivers the finished product to the Company. There is a minimum order quantity (“MoQ”) of 1,000 pieces per product code. Both parties have agreed that the Company will deposit 60% of the total cost upon agreement and assignment and 40% of the total cost including VAT charge upon the delivery date. The prices are indicative and are subject to amendments if the cost of the raw material or the production cost change.

 For the three months ended September 30, 2023 and 2022, the Company has purchased €418,577 ($455,586) and €382,706 ($450,311), respectively, in inventory related to this agreement.

For the nine months ended September 30, 2023 and 2022, the Company has purchased €967,785 ($1,048,557) and €1,060,412 ($1,127,897), respectively, in inventory related to this agreement.

On May 17, 2021, Doc Pharma and the Company entered into a Research and Development (“R&D”) agreement whereby Doc Pharma will be responsible for the research, development, design, registration, copy rights and licenses of 250 nutritional supplements for the final products called Sky Premium Life^®. These products will be sold in Greece and abroad. The total cost of this project will be €1,425,000 plus VAT and will be done over three phases as follows: Design & Development (€725,000); Control and Product Manufacturing (€250,000) and Clinical Study and Research (€450,000). SkyPharm has bought a total of as of 81 licenses at value of €554,500 ($593,204) which is 38.91% of the total cost, as of December 31, 2022. During the 9-month period ended September 30, 2023, 23 additional licenses were purchased at value of €424,400 ($449,185). The agreement will terminate on December 31, 2025.  

Purchase of branded pharmaceuticals

On June 28, 2023, the Company approved the purchase of five proprietary and innovative branded pharmaceuticals with significant market presence and material profit contribution from Zakalia Ltd., the parent company of Doc Pharma, for €1,800,000 ($1,965,600). The transaction was settled on a non-cash basis through the reduction, of an equivalent amount, of prepaid expense balances the Company held with Doc Pharma. The purchased branded pharmaceuticals are presented in "Goodwill and intangible assets, net" on the accompanying condensed consolidated balance sheets.

22

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Loans receivable - related party

The balance of prepaid expenses due Doc Pharma as of December 31, 2022, had increased to €7,103,706 ($7,599,545), which was mainly attributable to the prepayments SkyPharm S.A. made in accordance with the CMO agreement and the extensive orders and sales of the SPL products the Company expects to achieve within 2023, mainly through its Amazon channels in the UK, Singapore, Canada and other countries. However, as the benefit from a significant portion of the prepaid balance would not have been realized within a 12-month period, the Company opted to secure a portion of the outstanding prepaid balance through a loan agreement. SkyPharm S.A. (the “Lender”) entered into a loan agreement with Doc Pharma (the “Borrower”) for €4,000,000 ($4,279,200), all of which was financed through the outstanding prepaid balance. The duration of the loan is for a 10-year period up to December 1, 2032 (the “Maturity Date”). The loan bears a fixed interest rate of 5.5% payable on a monthly basis and will be repayable in 120 equal instalments of €33,333.33 ($35,660). The loan may be prepaid anytime during its duration in full or partially based on the Company’s product requirements and other factors, without Doc Pharma incurring any prepayment penalty. As of September 30, 2023 and December 31, 2022, the loan had a current portion of €400,000 ($423,360) and €400,000 ($427,720), and a non-current portion of €3,300,000 ($3,492,720), and €3,600,000 ($3,851,280), respectively, which is classified as "Loans receivable – related party" on the accompanying condensed consolidated balance sheets. During the nine-month period ended September 30, 2023, the Company had received €300,000 ($317,520) in principal repayments, and €159,500 ($172,812) of interest repayments. Additionally, during the nine month period ended September 30, 2023, the Company recorded €161,333 ($174,798) as interest income relating to this loan.  

Cana Laboratories Holding Limited 

Cana was considered a related party as the Company had signed a binding letter of intent and an SPA for the acquisition of Cana. The acquisition was completed on June 30, 2023 according to the SPA signed on May 31, 2023. Thus, all balances between the Company and Cana were eliminated upon consolidation as of September 30, 2023. The Secured Promissory Note discussed below was included in consideration transferred upon acquisition (see Note 2).

Loans receivable - Related Party - Long Term

On February 28, 2023 (Issue Date) the Company signed a Secured Promissory Note with Cana Laboratories Holding (Cyprus) Limited (the “Holder”), whereby the Holder borrowed the sum of €4,100,000 ($4,457,520) from the Company. Interest on the Principal Amount under this Note shall accrue at a rate equal to Five Percent (5%) plus 1 month LIBOR per annum (5.18% as of September 30, 2023). The maturity date (“Maturity Date”) of this Note shall be five (5) years from the Issue Date. The Principal Amount, as well as all accrued interest shall be due and payable on the Maturity Date. During the three and six months ended June 30, 2023, the Company recorded interest income of €103,123 ($112,292) and €137,138 ($148,789), respectively. Following, the completion of Cana’s acquisition on June 30, 2023 the balance of the Note is eliminated on a consolidated level.

Panagiotis Kozaris

Panagiotis Kozaris is considered a related party due to the fact that he is a former General operational manager and current employee of Cosmofarm S.A.

Prepaid Expenses and Other Current Assets - Related Party

From time-to-time the Company purchases back shares that Panagiotis Kozaris owns and records them as treasury shares. The Company pays Panagiotis Kozaris in advance for the shares owned and obtains the shares upon execution of a cumulative stock-purchase agreement (“SPA”). During the nine months ended September 30, 2023 and September 30, 2022, the Company paid Panagiotis Kozaris an additional sum of $51,159 and $0 respectively for shares owned, however, no SPA for these funds has been executed as of September 30, 2023. The Company intends to execute a cumulative SPA for these amounts during 2023. The total balances owed of $194,215 and $143,056 are included in "Prepaid expenses and other current assets - related party", on the accompanying condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively.

Maria Kozari

Maria Kozari is considered a related party to the Company due to the fact that she is the daughter of Panagiotis Kozaris, a former Operational General Manager and current employee of Cosmofarm S.A.

23

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Accounts Receivable - Related Party

During 2021, the Company, through its subsidiary, Cosmofarm SA, commenced a partnership with a pharmacy called “Pharmacy & More”, owned by Maria Kozari. The transactions with the respective pharmacy were in Cosmofarm’s normal course of business, however, a more flexible credit policy was allowed as the pharmacy was new and needed to be established in the market. During the nine months ended September 30, 2023 and 2022 the Company’s net sales to Pharmacy & More amounted to $359,760 and $328,017 respectively. During the three months ended September 30, 2023 and 2022 the Company’s net sales to Pharmacy & More amounted to $122,969 and $115,625 respectively. As of September 30, 2023 and December 31, 2022 the Company’s outstanding receivable balance due from the pharmacy amounted to $1,009,103, (€953,423) and $760,025 (€710,436), respectively, and are included in "Accounts receivable - related party", on the accompanying condensed consolidated balance sheets.

Other Related Parties

Additionally, the Company has the following balances as of September 30, 2023: a) a balance of $95,000 relating to unpaid salaries and bonuses due to George Terzis, the CFO of the Company, classified as "Accounts payable and accrued expenses - related party" in the Company’s condensed consolidated balance sheets, b) balances of $6,326 and $11,927 due to Kanarogloy & Sia Epe and Cana International Development Services Ltd, which are both managed by Konstantinos Gaston Kanaroglou, former manager and current employee of the Company’s wholly owned subsidiary Cana, classified as "Accounts receivable" in the Company’s condensed consolidated balance sheets.

Notes Payable – Related Party 

A summary of the Company’s related party notes payable activity as of and for the nine and twelve month periods ended September 30, 2023 and December 31, 2022 is presented below:

	September 30, 2023			December 31, 2022
Beginning balance	$	10,912		$	464,264
Payments		-			(472,920	)
Foreign currency translation		(116	)		19,568
Ending balance	$	10,796		$	10,912

Grigorios Siokas

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

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 bore an interest rate of 4.7% per annum, originally matured on March 18, 2019 pursuant to the original agreement which was extended to December 31, 2021, and again to December 31, 2023. During the year ended December 31, 2022, the Note was paid in full and as of September 30, 2023 the Company had an outstanding balance of $0. As of September 30, 2023 and December 31, 2022, the Company had accrued interest of €891 ($973) and €192,891 ($206,355) outstanding related to this loan, classified under "Accrued interest" in the Company’s condensed consolidated balance sheets.

Dimitrios Goulielmos

Dimitris Goulielmos was the Company’s former CEO and a Director of the Company.  

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 has no maturity date and is non-interest bearing. As of September 30, 2023 and December 31, 2022, the Company had a principal balance of €10,200 ($10,796) and €10,200 ($10,912), respectively.

24

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the nine months ended September 30, 2023, the Company recorded a gain of $116, from foreign currency exchange related to these balances.

Loans Payable – Related Party

A summary of the Company’s related party loans payable during the three months ended September 30, 2023, and the year ended December 31, 2022 is presented below:

	September 30, 2023			December 31, 2022
Beginning balance	$	12,821		$	1,293,472
Proceeds		-			3,635,756
Payments		-			(4,851,678	)
Foreign currency translation		(137	)		(64,729	)
Ending balance	$	12,684		$	12,821

Grigorios Siokas

From time to time, Grigorios Siokas loans the Company funds in the form of non-interest bearing, no-term loans. As of December 31, 2022, the Company had an outstanding principal balance under these loans of $12,821 in loans payable to Grigorios Siokas. As of September 30, 2023, the Company had an outstanding principal balance of $12,684 related to this payable.

The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the nine months ended September 30, 2023, the Company recorded a gain of $137, from foreign currency exchange related to these balances.

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 10 – LINES OF CREDIT

A summary of the Company’s lines of credit as of September 30, 2023 and December 31, 2022 is presented below:

	September 30, 2023		December 31, 2022
National	$	3,581,257	$	3,103,605
Alpha		1,080,454		991,492
Pancreta		273,382		1,232,128
EGF		419,659		431,512
Ending balance	$	5,354,752	$	5,758,737

The Company has three lines of credit with the National Bank of Greece, which are renewed annually. The three lines have interest rates of 6.00% (the "National Bank LOC"), 3.6% (the "COSME 2 Facility"), and 3.6% plus the six-month Euribor rate and any contributions currently in force by law on certain lines of credit (the "COSME 1 Facility").

The maximum borrowing allowed for the National Bank LOC was $3,148,740 and $3,182,655 as of September 30, 2023 and December 31, 2022, respectively. The outstanding balance of the facility was $2,631,645 and $2,118,952, as of September 30, 2023 and December 31, 2022, respectively.

25

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

The cumulative maximum borrowing allowed for the COSME 1 Facility and COSME 2 Facility (collectively, the "Facilities") was $1,058,400 and $1,069,800 as of September 30, 2023 and December 31, 2022, respectively. The outstanding balance of the Facilities was $957,335 and $984,653 as of September 30, 2023 and December 31, 2022, respectively. 

The Company maintains a line of credit with Alpha Bank of Greece ("Alpha LOC"), which is renewed annually and has a current interest rate of 6.00%. The maximum borrowing allowed was $1,058,400 and $1,069,800 as of September 30, 2023 and December 31, 2022, respectively. The outstanding balance of the Alpha LOC was $1,080,454 and $991,429, as of September 30, 2023 and December 31, 2022, respectively.

The Company holds a line of credit with Pancreta Bank ("Pancreta LOC"), which is renewed annually and has a current interest rate of 4.10%. The maximum borrowing allowed as of September 30, 2023 and December 31, 2022 was $1,471,176 and $1,487,022, respectively. The outstanding balance of the Pancreta LOC as of September 30, 2023 and December 31, 2022 was $273,382 and $1,232,128, respectively.

The Company maintains a line of credit with EGF ("EGF LOC"), which is renewed annually and has a current interest rate of 4.49%. The maximum borrowing allowed as of September 30, 2023 and December 31, 2022 was $423,360 and $427,920, respectively. The outstanding balance of the EGF LOC as of September 30, 2023 and December 31, 2022 was $419,659 and $431,512, respectively.

Under the aforementioned line of credit agreements, the Company is required to maintain certain financial ratios and covenants. As of September 30, 2023 and December 31, 2022, the Company was in compliance with these ratios and covenants.

All lines of credit are guaranteed by customer receivable checks, which are a type of factoring in which postponed customer checks are assigned by the Company to the bank, in order to be financed at an agreed upon rate.

Interest expense on the Company's outstanding lines of credit balances was $204,654 and $136,222 for the nine month periods ended September 30, 2023 and 2022, respectively, and $37,536 and $2,436 for the three month periods ended September 30, 2023 and 2022, respectively. 

NOTE 11 – CONVERTIBLE DEBT

A summary of the Company’s convertible debt activity as of and for the nine and twelve months ended September 30, 2023 and December 31, 2022 is presented below:

	September 30, 2023			December 31, 2022
Beginning balance convertible notes	$	100,000		$	640,000
Payments		(100,000	)		(525,000	)
Conversion to common stock		-			(15,000	)
Convertible notes payable	$	-		$	100,000

December 21, 2020 Securities Purchase Agreement

On December 21, 2020 the Company entered into a convertible promissory note with Platinum Point Capital, LLC (the “Holder”, “Lender” or “Platinum”) pursuant to a Securities Purchase Agreement (the “SPA”).

The Company issued the $540,000 Note in exchange for $500,000 in cash and included a $40,000 Original Issue Discount (“OID”) and paid $3,000 in financing costs. The principal amount together with interest at the rate of eight percent (8.0%) per annum, compounded annually (the “Interest Rate”), will be paid to the Lenders on or before the Maturity Date (December 31, 2021 or as defined below). Accrued interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed. In the event that on or before the Maturity Date, the Note either (i) had not been converted or have not been otherwise satisfied in full or (ii) an Event of Default (as defined in the SPA) occurs, then the applicable rate of interest on the outstanding amount of the Note since inception shall be the Interest Rate plus eighteen percent (18.0%), the Default Interest. Unless previously converted, the principal and accrued interest on the Note is due and payable in cash (USD) upon the earlier of (i) December 31, 2021, (ii) a Change of Control (as defined in the SPA) or (iii), an Event of Default (collectively, the “Maturity Date”).

26

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

On May 1, 2022 the Company issued 1,574 shares of common stock to convert the outstanding principal and accrued interest balance of $26,515 to equity. Following the conversion, the outstanding balance of the above Note is $0. Upon conversion, the 1,574 shares were issued at a fair value of $38,144 which was recorded as equity. Accordingly, upon conversion, the Company reduced its derivative liability by $11,629.

The Company determined that the embedded conversion feature of the convertible promissory note meets the definition of a derivative liability which is accounted for separately. The Company determined a derivative liability exists and determined that the embedded derivative was valued at $456,570 which was recorded as a debt discount, and together with the original issue discount and transaction expenses of $43,000, in the aggregate of $499,570, is being amortized over the life of the loan. As of December 31, 2022 the full amount of the debt discount has been amortized. Therefore, as of September 30, 2023 and December 31, 2022, the fair value of the derivative liability was $0. For the nine months ended September 30, 2023 and 2022, the Company recorded a loss on the change in fair value of the derivative of $0 and $5,807, respectively.

January 7, 2021 Subscription Agreement

On January 7, 2021 (the “Issue Date”), the Company entered into a subscription agreement with an unaffiliated third party, whereby the Company issued for a purchase price of $100,000 in principal amount, a convertible promissory note. The note bore an interest rate of 8% per annum and originally matured on the earlier of (i) consummation of the Company listing its common shares on the NEO Stock Exchange or (ii) October 31, 2021.

However, the listing to NEO Stock Exchange did not occur. As of December 31, 2022, the Company had a principal balance of $100,000 and had accrued $13,740 in interest expense. During the nine month period ended September 30, 2023, the Company paid the balance in full.

The Company determined that the embedded conversion feature of the convertible promissory note meets the definition of a derivative liability which is accounted for separately. The Company measured the embedded derivative valued at $62,619 which was recorded as a debt discount and additional paid-in capital and was being amortized over the life of the loan. As of December 31, 2022, the debt discount had been fully amortized. As of September 30, 2023 and December 31, 2022, the fair value of the derivative liability was $0 and $54,293, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded a loss of $3,384 and $1,449, respectively, from the change in fair value of derivative liability, which is included in “Other expense, net" in the condensed consolidated statements of operations and comprehensive loss.

The Company considered both the note payable and conversion feature separately and upon settlement. The Company re-valued the conversion feature to fair value and applied extinguishment accounting as the debt has now been settled. Because the conversion feature is extinguished upon settling the note, the value of the conversion feature goes though debt extinguishment and the Company recorded a gain on settlement of debt, which totaled $50,909 for the nine month period ended September 30, 2023. 

Convertible Promissory Note and Securities Purchase Agreement

On September 17, 2021 (the “Issue Date”), the Company entered into a convertible promissory note and securities purchase agreement with an unaffiliated third party.

The Company issued the convertible promissory note for a purchase price of $525,000 in principal amount for cash proceeds of $500,000. The note was issued with an original issue discount (“OID”) of $25,000, bears an interest rate of 10% per annum and matures on the earlier of (i) the consummation of the Company listing its common shares on the Nasdaq Stock Market or (ii) September 17, 2022.

27

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Upon the consummation of our Nasdaq listing in 2022, the total principal and accrued interest outstanding on the note would convert into shares of the Company’s common stock at a 30% discount to the prices of the common shares sold in the financing to be conducted in conjunction with our Nasdaq listing, subject to a conversion floor of $75.00. However, the Company, upon agreement with the third party, did not convert the note and fully repaid it in cash on October 21, 2022.

As of December 31, 2022, the Company repaid the remaining outstanding balance of the note and thus its outstanding balance as of the end of the period was $0. For the nine months ended September 30, 2023 and 2022, the Company recorded amortization of debt discount in the amount of $0 and $294,000, respectively, which is included in "Non-cash interest expense" on the accompanying condensed statements of operations and comprehensive loss.

Derivative Liabilities

The table below provides a summary of the changes in fair value, including net transfers in and/or out of all financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30, 2023:

	Amount
Balance on January 1, 2023	$	54,293
Reduction of derivative related to conversions		(50,909	)
Change in fair value of derivative liabilities		(3,384	)
Balance on September 30, 2023	$	-

The fair value of the derivative conversion features and warrant liabilities as of December 31, 2022 was calculated using a Monte-Carlo option model valued with the following assumptions:

	December 31,
	2022
Dividend yield		0	%
Expected volatility	87.9% - 157.2
Risk free interest rate	1.46% - 3.75
Contractual terms (in years)	1.25 - 0.75

NOTE 12 – DEBT

A roll forward of the Company’s third-party debt for the nine months ended September 30, 2023 is presented below:

September 30, 2023	Trade Facility			Third Party			COVID Loans			Total
Beginning balance, December 31, 2022	$	3,305,532		$	1,505,078		$	207,377		$	5,017,987
Proceeds		-			1,034,798			-			1,034,798
Payments		(1,152,920	)		(315,670	)		(20,593	)		(1,489,183	)
Debt forgiveness		(306,637	)		-			-			(306,637	)
Foreign currency translation		(20,235	)		(15,769	)		(1,007	)		(37,011	)
Ending balance, September 30, 2023		1,825,740			2,208,437			185,777			4,219,954
Notes payable – long-term		(1,349,460	)		(1,652,562	)		(158,255	)		(3,160,277	)
Notes payable - short-term	$	476,280		$	555,875		$	27,522		$	1,059,677

28

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Our outstanding debt as of September 30, 2023, is repayable as follows:
	September 30,  2023
2023	$	1,059,977
2024		905,048
2025		1,412,743
2026		202,401
2027 and thereafter		640,085
Total debt		4,219,954
Less: Notes payable–- current portion		(1,059,677	)
Notes payable–- long term portion	$	3,160,277

Loan Facility Agreement

On August 4, 2021, the Company entered into an exchange agreement for the existing loan facility agreement with Synthesis Peer-to-Peer Income Fund, whereby the Company agreed to the following:

· Issue on August 4, 2021, 12,852 shares of common stock to settle $1,606,500 (€1,350,000) of debt. The Company recorded a gain on settlement of $292,383 upon the issuance of the 12,852 shares; and

· Agreed to issue no more than 9,520 shares of common stock upon approval of the listing of the Company’s common stock on Nasdaq to settle $1,190,000 (€1,000,000) of debt. The Company issued these shares on February 28, 2022. Upon issuance of the 9,520 shares of common stock, the Company recorded a gain on extinguishment of debt in the amount of $216,580 determined using the fair value of the Company’s common stock at the commitment date of $102.25 per share.

The principal debt balance was paid in full during the year ended December 31, 2022. As of September 30, 2023 and December 31, 2022, the outstanding principal balance on the debt was $0, and it had accrued interest expense of $0 and $12,853, respectively.

Trade Facility Agreements

On May 12, 2017, SkyPharm entered into a Trade Finance Facility Agreement (the “TFF”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”) as amended on November 16, 2017, and May 16, 2018.

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 ($2,316,000), (the "EURO Loan") and USD $4,000,000 (the "USD Loan"). Interest on both the EURO Loan and USD Loan commenced on October 1, 2018, at 6% per annum plus one-month Euribor (3.39% as of September 30, 2023), and 6% plus one-month LIBOR (5.18% as of date of September 30, 2023), respectively.

On December 30, 2020, the Company transferred the EURO Loan to a new third-party lender. The terms remained the same except interest accrues at 5.5% per annum plus one-month Euribor (3.39% as of September 30, 2023). The principal was scheduled to be repaid in a total of five quarterly installments beginning October 31, 2021 of €50,000 ($54,600) each with a final repayment of €1,800,000 ($1,965,600) Euro payable on October 31, 2022.

29

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

On March 3, 2022, the Company entered into a modification agreement to extend the maturity date to January 10, 2023 and payments under the USD Loan. During June 2022, the Company agreed with the Lender to postpone the repayment of an installment of $500,000 due on June 30, 2022 (based on the modification agreement signed on March 3, 2022) until January 2023. During September 2022, the Company entered into an agreement with the Lender to postpone the repayment of the outstanding balance on the USD Loan of $3,950,000, plus unpaid accrued interest until January 2023. The Company capitalized fees paid upon modification of €200,000 ($221,060) that are being amortized over the life of the loan. The Company incurred non-cash interest expense of $23,820 during the three-month period ended September 30, 2022 concerning the above capitalized fees.

During the year ended December 31, 2022, the Company repaid €175,000 ($191,100) of the EURO Loan and $2,593,363 of the USD Loan such that as of December 31, 2022, the Company had principal balances of €1,775,000 ($1,898,895) and $1,406,637 under the agreements, respectively. As of September 30, 2022, the Company had accrued $17,434 in interest expense related to these agreements. 

On December 21, 2022 the USD Loan was assigned to GIB Fund Solutions ICAV (the “Fund”). On January 31, 2023, the Company paid $1,100,000 to the Fund under a full and final settlement agreement for the USD Loan, recording a gain on extinguishment of debt of $306,637 relating to the waiver of the unpaid balance. Additionally, the Company repaid €50,000 ($52,920) of the EURO Loan during the nine-month period ended September 30, 2023. As of September 30, 2023 the Company had an outstanding principal balance of €1,725,000 ($1,825,740), of which $1,349,460 is classified as ''Notes payable - long term portion" on the condensed consolidated balance sheets. As of September 30, 2023, the Company had accrued $58,825 in interest expense related to these agreements.

On December 22, 2022, Skypharm signed an agreement for the extension of the payments and an increase in interest rate due under the EURO loan, that was extended to be repaid with a balloon payment now due on October 31, 2025. This extension was agreed upon in writing on December 22, 2022, with a retroactive modification date to October 31, 2022 (the original maturity date). 

Third Party Debt

On November 16, 2015, the Company entered into a Loan Agreement with Panagiotis Drakopoulos, the Company’s 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 bore an interest rate of 6% per annum and was due and payable in full on November 15, 2016. As of December 31, 2022, the Company had an outstanding principal balance of €8,000 ($8,558) and accrued interest of €6,797 ($7,271). During the nine-month period ended September 30, 2023, the Company repaid the entire outstanding balance of €8,000. Therefore, as of September 30, 2023, the outstanding principal balance was $0. Mr. Drakopoulos is not considered a related party since he is no longer employed by the Company and currently holds no equity position in the Company.

May 18, 2020, July 3, 2020, and August 4, 2020 Senior Promissory Notes

Modification of May 18, 2020, July 3, 2020, and August 4, 2020 Senior Promissory Notes

On February 23, 2022, the Company entered into modification agreements to extend the due dates of the May 18 Note, July 3 Note, and August 4 Note to June 30, 2023, totaling $9,000,000, in the aggregate. The Company paid restructuring fees totaling $506,087 upon modification. The Company determined the modification should be recorded as debt extinguishment in accordance with ASC 470 because the present value of the remaining cash flows under the terms of the new debt instrument is at least 10% different from the present value of the remaining cash flows under the terms of the original instrument. The Company recorded the new debt at fair value in the amount of $7,706,369 and a gain upon extinguishment in the amount of $787,544. During the year ended December 31, 2022, the Company repaid the aggregate principal balance of $7,000,000 and the aggregate accrued interest related to these notes in full. During the three- and nine-month period ended September 30, 2023, the Company recorded non-cash interest expense of $295,846 and $772,180, respectively, related to the amortization of debt issuance costs. 

30

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

June 23, 2020 Debt Agreement

On June 23, 2020, the Company’s subsidiary, Cosmofarm, entered into an agreement with the National Bank of Greece S.A. (the “Bank”) to borrow a maximum of €500,000 ($611,500). The note has a maturity date of sixty (60) months from the date of the first disbursement, which includes a grace period of nine months. The total amount of the initial proceeds was received in 3 equal monthly installments. The note is interest bearing from the date of receipt and is payable every three (3) months at an interest rate of 3.06% plus 3-month Euribor (3.6% as of September 30, 2023). The outstanding balance was €264,706 ($289,059) and €235,294 ($249,035) as of September 30, 2023 and December 31, 2022, respectively, of which $124,517 and $220,253 was classified as "Notes payable - long-term portion" respectively, on the accompanying condensed consolidated balance sheets. During the nine months ended September 30, 2023, the Company repaid €88,235 ($93,388) of the principal balance.

November 19, 2020 Debt Agreement

On November 19, 2020, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($611,500). The note matures on November 18, 2025 and bears an annual interest rate, based on a 360-day year, of 3% plus .6% plus 6-month Euribor when Euribor is positive (3.93% as of September 30, 2023). The principal is to be repaid in 18 quarterly installments of €27,778 ($30,333). During the year ended December 31, 2022, the Company repaid €111,111 ($118,867) of the principal and as of December 31, 2022, the Company had accrued interest of $8,069 related to this note and a principal balance of €333,333 ($356,600), of which $237,733 is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets. During the nine months ended September 30, 2023, the Company repaid €83,333 ($88,200) of the principal and as of September 30, 2023, the Company has accrued interest of €6,108 ($6,464) related to this note and a principal balance of €250,000 ($264,600), of which $147,000 is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets.

July 30, 2021 Debt Agreement

On July 30, 2021, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($578,850). The note matures on August 5, 2026 and bears an annual interest rate that applies to 60% of the principal of the note that is based on a 365-day year, of 5.84% plus 3-month Euribor when Euribor is positive (3.93% as of September 30, 2023). Pursuant to the terms of the agreement, there is a nine-month grace period for principal repayment during which interest is accrued. The principal is to be repaid in 18 quarterly installments of €27,778 commencing three months from the end of the grace period. During the year ended December 31, 2022, the Company repaid €77,985 ($83,428) of the principal balance. As of December 31, 2022, the Company had accrued interest of €2,509 ($2,728) and a principal balance of €422,016 ($451,472), of which $336,788 is classified as notes payable – long term portion on the accompanying condensed consolidated balance sheet. During the nine months ended September 30, 2023, the Company repaid €78,429 ($83,009) of the principal. As of September 30, 2023, the Company has accrued interest of €7,982 ($8,449) and principal of €343,587 ($363,652), of which $247,186 is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets.

June 9, 2022 Debt Agreement

On June 9, 2022 the Company entered into an agreement with a third-party lender in the principal amount of €320,000 ($335,008), the “Note”. The Note matures on June 16, 2027 and bears an annual interest rate of 3.89% plus an additional rate of 0.60%, plus the 3-month Euribor (3.6% as of September 30, 2023). Pursuant to the agreement, there is a twelve-month grace period for principal repayment during which interest is accrued. The principal is to be repaid in 17 equal quarterly installments of €18,824 commencing on June 30, 2023. During the nine months ended September 30, 2023, the Company repaid €40,000 ($42,336) of the principal. As of September 30, 2023 and December 31, 2022 the Company has accrued interest of €4,164 ($4,407) and €7,707 ($8,379), respectively, and an outstanding balance of €280,000 ($296,352), of which $216,661 and $281,924, respectively, is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets.

August 29, 2022 Promissory Note

On August 29, 2022, the Company entered into a promissory note for the principal amount of $166,667. The Company received $150,000 in cash and recorded $16,667 as an original issue discount upon issuance. The promissory note matured on the earlier of (a) December 27, 2022, or (b) the date the Company completes a debt or equity financing of at least $1,000,000. The debt carried an annual interest rate of 12% which was due upon maturity. As of December 31, 2022, the Company had repaid the principal balance in full and had a balance of $5,041 in accrued interest related to this note. The Company repaid the outstanding interest during the nine-month period ended September 30, 2023 and thus the balance of both principal and interest as of September 30, 2023 is $0.

31

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

July 14, 2023 Debt Agreement

On July 14, 2023 the Company entered into an agreement with a third-party lender in the principal amount of €1,000,000 ($1,123,700), the “Note”. The Note matures on July 31, 2028 and bears an annual interest rate of 2.46% plus the 3-month Euribor (3.6% as of September 30, 2023). Pursuant to the agreement, there is a nine-month grace period for interest and principal repayment. The principal is to be repaid in 18 equal quarterly installments of €55,556 commencing on May 2, 2024. As of September 30, 2023 and December 31, 2022 the Company an outstanding balance of €977,000 ($1,034,798) and $0, of which $917,198 and $0, respectively, is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets.

June 24, 2020 Debt Agreement

On June 24, 2020, the Company’s subsidiary, Decahedron, received a loan £50,000 ($68,310) from the United Kingdom government. The loan has a ten-year maturity and bears interest at a rate of 2.5% per annum beginning 12-months after the initial disbursement, which was on July 10, 2020. The Company may prepay this loan without penalty at any time. As of December 31, 2022, the principal balance was £47,144 ($56,936). As of September 30, 2023, the principal balance was £42,430 ($51,824).

COVID-19 Loans

On May 12, 2020, the Company’s subsidiary, SkyPharm, was granted and on May 22, 2020 received a €300,000 ($366,900) loan from the Greek government. The loan will be repaid in 40 equal monthly installments beginning on July 29, 2022. As a condition to the loan, the Company was required to retain the same number of employees until October 31, 2020. As of December 31, 2022, the principal balance was $150,441. During the nine months ended September 30, 2023, the Company repaid €14,063 ($14,884) of the principal balance. The outstanding balance as of September 30, 2023 is €126,563 ($133,954). 

 NOTE 13 – LEASES

The Company has various operating and finance lease agreements with terms up to 10 years, for various types of property and equipment (such as office space and vehicles) etc. 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 average interest rate of our long-term debt on the date of inception.

Operating Leases

The Company’s weighted-average remaining lease term relating to its operating leases is 6.64 years, with a weighted-average discount rate of 6.74%.

The following table presents information about the amount and timing of cash flows arising from the Company’s operating leases as of September 30, 2023:

32

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Maturity of Operating Lease Liability:

2023	$	54,076
2024		217,112
2025		141,302
2026		99,562
Thereafter		480,361
Total undiscounted operating lease payments	$	992,413
Less: Imputed interest		(194,734	)
Present value of operating lease liabilities	$	797,679

The Company incurred lease expense, due to amortization of operating lease right-of-use assets, of $173,894 and $158,407 which was included in “General and administrative expenses,” for the nine months ended September 30, 2023 and 2022, respectively. For the three months ended September 30, 2023 and 2022 the Company incurred lease expense of $50,690 and $50,209, respectively.

Finance leases

The Company’s weighted-average remaining lease term relating to its finance leases is 2.8 years, with a weighted-average discount rate of 6.74%, based on the interest rate implicit in the lease.

The following table presents information about the amount and timing of cash flows arising from the Company’s finance leases as of September 30, 2023:

Maturity of Finance Lease Liability
2023	$	41,451
2024		145,743
2025		117,000
2026		91,080
Thereafter		38,385
Total undiscounted finance lease payments	$	433,659
Less: Imputed interest		(43,027	)
Present value of finance lease liabilities	$	390,632

The Company incurred interest expense on its finance leases of $20,629 and $11,645 which was included in “Interest expense”, on the accompanying condensed statements of operations and comprehensive loss for the nine months ended September 30, 2023 and 2022, respectively and $6,920 and $4,012 for the three months ended September 30, 2023 and 2022, respectively. The Company incurred amortization expense on its finance leases of $102,549 and $60,935, which was included in “Depreciation and amortization expense”, on the accompanying condensed statements of operations and comprehensive loss for the nine months ended September 30, 2023 and 2022, respectively and $35,452 and $21,628 for the three months ended September 30, 2023 and 2022, respectively. The total cash used for the Company’s finance leases for the nine months ended September 30, 2023 and September 30, 2022 amounted to $118,847 and $71,172 respectively and is solely related to lease payments. For the three months ended September 30, 2023 and 2022 the total cash used for the Company’s finance leases amounted to $41,094 and $24,495, respectively.

NOTE 14 – 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 September 30, 2023, the following litigation matters were pending. None of the below is expected to have a material financial or operational impact.

33

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Solgar Inc, a competitor of the Company, sued SkyPharm for product homogeneity regarding the nutraceutical line “Sky Premium Life”. As a result, Solgar requested the prohibition for SkyPharm to manufacture, import and sell, market or in any way possess and distribute, including internet sales and advertise in any way in the Greek market of “Sky Premium Life” due to homogeneity with Solgar’s products. Solgar Inc. has further requested to be awarded compensation for non-pecuniary damage amounting to €20,000 ($21,744). The case was heard on January 28, 2022, and the decision numbered 8842/2022 of the court of Thessaloniki was issued, which, accepted our claims and dismissed the Solgar’s Inc. lawsuit.

On July 22, 2015, the National Medicines Agency approved the license of wholesale sale of pharmaceutical products under the name SkyPharm SA with set validity at five years and an expiration date of July 22, 2020. Subsequently, SkyPharm on June 15, 2020, legally and timely submitted the application for renewal of the wholesale license of pharmaceutical products to the National Medicines Agency. The National Medicines Agency did not respond, therefore the Company asked for an immediate decision on the renewal. Two months after the filing of the no. 3459 / 15.01.2021 letter and almost nine months after the no. 627615.06.2020 company application for the renewal, the National Medicines Agency replied by rejecting the renewal request on March 9, 2021 (ref. 62769 / 20-25.02.2021). In addition, document No. 127351-16.12.2021 of EOF (Greek National Medicines Organization) to SkyPharm states that after an inspection of EOF at the premises of Doc Pharma, we did not have a wholesale license in violation of article 106 par. 1b and par. 1c of the ministerial decision D.YG3a / GP.32221 / 29-4-2019. The National Medicines Agency imposed a fine of €15,000 ($16,214) on SkyPharm for the above case, which was included in "General and administrative" expense on the accompany statement of operations and comprehensive loss for the three month period ended September 30, 2023.

There has been a payment request by the Greek court, which relates to a fine arising from Cosmofarm’s tax audit for financial year 2014. The law with no. 483/16.12.2020 was used by the court against Cosmofarm (the “defendant”). The defendant appealed against the decision using the law with no.11541/09.03.2021. This appeal was dismissed after 120 days from its submission to the court. Additionally, there had been an obligation for payment of additional tax and fines related to this matter in the amount of €91,652 ($99,644), which the defendant has already settled. However, the defendant has claimed back the respective amount through appeal. As of September 30, 2023, the trial is still pending.

Advisory Agreements

On July 1, 2021, the Company entered into a two-year advisory agreement with a third party (the “Consultant”) for advisory and consulting services related to the Company’s intention to become listed on Nasdaq. Peter Goldstein, a then director of the Company is a principal of the Consultant. As consideration for services rendered, and successful Nasdaq listing, the Company paid $100,000. The $100,000 bonus was incurred and settled within 2022. Finally, the Consultant received a total of 10,000 shares of the Company’s common stock, 2,000 of such shares that have been previously issued pursuant to previous agreements and additional 15,258 shares that were issued on February 2, 2023, based on the amendment signed on February 1, 2023.

Research and Development Agreements

On June 26, 2022, the Company signed a research and development ("R&D") agreement with a third party, through which the Company assigns to the third party the development of new products and services in the field of health, focusing on the human intestinal microbiome. The cost of the projects amount to EUR 820,000 ($891,504) which is allocated to certain phases. The amount will be due and payable upon completion of the corresponding phases. The Company records the corresponding R&D expense based on the project’s progress, which is actually invoiced by the third party in the relevant period. No such costs were incurred for the three and nine month periods ended September 30, 2023 or 2022.

34

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

NOTE 15 – WARRANTS

Omnibus Equity Incentive Plan

On September 19, 2022 the Company held a Board of Directors meeting, whereas, the Board of Directors had elected to adopt an Omnibus Equity Incentive Plan (the “Plan”), that includes reserving 200,000 shares of common stock eligible for issuance under the Plan to be registered on a Form S-8 Registration Statement with the SEC. The Plan is designed to enable the flexibility to grant equity awards to the Company’s officers, employees, non-employee directors and consultants and to ensure that it can continue to grant equity awards to eligible recipients at levels determined to be appropriate by the Board and/or the Compensation Committee. According to the Proxy Statement filed with the SEC on October 20, 2022 the Plan received final approval by the Company’s stockholders at the Annual Meeting of Stockholders held on December 2, 2022.

On April 3, 2023, the Company approved incentive stock awards for the CFO, certain officers and directors and other employees of the Company. The awards are in the form of restricted stock and will vest in two parts: 50% on October 2, 2023 and 50% on October 2, 2024. A total of 185,000 shares were awarded and a corresponding share-based compensation expense of $109,636 and $214,505 was recorded for the three and nine month periods ended September 30, 2023, respectively, based on the amortization of fair value from the date of issuance of April 3, 2023 through September 30, 2023.

Warrants 

As of September 30, 2023, there were 6,124,412 warrants classified within equity outstanding and 4,188,928 warrants exercisable with 4,175,595 warrants having expiration dates from May 2023 through December 2027 and 13,333 warrants with no expiration date.

A summary of the Company’s warrant activity during the three months ended September 30, 2023 is presented below:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Warrants	Shares		Price		Term		Value
Balance outstanding, January 1, 2023		4,194,236	$	8.31		5.04	$	2,562,600
Balance outstanding, September 30, 2023		6,124,413	$	5.40		4.76	$	20,934
Exercisable, September 30, 2023		4,188,928	$	6.63		4.52	$	20,934

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 three months ended:

	September 30,		September 30,
Country	2023		2022
Greece		12,544,643		11,990,599
Cyprus		72,754		-
UK		190,614		26,209
USA		210		-
Ireland		1,417		-
Croatia		14,159		(710)
Total	$	12,823,797	$	12,016,098

35

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

The following table presents our revenue disaggregated by country for the nine months ended:

	September 30,		September 30,
Country	2023		2022
Greece		36,041,012		38,151,898
Cyprus		141,402		-
UK		1,338,509		-
USA		504		-
Ireland		1,417		118,467
Croatia		14,159		26,037
Total	$	37,537,003	$	38,296,402

NOTE 17 – SEGMENT REPORTING

A. Basis for segmentation

The Group operates through various operating segments, which are the wholesale sector, the pharmaceutical manufacturing sector, the nutraceuticals and pharmaceuticals sectors and other, with only the first three of them being reportable segments based on the criteria (quantitative thresholds) of ASC 280. The financial information reviewed by our Chief Operating Decision Maker, which is our Board of Directors, is included within the operating segments mentioned above for purposes of allocating resources and evaluating financial performance.

B. Information about reportable segments

The table below presents information about the Company's reportable segments for the 3- and 9-month periods ended September 30, 2023. The accounting policies followed in the preparation of the reportable segments are the same with those followed in the preparation of the Company's consolidated financial statements.

3-month period ended September 30, 2023

	Wholesale			Pharma manufacturing			Nutraceuticals & Pharmaceuticals			Other			Total
Revenues		11,936,166			91,055			796,576			-			12,823,797
Segment profit / (loss)		(728,986	)		(604,790	)		(1,838,942	)		(1,082,184	)		(4,254,902	)
Total assets		23,605,372			11,892,278			29,950,031			6,077,698			71,525,379

9-month period ended September 30, 2023

	Wholesale			Pharma manufacturing			Nutraceuticals & Pharmaceuticals			Other			Total
Revenues		34,908,505			91,055			2,537,443			-			37,537,003
Segment profit / (loss)		(549,841	)		(604,790	)		(2,944,599	)		(1,177,414	)		(5,726,644	)
Total assets		23,605,372			11,892,278			29,950,031			6,077,698			71,525,379

The following summary describes the operations of the reportable segment:

Reportable segments	Operations
Wholesale	Distribution and export of pharmaceutical products
Pharma manufacturing	Production of pharmaceutical products
Nutraceutical and pharmaceuticals	Trade of owned nutraceutical & pharmaceutical products

NOTE 18 – SUBSEQUENT EVENTS

On October 9, 2023 the Company entered into a purchase agreement to acquire an artificial intelligence platform, which aims in drug repositioning and repurposing. The purchase price for the acquisition amounted to €300,000 ($318,540) (the “Cash Consideration”) payable in fifteen equal monthly installments and 280,000 shares of authorized and issued restricted common stock of the Company for the amount of $700,000 at an issuance price of $2.50 per share (the “Stock Consideration”).

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Available Information

The following discussion should be read in conjunction with our interim Condensed Consolidated Financial Statements and the related notes and other financial information appearing elsewhere in this report as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Form 10-K for the year ended December 31, 2022 (“Form 10-K”) and this Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.

Forward-Looking Statements

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

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

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

Overview

Summary

We are an international healthcare company with a proprietary line of nutraceuticals and distributor of branded and generic pharmaceuticals, nutraceuticals, OTC medications and medical devices. 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. 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 in the market in the same therapeutic category, and are subject to potential competition from new products that competitors may introduce in the future.

We continue to rapidly expand our distribution network worldwide and open new markets for our proprietary line of branded pharmaceuticals, nutraceuticals, and nutraceuticals through our distribution channels and e-commerce marketplace. We use our extensive network with direct access to Europe’s primary sales channels for pharmaceuticals and nutraceuticals, which includes over 160 pharmaceutical wholesale distributors in Europe’s largest markets, over 40,000 pharmacies in Europe and 1,500 pharmacies in Greece. We achieve stable supply of pharmaceuticals from DocPharma, a related party, which enhances our ability to scale our expansion. Additionally, following the successful completion of the acquisition of Cana on June 30, 2023, the Company expects to also utilize Cana’s facilities for the production of both pharmaceutical and nutraceutical products. We receive full priority in the production of nutraceuticals and volumes. Our full production in Greece ensures a decisive production-cost advantage while we secure additional discounts by leveraging our purchasing scale.

Our focus on investing in technology enhances yield cost savings and economies of scale. The safety, distribution and warehousing efficiency and reliability is a result of 0% error selection rate and acceleration order fulfillment due to our Robotic systems and integrated automations (“ROWA” robotics).

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Revenue sources

The Company operates in nutraceuticals industry, distribution of pharmaceuticals and healthcare distribution.

Pharmaceuticals

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

Healthcare Distribution

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

Nutraceutical

We have created and developed our own proprietary branded nutraceutical products, named “Sky Premium Life®” which was launched in 2018 and “Mediterranation®” which was launched in 2022. Utilizing unique formulations, and specialized extraction processes which follow strict pharmaceutical standards, our proprietary lines of nutraceuticals aim for excellence. We have a full portfolio of fast-moving and specialty formulas with more than 80 product codes including vitamins, minerals and other herbal extracts. Our nutraceutical products are manufactured exclusively by Doc Pharma, a related party of the Company. Our nutraceutical products have penetrated several markets within 2022 and 2023 through digital channels such as Amazon and Tmall. We focus on nutraceutical products because we foresee it as a market with high grow opportunities due to its large market size and margin contribution as the demand for nutraceutical products is increasing globally.

Regulations and Licenses

Our subsidiary, Decahedron, was granted the license for the wholesale of medicinal products for human use in February 2021 pursuant to the regulation of 18 of The Human Medicines Regulations 2012 (SI 2012/1916). It fulfills the guidelines of the Wholesale Distribution Authorisation (Human). Finally, our subsidiary, Cosmofarm S.A., was granted the license for the wholesale of pharmaceutical products for human use on February 2019 pursuant to the EU directive of (2013/C 343/01). It fulfils the Guidelines of the Good Distribution Practices of medical products for human use. All licenses were granted based on inspections and are valid unless current inspections occur which will revise their status.

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Risks

Supply chain disruption is a growing concern for the European pharmaceutical industry as it increasingly looks to cut costs by relying on ‘emerging markets’, where standards can be lower in terms of compliance, ethics and health and safety.

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

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

Distribution and Trade Agreements

On July 1, 2021, the Company’s subsidiary SkyPharm SA, entered into an exclusive distribution agreement with a company based in Germany the “Distributor A”, whereas SkyPharm appointed Distributor A to be the responsible Partner for the distribution, promotion, trade marketing, logistics and sale of the nutraceuticals manufactured and supplied by SkyPharm (Sky Premium Life®), in the territories of Austria and Germany. Distributor A places purchase orders with SkyPharm at the company’s address and the purchase order is necessary to initiate any shipment.

On July 7, 2021, SkyPharm SA signed a trade agreement with a company specializing in e-commerce mall advice and operation, henceforward referred as “Distributor B”. Based on the agreement, SkyPharm will sell its own branded products Sky Premium Life ® to final consumers through the e-commerce store opened by Distributor B on Tmall International MALL and Distributor B will provide platform operation services to SkyPharm. The services provided by Distributor B will include mall construction, mall operation and network promotion, along with collection, settlement, customer service, logistics and distribution.

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

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

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

Acquisitions and Co-Ventures

ZipDoctor

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

On March 17, 2023, the Company announced that it has entered into a definitive agreement to acquire ZipDoctor Inc. for a total sum of $150,000. The Sale and Purchase Agreement (“SPA”) was signed on March 17, 2023, and the transaction closed on April 3, 2023.

CANA 

On May 31, 2023, the Company entered into a Stock Purchase Agreement with the owners of one hundred (100%) percent of the equity (the “Shares”) of Pharmaceutical Laboratories Cana S.A. (“Cana”).  The purchase price for the shares for the two Sellers is €800,000 and 46,377 shares of Cosmos restricted common stock at an issuance price of $17.25 per share or $800,000. Moreover, on February 28, 2023, the Company signed a Secured Promissory Note with Cana, whereby Cana borrowed the sum of €4,100,000 ($4,457,520), included in the total cash consideration provided for the acquisition. The acquisition was successfully completed on June 30, 2023.

Cana is a Greek pharmaceutical company that manufactures, sells, distributes, and markets original branded products researched and developed by leading global pharmaceutical and healthcare companies. Cana stands out as it brings significant synergies and vertical integration. With a long-standing history spanning almost a century, Cana has earned the trust of industry giants like AstraZeneca, Merck, Unilever, and Procter & Gamble. Cana's Good Manufacturing Practice (GMP) license enables us to manufacture pharmaceuticals, including medicines, within the EU, which creates attractive opportunities for high-margin contract manufacturing agreements with major multinational clients.

Bikas

On June 15, 2023, Cosmos Health Inc. entered into an Assignment and Assumption Agreement (the “Agreement”) with Ioannis Bikas O.E., a Greek Company, (“Bikas”). Bikas is owner of a pharmaceutical distribution network in Greece and agreed to sell the Company their distribution network and customer base. The purchase price of the network was €100,000 ($109,330) of cash, and €300,000 ($316,081) of the Company’s stock. The Company issued 99,710 shares of common stock related to the acquisition of the customer base, based on the fair value of the stock on acquisition date. The Company accounted for the acquisition as an asset acquisition in accordance with ASC 805 and recorded $425,411 as an intangible asset related to the customer base acquired.

This acquisition positively impacted our revenue (an increase of more than $10 million annually) and enhanced the Company's gross margins (due to economies of scale). Additionally, synergies with Cosmofarm's state-of-the-art facility, which employs robotic technologies for procurement, inventory management, and order execution, provide an elevated level of service to pharmacies, leading to increased orders. We are pleased to announce that we have now successfully integrated Bikas within the Cosmofarm platform.

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Results of Operations

Three and Nine Month Periods Ended September 30, 2023 and 2022

Revenue and net loss

The Company had revenue of $12,823,797 and $12,016,098 (an increase of 6.72%) for the three months ended September 30, 2023 and 2022, respectively and $37,537,003 and $38,296,402 (a decrease of 1.98%) for the nine months ended September 30, 2023 and 2022, respectively. Revenue remained relatively stable overall, compared to the prior periods, and the slight decrease in the nine month period is mainly attributed to the effect of the foreign exchange rates. The increase in the three month period is attributable to the acquisition of CANA on June 30, 2023. The Company had a net loss of $3,349,204 on revenue of $12,823,797 versus a net loss of $1,972,775 on revenue of $12,016,098 for the three months ended September 30, 2023 and 2022, respectively. Also, the Company had a net loss of $4,790,597 on revenue of $37,537,003 versus a net loss of $3,010,684 on revenue of $38,296,402 for the nine months ended September 30, 2023 and 2022, respectively. The increase in net loss for the three month period ended September 30, 2023 compared to the one ended September 30, 2022 of $1,371,875 relates to the significant increase of salaries and general and administrative expenses within 2023 as long as the provision for extraordinary tax charges recorded within Q3 2023 of $579,387.

Cost of Goods Sold

The Company had costs of goods sold of $11,609,039 versus $10,232,201 (an increase of 13.46%) for the three months ended September 30, 2023 and 2022, respectively. In addition, the Company had costs of goods sold of $34,418,334 versus $32,774,701 (an increase of 5.01%) for the nine months ended September 30, 2023 and 2022, respectively. The increase in cost of goods sold is due to the increased sales volume of the wholesale revenue stream compared to the nutraceuticals one, given that the wholesale stream has significantly lower gross profit margins.

Our future revenue growth is expected to 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 branded pharmaceutical products that will be available over the next few years’ price increases and price deflation, general economic conditions, including the effects of the current conflict in the Ukraine, the coronavirus in the United Kingdom and 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.

Gross Profit

The Company had gross profit of $1,214,758 versus $1,783,897 (a decrease of 31.9%) for the three months ended September 30, 2023 and 2022, respectively. In addition, the Company had gross profit of $3,118,669 versus $5,521,701 (a decrease of 43.52%) for the nine months ended September 30, 2023 and 2022, respectively. The decrease in gross profit for the three and nine-month periods is attributable to the significantly decreased and discounted sales of SkyPharm’s nutritional supplements, pursuant to an effort to substantially decrease the receivable balances due from Medihelm SA. Since nutraceuticals is a high margin revenue stream, this contributed to the decreased gross profit for both periods.

Operating Expenses

The Company had general and administrative costs of $2,573,414 and $1,335,033 salaries and wage expenses of $1,252,680 and $576,118, sales and marketing expenses of $157,435 and $103,979 and depreciation and amortization expense of $248,530 and $112,879 for a loss from operations of $3,017,301 and a loss from operations of $344,112 for the three months ended September 30, 2023 and 2022, respectively. The increase in operating expenses is primarily attributed to management’s compensation, which are included in “Salaries and wages”, and management’s bonuses and stock-based compensation, which are included in “General and administrative expenses” during the three-month period ended September 30, 2023. Management’s compensation in terms of both salaries and bonuses was increased due to the significant goals the Company achieved within 2022, including but not limited to the substantial capital raises executed within the period.

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For the nine months ended September 30, 2023 and 2022, the Company had general and administrative expenses of $6,662,579 and $3,192,137 salaries and wage expenses of $3,279,803 and $1,675,068, sales and marketing expenses of $942,759 and $496,371 and depreciation and amortization expense of $478,466 and $334,349 for a net operating loss of $8,244,838 and $176,224 for the nine months ended September 30, 2023 and 2022, respectively. Similarly, to the three-month period change, the increase in operating expenses is primarily attributed to the increased management’s salaries and bonuses as well as the increased marketing expenses for the nine-month period ended September 30, 2023. Similar to the three-month period, management’s compensation in terms of both salaries and bonuses was increased due to the significant goals the Company achieved within 2022, including but not limited to the substantial capital raises executed within the period.

Other Income (Expense)

The Company had interest expense related to notes payable of $151,274 and $529,782 versus $517,660 and $1,772,750 and non-cash interest expense related to the amortization of debt discount of $0 and $0 versus $295,846 and $772,180 for the three and nine months ended September 30, 2023 and 2022, respectively. The decrease in interest expense is attributable to the significant debt repayments that took place during the year ended December 2022.

Moreover, a loss on equity investments of $1,093 and a gain of $2,876 versus a gain of $359 and $415 in conjunction with a gain due to change in fair value of derivative liability of $0 and $3,384 versus gain of $628 and a loss of $6,627 due to agreements on convertible debentures were recorded during the three and nine-month periods ended September 30, 2023 and 2022, respectively. The net foreign currency loss amounted to $371,115 and $108,406 versus a loss of $468,362 and $984,401. The decrease in foreign currency loss is derived slightly from the positive movement of the foreign exchange rates. Furthermore, the Company had other income of $14,404 and loss of $14,330 versus loss of $5,431 and $60,558 for the three and nine months ended September 30, 2023, respectively.

Interest income amounted to $110,596 and $551,281 versus $55,715 and $180,813 for the three and nine months ended September 30, 2023 and 2022, respectively and the increase in interest income is attributable to the Company’s treasury bills and loans receivable balances, that were not in place as of September 30, 2022. Additionally, a gain on debt extinguishment relating to the write-off of a share settled debt obligation and the forgiveness of a notes payable balance of $1,910,770 in the nine months ended September 30, 2023 versus a gain on a debt extension which was accounted as extinguishment of debt of $1,004,124 was recorded for the nine months ended September 30, 2022

Finally, the Company has recorded a bargain purchase gain of $1,633,842 versus $0 for the nine months ended September 30, 2023 and 2022, respectively. The bargain purchase gain recorded related solely to the gain recognized upon acquisition of Cana.

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Foreign currency translation adjustment, net

The Company had a Foreign currency translation adjustment, net of $890,645 and $470,994 versus losses of $1,029,141 and $2,463,245, attributable to the positive movement of the exchange rates during the three and nine-month periods ended September 30, 2023 and September 30, 2022, respectively, and a net comprehensive loss of $4,254,902 and $5,276,644 versus a loss of $3,021,253 and $28,304,730 for the three and nine months ended September 30, 2023 and 2022, respectively. The change in comprehensive loss mainly derives from the deemed dividends on the issuance of warrants of $14,268,872 and the deemed dividends on preferred stock of $8,561,929 recorded during the nine-month period ended September 30, 2022

Liquidity and Capital Resources

As of September 30, 2023, the Company had working capital of $23,901,453 compared to $34,618,044 as of December 31, 2022.

The Company had cash and cash equivalents of $2,360,604 versus $20,749,683 as of September 30, 2023 and December 2022, respectively. The Company had net cash used in operating activities of $16,587,726 and $4,552,332 for the nine months ended September 30, 2023 and 2022, respectively. The Company has devoted substantially all of its cash resources to expand through organic business growth and has incurred significant general and administrative expenses in order to enable the financing and growth of its business and operations. The increase is attributable to the significant outflows to suppliers due to change in payment terms in addition to the material prepayments for the purchase and production of nutraceutical products.

The Company had net cash used in investing activities of $10,399,264 and $68,932 during the nine months ended September 30, 2023 and 2022, respectively. For the nine months ended September 30, 2023, the net cash used in investing activities was mainly attributable to the outflow of consideration transferred through the Cana acquisition, the purchase of ZipDoctor Inc and the purchase of Bikas customer base.

The Company had net cash provided by financing activities of $8,401,750 versus $4,477,843 during the nine months ended September 30, 2023 and 2022, respectively. For the period ended September 30, 2023, the Company received proceeds from lines of credit of $14,218,787 and payments of lines of credit of $14,569,517, for a net decrease on the line of credit of $350,730. The significant increase in the inflows arising from investing activities is mainly attributable to the July’s 20, 2023 registered direct offering for net proceeds of $4,807,039. Moreover, the receipt of the $4,750,107 subscription receivable, due from December’s 2022 offering significantly contributed to the $8.4 million positive cashflows arising from investing activities. 

We anticipate using cash in our bank account as of September 30, 2023, cash generated from debt or equity financing, from investing activities or from management loans 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. If we fail to meet these requirements, we may lose the qualification for quotation and our securities would no longer trade on Nasdaq Capital Market. Further, as a consequence we would fail to satisfy our reporting obligations with the Securities and Exchange Commission (“SEC”), and investors would then own stock in a company that does not provide the disclosure available in quarterly and annual reports filed with the SEC and investors may have increased difficulty in selling their stock as we will be non-reporting.

Going Concern

The Company’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplates the continuation of the Company as a going concern. For the nine-month period September 30, 2023, the Company had revenue of $37,537,003, net loss of $4,790,597 and net cash used in operations of $16,587,726. Additionally, as of September 30, 2023, the Company had positive working capital of $23,901,453, an accumulated deficit of $71,038,463, and stockholders’ equity of $44,195,740. 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 Company’s revenues are not able to sustain its operations, and concerns exist regarding the Company’s ability to meet its obligations as they become due. The Company is subject to a number of risks to those of smaller commercial companies, including dependence on key individuals and products, the difficulties inherent in the development of a commercial market, the need to obtain additional capital, competition from larger companies, and other pharmaceutical and health care companies.

Management evaluated the above conditions which raise substantial doubt about the Company’s ability to continue as a going concern to determine if it can meet its obligations for the subsequent twelve months from the date of this filing. Management considered its ability to access future capital, curtail expenses if needed, expand product lines, and acquire new products.

Management’s plans include expansion of brand name products to the market, expanding the current product portfolio, and evaluating acquisition targets to expand distribution. Furthermore, the Company intends to vertically integrate the supply chain distribution network. Finally, the Company plans to access the capital markets further in order to raise additional funds through equity offerings as well as receive proceeds from the exercise of its existing warrants during the following 3 months. 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.

Considering the above, management is of the view that substantial doubt exists for the Company’s ability to continue as a going concern. 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.

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Plan of Operation in the Next Twelve Months

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

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

Our plan for our own branded nutraceuticals is to enlarge our portfolio up to 150 SKUs by the end of 2023 including more basic line formulas to cover more customer needs of any age, advanced formulations, formulas based on herbs and further clinical studies with research and development for further products. Our plan for geographic expansion in distributing and market penetration in EU, Asia, USA, and Canada is based on exclusive distributors, wholesalers, ecommerce, development of franchising model, alliances and acquisitions of nutraceutical companies.

In addition, our plan for branded generics and OTC products is geographic expansion across the world, especially in the EU and UK, as well as in third world countries with fast registration, and developed markets with liberalized OTC policies for online pharmacies and supermarkets. We also intend to enhance our exclusive distribution rights with a growing basis of cooperating partners while purchasing generics’, biosimilar drugs and OTC licenses. We also intend to enhance our product expectance by registered copyrights and trademarks in all OTC drugs. In addition, we remain committed to strategic research and development across each business unit with a particular focus on assets with inherently lower risk. Our plan for our healthcare distribution is to expand in the Greek territory, enlarge our customer portfolio and integrate an established sales network of pharmacies through the use of B2B and B2C ecommerce platforms and exclusive distributors. We are also aiming at increasing the exports of branded pharmaceuticals as we focus on higher profit margin categories (OTC and VMS), deliver 3PL services to pharma companies, put in force loyalty programs, provide added value services to pharmacies and emergency deliveries to VIP customers. The Company will evaluate and, where appropriate, execute on opportunities to expand its network of pharmacies and products in areas that it believes will offer above average growth characteristics and attractive margins.

The Company is growing its business through organic growth, market penetration, geographic expansion and acquisitions which would add value to its business and its Shareholders. The Company is also committed to pursuing various forms of business development; this can include trading, alliances, joint ventures and dispositions. Moreover, it hopes to continue to build on its portfolio of pharmaceutical products and expand its OTC and nutraceutical product portfolio. Thus, the Company believes that it is developing a sound sales distribution network specializing in its own branded nutraceutical products.

The Company’s main objective is expanding the business operations of its subsidiaries. The Company views its business development activity as an enabler of its strategies, and it seeks to generate earnings growth and enhance shareholder value by pursuing a disciplined, strategic, and financial approach to evaluating business development opportunities. Under these principles the Company assesses businesses and assets as part of its regular, ongoing portfolio review process and continues to consider trading development activities for its businesses. The Company’s objective is the optimization of operating expenses across all entities without compromising the quality of the Company’s services and products.

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.

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

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Strategic Plan

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

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

Organic Growth

Proprietary Portfolio of Branded Products: A bright spot so far in 2023 is the strong demand for our branded nutraceuticals, as we aspire to transform them into global brands. Our products have received very positive feedback at leading events like Arab Health in Dubai, Infarma in Barcelona, Vitafoods in Geneva, and Pharmacy Show in Birmingham.

Sky Premium Life®: We are selling Sky Premium Life products in an increasing number of countries through pharmacies, retail chains, and online platforms. Among our prominent retailers is Holland & Barrett. With over 1,600 stores in 18 countries across the world, it is not only Europe's largest health and wellbeing retailer but also one of the world's largest, generating about $1 billion in annual revenue. Additionally, our products are available online through platforms like eBay and Amazon in the UK, Canada, the US, Germany, France, Spain, and Singapore. We are investing in our infrastructure, expanding our production capacity to accommodate increasing volumes, accelerating our efforts to broaden our distribution network, and planning to penetrate new major markets. This is boosted by strategic collaborations like the one recently announced with C.A.PAPAELLINAS Group, a market leader with an extensive distribution network throughout Cyprus. PAPAELLINAS will represent and distribute Sky Premium Life, not only in Holland & Barrett stores but also in pharmacies throughout Cyprus.

Mediterranation®: Building upon the success of Sky Premium Life, we also launched Mediterranation, our premium food supplements brand. Inspired by the Mediterranean way of life, renowned for its healthy food, sunny climate, and longevity, Mediterranation utilizes organic herbs and plant extracts, such as dittany of Crete, oregano, mastic, and kritamos from the Mediterranean region. All of our products are manufactured under strict pharmaceutical standards and adhere to GMP protocols.

Bio-Bebe® and C-Sept®/C-Scrub: Among Cana's many valuable assets, Cosmos Health also obtained a proprietary portfolio of pharmaceutical, dermocosmetic, antiseptic, and food supplement branded products. These include, among others: Bio-Bebe, an organic infant care and nutrition brand, which we are in the process of relaunching. This presents us with a great opportunity to enter the lucrative global baby food market that, according to Fortune Business Insights, is worth $102.90 billion per year. C-Sept, an antiseptic brand, which we are expanding with the launch of the new C-Scrub Wash 4% CHG Biocide. We are well positioned to capitalize on the global antiseptic and disinfectant market that, according to Grand View Research, is worth $29 billion per year. 

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

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

Off Balance Sheet Arrangements

As of September 30, 2023, there were no off-balance sheet arrangements.

Critical Accounting Policies

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

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

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

Income Taxes. The Company accounts for income taxes under the asset and liability method, as required by the accounting standard for income taxes, ASC 740. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company is liable for income taxes in Greece and the United Kingdom. The corporate income tax rate is 22% in Greece (tax losses are carried forward for five years effective January 1, 2013) and 19% in United Kingdom. Losses may also be subject to limitation under certain rules regarding change of ownership.

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

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

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

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

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

Accounts Receivable and Allowance for Doubtful Accounts

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

Inventory Reserves

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

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

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

Item 4. 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 and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

AS 2201 and the SEC define the term “material weakness” as “a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.” We had the following material weaknesses at September 30, 2023 set forth below:

· The Company does not have an official chart of authorities to approve transactions. On January 6, 2023, the Company entered into a purchase agreement to acquire a building in Montreal in Canada for a total purchase price of $3,950,000. Despite its materiality, although the transaction has not been formally approved by the Company’s Board of Directors, the Company will have the transaction ratified by the Board.

Despite the existence of the material weaknesses, we believe that our consolidated financial statements contained in this Form 10-Q fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Principal Executive Officer and 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 ineffective due to material weaknesses stated above.

47

Changes in Internal Controls Over Financial Reporting

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

Our Audit Committee is in process of evaluating our existing controls and procedures, while communicating with the Management on quarterly basis.

Audit Committee

We have a separately designated standing audit committee, which is appointed by the Board of Directors of Cosmos Health Inc. On April 28, 2022, Dr Anastasios Aslidis was elected to serve on the Board of Directors and was appointed as a chair of the Audit Committee, replacing Mr Peter Goldstein, who submitted his resignation on the same date. Our three independent directors, Anastasios Aslidis, John Hoidas and Demetrios Demetriades serve on the Audit Committee. The primary function of the committee is to assist the Board of Directors in overseeing (1) the financial reporting and accounting processes of the Company, and (2) the financial statements audits of the Company. The Committee also prepares a written report to be included in the annual proxy statement of the Company pursuant to the applicable rules and regulations of the “SEC”. In furtherance of these purposes, the Committee shall maintain direct communication among the Company’s independent auditors and the Board of Directors. The independent auditors and any other registered public accounting firm engaged in preparing or issuing an audit report or performing other audit review or attest services for the Company shall report directly to the Committee and are ultimately accountable to the Committee and the Board of Directors.

In discharging its oversight role, the Committee is authorized to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of the Company. The Committee shall have the sole authority to retain at the Company’s expense outside legal, accounting or other advisors to advise the Committee and to receive appropriate funding, as determined by the Committee, from the Company for the payment of the compensation of such advisors and for the payment of ordinary administrative expenses of the Committee that are necessary to carry out its duties. The Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditors to attend a meeting of the Committee or to meet with any member of, or advisors to, the Committee. The Committee may also meet with the Company’s investment bankers or financial analysts who follow the Company.

The Committee shall meet no less frequently than four times per year, with additional meetings as circumstances warrant. The Committee shall also meet periodically with management, the internal auditors, if any, and the independent auditors in separate executive sessions. The Committee shall record the minutes of all such meetings and shall submit the minutes of its meetings to, or discuss the matters deliberated at each meeting with, the Board of Directors. The Company’s chief financial or accounting officer shall function as the management liaison officer to the Committee.

48

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There have been no changes since the filing of the Company’s Form 10-K for the year ended December 31, 2022.

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. You should refer to the other information set forth in this report, including the information set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in our consolidated financial statements and the related notes. Our business prospects, financial condition or results of operations could be adversely affected by any of these risks.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

During the nine month period ended September 30, 2023 the Company issued 15,258 shares of common stock to a consultant for services rendered.  On April 3, 2023, the Company issued 185,000 shares of unvested common stock to employees, officers and directors under the Company’s Omnibus Equity Incentive Plan (the “Plan”). These shares vest in two tranches, 1) 50% vesting on October 2, 2023, and 2) 50% vesting on October 2, 2024.  The foregoing share issuances were made in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

On June 15, 2023, the Company issued 99,710 shares of common stock related to the acquisition of the customer base of Bikas as described in Note 1 above.  On June 30, 2023, the Company issued 46,377 shares of common stock related to the acquisition of Cana as described in Note 1 above.  The foregoing share issuances were made pursuant to representations made by the purchasers under their acquisition agreements and in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act.

During the nine-month period ended September 30, 2022, the Company issued 9,520 shares of common stock upon the conversion of $1,190,000 of notes payable. The foregoing shares were made in reliance pursuant to the holders’ notes and in reliance upon the exemption from registration under Section 3(a)(9) of the Securities Act.

There were no placement agents or underwriters involved and no sales commissions were paid in any of the above three paragraphs.

On July 21, 2023, pursuant to a Securities Purchase Agreement (the “SPA”) dated July 20, 2023, the Company issued an aggregate of 1,935,484 common stock warrants in a concurrent private placement to a registered direct offering.  The warrants and one accompanying share of common stock were sold as a unit at a price of $2.48.  The warrants have an exercise price of $2.75 per share and are immediately exercisable and expire five (5) years from the issuance date.  The warrants were issued based upon the representations made by the holders in their respective SPAs.  The Company issued the warrants in reliance upon an exemption from registration in Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act. A.G.P./Alliance Global Partners was the sole placement agent for this offering and received an aggregate sales commission of $310,371. 

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits.

(a) Exhibits.

Exhibit No.	Document Description
31.1*	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of CFO 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 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).**
101.SCH	Inline XBRL Taxonomy Extension Schema Document.**
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.**
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.**
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.**
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.**
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).**

_____________

*

This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

**

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.

50

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 Health Inc.
Date: November 20, 2023	By:	/s/ Grigorios Siokas
		Grigorios Siokas
		Chief Executive Officer
		(Principal Executive Officer)

Date: November 20, 2023	By:	/s/ Georgios Terzis
		Georgios Terzis
		Chief Financial Officer
		(Principal Financial Officer, And Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit No.	Document Description
31.1*	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of CFO 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 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).**
101.SCH	Inline XBRL Taxonomy Extension Schema Document.**
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.**
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.**
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.**
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.**
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).**

___________

*

This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

**

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.

52

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Grigorios Siokas, the Chief Executive Officer of Cosmos Health, Inc., certify that:

1.	I have reviewed this report on Form 10-Q of Cosmos Health Inc. for the quarter ended September 30, 2023;
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 Health Inc.
Date: November 20, 2023	By:	/s/ Grigorios Siokas
		Grigorios Siokas, Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Georgios Terzis, the Chief Financial Officer of Cosmos Health, Inc., certify that:

1.	I have reviewed this report on Form 10-Q of Cosmos Health Inc., for the quarter ended September 30, 2023;
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 Health Inc.
Date: November 20, 2023	By:	/s/ Georgios Terzis
		Georgios Terzis, Chief Financial Officer
		(Chief Financial 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 Quarterly Report on Form 10-Q for the period ended September 30, 2023 of Cosmos Health 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 Health Inc.
Date: November 20, 2023	By:	/s/ Grigorios Siokas
		Grigorios Siokas
		Principal Executive 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 Health Inc. and will be retained by Cosmos Health Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

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 Quarterly Report on Form 10-Q for the period ended September 30, 2023 of Cosmos Health 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 Health Inc.
Date: November 20, 2023	By:	/s/ Georgios Terzis
		Georgios Terzis
		Principal Financial Officer and 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 Health Inc. and will be retained by Cosmos Health Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover - shares	9 Months Ended
	Sep. 30, 2023	Nov. 20, 2023
Cover [Abstract]
Entity Registrant Name	COSMOS HEALTH INC.
Entity Central Index Key	0001474167
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Sep. 30, 2023
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Entity Common Stock Shares Outstanding		13,404,204
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-54436
Entity Incorporation State Country Code	NV
Entity Tax Identification Number	27-0611758
Entity Address Address Line 1	5 Agiou Georgiou Str
Entity Address City Or Town	Pilea
Entity Address Country	GR
Entity Address Postal Zip Code	55438
City Area Code	312
Local Phone Number	536-3102
Security 12b Title	Common Stock, $.001 par value
Trading Symbol	COSM
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2023	Dec. 31, 2022
CURRENT ASSETS:
Cash and cash equivalents	$ 2,360,604	$ 20,749,683
Accounts receivable, net	25,591,342	23,084,000
Accounts receivable - related party	3,009,169	2,830,595
Marketable securities	17,532	14,881
Inventory	5,960,342	3,451,868
Loans receivable	388,693	377,038
Loans receivable - related party	423,360	427,920
Prepaid expenses and other current assets	3,047,669	1,967,527
Prepaid expenses and other current assets - related party	5,688,041	3,463,401
TOTAL CURRENT ASSETS	46,486,752	56,366,913
Property, plant and equipment, net	10,249,782	1,817,025
Goodwill and intangible assets, net	4,065,513	706,914
Loans receivable - long term portion	3,458,115	3,792,034
Loans receivable - related party - long term	3,492,720	3,851,280
Operating lease right-of-use asset	797,681	821,069
Financing lease right-of-use asset	374,949	291,762
Advances for building's acquisition	2,000,020	0
Other assets	599,847	391,624
TOTAL ASSETS	71,525,379	68,038,621
CURRENT LIABILITIES:
Accounts payable and accrued expenses	12,646,081	11,918,997
Accounts payable and accrued expenses - related party	96,905	205,360
Accrued interest	82,500	275,547
Lines of credit	5,354,752	5,758,737
Convertible notes payable, net of unamortized discount of $0 and $258,938, respectively	0	100,000
Derivative liability - convertible note	0	54,293
Notes payable	1,059,677	2,158,417
Notes payable - related party	10,796	10,912
Loans payable - related party	12,684	12,821
Taxes payable	426,377	126,855
Operating lease liability, current portion	169,500	167,393
Financing lease liability, current portion	128,529	97,097
Other current liabilities	2,597,498	862,440
TOTAL CURRENT LIABILITIES	22,585,299	21,748,869
Share settled debt obligation	0	1,554,590
Notes payable - long term portion	3,160,277	2,859,570
Operating lease liability, net of current portion	628,179	653,673
Financing lease liability, net of current portion	262,103	206,407
Other liabilities	321,367	1,358,803
TOTAL LIABILITIES	26,957,225	28,381,912
Commitments and Contingencies (see Note 14)	0	0
Preferred stock, $0.001 par value; 100,000,000 shares authorized:
Series A preferred stock, stated value $1,000 per share, 6,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2023 and December 31, 2022; liquidation preference of $372,414	372,414	372,414
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value; 300,000,000 shares authorized; 13,068,693 shares issued and 12,982,196 outstanding as of September 30, 2023, and 10,605,412 shares issued and 10,589,915 outstanding as of December 31, 2022	13,069	10,606
Additional paid-in capital	117,791,721	112,205,952
Subscription receivable	(50,000)	(4,750,108)
Treasury stock, at cost, 86,497 and 15,497 shares as of September 30, 2023 and December 31, 2022, respectively	(916,958)	(816,707)
Accumulated deficit	(71,038,463)	(66,232,813)
Accumulated other comprehensive loss	(1,603,629)	(1,132,635)
TOTAL STOCKHOLDERS' EQUITY	44,195,740	39,284,295
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY	$ 71,525,379	$ 68,038,621

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Convertible notes payable, net of unamortized discount	$ 0	$ 258,938
Preferred stock, shares par value	$ 0.001
Preferred stock, shares authorized	100,000,000	100,000,000
Common stock, shares par value	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	13,068,693	10,605,412
Common stock, shares outstanding	12,982,196	10,589,915
Treasury stock	86,497	15,497
Series A Preferred Stock [Member]
Preferred stock, shares par value	$ 1,000	$ 1,000
Preferred stock, shares authorized	6,000,000	6,000,000
Preferred Stock, Share Issued	0	0
Preferred Stock,Shares Outstanding	0	0
Preferred Stock, liquidation preference	$ 372,414	$ 372,414

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited)
REVENUE	$ 12,823,797	$ 12,016,098	$ 37,537,003	$ 38,296,402
COST OF GOODS SOLD	11,609,039	10,232,201	34,418,334	32,774,701
GROSS PROFIT	1,214,758	1,783,897	3,118,669	5,521,701
OPERATING EXPENSES
General and administrative expenses	2,573,414	1,335,033	6,662,579	3,192,137
Salaries and wages	1,252,680	576,118	3,279,803	1,675,068
Sales and marketing expenses	157,435	103,979	942,759	496,371
Depreciation and amortization expense	248,530	112,879	478,466	334,349
TOTAL OPERATING EXPENSES	4,232,059	2,128,009	11,363,607	5,697,925
LOSS FROM OPERATIONS	(3,017,301)	(344,112)	(8,244,938)	(176,224)
OTHER INCOME (EXPENSE)
Other income (expense), net	14,404	(5,431)	(14,330)	(60,558)
Interest expense	(151,274)	(517,660)	(529,782)	(1,722,750)
Interest income	110,596	55,715	555,281	180,813
Non-cash interest expense	0	(295,846)	0	(772,180)
Gain (loss) on equity investments, net	(1,093)	359	2,876	415
Gain on extinguishment of debt	706	0	1,911,476	1,004,124
Change in fair value of derivative liability	0	628	3,384	(6,627)
Bargain purchase gain	0	0	1,633,842	0
Foreign currency transaction, net	(371,115)	(468,362)	(108,406)	(984,401)
TOTAL OTHER INCOME (EXPENSE), NET	(397,776)	(1,230,597)	3,454,341	(2,361,164)
LOSS BEFORE INCOME TAXES	(3,415,077)	(1,574,709)	(4,790,597)	(2,537,388)
INCOME TAX EXPENSE	65,873	(398,066)	0	(473,296)
NET LOSS	(3,349,204)	(1,972,775)	(4,790,597)	(3,010,684)
Deemed dividend on issuance of warrants	0	0	0	(5,788,493)
Deemed dividend on downround of warrants	(15,053)	0	(15,053)	(8,480,379)
Deemed dividend on downround of preferred stock	0	0	0	(8,189,515)
Deemed dividend on preferred stock	0	(19,607)	0	(372,414)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	(3,364,257)	(1,992,382)	(4,805,650)	(25,841,485)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment, net	(890,645)	(1,029,141)	(470,994)	(2,463,245)
TOTAL COMPREHENSIVE LOSS	$ (4,254,902)	$ (3,021,523)	$ (5,276,644)	$ (28,304,730)
BASIC NET LOSS PER SHARE	$ (0.27)	$ (1.93)	$ (0.42)	$ (29.35)
DILUTED NET LOSS PER SHARE	$ (0.27)	$ (1.93)	$ (0.42)	$ (29.35)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic	12,585,479	1,032,275	11,346,071	880,542
Diluted	12,585,479	1,032,275	11,346,071	880,542

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) AND MEZZANINE EQUITY (Unaudited) - USD ($)	Total	Preferred Stock	Common Stock	Treasury Stocks	Additional Paid-In Capital	Subscription Receivable	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Income (Loss)
Balance, shares at Dec. 31, 2021			701,780	15,497
Balance, amount at Dec. 31, 2021	$ 4,379,463	$ 0	$ 702	$ (816,707)	$ 39,692,595	$ 0	$ (34,345,506)	$ (151,621)
Foreign currency translation adjustment, net	(405,229)	0	0	0	0	0	0	(405,229)
Adoption of ASU 2020-06	(240,752)	$ 0	0	0	(294,000)	0	53,248	0
Issuance of Series A preferred stock, net of issuance costs of $547,700, shares		6,000
Issuance of Series A preferred stock, net of issuance costs of $547,700, amount	0	$ 5,452,300	$ 0	0	0	0	0	0
Conversion of notes payable into shares of common stock, shares			9,520
Conversion of notes payable into shares of common stock, amount	973,420	0	$ 10	0	973,410	0	0	0
Cashless exercise of warrants, shares			33,179
Cashless exercise of warrants, amount	0	0	$ 33	0	(829)	0	0	0
Net income	203,347	$ 0	$ 0	$ 0	0	0	203,347	0
Balance, shares at Mar. 31, 2022		6,000	744,479	15,497
Balance, amount at Mar. 31, 2022	4,910,249	$ 5,452,300	$ 745	$ (816,707)	40,371,176	0	(34,088,911)	(556,850)
Balance, shares at Dec. 31, 2021			701,780	15,497
Balance, amount at Dec. 31, 2021	4,379,463	$ 0	$ 702	$ (816,707)	39,692,595	0	(34,345,506)	(151,621)
Net income	(3,010,684)
Forgiveness of related party debt	557,361
Deemed dividend on preferred stock	(372,414)
Balance, shares at Sep. 30, 2022		1,500	1,054,616	15,497
Balance, amount at Sep. 30, 2022	3,443,833	$ 1,712,035	$ 1,055	$ (816,707)	61,218,805	0	(54,345,250)	(2,614,866)
Balance, shares at Mar. 31, 2022		6,000	744,479	15,497
Balance, amount at Mar. 31, 2022	4,910,249	$ 5,452,300	$ 745	$ (816,707)	40,371,176	0	(34,088,911)	(556,850)
Foreign currency translation adjustment, net	(1,028,875)	0	$ 0	0	0	0	0	(1,028,875)
Cashless exercise of warrants, shares			18,213
Cashless exercise of warrants, amount	0	0	$ 18	0	(18)	0	0	0
Net income	(1,241,256)	$ 0	$ 0	0	0	0	(1,241,256)	0
Conversion of Series A preferred stock, shares		(3,034)	195,689
Conversion of Series A preferred stock, amount	2,427,693	$ (2,427,693)	$ 196	0	2,427,497	0	0	0
Conversion of convertible debt, shares			1,574
Conversion of convertible debt, amount	38,144	0	$ 2	0	38,142	0	0	0
Forgiveness of related party debt	0	0	0	0	0	0	0	0
Restricted stock issued to a consultant	0	0	0	0	0	0	0	0
Deemed dividend upon downround of preferred stock and warrants	0	0	0	0	16,669,894	0	(16,669,894)	0
Deemed dividend on preferred stock	0	0	0	0	352,807	0	(352,807)	0
Payment of deemed dividend on preferred stock	0	0	0	0	0	0	0	0
Stock-based compensation	24,101	$ 0	$ 0	$ 0	24,101	0	0	0
Balance, shares at Jun. 30, 2022		2,966	959,954	15,497
Balance, amount at Jun. 30, 2022	5,130,056	$ 3,024,607	$ 961	$ (816,707)	59,883,599	0	(52,352,868)	(1,585,725)
Foreign currency translation adjustment, net	(1,029,141)	0	0	0	0	0	0	(1,029,141)
Net income	(1,972,775)	$ 0	$ 0	0	0	0	(1,972,775)	0
Conversion of Series A preferred stock, shares		(1,466)	94,362
Conversion of Series A preferred stock, amount	1,332,180	$ (1,332,179)	$ 94	0	1,332,086	0	0	0
Deemed dividend on preferred stock	(19,607)	19,607	$ 0	0	0	0	(19,607)	0
Stock-based compensation, shares			300
Stock-based compensation, amount	3,120	$ 0	$ 0	$ 0	3,120	0	0	0
Balance, shares at Sep. 30, 2022		1,500	1,054,616	15,497
Balance, amount at Sep. 30, 2022	3,443,833	$ 1,712,035	$ 1,055	$ (816,707)	61,218,805	0	(54,345,250)	(2,614,866)
Balance, shares at Dec. 31, 2022			10,605,412	15,497
Balance, amount at Dec. 31, 2022	39,284,295	372,414	$ 10,606	$ (816,707)	112,205,952	(4,750,108)	(66,232,813)	(1,132,635)
Foreign currency translation adjustment, net	336,463	0	0	0	0	0	0	336,463
Net income	(459,863)	0	0	0	0	0	(459,863)	0
Proceeds from sale of common stock	4,750,000	0	$ 0	0	0	4,750,000	0	0
Shares issued in lieu of cash, shares			15,258
Shares issued in lieu of cash, amount	96,888	0	$ 15	$ 0	96,873	0	0	0
Balance, shares at Mar. 31, 2023			10,620,670	15,497
Balance, amount at Mar. 31, 2023	44,007,783	372,414	$ 10,621	$ (816,707)	112,302,825	(108)	(66,692,676)	(796,172)
Balance, shares at Dec. 31, 2022			10,605,412	15,497
Balance, amount at Dec. 31, 2022	39,284,295	372,414	$ 10,606	$ (816,707)	112,205,952	(4,750,108)	(66,232,813)	(1,132,635)
Net income	(4,790,597)
Forgiveness of related party debt	0
Deemed dividend on preferred stock	0
Balance, shares at Sep. 30, 2023			13,068,693	86,497
Balance, amount at Sep. 30, 2023	44,195,740	372,414	$ 13,069	$ (916,958)	117,791,721	(50,000)	(71,038,463)	(1,603,629)
Balance, shares at Mar. 31, 2023			10,620,670	15,497
Balance, amount at Mar. 31, 2023	44,007,783	372,414	$ 10,621	$ (816,707)	112,302,825	(108)	(66,692,676)	(796,172)
Foreign currency translation adjustment, net	83,188	0	0	0	0	0	0	83,188
Net income	(981,530)	0	$ 0	0	0	0	(981,530)	0
Stock-based compensation, shares			185,000
Stock-based compensation, amount	104,869	0	$ 185	0	104,684	0	0	0
Proceeds from sale of common stock	0	0	$ 0	0	0	0	0	0
Shares issued for purchase of customer base, shares			99,710
Shares issued for purchase of customer base, amount	316,081	0	$ 100	0	315,981	0	0	0
Shares issued for purchase of Cana, shares			46,377
Shares issued for purchase of Cana, amount	138,667	0	$ 46	$ 0	138,621	0	0	0
Balance, shares at Jun. 30, 2023			10,951,757	15,497
Balance, amount at Jun. 30, 2023	43,669,058	372,414	$ 10,952	$ (816,707)	112,862,111	(108)	(67,674,206)	(712,984)
Foreign currency translation adjustment, net	(890,645)	0	0	0	0	0	0	(890,645)
Net income	(3,349,204)	0	0	0	0	0	(3,349,204)	0
Deemed dividend upon downround of preferred stock and warrants	0	0	0	0	15,053	0	(15,053)	0
Deemed dividend on preferred stock	0
Stock-based compensation	109,636	0	$ 0	$ 0	109,636	0	0	0
Proceeds from sale of common stock, net of financing fees of $442,870, shares			2,116,936
Proceeds from sale of common stock, net of financing fees of $442,870, amount	4,757,146		$ 2,117		4,804,921	(49,892)
Repurchase of treasury stock, shares				71,000
Repurchase of treasury stock, amount	(100,251)	0	$ 0	$ (100,251)	0	0
Balance, shares at Sep. 30, 2023			13,068,693	86,497
Balance, amount at Sep. 30, 2023	$ 44,195,740	$ 372,414	$ 13,069	$ (916,958)	$ 117,791,721	$ (50,000)	$ (71,038,463)	$ (1,603,629)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$ (4,790,597)	$ (3,010,684)
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities:
Depreciation and amortization expense	375,918	273,415
Amortization of right-of-use assets	102,549	60,934
Amortization of debt discounts and accretion of debt	0	772,180
Bad debt expense	836,300	0
Provisions for extraordinary tax charges	579,387	0
Shares issued in lieu of cash	96,888	0
Lease expense	178,893	158,406
Interest on finance leases	20,629	11,645
Stock-based compensation	214,505	27,221
Deferred income taxes	(1,923)	490,460
Gain on extinguishment of debt	(1,911,476)	(1,004,124)
Bargain purchase gain	(1,633,842)	0
Change in fair value of the derivative liability	(3,384)	6,627
Gain on net change in fair value of equity investments	(2,876)	(415)
Other income	(928)	0
Changes in assets and liabilities:
Accounts receivable	(1,960,236)	(2,255,383)
Accounts receivable - related party	(416,814)	481,941
Inventory	(2,299,829)	(1,392,884)
Prepaid expenses and other assets	(1,856,642)	117,498
Prepaid expenses and other current assets - related party	(2,312,324)	(1,413,967)
Accounts payable and accrued expenses	206,746	1,692,704
Accounts payable and accrued expenses - related party	(112,233)	(216,456)
Accrued interest	(194,361)	881,347
Lease liabilities	(179,081)	(158,788)
Taxes payable	307,357	(101,909)
Other current liabilities	(783,174)	27,900
Other liabilities	(1,047,178)	0
NET CASH USED IN OPERATING ACTIVITIES	(16,587,726)	(4,552,332)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from loan receivable	609,455	267,205
Cash paid for the acquisition of Cana	(5,230,593)	0
Loan receivable - related party	(168,469)	0
Sale of fixed assets	0	12,859
Advances for building's acquisition	(1,665,000)	0
Purchase of intangible assets	(2,678,167)	(311,859)
Purchase of property and equipment	(1,266,490)	(37,137)
NET CASH USED IN INVESTING ACTIVITIES	(10,399,264)	(68,932)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of convertible note payable	(100,000)	0
Payment of note payable	(1,494,867)	(2,454,143)
Proceeds from note payable	1,059,300	490,365
Payment of related party loan	0	(557,361)
Proceeds from related party loan	0	973,424
Payment of lines of credit	(14,569,517)	(16,348,941)
Proceeds from lines of credit	14,218,787	17,206,099
Proceeds from issuance of Series A Preferred Stock	0	5,452,300
Proceeds from the issuance of common stock	9,950,037	0
Financing fees from the sale of common stock	(442,892)	0
Payments of finance lease liability	(118,847)	(71,172)
Payments of financing fees	0	(212,728)
Payments for purchase of treasury stock	(100,251)	0
NET CASH PROVIDED BY FINANCING ACTIVITIES	8,401,750	4,477,843
Effect of exchange rate changes on cash	196,161	169,318
NET CHANGE IN CASH	(18,389,079)	25,898
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	20,749,683	286,487
CASH AND CASH EQUIVALENTS AT END OF PERIOD	2,360,604	312,385
Cash paid during the year:
Interest	371,846	317,449
Income tax	$ 0	0
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Common shares issued for acquisition of customer base	316,081
Common shares issued for acquisition of Cana	138,667
Conversion of notes payable to common stock	$ 0	$ 973,420
Conversion of convertible notes payable to common stock		959,025
Deemed dividend on warrants upon conversion of convertible debt	0	$ 5,788,493
Deemed dividend on preferred stock and warrants upon trigger of downround feature	0	16,669,894
Deemed dividend upon cumulative dividend on preferred stock	0	372,414
Conversion of Series A preferred stock	0	2,427,693
Conversion of convertible debt	$ 0	$ 38,144

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2023

BASIS OF PRESENTATION

BASIS OF PRESENTATION

NOTE 1 – BASIS OF PRESENTATION

The terms “COSM,” “we,” “the Company,” “Group” and “us” as used in this report refer to Cosmos Health, Inc. The accompanying unaudited condensed consolidated balance sheet as of September 30, 2023 and unaudited condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September30, 2023 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management of COSM, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or any other period. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the financial statements for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (“Form 10-K”). The accompanying condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements filed in our Form 10-K and is included for comparison purposes in the accompanying balance sheet.

Going Concern

The Company’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplates the continuation of the Company as a going concern. For the nine-month period September 30, 2023, the Company had revenue of $37,537,003, net loss of $4,790,597 and net cash used in operations of $16,587,726. Additionally, as of September 30, 2023, the Company had positive working capital of $23,901,453, an accumulated deficit of $71,038,463, and stockholders’ equity of $44,195,740. 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 Company’s revenues are not able to sustain its operations, and concerns exist regarding the Company’s ability to meet its obligations as they become due. The Company is subject to a number of risks to those of smaller commercial companies, including dependence on key individuals and products, the difficulties inherent in the development of a commercial market, the need to obtain additional capital, competition from larger companies, and other pharmaceutical and health care companies.

Management evaluated the above conditions which raise substantial doubt about the Company’s ability to continue as a going concern to determine if it can meet its obligations for the subsequent twelve months from the date of this filing. Management considered its ability to access future capital, curtail expenses if needed, expand product lines, and acquire new products.

Management’s plans include expansion of brand name products to the market, expanding the current product portfolio, and evaluating acquisition targets to expand distribution. Furthermore, the Company intends to vertically integrate the supply chain distribution network. Finally, the Company plans to access the capital markets further in order to raise additional funds through equity offerings as well as receive proceeds from the exercise of its existing warrants during the following 3 months. 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.

Considering the above, management is of the view that substantial doubt exists for the Company’s ability to continue as a going concern. 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.

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ORGANIZATION AND NATURE OF THE BUSINESS

9 Months Ended

Sep. 30, 2023

ORGANIZATION AND NATURE OF THE BUSINESS

ORGANIZATION AND NATURE OF THE BUSINESS

NOTE 2 – ORGANIZATION AND NATURE OF THE BUSINESS

Cosmos Health Inc. and its subsidiaries are an international healthcare group headquartered in Thessaloniki, Greece. The Group is engaged in the nutraceuticals sector through its own proprietary lines of products “Sky Premium Life” and “Mediterranation”. The Company is operating in the pharmaceutical sector as well, through the provision of a broad line of branded generics and OTC medications. In addition, the group is involved in the healthcare distribution sector through its subsidiaries in Greece and the UK, serving retail pharmacies and wholesale distributors. The Company is strategically focusing on the research and development (“R&D”) of novel patented nutraceuticals (Intellectual Property) and specialized root extracts as well as on the R&D of proprietary complex generics and innovative OTC products. The Company has developed a global distribution platform and is currently expanding throughout Europe, Asia and North America. The Company has offices and distribution centers in Thessaloniki and Athens, Greece and Harlow, UK.

The Company was incorporated in the State of Nevada under the name Prime Estates and Developments, Inc. on July 21, 2009, and on November 29, 2022, we changed our name to Cosmos Health Inc. Through its acquisition of Amplerissimo Ltd, on September 27, 2013, the Company changed its principal activities into trading of products, providing representation, and provision of consulting services to various sectors. On August 1, 2014, the Company formed SkyPharm S.A., a Greek Company (“SkyPharm”), a subsidiary that focuses on the trading, sourcing and export of nutraceutical and pharmaceutical products. In February 2017, the Company acquired Decahedron Ltd., a UK Company (“Decahedron”) which is a fully licensed second-generation wholesaler specializing in imports and exports of generics and OTC pharmaceutical products within the European Economic Area ( the “EEA”) and distributor of Sky Premium Life nutraceutical products in the UK. On December 19, 2018, the Company acquired Cosmofarm, a pharmaceutical wholesaler specializing in the distribution and export of pharmaceutical products through its extensive pharmacies network.

Acquisition Accounting

ZipDoctor

On April 3, 2023, the Company completed the acquisition of ZipDoctor Inc. (“ZipDoctor”), a telehealth company for a total sum of $150,000 in cash and $8,788 in fees. The Company accounted for the acquisition as an asset acquisition in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations, ("ASC 805") and recorded $158,788 as an intangible asset related to the technology platform acquired.

Bikas

On June 15, 2023, Cosmos Health Inc. entered into an Assignment and Assumption Agreement (the “Agreement”) with Ioannis Bikas O.E., a Greek Company, (“Bikas”). Bikas is owner of a pharmaceutical distribution network in Greece and agreed to sell to the Company their distribution network and customer base. The purchase price of the network was €100,000 ($109,330) of cash, and €300,000 ($316,081) of the Company’s stock. The Company issued 99,710 shares of common stock related to the acquisition of the customer base, based on the fair value of the stock on acquisition date. The Company accounted for the acquisition as an asset acquisition in accordance with ASC 805 and recorded $425,411 as an intangible asset related to the customer base acquired.

Buildings Acquisitions

On April 24, 2023, the Company purchased a building for a total sum of $1,054,872 in cash. The Company accounted for the acquisition as an asset acquisition in accordance with ASC 805 and recorded the cost of the building as "Property, plant and equipment" on the condensed consolidated balance sheets.

On January 6, 2023, the Company agreed to purchase land and building located in Montreal, Canada from a third-party vendor. The total purchase price amounts to $3,950,000 and the closing date of the agreement based on the amendment signed on July 19, 2023, is December 31, 2023. As of September 30, 2023, the Company has made prepayments of $2,000,020 classified as "Advances for building's acquisition” on the Company’s condensed consolidated balance sheets.

.

Cana

On June 30, 2023, the Company acquired CANA Pharmaceutical Laboratories, S.A. (“Cana”) for €800,000 ($873,600) in cash and 46,377 shares of common stock, with fair value of $138,667 as of the date of acquisition. Moreover, on February 28, 2023, the Company had signed a Secured Promissory Note with Cana, whereby Cana borrowed the sum of €4,100,000 ($4,457,520), included in the total consideration of $5,469,787. The Company accounted for the acquisition as a business acquisition in accordance with ASC 805. The fair value of Cana assets acquired, and liabilities assumed was based upon management’s estimates assisted by an independent third-party valuation firm. The fixed assets of Cana (which included land, building & machinery) were valued as of December 31, 2022 and the Company believes that nothing has materially changed between such date and the acquisition date (June 30, 2023). The following table summarizes the preliminary allocation of purchase price of the acquisition:

Consideration
Cash	$	5,331,120
Fair value of common stock issued		138,667
Fair value of total consideration transferred	$	5,469,787
Recognized amounts of identifiable assets acquired
Financial assets	$	1,796,911
Inventory		297,340
Property, plant and equipment		7,682,411
Identifiable intangible assets		562,200
Financial liabilities		(3,235,233	)
Total identifiable net assets	$	7,103,629
Bargain purchase gain	$	1,633,842

Revenue for the 3- month period ended September 30, 2023	$	91,056
Loss for the 3- month period ended September 30, 2023	$	(604,790	)

During the prior year period, Cana had minimal operations as it was in financial difficulties and seeking for an investor.

Basis of Financial Statement Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Principles of Consolidation

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

Transactions in and Translations of Foreign Currency

The functional currency for the Greek subsidiaries of the Company (CANA Laboratories, Cosmofarm S.A. and SkyPharm SA) is EURO (€) and for the UK subsidiary (Decahedron Ltd) is GBP (£). ZipDoctor Inc is a U.S. based entity. As a result, the financial statements of the subsidiaries (except for ZipDoctor Inc) have been translated from the local currency into U.S. dollars using (i) year-end exchange rates for balance sheet accounts, and (ii) average exchange rates for the reporting period for all income statements accounts. Foreign currency translations gains and losses are reported as a separate component of the condensed consolidated statements of changes in stockholders’ equity and mezzanine equity.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP 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.

The Effects of War in the Ukraine

On February 24, 2022, Russian forces launched significant military action against Ukraine. There continues to be sustained conflict and disruption in the region, which is expected to endure for the foreseeable future. We do not conduct any commercial transactions with either Ukraine or Russia and the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. Such political issues and conflicts could have a material adverse effect on our results of operations and financial condition if they escalate in areas in which we do business. In addition, changes in and adverse actions by governments in foreign markets in which we do business could have a material adverse effect on our results of operations and financial condition.

Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments, which amends the requirement on the measurement and recognition of expected credit losses for financial assets held. Furthermore, amendments ASU 2019-10 and ASU 2019-11 provided additional clarification for implementing ASU 2016-13. ASU 2016-13 is effective for the Company beginning January 1, 2023, with early adoption permitted. The Company adopted the standard on January 1, 2023, and the standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures. The Company is exposed to credit losses primarily through sales to its customers and the loans that it has provided. The Company assesses each customer’s/ borrower ability to pay, and a credit loss estimate by conducting a credit review which includes consideration of established credit rating, or an internal assessment of the customer’s creditworthiness based on an analysis of their payment history when a credit rating is not available. The Company monitors credit exposure through active review of customer balances. The Company’s expected loss methodology for accounts receivable is developed through consideration of factors including, but not limited to, historical collection experience, current customer credit ratings, current customer financial condition, current and future economic and market conditions, and age of the receivables. Charges related to credit losses are included in “General and administrative expenses” and are recorded in the period that the outstanding receivables are determined to be doubtful. Account balances are written-off against the allowance when they are deemed uncollectible.

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.

The Company maintains bank accounts in the United States denominated in U.S. Dollars, in Greece denominated in Euros, U.S. Dollars and Great Britain Pounds (British Pounds Sterling), and in Bulgaria denominated in Euros. The Company also maintains bank accounts in the United Kingdom, denominated in Euros and Great Britain Pounds (British Pounds Sterling).

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. As of September 30, 2023 and December 31, 2022, the Company’s allowance for doubtful accounts was $7,735,425 and $6,987,301, respectively.

Tax Receivable

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 September 30, 2023 and December 31, 2022, the Company had a VAT net prepaid expenses balance of $456,788 and VAT, net payable $79,373, respectively, recorded in the condensed consolidated balance sheet as “Prepaid expenses and other current assets” and “Accounts payable and accrued expenses”, respectively.

Inventory

Inventory is stated at the lower-of-cost or net realizable value using the weighted average FIFO method. Inventory consists primarily of finished goods and packaging materials, i.e., packaged pharmaceutical products and the wrappers and containers they are sold in. A periodic inventory system is maintained by 100% count. 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, Plant and Equipment, net

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated 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
Buildings	25-30 years
Vehicles	6 years
Machinery	20 years
Furniture, fixtures and equipment	5–10 years
Computers and software	3-5 years

Depreciation expense was $124,910 and $83,214 for the three months ended September 30, 2023 and 2022, respectively and $237,479 and $248,670 for the nine months ended September 30, 2023 and 2022, respectively.

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. First, under step 0, we determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Following, if step 0 fails, 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 has estimated a useful life of 10 years for its pharmaceutical and nutraceutical product licenses, customers base, and IT platform. The Company has also estimated a useful life of 5 years for its tradenames. 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 September30, 2023, no revision to the remaining amortization period of the intangible assets was made.

Amortization expense was $88,168 and $36,982 for the three months ended September 30, 2023 and 2022, respectively and $138,438 and $53,389 for the nine months ended September 30, 2023 and 2022, respectively.

Impairment of Long-Lived Assets

In accordance with ASC 360-10, Long-lived Assets, property, plant 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.

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 will record its share in the earnings of the investee and will include it within the condensed 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 (see Note 3).

Investments in Equity Securities

Investments in equity securities are accounted for at fair value with changes in fair value recognized in net income (loss). 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 condensed 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 condensed 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 September 30, 2023, investments consisted of (i) 3,000,000 shares, which traded at a closing price of $0 per share or a value of $0 of ICC International Cannabis Corp and (ii) 16,666 shares which traded at a closing price of $0.53 per share or value of $9,419 of National Bank of Greece. Additionally, the Company has $8,113 in equity securities of Pancreta Bank, which are revalued annually.  

Fair Value Measurement

The Company applies ASC Topic 820, Fair Value Measurement, (“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 tables presents assets that are measured and recognized at fair value as of September 30, 2023 and December 31, 2022, on a recurring basis:

	September 30, 2023						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – Pancreta Bank	$	8,113		-		-	$	8,113
Marketable securities – National Bank of Greece		9,419		-		-		9,419
	$	17,532					$	17,532

	December 31, 2022						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – Pancreta Bank	$	8,200		-		-	$	8,200
Marketable securities – National Bank of Greece		6,681		-		-		6,681
	$	14,881					$	14,881

In addition, 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.

Derivative Instruments

Derivative financial instruments are recorded in the accompanying condensed consolidated balance sheets at fair value in accordance with ASC Topic 815, Derivatives and Hedging. When the Company enters into a financial instrument such as a debt or equity agreement (the “host contract”), the Company assesses whether the economic characteristics of any embedded features are clearly and closely related to the primary economic characteristics of the remainder of the host contract. When it is determined that (i) an embedded feature possesses economic characteristics that are not clearly and closely related to the primary economic characteristics of the host contract, and (ii) a separate, stand-alone instrument with the same terms would meet the definition of a financial derivative instrument, then the embedded feature is bifurcated from the host contract and accounted for as a derivative instrument. The estimated fair value of the derivative feature is recorded in the accompanying condensed consolidated balance sheets separately from the carrying value of the host contract. Subsequent changes in the estimated fair value of derivatives are recorded as a gain or loss in the Company’s condensed consolidated statements of operations and comprehensive loss.

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 advances balance and credit the Company’s revenues.

Revenue Recognition

In accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), the Company uses 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, including the constraint on variable consideration, (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 transfer of the product to the customer.

Commencing from January 1, 2023, and pursuant to the agreement with Medihelm, the exclusive distributor of the Company’s own proprietary line of nutraceuticals, the Company considers the transaction price to be variable and records an estimate of the transaction price, subject to the constraint for variable consideration. The Company is basing the change in transaction price with the exclusive distributor through assessment of significant overdue receivables from the exclusive distributor, which the Company reassesses each reporting period. Through this assessment, the Company applied the “expected value” model under ASC 606-10-32-5 and had applied specific constraints to revenue due from the customer at the end of each reporting period. Following the application of the “expected value” model, the Company deferred an amount of $317,129 and recorded it against the sales to Medihelm for the nine-month period ended September 30, 2023. The Company does not consider that sales to any other customer include a variable component as of September 30, 2023.

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC Topic 718, Compensation - Stock Compensation (“ASC 718”) and Staff Accounting Bulletin No. 107 (“SAB 107”) 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-Improvements to Nonemployee Share-Based Payment Accounting.”

Foreign Currency Translation and Transactions

Assets and liabilities of all foreign operations are translated at period-end rates of exchange, and amounts included in the accompanying condensed statements of operations and comprehensive income (loss) are translated at the average rates of exchange for the period. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders’ equity (deficit) 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 other income (expense) in the condensed consolidated statements of operations and comprehensive income (loss).

Income Taxes

The Company accounts for income taxes under the asset and liability method, as required by the accounting standard for income taxes ASC Topic 740, Income Taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company is liable for income taxes in Greece and the United Kingdom The corporate income tax rate is 22% in Greece and 19% in the United Kingdom. Losses may also be subject to limitation under certain rules regarding change of ownership.

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

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 judgments 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.

Basic and Diluted Net 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.

The following table summarizes potential common shares that were excluded as their effect is anti-dilutive:

	September 30, 2023		September 30, 2022
Warrants		6,124,412		434,501
Options		-		-
Convertible Notes		-		15,535
Total		6,124,412		450,036

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.

Reclassifications to Prior Period Financial Statements and Adjustments

Certain reclassifications have been made in the Company’s financial statements of the prior period to correct an immaterial classification error.  As of December 31, 2022, $322,010 was reclassified from “Other assets” to “Accounts receivable, net”.

Recent Accounting Pronouncements

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 condensed consolidated financial statements. 

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EQUITY METHOD INVESTMENTS

9 Months Ended

Sep. 30, 2023

EQUITY METHOD INVESTMENTS

EQUITY METHOD INVESTMENTS

NOTE 3 – EQUITY METHOD INVESTMENTS

Distribution and Equity Agreement

On March 19, 2018, the Company entered into a 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 intended to await further clarification from the U.S. Government on cannabis regulation prior to determining whether to enter the domestic market.

The above 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 failed to meet certain performance milestones. The Company was 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 was 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.

The Distribution and Equity Acquisition Agreement was 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. On March 20, 2023, the Company sent a termination notice, to Marathon, which became effective on April 19, 2023 as a result of Marathon’s failure to satisfy these conditions. The Company had accounted for its obligation to issue a variable number of the Company’s Common Shares as Share-settled debt obligation in accordance with ASC Topic 480, Distinguishing Liabilities from Equity ("ASC 480"), which was measured at fair value or the settlement amount of $1,554,590 (CAD $2 million). Due to termination of the Equity agreement, the Company recorded a gain on extinguishment of debt of $1,554,590 due to the write-off of the share settled debt obligation, for the nine-month period ended September 30, 2023.

CosmoFarmacy LP

In September 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, and OTC 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 ($163,080) which was later increased to EUR 500,000 ($543,600). 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 ($163,080) 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 September 30, 2023 and December 31, 2022, was $158,760 and $160,470, respectively, and is included in “Other assets” on the Company’s condensed consolidated balance sheets. 

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PROPERTY, PLANT AND EQUIPMENT, NET

9 Months Ended

Sep. 30, 2023

PROPERTY, PLANT AND EQUIPMENT, NET

PROPERTY, PLANT AND EQUIPMENT, NET

NOTE 4 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consists of the following:

	September 30, 2023			December 31, 2022
Land	$	3,397,575		$	-
Buildings and improvements		4,761,344			-
Leasehold improvements		3,482			502,882
Vehicles		264,355			107,976
Furniture, fixtures and equipment		2,571,063			1,945,207
Computers and software		143,760			138,783
		11,141,579			2,694,848
Less: Accumulated depreciation and amortization		(891,797	)		(877,823	)
Total	$	10,249,782		$	1,817,025

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GOODWILL AND INTANGIBLE ASSETS, NET

9 Months Ended

Sep. 30, 2023

GOODWILL AND INTANGIBLE ASSETS, NET

GOODWILL AND INTANGIBLE ASSETS

NOTE 5 – GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill and intangible assets, net consist of the following at:

	September 30, 2023			December 31, 2022
License	$	3,356,913		$	643,204
Trade name / mark		392,197			36,997
Customer base		602,204			176,793
		4,351,314			856,994
Less: Accumulated amortization		(335,498	)		(199,777	)
Subtotal		4,015,816			657,217
Goodwill		49,697			49,697
Total	$	4,065,513		$	706,914

At September 30, 2023, the estimated aggregate amortization expense for intangible assets subject to amortization for each of the five succeeding fiscal years is as follows:

Year	Amount
2023	$	103,193
2024		398,636
2025		398,709
2026		398,709
2027		398,709
Thereafter		1,962,661
Total amortization	$	3,660,616

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LOAN RECEIVABLE

9 Months Ended

Sep. 30, 2023

LOAN RECEIVABLE

LOAN RECEIVABLE

NOTE 6 – LOAN RECEIVABLE

On October 30, 2021, the Company entered into an agreement for a ten-year loan with Medihelm S.A. to memorialize €4,284,521 ($4,849,221) of the prepayments the Company had made. The prepayments to Medihelm S.A. had been made in accordance with the parallel export business, through which Medihelm supplied and would supply SkyPharm S.A. with branded pharmaceuticals. This business is no longer in place for the Company and thus the Company entered into this agreement with Medihelm S.A. in order for the outstanding amount to be settled. Interest is calculated at a rate of 5.5% per annum on a 360-day basis. Under the terms of the agreement, the Company is to receive 120 equal payments over the term of the loan. As of December 31, 2022, the Company had a short-term receivable balance of $377,038 and a long-term receivable balance of $3,792,034 under this loan. During the nine months ended September 30, 2023, the Company received €262,507 ($277,838) in principal payments such that as of September 30, 2023, the Company had a short-term receivable balance of $388,693 and a long-term receivable balance of $3,458,115 under this loan. The Company also received €132,581 ($140,324) in interest payments during the nine months ended September 30, 2023.

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INCOME TAXES

9 Months Ended

Sep. 30, 2023

INCOME TAXES

INCOME TAXES

NOTE 7 – INCOME TAXES

The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company had no U.S. taxable income for the nine months ended September 30, 2023 and 2022.

The Company’s Greece subsidiaries are governed by the income tax laws of Greece. The corporate tax rate in Greece is 22% on income reported in the statutory financial statements after appropriate tax adjustments.

The Company’s United Kingdom subsidiaries are governed by the income tax laws of the United Kingdom. The corporate tax rate in the United Kingdom is 25% on income reported in the statutory financial statements after appropriate tax adjustments.

As of September 30, 2023 and 2022, the Company’s effective tax rate differs from the U.S. federal statutory tax rate primarily due to a valuation allowance recorded against net deferred tax assets in in the United States and the United Kingdom.

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. As of September 30, 2023 and December 31, 2022, the Company has maintained a valuation allowance against all net deferred tax assets in the United States, Greece, and the UK.

For the three and nine months ended September 30, 2023, and 2022, the Company has recorded tax benefit (expense) in any jurisdiction where it is subject to income tax, in the amount of $0 and $473,296 respectively, on the condensed consolidated statements of operation and comprehensive loss.

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CAPITAL STRUCTURE

9 Months Ended

Sep. 30, 2023

CAPITAL STRUCTURE

CAPITAL STRUCTURE

NOTE 8 – CAPITAL STRUCTURE

Preferred Stock

The Company is authorized to issue 100 million shares of preferred stock, of which 6,000,000 are designated as Series A convertible preferred stock. The preferred stock has a liquidation preference over the common stock and is non-voting. As of September 30, 2023 and December 31, 2022, all Series A convertible preferred stock had been converted and no preferred shares were issued and outstanding.

Major Rights & Preferences of Series A Preferred Stock

On and effective October 4, 2021, the Company amended and restated its articles of incorporation (the “Amended and Restated Articles”) and filed a certificate of designation (the “COD”) for its Series A Preferred Stock (the “Series A Preferred Stock”) with the State of Nevada. The Amended and Restated Articles allow the Company’s Board of Directors the authority to authorize the issuance of preferred stock from time to time in one or more classes or series by resolution. On February 23, 2022, the Company filed Correction No. 1 to the COD. On July 28, 2022, the Company filed an Amendment to the COD with the State of Nevada to allow a holder to waive application of the Beneficial Ownership Limitation with respect to the conversion of Series A Preferred Stock.

The Series A Preferred Stock was initially convertible into the Company’s common stock as determined by dividing the number of shares of Series A Preferred Stock to be converted by the lower of (i) $75.00 or (ii) 80% of the average volume weighted average price for the Company’s common stock for the five (5) trading days immediately following the effectiveness of the registration statement concerning the shares (the “Conversion Price”). On June 14, 2022, the Conversion Price was reset to $15.54 per share.

Each holder was entitled to receive dividends in shares of Series A Preferred Stock or cash determined based on the stated value of each Series A Preferred Stock at the dividend rate of 8.0% per year. As of September 30, 2023 and December 31, 2022, the cumulative accrued dividend has been recorded as mezzanine equity in the amount of $372,414. The Company had not issued shares of Series A Preferred Stock or cash for the accrued dividends as of September 30, 2023.

On February 28, 2022, the Company entered into a securities purchase agreement, or the Purchase Agreement, with certain investors and an insider for a private placement of the Company’s securities (the “Private Placement”).

The Private Placement consisted of the sale of 6,000 shares of the Company’s Series A Convertible Preferred Stock, or the Series A Shares, at a price of $1,000 per share, and 80,000 warrants to purchase shares of common stock, or the Warrants, for aggregate gross proceeds of approximately $6 million. The Warrants were initially exercisable to purchase shares of common stock at $82.50 per share, or 110% of the Series A Shares initial conversion price and will expire five and one-half years following the initial exercise date of the Warrants. The Company determined that the 80,000 warrants were additional value being distributed to the preferred stockholders and presented the warrants’ fair value of $5,788,493 as a deemed dividend on issuance of warrants in the condensed consolidated statements of operations and comprehensive loss. The warrants were valued using the Black-Scholes option pricing model with the following terms: a) exercise price of $82.50, b) common stock fair value of $85.50, c) volatility of 118%, d) discount rate of 1.71%, e) term of 5.50 years and f) dividend rate of 0%.

The closing of the Private Placement occurred on February 28, 2022. As a condition to the closing of the sale, the Company’s common stock received conditional approval for listing and trading on the Nasdaq Capital Market and commenced trading on February 28, 2022, under the trading symbol, COSM. Concurrent with the issuance of the Series A Shares, the Company executed a registration rights agreement (the “Registration Rights Agreement”) to register the resale of the shares of common stock issuable upon conversion of the Series A Shares and the shares of common stock issuable upon exercise of the warrants issued in connection with the Series A Shares. The Company was required to file its initial registration statement within 45 days following February 28, 2022. The effectiveness date was required to be 60 days after February 28, 2022, or 75 days following the SEC’s full review, and any additional registration statements that may be required are to be filed within 20 days following the date required by the SEC. The Company failed to timely file its initial registration statement and thus paid each holder 2% of the subscription amount in cash.

Treasury stock

As of September 30, 2023 and December 31, 2022, the Company held 86,497 and 15,497, respectively, shares of our common stock at a cost of $917,159 and $816,707, respectively. Shares of our common stock that are repurchased are classified as treasury stock pending future use and reduce the number of shares outstanding used in calculating earnings per share. Cosmos may repurchase shares from time to time through open market purchases in accordance with applicable securities laws and other restrictions. The Company repurchased 71,000 shares of our common stock for $100,452 during the three and nine months ended September 30, 2023. No repurchases took place during the three and nine months ended September 30, 2022.

On January 24, 2023 the Company announced that its Board of Directors has approved a share repurchase program with authorization to purchase up to $3 million of its common stock. Cosmos may repurchase shares from time to time through open market purchases in accordance with applicable securities laws and other restrictions.

Mezzanine Equity

The Series A Shares were recorded at its initial net carrying value in the amount of $5,452,300. The Series A Shares were recorded as mezzanine equity in accordance with ASC 480 as the Company was potentially obligated to issue a variable number of shares at a fixed price known at inception and there was no maximum number of shares that could potentially be issued upon conversion. In this instance, cash settlement would have been presumed. Immediately upon effectiveness of the registration statement registering for resale of all the common stock issuable under the Series A Shares, all outstanding Series A Shares were automatically converted into common stock.

As of December 31, 2022, 6,000 of the Series A Shares had been converted into 386,588 shares of common stock in accordance with the terms of the agreements and thus an amount of $5,452,300 was reclassified from mezzanine equity to common stock and additional paid-in capital, in the aggregate.  

Common Stock

The Company is authorized to issue 300 million shares of common stock. As of September 30, 2023 and December 31, 2022, the Company had 13,068,693 and 10,605,412 shares of our common stock issued, respectively, and 12,982,196 and 10,589,915 shares outstanding, respectively.

Issuance of common stock

During the nine months ended September 30, 2023 the Company issued 15,258 shares of common stock to a consultant for services rendered. The shares were valued and expensed in the amount of $96,888 on the date of issuance and are separately presented in the condensed consolidated statement of changes in stockholders’ equity and mezzanine equity as “Shares issued in lieu of cash” for the three and nine month period ended September 30, 2023.

On April 3, 2023, the Company issued 185,000 shares of unvested common stock to employees, officers and directors under the Company’s Equity Incentive Plan. These shares vest in two tranches, 1) 50% vesting on October 2, 2023, and 2) 50% vesting on October 2, 2024. The Company valued these shares on April 3, 2023 in the amount of $653,050 which is being amortized over the vesting period. During the three and nine months ended September 30, 2023, the Company had recorded $214,505 and 109,636, respectively, of stock-based compensation expense related to the shares issued, which is included in "General and administrative expense" on the accompanying consolidated condensed statements of operations and comprehensive loss. As of September 30, 2023, the unamortized stock-based compensation for the 185,000 shares of common stock was $438,545, which will be amortized through October 2, 2024.

On June 15, 2023, the Company issued 99,710 shares of common stock related to the acquisition of the customer base of Bikas. The fair value of these shares at the acquisition date was $316,081, which was included in the purchase price (see Note 1).

On June 30, 2023, the Company issued 46,377 shares of common stock related to the acquisition of the Cana. The fair value of these shares at the acquisition date was $138,667, which was included in the purchase price of Cana (see Note 1). 

On July 20, 2023, the Company entered into a Securities Purchase Agreement with three investors to issue and sell in the aggregate 1,401,163 shares of common stock, 715,323 pre-funded warrants at an exercise price of $0.01 per share in lieu of common stock, and warrants to purchase 1,935,484 warrants at an exercise price of $2.75 per share of common stock. The 1,935,484 warrants expire on January 1, 2029. The common stock and warrants were sold together at the unit price of $2.75 per share, raised gross proceeds of approximately $5,250,000, and incurred financing fees of approximately $443,000. The Company issued 2,116,936 shares of common stock which were recorded in the amount of $4,757,146 on the Company’s consolidated statements of changes in stockholders’ equity and mezzanine equity.

The July 20, 2023 Securities Purchase Agreement triggered a downround provision for 782,610 previously issued warrants.  The Company recorded a deemed dividend in the amount of $15,053, which was calculated using the black-scholes option pricing model with the following assumptions: a) exercise prices of $11.00 before repricing and $2.75 after repricing, b) common stock fair value of $1.89, c) volatility of 253.1% before repricing and 2347.7% after repricing, d) discount rate of 4.265% before repricing and 4.03% after repricing, e) terms of 4.42 years before repricing and 5.51 years after repricing and f) dividend rate of 0%.

During the nine months ended September 30, 2022, the Company issued 300 shares of common stock for services rendered and recorded $3,120 of compensation expense in relations to the services.

Debt Conversions

During the nine month period ended September 30, 2022, the Company issued 9,520 shares of common stock upon the conversion of $1,190,000 of notes payable. The Company recorded $973,420 as a capital contribution and an increase in equity related to the conversion of the $1,190,000 reduced by $216,580 recorded as a gain upon extinguishment of debt upon modification. The $216,580 gain upon extinguishment was determined using the fair value of the Company of $102.25 per share at the extinguishment commitment date.

During the nine month period ended September 30, 2022, the Company issued 1,574 shares of common stock upon the conversion of $38,144 of convertible debt.

Exercise of Warrants

During the nine month period ended September 30, 2022, the Company issued 51,391 shares of common stock upon the cashless exercise of 139,527 warrant shares.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2023

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 9 – RELATED PARTY TRANSACTIONS

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 S.A. in the past.

Prepaid expenses and other current assets – related party

As of September 30, 2023, and December 31, 2022, the Company had a prepaid balance of $5,493,826 and $3,320,345, respectively, to Doc Pharma related to purchases of inventory.

Accounts payable and accrued expenses - related party

As of September 30, 2023, and December 31, 2022, the Company had an accounts payable balance to Doc Pharma of $1,536 and $201,991, respectively.

Accounts receivable - related party

Additionally, the Company had a receivable balance of $1,981,814 and $2,070,570 from Doc Pharma S.A as of September 30, 2023, and December 31, 2022, respectively.

Sales and Purchases

During the three months ended September 30, 2023 and 2022, the Company purchased a total of $456,948 and $412,216 of products from Doc Pharma S.A., respectively. During the three months ended September 30, 2023 and 2022, the Company had $40,885 and $401,179 revenue from Doc Pharma, respectively.

During the nine months ended September 30, 2023 and 2022, the Company purchased a total of $1,057,621 and $1,672,002 of products from Doc Pharma S.A., respectively. During the nine months ended September 30, 2023 and 2022, the Company had $43,287 and $819,896 revenue from Doc Pharma, respectively.

Other Agreements

On October 10, 2020, the Company entered into a contract manufacturer outsourcing (“CMO”) agreement with Doc Pharma whereby Doc Pharma is responsible for the development and manufacturing of pharmaceutical products and nutritional supplements according to the Company’s specifications based on strict pharmaceutical standards and good manufacturing practice (“GMP”) protocols as the National Organization for Medicines requires. The Company has the exclusive ownership rights for trading and distribution of its own branded nutritional supplements named “Sky Premium Life^®”. The duration of the agreement is for five years, however, either party may terminate the agreement at any time giving six-months advance notice. Doc Pharma is exclusively responsible for supplying the raw materials and packaging required to manufacture the final product. However, they are not responsible for potential delays that may arise, concerning their import. Doc Pharma is also obligated to store the raw and packaging materials. The delivery of raw and packaging materials should be purchased at least 30 and 25 days, respectively, before the delivery date of the final product. The Manufacturer solely delivers the finished product to the Company. There is a minimum order quantity (“MoQ”) of 1,000 pieces per product code. Both parties have agreed that the Company will deposit 60% of the total cost upon agreement and assignment and 40% of the total cost including VAT charge upon the delivery date. The prices are indicative and are subject to amendments if the cost of the raw material or the production cost change.

 For the three months ended September 30, 2023 and 2022, the Company has purchased €418,577 ($455,586) and €382,706 ($450,311), respectively, in inventory related to this agreement.

For the nine months ended September 30, 2023 and 2022, the Company has purchased €967,785 ($1,048,557) and €1,060,412 ($1,127,897), respectively, in inventory related to this agreement.

On May 17, 2021, Doc Pharma and the Company entered into a Research and Development (“R&D”) agreement whereby Doc Pharma will be responsible for the research, development, design, registration, copy rights and licenses of 250 nutritional supplements for the final products called Sky Premium Life^®. These products will be sold in Greece and abroad. The total cost of this project will be €1,425,000 plus VAT and will be done over three phases as follows: Design & Development (€725,000); Control and Product Manufacturing (€250,000) and Clinical Study and Research (€450,000). SkyPharm has bought a total of as of 81 licenses at value of €554,500 ($593,204) which is 38.91% of the total cost, as of December 31, 2022. During the 9-month period ended September 30, 2023, 23 additional licenses were purchased at value of €424,400 ($449,185). The agreement will terminate on December 31, 2025.  

Purchase of branded pharmaceuticals

On June 28, 2023, the Company approved the purchase of five proprietary and innovative branded pharmaceuticals with significant market presence and material profit contribution from Zakalia Ltd., the parent company of Doc Pharma, for €1,800,000 ($1,965,600). The transaction was settled on a non-cash basis through the reduction, of an equivalent amount, of prepaid expense balances the Company held with Doc Pharma. The purchased branded pharmaceuticals are presented in "Goodwill and intangible assets, net" on the accompanying condensed consolidated balance sheets.

Loans receivable - related party

The balance of prepaid expenses due Doc Pharma as of December 31, 2022, had increased to €7,103,706 ($7,599,545), which was mainly attributable to the prepayments SkyPharm S.A. made in accordance with the CMO agreement and the extensive orders and sales of the SPL products the Company expects to achieve within 2023, mainly through its Amazon channels in the UK, Singapore, Canada and other countries. However, as the benefit from a significant portion of the prepaid balance would not have been realized within a 12-month period, the Company opted to secure a portion of the outstanding prepaid balance through a loan agreement. SkyPharm S.A. (the “Lender”) entered into a loan agreement with Doc Pharma (the “Borrower”) for €4,000,000 ($4,279,200), all of which was financed through the outstanding prepaid balance. The duration of the loan is for a 10-year period up to December 1, 2032 (the “Maturity Date”). The loan bears a fixed interest rate of 5.5% payable on a monthly basis and will be repayable in 120 equal instalments of €33,333.33 ($35,660). The loan may be prepaid anytime during its duration in full or partially based on the Company’s product requirements and other factors, without Doc Pharma incurring any prepayment penalty. As of September 30, 2023 and December 31, 2022, the loan had a current portion of €400,000 ($423,360) and €400,000 ($427,720), and a non-current portion of €3,300,000 ($3,492,720), and €3,600,000 ($3,851,280), respectively, which is classified as "Loans receivable – related party" on the accompanying condensed consolidated balance sheets. During the nine-month period ended September 30, 2023, the Company had received €300,000 ($317,520) in principal repayments, and €159,500 ($172,812) of interest repayments. Additionally, during the nine month period ended September 30, 2023, the Company recorded €161,333 ($174,798) as interest income relating to this loan.  

Cana Laboratories Holding Limited 

Cana was considered a related party as the Company had signed a binding letter of intent and an SPA for the acquisition of Cana. The acquisition was completed on June 30, 2023 according to the SPA signed on May 31, 2023. Thus, all balances between the Company and Cana were eliminated upon consolidation as of September 30, 2023. The Secured Promissory Note discussed below was included in consideration transferred upon acquisition (see Note 2).

Loans receivable - Related Party - Long Term

On February 28, 2023 (Issue Date) the Company signed a Secured Promissory Note with Cana Laboratories Holding (Cyprus) Limited (the “Holder”), whereby the Holder borrowed the sum of €4,100,000 ($4,457,520) from the Company. Interest on the Principal Amount under this Note shall accrue at a rate equal to Five Percent (5%) plus 1 month LIBOR per annum (5.18% as of September 30, 2023). The maturity date (“Maturity Date”) of this Note shall be five (5) years from the Issue Date. The Principal Amount, as well as all accrued interest shall be due and payable on the Maturity Date. During the three and six months ended June 30, 2023, the Company recorded interest income of €103,123 ($112,292) and €137,138 ($148,789), respectively. Following, the completion of Cana’s acquisition on June 30, 2023 the balance of the Note is eliminated on a consolidated level.

Panagiotis Kozaris

Panagiotis Kozaris is considered a related party due to the fact that he is a former General operational manager and current employee of Cosmofarm S.A.

Prepaid Expenses and Other Current Assets - Related Party

From time-to-time the Company purchases back shares that Panagiotis Kozaris owns and records them as treasury shares. The Company pays Panagiotis Kozaris in advance for the shares owned and obtains the shares upon execution of a cumulative stock-purchase agreement (“SPA”). During the nine months ended September 30, 2023 and September 30, 2022, the Company paid Panagiotis Kozaris an additional sum of $51,159 and $0 respectively for shares owned, however, no SPA for these funds has been executed as of September 30, 2023. The Company intends to execute a cumulative SPA for these amounts during 2023. The total balances owed of $194,215 and $143,056 are included in "Prepaid expenses and other current assets - related party", on the accompanying condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively.

Maria Kozari

Maria Kozari is considered a related party to the Company due to the fact that she is the daughter of Panagiotis Kozaris, a former Operational General Manager and current employee of Cosmofarm S.A.

Accounts Receivable - Related Party

During 2021, the Company, through its subsidiary, Cosmofarm SA, commenced a partnership with a pharmacy called “Pharmacy & More”, owned by Maria Kozari. The transactions with the respective pharmacy were in Cosmofarm’s normal course of business, however, a more flexible credit policy was allowed as the pharmacy was new and needed to be established in the market. During the nine months ended September 30, 2023 and 2022 the Company’s net sales to Pharmacy & More amounted to $359,760 and $328,017 respectively. During the three months ended September 30, 2023 and 2022 the Company’s net sales to Pharmacy & More amounted to $122,969 and $115,625 respectively. As of September 30, 2023 and December 31, 2022 the Company’s outstanding receivable balance due from the pharmacy amounted to $1,009,103, (€953,423) and $760,025 (€710,436), respectively, and are included in "Accounts receivable - related party", on the accompanying condensed consolidated balance sheets.

Other Related Parties

Additionally, the Company has the following balances as of September 30, 2023: a) a balance of $95,000 relating to unpaid salaries and bonuses due to George Terzis, the CFO of the Company, classified as "Accounts payable and accrued expenses - related party" in the Company’s condensed consolidated balance sheets, b) balances of $6,326 and $11,927 due to Kanarogloy & Sia Epe and Cana International Development Services Ltd, which are both managed by Konstantinos Gaston Kanaroglou, former manager and current employee of the Company’s wholly owned subsidiary Cana, classified as "Accounts receivable" in the Company’s condensed consolidated balance sheets.

Notes Payable – Related Party 

A summary of the Company’s related party notes payable activity as of and for the nine and twelve month periods ended September 30, 2023 and December 31, 2022 is presented below:

	September 30, 2023			December 31, 2022
Beginning balance	$	10,912		$	464,264
Payments		-			(472,920	)
Foreign currency translation		(116	)		19,568
Ending balance	$	10,796		$	10,912

Grigorios Siokas

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

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 bore an interest rate of 4.7% per annum, originally matured on March 18, 2019 pursuant to the original agreement which was extended to December 31, 2021, and again to December 31, 2023. During the year ended December 31, 2022, the Note was paid in full and as of September 30, 2023 the Company had an outstanding balance of $0. As of September 30, 2023 and December 31, 2022, the Company had accrued interest of €891 ($973) and €192,891 ($206,355) outstanding related to this loan, classified under "Accrued interest" in the Company’s condensed consolidated balance sheets.

Dimitrios Goulielmos

Dimitris Goulielmos was the Company’s former CEO and a Director of the Company.  

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 has no maturity date and is non-interest bearing. As of September 30, 2023 and December 31, 2022, the Company had a principal balance of €10,200 ($10,796) and €10,200 ($10,912), respectively.

The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the nine months ended September 30, 2023, the Company recorded a gain of $116, from foreign currency exchange related to these balances.

Loans Payable – Related Party

A summary of the Company’s related party loans payable during the three months ended September 30, 2023, and the year ended December 31, 2022 is presented below:

	September 30, 2023			December 31, 2022
Beginning balance	$	12,821		$	1,293,472
Proceeds		-			3,635,756
Payments		-			(4,851,678	)
Foreign currency translation		(137	)		(64,729	)
Ending balance	$	12,684		$	12,821

Grigorios Siokas

From time to time, Grigorios Siokas loans the Company funds in the form of non-interest bearing, no-term loans. As of December 31, 2022, the Company had an outstanding principal balance under these loans of $12,821 in loans payable to Grigorios Siokas. As of September 30, 2023, the Company had an outstanding principal balance of $12,684 related to this payable.

The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the nine months ended September 30, 2023, the Company recorded a gain of $137, from foreign currency exchange related to these balances.

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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LINES OF CREDIT

9 Months Ended

Sep. 30, 2023

LINES OF CREDIT

LINES OF CREDIT

NOTE 10 – LINES OF CREDIT

A summary of the Company’s lines of credit as of September 30, 2023 and December 31, 2022 is presented below:

	September 30, 2023		December 31, 2022
National	$	3,581,257	$	3,103,605
Alpha		1,080,454		991,492
Pancreta		273,382		1,232,128
EGF		419,659		431,512
Ending balance	$	5,354,752	$	5,758,737

The Company has three lines of credit with the National Bank of Greece, which are renewed annually. The three lines have interest rates of 6.00% (the "National Bank LOC"), 3.6% (the "COSME 2 Facility"), and 3.6% plus the six-month Euribor rate and any contributions currently in force by law on certain lines of credit (the "COSME 1 Facility").

The maximum borrowing allowed for the National Bank LOC was $3,148,740 and $3,182,655 as of September 30, 2023 and December 31, 2022, respectively. The outstanding balance of the facility was $2,631,645 and $2,118,952, as of September 30, 2023 and December 31, 2022, respectively.

The cumulative maximum borrowing allowed for the COSME 1 Facility and COSME 2 Facility (collectively, the "Facilities") was $1,058,400 and $1,069,800 as of September 30, 2023 and December 31, 2022, respectively. The outstanding balance of the Facilities was $957,335 and $984,653 as of September 30, 2023 and December 31, 2022, respectively. 

The Company maintains a line of credit with Alpha Bank of Greece ("Alpha LOC"), which is renewed annually and has a current interest rate of 6.00%. The maximum borrowing allowed was $1,058,400 and $1,069,800 as of September 30, 2023 and December 31, 2022, respectively. The outstanding balance of the Alpha LOC was $1,080,454 and $991,429, as of September 30, 2023 and December 31, 2022, respectively.

The Company holds a line of credit with Pancreta Bank ("Pancreta LOC"), which is renewed annually and has a current interest rate of 4.10%. The maximum borrowing allowed as of September 30, 2023 and December 31, 2022 was $1,471,176 and $1,487,022, respectively. The outstanding balance of the Pancreta LOC as of September 30, 2023 and December 31, 2022 was $273,382 and $1,232,128, respectively.

The Company maintains a line of credit with EGF ("EGF LOC"), which is renewed annually and has a current interest rate of 4.49%. The maximum borrowing allowed as of September 30, 2023 and December 31, 2022 was $423,360 and $427,920, respectively. The outstanding balance of the EGF LOC as of September 30, 2023 and December 31, 2022 was $419,659 and $431,512, respectively.

Under the aforementioned line of credit agreements, the Company is required to maintain certain financial ratios and covenants. As of September 30, 2023 and December 31, 2022, the Company was in compliance with these ratios and covenants.

All lines of credit are guaranteed by customer receivable checks, which are a type of factoring in which postponed customer checks are assigned by the Company to the bank, in order to be financed at an agreed upon rate.

Interest expense on the Company's outstanding lines of credit balances was $204,654 and $136,222 for the nine month periods ended September 30, 2023 and 2022, respectively, and $37,536 and $2,436 for the three month periods ended September 30, 2023 and 2022, respectively. 

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CONVERTIBLE DEBT

9 Months Ended

Sep. 30, 2023

CONVERTIBLE DEBT

CONVERTIBLE DEBT

NOTE 11 – CONVERTIBLE DEBT

A summary of the Company’s convertible debt activity as of and for the nine and twelve months ended September 30, 2023 and December 31, 2022 is presented below:

	September 30, 2023			December 31, 2022
Beginning balance convertible notes	$	100,000		$	640,000
Payments		(100,000	)		(525,000	)
Conversion to common stock		-			(15,000	)
Convertible notes payable	$	-		$	100,000

December 21, 2020 Securities Purchase Agreement

On December 21, 2020 the Company entered into a convertible promissory note with Platinum Point Capital, LLC (the “Holder”, “Lender” or “Platinum”) pursuant to a Securities Purchase Agreement (the “SPA”).

The Company issued the $540,000 Note in exchange for $500,000 in cash and included a $40,000 Original Issue Discount (“OID”) and paid $3,000 in financing costs. The principal amount together with interest at the rate of eight percent (8.0%) per annum, compounded annually (the “Interest Rate”), will be paid to the Lenders on or before the Maturity Date (December 31, 2021 or as defined below). Accrued interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed. In the event that on or before the Maturity Date, the Note either (i) had not been converted or have not been otherwise satisfied in full or (ii) an Event of Default (as defined in the SPA) occurs, then the applicable rate of interest on the outstanding amount of the Note since inception shall be the Interest Rate plus eighteen percent (18.0%), the Default Interest. Unless previously converted, the principal and accrued interest on the Note is due and payable in cash (USD) upon the earlier of (i) December 31, 2021, (ii) a Change of Control (as defined in the SPA) or (iii), an Event of Default (collectively, the “Maturity Date”).

On May 1, 2022 the Company issued 1,574 shares of common stock to convert the outstanding principal and accrued interest balance of $26,515 to equity. Following the conversion, the outstanding balance of the above Note is $0. Upon conversion, the 1,574 shares were issued at a fair value of $38,144 which was recorded as equity. Accordingly, upon conversion, the Company reduced its derivative liability by $11,629.

The Company determined that the embedded conversion feature of the convertible promissory note meets the definition of a derivative liability which is accounted for separately. The Company determined a derivative liability exists and determined that the embedded derivative was valued at $456,570 which was recorded as a debt discount, and together with the original issue discount and transaction expenses of $43,000, in the aggregate of $499,570, is being amortized over the life of the loan. As of December 31, 2022 the full amount of the debt discount has been amortized. Therefore, as of September 30, 2023 and December 31, 2022, the fair value of the derivative liability was $0. For the nine months ended September 30, 2023 and 2022, the Company recorded a loss on the change in fair value of the derivative of $0 and $5,807, respectively.

January 7, 2021 Subscription Agreement

On January 7, 2021 (the “Issue Date”), the Company entered into a subscription agreement with an unaffiliated third party, whereby the Company issued for a purchase price of $100,000 in principal amount, a convertible promissory note. The note bore an interest rate of 8% per annum and originally matured on the earlier of (i) consummation of the Company listing its common shares on the NEO Stock Exchange or (ii) October 31, 2021.

However, the listing to NEO Stock Exchange did not occur. As of December 31, 2022, the Company had a principal balance of $100,000 and had accrued $13,740 in interest expense. During the nine month period ended September 30, 2023, the Company paid the balance in full.

The Company determined that the embedded conversion feature of the convertible promissory note meets the definition of a derivative liability which is accounted for separately. The Company measured the embedded derivative valued at $62,619 which was recorded as a debt discount and additional paid-in capital and was being amortized over the life of the loan. As of December 31, 2022, the debt discount had been fully amortized. As of September 30, 2023 and December 31, 2022, the fair value of the derivative liability was $0 and $54,293, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded a loss of $3,384 and $1,449, respectively, from the change in fair value of derivative liability, which is included in “Other expense, net" in the condensed consolidated statements of operations and comprehensive loss.

The Company considered both the note payable and conversion feature separately and upon settlement. The Company re-valued the conversion feature to fair value and applied extinguishment accounting as the debt has now been settled. Because the conversion feature is extinguished upon settling the note, the value of the conversion feature goes though debt extinguishment and the Company recorded a gain on settlement of debt, which totaled $50,909 for the nine month period ended September 30, 2023. 

Convertible Promissory Note and Securities Purchase Agreement

On September 17, 2021 (the “Issue Date”), the Company entered into a convertible promissory note and securities purchase agreement with an unaffiliated third party.

The Company issued the convertible promissory note for a purchase price of $525,000 in principal amount for cash proceeds of $500,000. The note was issued with an original issue discount (“OID”) of $25,000, bears an interest rate of 10% per annum and matures on the earlier of (i) the consummation of the Company listing its common shares on the Nasdaq Stock Market or (ii) September 17, 2022.

Upon the consummation of our Nasdaq listing in 2022, the total principal and accrued interest outstanding on the note would convert into shares of the Company’s common stock at a 30% discount to the prices of the common shares sold in the financing to be conducted in conjunction with our Nasdaq listing, subject to a conversion floor of $75.00. However, the Company, upon agreement with the third party, did not convert the note and fully repaid it in cash on October 21, 2022.

As of December 31, 2022, the Company repaid the remaining outstanding balance of the note and thus its outstanding balance as of the end of the period was $0. For the nine months ended September 30, 2023 and 2022, the Company recorded amortization of debt discount in the amount of $0 and $294,000, respectively, which is included in "Non-cash interest expense" on the accompanying condensed statements of operations and comprehensive loss.

Derivative Liabilities

The table below provides a summary of the changes in fair value, including net transfers in and/or out of all financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30, 2023:

	Amount
Balance on January 1, 2023	$	54,293
Reduction of derivative related to conversions		(50,909	)
Change in fair value of derivative liabilities		(3,384	)
Balance on September 30, 2023	$	-

The fair value of the derivative conversion features and warrant liabilities as of December 31, 2022 was calculated using a Monte-Carlo option model valued with the following assumptions:

	December 31,
	2022
Dividend yield		0	%
Expected volatility	87.9% - 157.2
Risk free interest rate	1.46% - 3.75
Contractual terms (in years)	1.25 - 0.75

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DEBT

9 Months Ended

Sep. 30, 2023

DEBT

DEBT

NOTE 12 – DEBT

A roll forward of the Company’s third-party debt for the nine months ended September 30, 2023 is presented below:

September 30, 2023	Trade Facility			Third Party			COVID Loans			Total
Beginning balance, December 31, 2022	$	3,305,532		$	1,505,078		$	207,377		$	5,017,987
Proceeds		-			1,034,798			-			1,034,798
Payments		(1,152,920	)		(315,670	)		(20,593	)		(1,489,183	)
Debt forgiveness		(306,637	)		-			-			(306,637	)
Foreign currency translation		(20,235	)		(15,769	)		(1,007	)		(37,011	)
Ending balance, September 30, 2023		1,825,740			2,208,437			185,777			4,219,954
Notes payable – long-term		(1,349,460	)		(1,652,562	)		(158,255	)		(3,160,277	)
Notes payable - short-term	$	476,280		$	555,875		$	27,522		$	1,059,677

Our outstanding debt as of September 30, 2023, is repayable as follows:
	September 30,  2023
2023	$	1,059,977
2024		905,048
2025		1,412,743
2026		202,401
2027 and thereafter		640,085
Total debt		4,219,954
Less: Notes payable–- current portion		(1,059,677	)
Notes payable–- long term portion	$	3,160,277

Loan Facility Agreement

On August 4, 2021, the Company entered into an exchange agreement for the existing loan facility agreement with Synthesis Peer-to-Peer Income Fund, whereby the Company agreed to the following:

· Issue on August 4, 2021, 12,852 shares of common stock to settle $1,606,500 (€1,350,000) of debt. The Company recorded a gain on settlement of $292,383 upon the issuance of the 12,852 shares; and

· Agreed to issue no more than 9,520 shares of common stock upon approval of the listing of the Company’s common stock on Nasdaq to settle $1,190,000 (€1,000,000) of debt. The Company issued these shares on February 28, 2022. Upon issuance of the 9,520 shares of common stock, the Company recorded a gain on extinguishment of debt in the amount of $216,580 determined using the fair value of the Company’s common stock at the commitment date of $102.25 per share.

The principal debt balance was paid in full during the year ended December 31, 2022. As of September 30, 2023 and December 31, 2022, the outstanding principal balance on the debt was $0, and it had accrued interest expense of $0 and $12,853, respectively.

Trade Facility Agreements

On May 12, 2017, SkyPharm entered into a Trade Finance Facility Agreement (the “TFF”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”) as amended on November 16, 2017, and May 16, 2018.

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 ($2,316,000), (the "EURO Loan") and USD $4,000,000 (the "USD Loan"). Interest on both the EURO Loan and USD Loan commenced on October 1, 2018, at 6% per annum plus one-month Euribor (3.39% as of September 30, 2023), and 6% plus one-month LIBOR (5.18% as of date of September 30, 2023), respectively.

On December 30, 2020, the Company transferred the EURO Loan to a new third-party lender. The terms remained the same except interest accrues at 5.5% per annum plus one-month Euribor (3.39% as of September 30, 2023). The principal was scheduled to be repaid in a total of five quarterly installments beginning October 31, 2021 of €50,000 ($54,600) each with a final repayment of €1,800,000 ($1,965,600) Euro payable on October 31, 2022.

On March 3, 2022, the Company entered into a modification agreement to extend the maturity date to January 10, 2023 and payments under the USD Loan. During June 2022, the Company agreed with the Lender to postpone the repayment of an installment of $500,000 due on June 30, 2022 (based on the modification agreement signed on March 3, 2022) until January 2023. During September 2022, the Company entered into an agreement with the Lender to postpone the repayment of the outstanding balance on the USD Loan of $3,950,000, plus unpaid accrued interest until January 2023. The Company capitalized fees paid upon modification of €200,000 ($221,060) that are being amortized over the life of the loan. The Company incurred non-cash interest expense of $23,820 during the three-month period ended September 30, 2022 concerning the above capitalized fees.

During the year ended December 31, 2022, the Company repaid €175,000 ($191,100) of the EURO Loan and $2,593,363 of the USD Loan such that as of December 31, 2022, the Company had principal balances of €1,775,000 ($1,898,895) and $1,406,637 under the agreements, respectively. As of September 30, 2022, the Company had accrued $17,434 in interest expense related to these agreements. 

On December 21, 2022 the USD Loan was assigned to GIB Fund Solutions ICAV (the “Fund”). On January 31, 2023, the Company paid $1,100,000 to the Fund under a full and final settlement agreement for the USD Loan, recording a gain on extinguishment of debt of $306,637 relating to the waiver of the unpaid balance. Additionally, the Company repaid €50,000 ($52,920) of the EURO Loan during the nine-month period ended September 30, 2023. As of September 30, 2023 the Company had an outstanding principal balance of €1,725,000 ($1,825,740), of which $1,349,460 is classified as ''Notes payable - long term portion" on the condensed consolidated balance sheets. As of September 30, 2023, the Company had accrued $58,825 in interest expense related to these agreements.

On December 22, 2022, Skypharm signed an agreement for the extension of the payments and an increase in interest rate due under the EURO loan, that was extended to be repaid with a balloon payment now due on October 31, 2025. This extension was agreed upon in writing on December 22, 2022, with a retroactive modification date to October 31, 2022 (the original maturity date). 

Third Party Debt

On November 16, 2015, the Company entered into a Loan Agreement with Panagiotis Drakopoulos, the Company’s 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 bore an interest rate of 6% per annum and was due and payable in full on November 15, 2016. As of December 31, 2022, the Company had an outstanding principal balance of €8,000 ($8,558) and accrued interest of €6,797 ($7,271). During the nine-month period ended September 30, 2023, the Company repaid the entire outstanding balance of €8,000. Therefore, as of September 30, 2023, the outstanding principal balance was $0. Mr. Drakopoulos is not considered a related party since he is no longer employed by the Company and currently holds no equity position in the Company.

May 18, 2020, July 3, 2020, and August 4, 2020 Senior Promissory Notes

Modification of May 18, 2020, July 3, 2020, and August 4, 2020 Senior Promissory Notes

On February 23, 2022, the Company entered into modification agreements to extend the due dates of the May 18 Note, July 3 Note, and August 4 Note to June 30, 2023, totaling $9,000,000, in the aggregate. The Company paid restructuring fees totaling $506,087 upon modification. The Company determined the modification should be recorded as debt extinguishment in accordance with ASC 470 because the present value of the remaining cash flows under the terms of the new debt instrument is at least 10% different from the present value of the remaining cash flows under the terms of the original instrument. The Company recorded the new debt at fair value in the amount of $7,706,369 and a gain upon extinguishment in the amount of $787,544. During the year ended December 31, 2022, the Company repaid the aggregate principal balance of $7,000,000 and the aggregate accrued interest related to these notes in full. During the three- and nine-month period ended September 30, 2023, the Company recorded non-cash interest expense of $295,846 and $772,180, respectively, related to the amortization of debt issuance costs. 

June 23, 2020 Debt Agreement

On June 23, 2020, the Company’s subsidiary, Cosmofarm, entered into an agreement with the National Bank of Greece S.A. (the “Bank”) to borrow a maximum of €500,000 ($611,500). The note has a maturity date of sixty (60) months from the date of the first disbursement, which includes a grace period of nine months. The total amount of the initial proceeds was received in 3 equal monthly installments. The note is interest bearing from the date of receipt and is payable every three (3) months at an interest rate of 3.06% plus 3-month Euribor (3.6% as of September 30, 2023). The outstanding balance was €264,706 ($289,059) and €235,294 ($249,035) as of September 30, 2023 and December 31, 2022, respectively, of which $124,517 and $220,253 was classified as "Notes payable - long-term portion" respectively, on the accompanying condensed consolidated balance sheets. During the nine months ended September 30, 2023, the Company repaid €88,235 ($93,388) of the principal balance.

November 19, 2020 Debt Agreement

On November 19, 2020, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($611,500). The note matures on November 18, 2025 and bears an annual interest rate, based on a 360-day year, of 3% plus .6% plus 6-month Euribor when Euribor is positive (3.93% as of September 30, 2023). The principal is to be repaid in 18 quarterly installments of €27,778 ($30,333). During the year ended December 31, 2022, the Company repaid €111,111 ($118,867) of the principal and as of December 31, 2022, the Company had accrued interest of $8,069 related to this note and a principal balance of €333,333 ($356,600), of which $237,733 is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets. During the nine months ended September 30, 2023, the Company repaid €83,333 ($88,200) of the principal and as of September 30, 2023, the Company has accrued interest of €6,108 ($6,464) related to this note and a principal balance of €250,000 ($264,600), of which $147,000 is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets.

July 30, 2021 Debt Agreement

On July 30, 2021, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($578,850). The note matures on August 5, 2026 and bears an annual interest rate that applies to 60% of the principal of the note that is based on a 365-day year, of 5.84% plus 3-month Euribor when Euribor is positive (3.93% as of September 30, 2023). Pursuant to the terms of the agreement, there is a nine-month grace period for principal repayment during which interest is accrued. The principal is to be repaid in 18 quarterly installments of €27,778 commencing three months from the end of the grace period. During the year ended December 31, 2022, the Company repaid €77,985 ($83,428) of the principal balance. As of December 31, 2022, the Company had accrued interest of €2,509 ($2,728) and a principal balance of €422,016 ($451,472), of which $336,788 is classified as notes payable – long term portion on the accompanying condensed consolidated balance sheet. During the nine months ended September 30, 2023, the Company repaid €78,429 ($83,009) of the principal. As of September 30, 2023, the Company has accrued interest of €7,982 ($8,449) and principal of €343,587 ($363,652), of which $247,186 is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets.

June 9, 2022 Debt Agreement

On June 9, 2022 the Company entered into an agreement with a third-party lender in the principal amount of €320,000 ($335,008), the “Note”. The Note matures on June 16, 2027 and bears an annual interest rate of 3.89% plus an additional rate of 0.60%, plus the 3-month Euribor (3.6% as of September 30, 2023). Pursuant to the agreement, there is a twelve-month grace period for principal repayment during which interest is accrued. The principal is to be repaid in 17 equal quarterly installments of €18,824 commencing on June 30, 2023. During the nine months ended September 30, 2023, the Company repaid €40,000 ($42,336) of the principal. As of September 30, 2023 and December 31, 2022 the Company has accrued interest of €4,164 ($4,407) and €7,707 ($8,379), respectively, and an outstanding balance of €280,000 ($296,352), of which $216,661 and $281,924, respectively, is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets.

August 29, 2022 Promissory Note

On August 29, 2022, the Company entered into a promissory note for the principal amount of $166,667. The Company received $150,000 in cash and recorded $16,667 as an original issue discount upon issuance. The promissory note matured on the earlier of (a) December 27, 2022, or (b) the date the Company completes a debt or equity financing of at least $1,000,000. The debt carried an annual interest rate of 12% which was due upon maturity. As of December 31, 2022, the Company had repaid the principal balance in full and had a balance of $5,041 in accrued interest related to this note. The Company repaid the outstanding interest during the nine-month period ended September 30, 2023 and thus the balance of both principal and interest as of September 30, 2023 is $0.

July 14, 2023 Debt Agreement

On July 14, 2023 the Company entered into an agreement with a third-party lender in the principal amount of €1,000,000 ($1,123,700), the “Note”. The Note matures on July 31, 2028 and bears an annual interest rate of 2.46% plus the 3-month Euribor (3.6% as of September 30, 2023). Pursuant to the agreement, there is a nine-month grace period for interest and principal repayment. The principal is to be repaid in 18 equal quarterly installments of €55,556 commencing on May 2, 2024. As of September 30, 2023 and December 31, 2022 the Company an outstanding balance of €977,000 ($1,034,798) and $0, of which $917,198 and $0, respectively, is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets.

June 24, 2020 Debt Agreement

On June 24, 2020, the Company’s subsidiary, Decahedron, received a loan £50,000 ($68,310) from the United Kingdom government. The loan has a ten-year maturity and bears interest at a rate of 2.5% per annum beginning 12-months after the initial disbursement, which was on July 10, 2020. The Company may prepay this loan without penalty at any time. As of December 31, 2022, the principal balance was £47,144 ($56,936). As of September 30, 2023, the principal balance was £42,430 ($51,824).

COVID-19 Loans

On May 12, 2020, the Company’s subsidiary, SkyPharm, was granted and on May 22, 2020 received a €300,000 ($366,900) loan from the Greek government. The loan will be repaid in 40 equal monthly installments beginning on July 29, 2022. As a condition to the loan, the Company was required to retain the same number of employees until October 31, 2020. As of December 31, 2022, the principal balance was $150,441. During the nine months ended September 30, 2023, the Company repaid €14,063 ($14,884) of the principal balance. The outstanding balance as of September 30, 2023 is €126,563 ($133,954). 

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LEASES

9 Months Ended

Sep. 30, 2023

LEASES

LEASES

 NOTE 13 – LEASES

The Company has various operating and finance lease agreements with terms up to 10 years, for various types of property and equipment (such as office space and vehicles) etc. 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 average interest rate of our long-term debt on the date of inception.

Operating Leases

The Company’s weighted-average remaining lease term relating to its operating leases is 6.64 years, with a weighted-average discount rate of 6.74%.

The following table presents information about the amount and timing of cash flows arising from the Company’s operating leases as of September 30, 2023:

Maturity of Operating Lease Liability:

2023	$	54,076
2024		217,112
2025		141,302
2026		99,562
Thereafter		480,361
Total undiscounted operating lease payments	$	992,413
Less: Imputed interest		(194,734	)
Present value of operating lease liabilities	$	797,679

The Company incurred lease expense, due to amortization of operating lease right-of-use assets, of $173,894 and $158,407 which was included in “General and administrative expenses,” for the nine months ended September 30, 2023 and 2022, respectively. For the three months ended September 30, 2023 and 2022 the Company incurred lease expense of $50,690 and $50,209, respectively.

Finance leases

The Company’s weighted-average remaining lease term relating to its finance leases is 2.8 years, with a weighted-average discount rate of 6.74%, based on the interest rate implicit in the lease.

The following table presents information about the amount and timing of cash flows arising from the Company’s finance leases as of September 30, 2023:

Maturity of Finance Lease Liability
2023	$	41,451
2024		145,743
2025		117,000
2026		91,080
Thereafter		38,385
Total undiscounted finance lease payments	$	433,659
Less: Imputed interest		(43,027	)
Present value of finance lease liabilities	$	390,632

The Company incurred interest expense on its finance leases of $20,629 and $11,645 which was included in “Interest expense”, on the accompanying condensed statements of operations and comprehensive loss for the nine months ended September 30, 2023 and 2022, respectively and $6,920 and $4,012 for the three months ended September 30, 2023 and 2022, respectively. The Company incurred amortization expense on its finance leases of $102,549 and $60,935, which was included in “Depreciation and amortization expense”, on the accompanying condensed statements of operations and comprehensive loss for the nine months ended September 30, 2023 and 2022, respectively and $35,452 and $21,628 for the three months ended September 30, 2023 and 2022, respectively. The total cash used for the Company’s finance leases for the nine months ended September 30, 2023 and September 30, 2022 amounted to $118,847 and $71,172 respectively and is solely related to lease payments. For the three months ended September 30, 2023 and 2022 the total cash used for the Company’s finance leases amounted to $41,094 and $24,495, respectively.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2023

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 14 – 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 September 30, 2023, the following litigation matters were pending. None of the below is expected to have a material financial or operational impact.

Solgar Inc, a competitor of the Company, sued SkyPharm for product homogeneity regarding the nutraceutical line “Sky Premium Life”. As a result, Solgar requested the prohibition for SkyPharm to manufacture, import and sell, market or in any way possess and distribute, including internet sales and advertise in any way in the Greek market of “Sky Premium Life” due to homogeneity with Solgar’s products. Solgar Inc. has further requested to be awarded compensation for non-pecuniary damage amounting to €20,000 ($21,744). The case was heard on January 28, 2022, and the decision numbered 8842/2022 of the court of Thessaloniki was issued, which, accepted our claims and dismissed the Solgar’s Inc. lawsuit.

On July 22, 2015, the National Medicines Agency approved the license of wholesale sale of pharmaceutical products under the name SkyPharm SA with set validity at five years and an expiration date of July 22, 2020. Subsequently, SkyPharm on June 15, 2020, legally and timely submitted the application for renewal of the wholesale license of pharmaceutical products to the National Medicines Agency. The National Medicines Agency did not respond, therefore the Company asked for an immediate decision on the renewal. Two months after the filing of the no. 3459 / 15.01.2021 letter and almost nine months after the no. 627615.06.2020 company application for the renewal, the National Medicines Agency replied by rejecting the renewal request on March 9, 2021 (ref. 62769 / 20-25.02.2021). In addition, document No. 127351-16.12.2021 of EOF (Greek National Medicines Organization) to SkyPharm states that after an inspection of EOF at the premises of Doc Pharma, we did not have a wholesale license in violation of article 106 par. 1b and par. 1c of the ministerial decision D.YG3a / GP.32221 / 29-4-2019. The National Medicines Agency imposed a fine of €15,000 ($16,214) on SkyPharm for the above case, which was included in "General and administrative" expense on the accompany statement of operations and comprehensive loss for the three month period ended September 30, 2023.

There has been a payment request by the Greek court, which relates to a fine arising from Cosmofarm’s tax audit for financial year 2014. The law with no. 483/16.12.2020 was used by the court against Cosmofarm (the “defendant”). The defendant appealed against the decision using the law with no.11541/09.03.2021. This appeal was dismissed after 120 days from its submission to the court. Additionally, there had been an obligation for payment of additional tax and fines related to this matter in the amount of €91,652 ($99,644), which the defendant has already settled. However, the defendant has claimed back the respective amount through appeal. As of September 30, 2023, the trial is still pending.

Advisory Agreements

On July 1, 2021, the Company entered into a two-year advisory agreement with a third party (the “Consultant”) for advisory and consulting services related to the Company’s intention to become listed on Nasdaq. Peter Goldstein, a then director of the Company is a principal of the Consultant. As consideration for services rendered, and successful Nasdaq listing, the Company paid $100,000. The $100,000 bonus was incurred and settled within 2022. Finally, the Consultant received a total of 10,000 shares of the Company’s common stock, 2,000 of such shares that have been previously issued pursuant to previous agreements and additional 15,258 shares that were issued on February 2, 2023, based on the amendment signed on February 1, 2023.

Research and Development Agreements

On June 26, 2022, the Company signed a research and development ("R&D") agreement with a third party, through which the Company assigns to the third party the development of new products and services in the field of health, focusing on the human intestinal microbiome. The cost of the projects amount to EUR 820,000 ($891,504) which is allocated to certain phases. The amount will be due and payable upon completion of the corresponding phases. The Company records the corresponding R&D expense based on the project’s progress, which is actually invoiced by the third party in the relevant period. No such costs were incurred for the three and nine month periods ended September 30, 2023 or 2022.

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WARRANTS

9 Months Ended

Sep. 30, 2023

WARRANTS

WARRANTS

NOTE 15 – WARRANTS

Omnibus Equity Incentive Plan

On September 19, 2022 the Company held a Board of Directors meeting, whereas, the Board of Directors had elected to adopt an Omnibus Equity Incentive Plan (the “Plan”), that includes reserving 200,000 shares of common stock eligible for issuance under the Plan to be registered on a Form S-8 Registration Statement with the SEC. The Plan is designed to enable the flexibility to grant equity awards to the Company’s officers, employees, non-employee directors and consultants and to ensure that it can continue to grant equity awards to eligible recipients at levels determined to be appropriate by the Board and/or the Compensation Committee. According to the Proxy Statement filed with the SEC on October 20, 2022 the Plan received final approval by the Company’s stockholders at the Annual Meeting of Stockholders held on December 2, 2022.

On April 3, 2023, the Company approved incentive stock awards for the CFO, certain officers and directors and other employees of the Company. The awards are in the form of restricted stock and will vest in two parts: 50% on October 2, 2023 and 50% on October 2, 2024. A total of 185,000 shares were awarded and a corresponding share-based compensation expense of $109,636 and $214,505 was recorded for the three and nine month periods ended September 30, 2023, respectively, based on the amortization of fair value from the date of issuance of April 3, 2023 through September 30, 2023.

Warrants 

As of September 30, 2023, there were 6,124,412 warrants classified within equity outstanding and 4,188,928 warrants exercisable with 4,175,595 warrants having expiration dates from May 2023 through December 2027 and 13,333 warrants with no expiration date.

A summary of the Company’s warrant activity during the three months ended September 30, 2023 is presented below:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Warrants	Shares		Price		Term		Value
Balance outstanding, January 1, 2023		4,194,236	$	8.31		5.04	$	2,562,600
Balance outstanding, September 30, 2023		6,124,413	$	5.40		4.76	$	20,934
Exercisable, September 30, 2023		4,188,928	$	6.63		4.52	$	20,934

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DISAGGREGATION OF REVENUE

9 Months Ended

Sep. 30, 2023

DISAGGREGATION OF REVENUE

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 three months ended:

	September 30,		September 30,
Country	2023		2022
Greece		12,544,643		11,990,599
Cyprus		72,754		-
UK		190,614		26,209
USA		210		-
Ireland		1,417		-
Croatia		14,159		(710)
Total	$	12,823,797	$	12,016,098

The following table presents our revenue disaggregated by country for the nine months ended:

	September 30,		September 30,
Country	2023		2022
Greece		36,041,012		38,151,898
Cyprus		141,402		-
UK		1,338,509		-
USA		504		-
Ireland		1,417		118,467
Croatia		14,159		26,037
Total	$	37,537,003	$	38,296,402

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2023

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 17 – SEGMENT REPORTING

A. Basis for segmentation

The Group operates through various operating segments, which are the wholesale sector, the pharmaceutical manufacturing sector, the nutraceuticals and pharmaceuticals sectors and other, with only the first three of them being reportable segments based on the criteria (quantitative thresholds) of ASC 280. The financial information reviewed by our Chief Operating Decision Maker, which is our Board of Directors, is included within the operating segments mentioned above for purposes of allocating resources and evaluating financial performance.

B. Information about reportable segments

The table below presents information about the Company's reportable segments for the 3- and 9-month periods ended September 30, 2023. The accounting policies followed in the preparation of the reportable segments are the same with those followed in the preparation of the Company's consolidated financial statements.

3-month period ended September 30, 2023

	Wholesale			Pharma manufacturing			Nutraceuticals & Pharmaceuticals			Other			Total
Revenues		11,936,166			91,055			796,576			-			12,823,797
Segment profit / (loss)		(728,986	)		(604,790	)		(1,838,942	)		(1,082,184	)		(4,254,902	)
Total assets		23,605,372			11,892,278			29,950,031			6,077,698			71,525,379

9-month period ended September 30, 2023

	Wholesale			Pharma manufacturing			Nutraceuticals & Pharmaceuticals			Other			Total
Revenues		34,908,505			91,055			2,537,443			-			37,537,003
Segment profit / (loss)		(549,841	)		(604,790	)		(2,944,599	)		(1,177,414	)		(5,726,644	)
Total assets		23,605,372			11,892,278			29,950,031			6,077,698			71,525,379

The following summary describes the operations of the reportable segment:

Reportable segments	Operations
Wholesale	Distribution and export of pharmaceutical products
Pharma manufacturing	Production of pharmaceutical products
Nutraceutical and pharmaceuticals	Trade of owned nutraceutical & pharmaceutical products

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2023

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 18 – SUBSEQUENT EVENTS

On October 9, 2023 the Company entered into a purchase agreement to acquire an artificial intelligence platform, which aims in drug repositioning and repurposing. The purchase price for the acquisition amounted to €300,000 ($318,540) (the “Cash Consideration”) payable in fifteen equal monthly installments and 280,000 shares of authorized and issued restricted common stock of the Company for the amount of $700,000 at an issuance price of $2.50 per share (the “Stock Consideration”).

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ORGANIZATION NATURE OF BUSINESS AND GOING CONCERN (Policies)

9 Months Ended

Sep. 30, 2023

ORGANIZATION NATURE OF BUSINESS AND GOING CONCERN (Policies)

Acquisition Accounting

ZipDoctor

On April 3, 2023, the Company completed the acquisition of ZipDoctor Inc. (“ZipDoctor”), a telehealth company for a total sum of $150,000 in cash and $8,788 in fees. The Company accounted for the acquisition as an asset acquisition in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations, ("ASC 805") and recorded $158,788 as an intangible asset related to the technology platform acquired.

Bikas

On June 15, 2023, Cosmos Health Inc. entered into an Assignment and Assumption Agreement (the “Agreement”) with Ioannis Bikas O.E., a Greek Company, (“Bikas”). Bikas is owner of a pharmaceutical distribution network in Greece and agreed to sell to the Company their distribution network and customer base. The purchase price of the network was €100,000 ($109,330) of cash, and €300,000 ($316,081) of the Company’s stock. The Company issued 99,710 shares of common stock related to the acquisition of the customer base, based on the fair value of the stock on acquisition date. The Company accounted for the acquisition as an asset acquisition in accordance with ASC 805 and recorded $425,411 as an intangible asset related to the customer base acquired.

Buildings Acquisitions

On April 24, 2023, the Company purchased a building for a total sum of $1,054,872 in cash. The Company accounted for the acquisition as an asset acquisition in accordance with ASC 805 and recorded the cost of the building as "Property, plant and equipment" on the condensed consolidated balance sheets.

On January 6, 2023, the Company agreed to purchase land and building located in Montreal, Canada from a third-party vendor. The total purchase price amounts to $3,950,000 and the closing date of the agreement based on the amendment signed on July 19, 2023, is December 31, 2023. As of September 30, 2023, the Company has made prepayments of $2,000,020 classified as "Advances for building's acquisition” on the Company’s condensed consolidated balance sheets.

.

Cana

On June 30, 2023, the Company acquired CANA Pharmaceutical Laboratories, S.A. (“Cana”) for €800,000 ($873,600) in cash and 46,377 shares of common stock, with fair value of $138,667 as of the date of acquisition. Moreover, on February 28, 2023, the Company had signed a Secured Promissory Note with Cana, whereby Cana borrowed the sum of €4,100,000 ($4,457,520), included in the total consideration of $5,469,787. The Company accounted for the acquisition as a business acquisition in accordance with ASC 805. The fair value of Cana assets acquired, and liabilities assumed was based upon management’s estimates assisted by an independent third-party valuation firm. The fixed assets of Cana (which included land, building & machinery) were valued as of December 31, 2022 and the Company believes that nothing has materially changed between such date and the acquisition date (June 30, 2023). The following table summarizes the preliminary allocation of purchase price of the acquisition:

Consideration
Cash	$	5,331,120
Fair value of common stock issued		138,667
Fair value of total consideration transferred	$	5,469,787
Recognized amounts of identifiable assets acquired
Financial assets	$	1,796,911
Inventory		297,340
Property, plant and equipment		7,682,411
Identifiable intangible assets		562,200
Financial liabilities		(3,235,233	)
Total identifiable net assets	$	7,103,629
Bargain purchase gain	$	1,633,842

Revenue for the 3- month period ended September 30, 2023	$	91,056
Loss for the 3- month period ended September 30, 2023	$	(604,790	)

During the prior year period, Cana had minimal operations as it was in financial difficulties and seeking for an investor.

Basis of Financial Statement Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Principles of Consolidation

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

Transactions in and Translations of Foreign Currency

The functional currency for the Greek subsidiaries of the Company (CANA Laboratories, Cosmofarm S.A. and SkyPharm SA) is EURO (€) and for the UK subsidiary (Decahedron Ltd) is GBP (£). ZipDoctor Inc is a U.S. based entity. As a result, the financial statements of the subsidiaries (except for ZipDoctor Inc) have been translated from the local currency into U.S. dollars using (i) year-end exchange rates for balance sheet accounts, and (ii) average exchange rates for the reporting period for all income statements accounts. Foreign currency translations gains and losses are reported as a separate component of the condensed consolidated statements of changes in stockholders’ equity and mezzanine equity.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP 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.

The Effects of War in the Ukraine

On February 24, 2022, Russian forces launched significant military action against Ukraine. There continues to be sustained conflict and disruption in the region, which is expected to endure for the foreseeable future. We do not conduct any commercial transactions with either Ukraine or Russia and the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. Such political issues and conflicts could have a material adverse effect on our results of operations and financial condition if they escalate in areas in which we do business. In addition, changes in and adverse actions by governments in foreign markets in which we do business could have a material adverse effect on our results of operations and financial condition.

Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments, which amends the requirement on the measurement and recognition of expected credit losses for financial assets held. Furthermore, amendments ASU 2019-10 and ASU 2019-11 provided additional clarification for implementing ASU 2016-13. ASU 2016-13 is effective for the Company beginning January 1, 2023, with early adoption permitted. The Company adopted the standard on January 1, 2023, and the standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures. The Company is exposed to credit losses primarily through sales to its customers and the loans that it has provided. The Company assesses each customer’s/ borrower ability to pay, and a credit loss estimate by conducting a credit review which includes consideration of established credit rating, or an internal assessment of the customer’s creditworthiness based on an analysis of their payment history when a credit rating is not available. The Company monitors credit exposure through active review of customer balances. The Company’s expected loss methodology for accounts receivable is developed through consideration of factors including, but not limited to, historical collection experience, current customer credit ratings, current customer financial condition, current and future economic and market conditions, and age of the receivables. Charges related to credit losses are included in “General and administrative expenses” and are recorded in the period that the outstanding receivables are determined to be doubtful. Account balances are written-off against the allowance when they are deemed uncollectible.

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.

The Company maintains bank accounts in the United States denominated in U.S. Dollars, in Greece denominated in Euros, U.S. Dollars and Great Britain Pounds (British Pounds Sterling), and in Bulgaria denominated in Euros. The Company also maintains bank accounts in the United Kingdom, denominated in Euros and Great Britain Pounds (British Pounds Sterling).

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. As of September 30, 2023 and December 31, 2022, the Company’s allowance for doubtful accounts was $7,735,425 and $6,987,301, 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 September 30, 2023 and December 31, 2022, the Company had a VAT net prepaid expenses balance of $456,788 and VAT, net payable $79,373, respectively, recorded in the condensed consolidated balance sheet as “Prepaid expenses and other current assets” and “Accounts payable and accrued expenses”, respectively.

Inventory

Inventory is stated at the lower-of-cost or net realizable value using the weighted average FIFO method. Inventory consists primarily of finished goods and packaging materials, i.e., packaged pharmaceutical products and the wrappers and containers they are sold in. A periodic inventory system is maintained by 100% count. 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, Plant and Equipment, net

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated 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
Buildings	25-30 years
Vehicles	6 years
Machinery	20 years
Furniture, fixtures and equipment	5–10 years
Computers and software	3-5 years

Depreciation expense was $124,910 and $83,214 for the three months ended September 30, 2023 and 2022, respectively and $237,479 and $248,670 for the nine months ended September 30, 2023 and 2022, respectively.

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. First, under step 0, we determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Following, if step 0 fails, 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 has estimated a useful life of 10 years for its pharmaceutical and nutraceutical product licenses, customers base, and IT platform. The Company has also estimated a useful life of 5 years for its tradenames. 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 September30, 2023, no revision to the remaining amortization period of the intangible assets was made.

Amortization expense was $88,168 and $36,982 for the three months ended September 30, 2023 and 2022, respectively and $138,438 and $53,389 for the nine months ended September 30, 2023 and 2022, respectively.

Impairment of Long-Lived Assets

In accordance with ASC 360-10, Long-lived Assets, property, plant 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.

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 will record its share in the earnings of the investee and will include it within the condensed 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 (see Note 3).

Investments in Equity Securities

Investments in equity securities are accounted for at fair value with changes in fair value recognized in net income (loss). 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 condensed 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 condensed 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 September 30, 2023, investments consisted of (i) 3,000,000 shares, which traded at a closing price of $0 per share or a value of $0 of ICC International Cannabis Corp and (ii) 16,666 shares which traded at a closing price of $0.53 per share or value of $9,419 of National Bank of Greece. Additionally, the Company has $8,113 in equity securities of Pancreta Bank, which are revalued annually.  

Fair Value Measurement

The Company applies ASC Topic 820, Fair Value Measurement, (“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 tables presents assets that are measured and recognized at fair value as of September 30, 2023 and December 31, 2022, on a recurring basis:

	September 30, 2023						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – Pancreta Bank	$	8,113		-		-	$	8,113
Marketable securities – National Bank of Greece		9,419		-		-		9,419
	$	17,532					$	17,532

	December 31, 2022						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – Pancreta Bank	$	8,200		-		-	$	8,200
Marketable securities – National Bank of Greece		6,681		-		-		6,681
	$	14,881					$	14,881

In addition, 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.

Derivatives Instruments

Derivative financial instruments are recorded in the accompanying condensed consolidated balance sheets at fair value in accordance with ASC Topic 815, Derivatives and Hedging. When the Company enters into a financial instrument such as a debt or equity agreement (the “host contract”), the Company assesses whether the economic characteristics of any embedded features are clearly and closely related to the primary economic characteristics of the remainder of the host contract. When it is determined that (i) an embedded feature possesses economic characteristics that are not clearly and closely related to the primary economic characteristics of the host contract, and (ii) a separate, stand-alone instrument with the same terms would meet the definition of a financial derivative instrument, then the embedded feature is bifurcated from the host contract and accounted for as a derivative instrument. The estimated fair value of the derivative feature is recorded in the accompanying condensed consolidated balance sheets separately from the carrying value of the host contract. Subsequent changes in the estimated fair value of derivatives are recorded as a gain or loss in the Company’s condensed consolidated statements of operations and comprehensive loss.

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 advances balance and credit the Company’s revenues.

Revenue Recognition

In accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), the Company uses 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, including the constraint on variable consideration, (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 transfer of the product to the customer.

Commencing from January 1, 2023, and pursuant to the agreement with Medihelm, the exclusive distributor of the Company’s own proprietary line of nutraceuticals, the Company considers the transaction price to be variable and records an estimate of the transaction price, subject to the constraint for variable consideration. The Company is basing the change in transaction price with the exclusive distributor through assessment of significant overdue receivables from the exclusive distributor, which the Company reassesses each reporting period. Through this assessment, the Company applied the “expected value” model under ASC 606-10-32-5 and had applied specific constraints to revenue due from the customer at the end of each reporting period. Following the application of the “expected value” model, the Company deferred an amount of $317,129 and recorded it against the sales to Medihelm for the nine-month period ended September 30, 2023. The Company does not consider that sales to any other customer include a variable component as of September 30, 2023.

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC Topic 718, Compensation - Stock Compensation (“ASC 718”) and Staff Accounting Bulletin No. 107 (“SAB 107”) 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-Improvements to Nonemployee Share-Based Payment Accounting.”

Foreign Currency Translations and Transactions

Assets and liabilities of all foreign operations are translated at period-end rates of exchange, and amounts included in the accompanying condensed statements of operations and comprehensive income (loss) are translated at the average rates of exchange for the period. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders’ equity (deficit) 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 other income (expense) in the condensed consolidated statements of operations and comprehensive income (loss).

Income Taxes

The Company accounts for income taxes under the asset and liability method, as required by the accounting standard for income taxes ASC Topic 740, Income Taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company is liable for income taxes in Greece and the United Kingdom The corporate income tax rate is 22% in Greece and 19% in the United Kingdom. Losses may also be subject to limitation under certain rules regarding change of ownership.

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

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 judgments 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.

Basic and Diluted Net 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.

The following table summarizes potential common shares that were excluded as their effect is anti-dilutive:

	September 30, 2023		September 30, 2022
Warrants		6,124,412		434,501
Options		-		-
Convertible Notes		-		15,535
Total		6,124,412		450,036

Reclassifications to Prior Period Financial Statements and Adjustments

Certain reclassifications have been made in the Company’s financial statements of the prior period to correct an immaterial classification error.  As of December 31, 2022, $322,010 was reclassified from “Other assets” to “Accounts receivable, net”.

Recent Accounting Pronouncements

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 condensed consolidated financial statements. 

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ORGANIZATION NATURE OF BUSINESS AND GOING CONCERN (Tables)

9 Months Ended

Sep. 30, 2023

ORGANIZATION NATURE OF BUSINESS AND GOING CONCERN (Policies)

Schedule of allocation of purchase price of acquisition

Consideration
Cash	$	5,331,120
Fair value of common stock issued		138,667
Fair value of total consideration transferred	$	5,469,787
Recognized amounts of identifiable assets acquired
Financial assets	$	1,796,911
Inventory		297,340
Property, plant and equipment		7,682,411
Identifiable intangible assets		562,200
Financial liabilities		(3,235,233	)
Total identifiable net assets	$	7,103,629
Bargain purchase gain	$	1,633,842

Summary of performa information

Revenue for the 3- month period ended September 30, 2023	$	91,056
Loss for the 3- month period ended September 30, 2023	$	(604,790	)

Schedule of Property and Equipment estimated useful life

	Estimated Useful Life
Leasehold improvements and technical works	Lesser of lease term or 40 years
Buildings	25-30 years
Vehicles	6 years
Machinery	20 years
Furniture, fixtures and equipment	5–10 years
Computers and software	3-5 years

Schedule of Assets Measured and Recognized at Fair Value on a Recurring Basis

	September 30, 2023						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – Pancreta Bank	$	8,113		-		-	$	8,113
Marketable securities – National Bank of Greece		9,419		-		-		9,419
	$	17,532					$	17,532

	December 31, 2022						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – Pancreta Bank	$	8,200		-		-	$	8,200
Marketable securities – National Bank of Greece		6,681		-		-		6,681
	$	14,881					$	14,881

Summary of potential common shares

	September 30, 2023		September 30, 2022
Warrants		6,124,412		434,501
Options		-		-
Convertible Notes		-		15,535
Total		6,124,412		450,036

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PROPERTY, PLANT AND EQUIPMENT, NET (Tables)

9 Months Ended

Sep. 30, 2023

PROPERTY, PLANT AND EQUIPMENT, NET

Schedule of Property and Equipment

	September 30, 2023			December 31, 2022
Land	$	3,397,575		$	-
Buildings and improvements		4,761,344			-
Leasehold improvements		3,482			502,882
Vehicles		264,355			107,976
Furniture, fixtures and equipment		2,571,063			1,945,207
Computers and software		143,760			138,783
		11,141,579			2,694,848
Less: Accumulated depreciation and amortization		(891,797	)		(877,823	)
Total	$	10,249,782		$	1,817,025

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GOODWILL AND INTANGIBLE ASSETS, NET (Tables)

9 Months Ended

Sep. 30, 2023

GOODWILL AND INTANGIBLE ASSETS, NET

Schedule of Goodwill and Intangible Assets

	September 30, 2023			December 31, 2022
License	$	3,356,913		$	643,204
Trade name / mark		392,197			36,997
Customer base		602,204			176,793
		4,351,314			856,994
Less: Accumulated amortization		(335,498	)		(199,777	)
Subtotal		4,015,816			657,217
Goodwill		49,697			49,697
Total	$	4,065,513		$	706,914

Schedule of amortization expense for intangible assets

Year	Amount
2023	$	103,193
2024		398,636
2025		398,709
2026		398,709
2027		398,709
Thereafter		1,962,661
Total amortization	$	3,660,616

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RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2023

RELATED PARTY TRANSACTIONS

Schedule of Related Party Notes Payable activity

	September 30, 2023			December 31, 2022
Beginning balance	$	10,912		$	464,264
Payments		-			(472,920	)
Foreign currency translation		(116	)		19,568
Ending balance	$	10,796		$	10,912

Schedule of Related Party Loans Payable

	September 30, 2023			December 31, 2022
Beginning balance	$	12,821		$	1,293,472
Proceeds		-			3,635,756
Payments		-			(4,851,678	)
Foreign currency translation		(137	)		(64,729	)
Ending balance	$	12,684		$	12,821

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LINES OF CREDIT (Tables)

9 Months Ended

Sep. 30, 2023

LINES OF CREDIT

Schedule of Lines of Credit

	September 30, 2023		December 31, 2022
National	$	3,581,257	$	3,103,605
Alpha		1,080,454		991,492
Pancreta		273,382		1,232,128
EGF		419,659		431,512
Ending balance	$	5,354,752	$	5,758,737

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CONVERTIBLE DEBT (Tables)

9 Months Ended

Sep. 30, 2023

CONVERTIBLE DEBT

Schedule of Convertible Debt Activity

	September 30, 2023			December 31, 2022
Beginning balance convertible notes	$	100,000		$	640,000
Payments		(100,000	)		(525,000	)
Conversion to common stock		-			(15,000	)
Convertible notes payable	$	-		$	100,000

Summary of Derivative Liabilities

	Amount
Balance on January 1, 2023	$	54,293
Reduction of derivative related to conversions		(50,909	)
Change in fair value of derivative liabilities		(3,384	)
Balance on September 30, 2023	$	-

	December 31,
	2022
Dividend yield		0	%
Expected volatility	87.9% - 157.2
Risk free interest rate	1.46% - 3.75
Contractual terms (in years)	1.25 - 0.75

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DEBT (Tables)

9 Months Ended

Sep. 30, 2023

DEBT

Summary of roll forward of the third party Debt

September 30, 2023	Trade Facility			Third Party			COVID Loans			Total
Beginning balance, December 31, 2022	$	3,305,532		$	1,505,078		$	207,377		$	5,017,987
Proceeds		-			1,034,798			-			1,034,798
Payments		(1,152,920	)		(315,670	)		(20,593	)		(1,489,183	)
Debt forgiveness		(306,637	)		-			-			(306,637	)
Foreign currency translation		(20,235	)		(15,769	)		(1,007	)		(37,011	)
Ending balance, September 30, 2023		1,825,740			2,208,437			185,777			4,219,954
Notes payable – long-term		(1,349,460	)		(1,652,562	)		(158,255	)		(3,160,277	)
Notes payable - short-term	$	476,280		$	555,875		$	27,522		$	1,059,677

Summary of Outstanding Debt

Our outstanding debt as of September 30, 2023, is repayable as follows:
	September 30,  2023
2023	$	1,059,977
2024		905,048
2025		1,412,743
2026		202,401
2027 and thereafter		640,085
Total debt		4,219,954
Less: Notes payable–- current portion		(1,059,677	)
Notes payable–- long term portion	$	3,160,277

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LEASES (Tables)

9 Months Ended

Sep. 30, 2023

LEASES

Schedule of maturity of Operating Lease liability

2023	$	54,076
2024		217,112
2025		141,302
2026		99,562
Thereafter		480,361
Total undiscounted operating lease payments	$	992,413
Less: Imputed interest		(194,734	)
Present value of operating lease liabilities	$	797,679

Schedule of maturity of finance lease liability

Maturity of Finance Lease Liability
2023	$	41,451
2024		145,743
2025		117,000
2026		91,080
Thereafter		38,385
Total undiscounted finance lease payments	$	433,659
Less: Imputed interest		(43,027	)
Present value of finance lease liabilities	$	390,632

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WARRANTS (Tables)

9 Months Ended

Sep. 30, 2023

WARRANTS

Schedule of warrant Activity

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Warrants	Shares		Price		Term		Value
Balance outstanding, January 1, 2023		4,194,236	$	8.31		5.04	$	2,562,600
Balance outstanding, September 30, 2023		6,124,413	$	5.40		4.76	$	20,934
Exercisable, September 30, 2023		4,188,928	$	6.63		4.52	$	20,934

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DISAGGREGATION OF REVENUE (Tables)

9 Months Ended

Sep. 30, 2023

DISAGGREGATION OF REVENUE

Schedule of Revenue Disaggregation

	September 30,		September 30,
Country	2023		2022
Greece		12,544,643		11,990,599
Cyprus		72,754		-
UK		190,614		26,209
USA		210		-
Ireland		1,417		-
Croatia		14,159		(710)
Total	$	12,823,797	$	12,016,098

	September 30,		September 30,
Country	2023		2022
Greece		36,041,012		38,151,898
Cyprus		141,402		-
UK		1,338,509		-
USA		504		-
Ireland		1,417		118,467
Croatia		14,159		26,037
Total	$	37,537,003	$	38,296,402

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2023

SEGMENT REPORTING

Schedule of segment reporting

	Wholesale			Pharma manufacturing			Nutraceuticals & Pharmaceuticals			Other			Total
Revenues		11,936,166			91,055			796,576			-			12,823,797
Segment profit / (loss)		(728,986	)		(604,790	)		(1,838,942	)		(1,082,184	)		(4,254,902	)
Total assets		23,605,372			11,892,278			29,950,031			6,077,698			71,525,379

	Wholesale			Pharma manufacturing			Nutraceuticals & Pharmaceuticals			Other			Total
Revenues		34,908,505			91,055			2,537,443			-			37,537,003
Segment profit / (loss)		(549,841	)		(604,790	)		(2,944,599	)		(1,177,414	)		(5,726,644	)
Total assets		23,605,372			11,892,278			29,950,031			6,077,698			71,525,379

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BASIS OF PRESENTATION (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Net loss			$ (4,790,597)	$ (3,010,684)
Accumulated deficit	$ (71,038,463)		(71,038,463)				$ (66,232,813)
Stockholders' equity	44,195,740	$ 3,443,833	44,195,740	3,443,833	$ 43,669,058	$ 44,007,783	$ 39,284,295	$ 5,130,056	$ 4,910,249	$ 4,379,463
Revenue	12,823,797	$ 12,016,098	37,537,003	$ 38,296,402
CANA Pharmaceutical Laboratories, S.A. ("Cana") [Member]
Net loss			(4,790,597)
Net cash used in operations			16,587,726
Working capital	23,901,453		23,901,453
Accumulated deficit	(71,038,463)		(71,038,463)
Stockholders' equity	$ 44,195,740		44,195,740
Revenue			$ 37,537,003

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ORGANIZATION AND NATURE OF THE BUSINESS (Details) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Financial assets	$ 71,525,379						$ 71,525,379		$ 68,038,621
Net loss	(3,349,204)	$ (981,530)	$ (459,863)	$ (1,972,775)	$ (1,241,256)	$ 203,347	(4,790,597)	$ (3,010,684)
CANA Pharmaceutical Laboratories, S.A. ("Cana") [Member]
Financial assets	1,796,911						1,796,911
Cash							5,331,120
Fair value of common stock issued							138,667
Fair value of total consideration transferred							5,469,787
Inventory	297,340						297,340
Property, plant and equipment	7,682,411						7,682,411
Identifiable intangible assets	562,200						562,200
Financial liabilities	(3,235,233)						(3,235,233)
Total identifiable net assets	7,103,629						7,103,629
Bargain purchase gain	1,633,842						$ 1,633,842
Net loss	(604,790)
Revenue	$ 91,056

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ORGANIZATION AND NATURE OF THE BUSINESS (Details 1)	9 Months Ended
	Sep. 30, 2023
Vehicles [Member]
Estimated Useful Life	6 years
Machinery [Member]
Estimated Useful Life	20 years
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, description	Lesser of lease term or 40 years
Building [Member] | Minimum [Member]
Estimated Useful Life	25 years
Building [Member] | Maximum [Member]
Estimated Useful Life	30 years

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ORGANIZATION AND NATURE OF THE BUSINESS (Details 2) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Fair value of assets and liabilities	$ 17,532	$ 14,881
Marketable securities - Pancretan Bank [Member]
Fair value of assets and liabilities	8,113	8,200
Marketable securities - National Bank of Greece [Member]
Fair value of assets and liabilities	9,419	6,681
Level 1 [Member]
Fair value of assets and liabilities	17,532	14,881
Level 1 [Member] | Marketable securities - Pancretan Bank [Member]
Fair value of assets and liabilities	8,113	8,200
Level 1 [Member] | Marketable securities - National Bank of Greece [Member]
Fair value of assets and liabilities	9,419	6,681
Level 2 [Member] | Marketable securities - Pancretan Bank [Member]
Fair value of assets and liabilities	0	0
Level 2 [Member] | Marketable securities - National Bank of Greece [Member]
Fair value of assets and liabilities	0	0
Level 3 [Member] | Marketable securities - Pancretan Bank [Member]
Fair value of assets and liabilities	0	0
Level 3 [Member] | Marketable securities - National Bank of Greece [Member]
Fair value of assets and liabilities	$ 0	$ 0

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ORGANIZATION AND NATURE OF THE BUSINESS (Details 3) - shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Potential common shares	6,124,412	450,036
Convertible Notes [Member]
Potential common shares		15,535
Warrant [Member]
Potential common shares	6,124,412	434,501

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ORGANIZATION AND NATURE OF THE BUSINESS (Details Narrative) - USD ($)		1 Months Ended				3 Months Ended		9 Months Ended
	Jan. 06, 2023	Jun. 15, 2023	Apr. 24, 2023	Mar. 17, 2023	Feb. 28, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 19, 2018
VAT net receivable and payable balance						$ 456,788		$ 456,788		$ 79,373
Allowance for doubtful accounts						7,735,425		7,735,425		6,987,301
Depreciation expense						124,910	$ 83,214	237,479	$ 248,670
Accounts receivable, net										322,010
Amortization expense						88,168	$ 36,982	138,438	$ 53,389
Goodwill						49,697		49,697		$ 49,697	$ 49,697
Deferred revenue						317,129		317,129
Building Acquision [Member]
Cash	$ 3,950,000		$ 1,054,872
Equity method investment aggregate cost	$ 2,000,020					0		0
ICC International Cannabis Corp [Member]
Equity method investment aggregate cost						0		$ 0
Equity method investment shares acquired, shares								3,000,000
Closing price								$ 0
National Bank of Greece [Member]
Equity method investment aggregate cost						9,419		$ 9,419
Equity method investment shares acquired, shares								16,666
Closing price								$ 0.53
Pancreta Bank [Member]
Equity method investment aggregate cost						$ 8,113		$ 8,113
Pharmaceuticals And Nutraceuticals Products License [Member]
Estimated useful life								5 years
Greece [Member]
Cash		$ 109,330
Intangible assets		425,411
Income tax rate								22.00%
Issuable stock amount		$ 316,081
Shares issued		99,710
United Kingdom Of England [Member]
Income tax rate								19.00%
CANA Pharmaceutical Laboratories, S.A. ("Cana") [Member]
Cash								$ 873,600
Issuable stock amount								$ 138,667
Shares issued								46,377
Secured Promissory Note					$ 4,457,520
Asset acquision					$ 5,469,787
Zip Doctor Inc [Member]
Payment in fees				$ 8,788
Cash				150,000
Intangible assets				$ 158,788

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EQUITY METHOD INVESTMENTS (Details Narrative)	9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2023 CAD ($)	Sep. 30, 2023 EUR (€)	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Sep. 30, 2019
Gain on extinguishment of debt	$ (1,911,476)			$ (1,004,124)
Cosmo Farmacy LP [Member]
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%
Marathon Global Inc [Member] | Distribution and Equity Acquisition Agreement [Member]
Upfront cash received		$ 2,000,000
Fair value of settlement account	$ 1,554,590
Gain on extinguishment of debt	$ 1,554,590
Agreement term	5 years	5 years	5 years
Cash received upon gross sales		$ 2,750,000
Marathon Global Inc [Member] | Distribution and Equity Acquisition Agreement [Member] | Gross Sales One [Member]
Cash received upon gross sales		2,750,000
Gross sales		13,000,000
Marathon Global Inc [Member] | Distribution and Equity Acquisition Agreement [Member] | Gross Sales [Member]
Gross sales		$ 6,500,000
Share Exchange Agreement [Member] | ICC [Member]
Investement	$ 158,760				$ 160,470

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PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Property plant and equipment	$ 11,141,579	$ 2,694,848
Less: Accumulated depreciation	(891,797)	(877,823)
Total	10,249,782	1,817,025
Land [Member]
Property plant and equipment	3,397,575	0
Computers and software [Member]
Property plant and equipment	143,760	138,783
Vehicles [Member]
Property plant and equipment	264,355	107,976
Leasehold Improvements [Member]
Property plant and equipment	3,482	502,882
Furniture, fixtures and equipment [Member]
Property plant and equipment	2,571,063	1,945,207
Building And Improvements [Member]
Property plant and equipment	$ 4,761,344	$ 0

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GOODWILL AND INTANGIBLE ASSETS, NET (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022	Dec. 19, 2018
Goodwill and intangible assets, gross	$ 4,351,314	$ 856,994
Less: Accumulated Amortization	335,498	199,777
Subtotal	4,015,816	657,217
Goodwill	49,697	49,697	$ 49,697
Total	4,065,513	706,914
Customer Base [Member]
Goodwill and intangible assets, gross	602,204	176,793
Trade name / mark [Member]
Goodwill and intangible assets, gross	392,197	36,997
License [Member]
Goodwill and intangible assets, gross	$ 3,356,913	$ 643,204

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GOODWILL AND INTANGIBLE ASSETS, NET (Details 1)	Sep. 30, 2023 USD ($)
GOODWILL AND INTANGIBLE ASSETS, NET
2023	$ 103,193
2024	398,636
2025	398,709
2026	398,709
2027	398,709
Thereafter	1,962,661
Total amortization	$ 3,660,616

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LOAN RECEIVABLE (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended
	Oct. 30, 2021	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Prepayments of loan	$ 4,849,221
Interest rate	5.50%
Principal payments		$ 277,838
Short-term receivable		388,693		$ 377,038
Interest payments		371,846	$ 317,449
Long term receivables		3,458,115		$ 3,792,034
Loan receivables term	360 days
Decription of loan payment	Company is to receive 120 equal payments over the term of the loan
Loans [Member]
Interest payments		$ 140,324

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INCOME TAXES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income tax expenses benefit	$ 65,873	$ (398,066)	$ 0	$ (473,296)
Greece [Member]
Corporate tax rate			22.00%
United Kingdom [Member]
Corporate tax rate			25.00%

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CAPITAL STRUCTURE (Details Narrative) - USD ($)		1 Months Ended			3 Months Ended		9 Months Ended		12 Months Ended
	Apr. 03, 2023	Jul. 20, 2023	Jun. 15, 2023	Feb. 28, 2022	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	May 01, 2022
Preferred stock, shares authorized					100,000,000		100,000,000		100,000,000
Conversion of stock in to common stock								959,025
Conversion of stock value							$ 0	$ 2,427,693
Common stock authorized to purchase							$ 100,251	0
Common stock, share issued					13,068,693		13,068,693		10,605,412
Stock-based compensation expense					$ 109,636		$ 214,505
Stock value					$ 13,069		$ 13,069		$ 10,606
Common stock, share outstanding					12,982,196		12,982,196		10,589,915
Gain on extinguishment of debt							$ (1,911,476)	$ (1,004,124)
Extinguishment of debt							$ 306,637
Debt Conversion [Member]
Shares, Issued								9,520
Conversion of Debt								$ 1,190,000
Capital contribution								973,420
Increase in equity related to the conversion								1,190,000
Gain on extinguishment of debt								216,580
Extinguishment of debt								$ 216,580
Fair values of extinguishment of debt								$ 102.25
Issue shares of common stock								1,574
Cashless exercise warrants								38,144
Securities Purchase Agreement
Stock issued during period, share		1,401,163
Pre-funded warrants		715,323
Warrants Exercise price		$ 0.01
Warrants to purchase		1,935,484
Common stock exercise price		$ 2.75
Expiry description		The 1,935,484 warrants expire on January 1, 2029
Unit price		$ 2.75
Gross proceed		$ 5,250,000
Financing fee		$ 443,000
Common stock issued, shares		2,116,936
Common stock issued, value		$ 4,757,146
Assumption of black-scholes option pricing model		a) exercise prices of $11.00 before repricing and $2.75 after repricing, b) common stock fair value of $1.89, c) volatility of 253.1% before repricing and 2347.7% after repricing, d) discount rate of 4.265% before repricing and 4.03% after repricing, e) terms of 4.42 years before repricing and 5.51 years after repricing and f) dividend rate of 0%
Deemed dividend		$ 15,053
Previously issued warrants to purchase		782,610
Issuance of shares of common stock for services							300
Issuance of shares of common stock for services, value							$ 3,120
Common stock, share issued										1,574
Mezzanine Equity [Member]
Net carrying values of preferred equity							$ 5,452,300
Series A Preferred Stock [Member]
Preferred stock, shares authorized					6,000,000		6,000,000		6,000,000
Description of preferred stock convertible into common stock							Series A Preferred Stock was initially convertible into the Company’s common stock as determined by dividing the number of shares of Series A Preferred Stock to be converted by the lower of (i) $75.00 or (ii) 80% of the average volume weighted average price for the Company’s common stock for the five (5) trading days immediately following the effectiveness of the registration statement concerning the shares (the “Conversion Price”). On June 14, 2022, the Conversion Price was reset to $15.54 per share
Dividend rate, per year							8.00%
Deemed dividend							$ 372,414
Preferred stock, shares issued					0		0		0
Preferred stock, shares outstnading					0		0		0
Preferred Stock [Member]
Preferred stock, shares authorized					100,000,000		100,000,000
Preferred stock, shares issued					0		0
Preferred stock, shares outstnading					0		0
Series A Convertible Preferred Stock [Member]
Preferred stock, shares authorized					6,000,000		6,000,000
Series A Convertible Preferred Stock [Member] | Private Placement [Member]
Sales of shares				6,000
Shares price, per share				$ 1,000
Warrants				80,000
Aggregate gross proceeds warrants				$ 6,000,000
Warrants, Description				The Warrants were initially exercisable to purchase shares of common stock at $82.50 per share, or 110% of the Series A Shares initial conversion price and will expire five and one-half years following the initial exercise date of the Warrants
Additional number of warrant				80,000
Dividends				$ 5,788,493
Warrants Black-Scholes option pricing model , Description				The warrants were valued using the Black-Scholes option pricing model with the following terms: a) exercise price of $82.50, b) common stock fair value of $85.50, c) volatility of 118%, d) discount rate of 1.71%, e) term of 5.50 years and f) dividend rate of 0%
Treasury Stock [Member]
Number of share held					86,497		86,497		15,497
Price of held common share					$ 917,159		$ 917,159		$ 816,707
Common stock repurchased, amount					$ 100,452		$ 100,452
Common stock repurchased, shares					71,000		71,000
Convertible stock									6,000
Conversion of stock in to common stock									386,588
Conversion of stock value									$ 5,452,300
Common stock authorized to purchase	$ 3,000,000
Issuance of common stock [Member]
Issuance of shares of common stock for services							15,258
Issuance of shares of common stock for services, value							$ 96,888
Stock issued for acquisition			99,710			46,377
Stock issued for acquisition, value			$ 316,081			$ 138,667
Issuance of common stock [Member] | Equity Incentive Plan [Member]
Unvested share issued	185,000
Stock-based compensation expense					$ 214,505		109,636
Unamortized stock-based compensation					185,000		185,000
Issuance of common stock [Member] | Equity Incentive Plan [Member] | Tranche One [Member]
Vesting shares description	50% vesting on October 2, 2023
Stock value	$ 653,050
Issuance of common stock [Member] | Equity Incentive Plan [Member] | Tranche Two [Member]
Vesting shares description	50% vesting on October 2, 2024
Stock value					$ 438,545		$ 438,545
Exercise of Warrants [Member]
Issue shares of common stock								51,391
Cashless exercise warrants								139,527

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RELATED PARTY TRANSACTIONS (Details) - Notes Payable - Related Party [Member] - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Beginning balance	$ 10,912	$ 464,264
Payments	0	(472,920)
Foreign currency translation	(116)	19,568
Ending balance	$ 10,796	$ 10,912

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RELATED PARTY TRANSACTIONS (Details 1) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Beginning balance	$ 12,821
Ending balance	12,684	$ 12,821
Loans Payable - Related Party [Member]
Beginning balance	12,821	1,293,472
Proceeds	0	3,635,756
Payments	0	(4,851,678)
Foreign currency translation	(137)	(64,729)
Ending balance	$ 12,684	$ 12,821

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	1 Months Ended			3 Months Ended		9 Months Ended
	Feb. 28, 2023	May 17, 2022	Dec. 20, 2018	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Interest income				$ 110,596	$ 55,715	$ 555,281	$ 180,813
Principal repayments						118,847	71,172
Outstanding principal balance								$ 5,017,987
Accrued interest				82,500		82,500		275,547
Accounts receivable balance				25,591,342		25,591,342		23,084,000
Prepaid expenses and other current assets - related party				3,047,669		3,047,669		1,967,527
Revenue				12,823,797	12,016,098	37,537,003	38,296,402
Grigorios Siokas [Member]
Borrowing			$ 1,718,400
Outstanding principal balance				12,684		12,684		12,821
Foreign curreny translation						137
Accrued interest				973		973		206,355
Interest rate			4.70%
Maturity date			Mar. 18, 2019
Cana Holdings Laboratories Holding Limited [Member]
Secured promissory note	$ 4,457,520
Description related to interest on principal	Interest on the Principal Amount under this Note shall accrue at a rate equal to Five Percent (5%) plus 1 month LIBOR per annum (5.18% as of September 30, 2023)
Maturity of promissory note	5 days
Interest income	$ 148,789			112,292
DOC Pharma S.A. [Member]
Interest income						174,798
Principal repayments						317,520
Interest repayments						172,812
Prepaid expenses						$ 7,599,545
Interest rate						5.50%
Loan term						10 days
Maturity date						Dec. 01, 2032
Accounts payable and accrued expenses - related party				1,536		$ 1,536		201,991
Prepaid balance				4,279,200		4,279,200
Accounts receivable - related party				1,981,814		1,981,814		2,070,570
Prepaid expenses and other current assets - related party				5,493,826		5,493,826		3,320,345
Revenue				40,885	401,179	$ 43,287	819,896
Agreement terminate						Dec. 31, 2025
Pieces per product						1,000 pieces
Purchased of additional licenses						$ 449,185
Loan current portion				423,360		423,360		427,720
Loan non-current portion				3,492,720		3,492,720		3,851,280
Inventroy purchase				456,948	412,216	1,057,621	1,672,002
Description of research and development		The total cost of this project will be €1,425,000 plus VAT and will be done over three phases as follows: Design & Development (€725,000); Control and Product Manufacturing (€250,000) and Clinical Study and Research (€450,000). SkyPharm has bought a total of as of 81 licenses at value of €554,500 ($593,204) which is 38.91% of the total cost, as of December 31, 2022
Purchase of branded pharmaceuticals	$ 1,965,600
Monthly basis instalments						35,660
DOC Pharma S.A. [Member] | Inventories Related Agreement [Member]
Inventroy purchase				455,586	450,311	1,048,557	1,127,897
Dimitrios Goulielmos [Member]
Outstanding principal balance				10,796		10,796		10,912
Foreign curreny translation						116
Panagiotis Kozaris [Member]
Shares owned						51,159	0
Prepaid expenses				194,215		194,215		143,056
Maria Kozari [Member]
Accounts receivable balance				1,009,103		1,009,103		760,025
Net sales				122,969	$ 115,625	359,760	$ 328,017
George Terzis [Member]
Unpaid salaries and bonuses				95,000		95,000
Kanarogloy & Sia Epe [Member]
Accounts payable and accrued expenses - related party				$ 6,326		$ 6,326		$ 11,927

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LINES OF CREDIT (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Subtotal	$ 5,354,752	$ 5,758,737
National [Member]
Subtotal	3,581,257	3,103,605
Alpha [Member]
Subtotal	1,080,454	991,492
Pancreta [Member]
Subtotal	273,382	1,232,128
EGF [Member]
Subtotal	$ 419,659	$ 431,512

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LINES OF CREDIT (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Interest expense	$ 151,274	$ 517,660	$ 529,782	$ 1,722,750
Outstanding debt balance	5,354,752		5,354,752		$ 5,758,737
Line of Credit [Member]
Interest expense	37,536	$ 2,436	204,654	$ 136,222
Line of Credit [Member] | National Bank of Greece Two [Member]
Borrowing	1,058,400		1,058,400		1,069,800
Outstanding debt balance	957,335		957,335		984,653
Line of Credit [Member] | Alpha Bank of Greece [Member]
Borrowing	1,058,400		1,058,400		1,069,800
Outstanding debt balance	$ 1,080,454		$ 1,080,454		991,429
Current interest rate	6.00%		6.00%
Line of Credit [Member] | Pancreta Bank of Greece [Member]
Borrowing	$ 1,471,176		$ 1,471,176		1,487,022
Outstanding debt balance	$ 273,382		$ 273,382		1,232,128
Current interest rate	4.10%		4.10%
National Bank of Greece One [Member] | Line of Credit [Member]
Borrowing	$ 3,148,740		$ 3,148,740		3,182,655
Outstanding debt balance	2,631,645		2,631,645		2,118,952
EGF [Member] | Line of Credit [Member]
Borrowing	423,360		423,360		427,920
Outstanding debt balance	$ 419,659		$ 419,659		$ 431,512
Current interest rate	4.49%		4.49%
National Bank of Greece [Member] | Line of Credit [Member]
Current interest rate	3.60%		3.60%
National Bank of Greece [Member] | Line of Credit [Member] | CosmeOne [Member]
Current interest rate	6.00%		6.00%
National Bank of Greece [Member] | Line of Credit [Member] | Cosme [Member]
Current interest rate	3.60%		3.60%

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CONVERTIBLE DEBT (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
CONVERTIBLE DEBT
Beginning balance convertible notes	$ 100,000	$ 640,000
Payments	(100,000)	(525,000)
Conversion to common stock	0	(15,000)
Ending balance convertible notes	$ 0	$ 100,000

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CONVERTIBLE DEBT (Details 1)	9 Months Ended
	Sep. 30, 2023 USD ($)
CONVERTIBLE DEBT
Beginning balance	$ 54,293
Reduction of derivative related to conversions	(50,909)
Change in fair value of derivative liabilities	(3,384)
Ending balance	$ 0

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CONVERTIBLE DEBT (Details 2)	12 Months Ended
	Dec. 31, 2022
Dividend yield	0.00%
Minimum [Member]
Expected volatility	87.90%
Risk free interest rate	1.46%
Contractual terms (in years)	1 day 6 hours
Maximum [Member]
Expected volatility	157.20%
Risk free interest rate	3.75%
Contractual terms (in years)	18 hours

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CONVERTIBLE DEBT (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended
	Dec. 21, 2020	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2023	Dec. 31, 2022	May 01, 2022	Dec. 31, 2021	Jan. 07, 2021
Convertible notes payable, principal amount		$ 0		$ 100,000	$ 100,000		$ 640,000
Amortization of debt discount		0	$ 772,180
Derivative liability		$ 0		$ 0	$ 54,293
Shares issued		13,068,693			10,605,412
Securities Purchase Agreement
Gain on settlement of debt,		$ 50,909
Convertible notes payable, principal amount		0			$ 100,000
Gain on change in fair value of derivative liability		3,384	1,449
Accrued interest					13,740	$ 26,515
Derivative liability						$ 11,629
Shares issued						1,574
Shares issued at a fair value						$ 38,144
Securities Purchase Agreement | Convertible Promissory Note [Member]
Convertible notes payable, principal amount		525,000
Amortization of debt discount		62,619
Derivative liability		0			$ 54,293
Debt original issue discount	$ 40,000	$ 25,000
Financing cost	$ 3,000
Interest rate	8.00%	10.00%
Default interest rate	18.00%							8.00%
Purchase price principal amount								$ 100,000
Note issued	$ 540,000
Cash proceeds from conversion		$ 500,000
Conversion discount to price		30.00%
Note issued upon exchange for cash	500,000
Conversion rate		$ 75.00
Securities Purchase Agreement | Senior Convertible Note 1 [Member] | Institutional investors [Member]
Amortization of debt discount		$ 0	294,000
Debt discount	456,570
Transaction expenses	43,000
Amortized cost	$ 499,570
Loss on the change in fair value of the derivative		$ 0	$ 5,807

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DEBT (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Proceeds of debt	$ 1,034,798
Payments	(1,489,183)
Debt forgiveness	(306,637)
Foreign currency translation	(37,011)
Beginning Ending	4,219,954
Notes payable - long-term	(3,160,277)	$ (2,859,570)
Notes payable - short-term	1,059,677	$ 2,158,417
Beginning balance	5,017,987
Third Party [Member]
Proceeds of debt	1,034,798
Payments	(315,670)
Debt forgiveness	0
Foreign currency translation	(15,769)
Notes payable - long-term	(1,652,562)
Notes payable - short-term	555,875
Beginning balance	1,505,078
Ending balance	2,208,437
Trade Facility [Member]
Proceeds of debt	0
Payments	(1,152,920)
Debt forgiveness	(306,637)
Foreign currency translation	(20,235)
Notes payable - long-term	(1,349,460)
Notes payable - short-term	476,280
Beginning balance	3,305,532
Ending balance	1,825,740
COVID Loans
Proceeds of debt	0
Payments	(20,593)
Debt forgiveness	0
Foreign currency translation	(1,007)
Notes payable - long-term	(158,255)
Notes payable - short-term	27,522
Beginning balance	207,377
Ending balance	$ 185,777

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DEBT (Details 1) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
DEBT
2023	$ 1,059,977
2024	905,048
2025	1,412,743
2026	202,401
2027 and thereafter	640,085
Total Debt	4,219,954
Less: notes payable - current portion	(1,059,677)	$ (2,158,417)
Notes payable - long term portion	$ 3,160,277	$ 2,859,570

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DEBT (Details Narrative) - USD ($)			1 Months Ended								3 Months Ended	9 Months Ended	12 Months Ended
	Mar. 03, 2022	May 12, 2020	Dec. 21, 2022	Feb. 28, 2022	Feb. 23, 2022	Jul. 30, 2021	Nov. 19, 2020	Jun. 24, 2020	Jun. 23, 2020	Nov. 16, 2015	Sep. 30, 2023	Sep. 30, 2023	Dec. 31, 2022	Aug. 29, 2022	Dec. 31, 2021	Aug. 04, 2021	Dec. 30, 2020	Oct. 17, 2018
Gain on extinguishment of debt												$ 306,637
Outstanding principal loan balance	$ 3,950,000					$ 578,850
Note payable long term											$ 3,160,277	$ 3,160,277	$ 2,859,570
Accrued interest expenses													17,434
Interest rate description											one-month Euribor (3.39% as of September 30, 2023), and 6% plus one-month LIBOR (5.18% as of date of September 30, 2023), respectively
Non cash interest expenses											$ 23,820
Repayment of installment											$ 500,000
Repayments of debt													191,100
Capitalized fees	$ 221,060
Debt instruments final payament													2,593,363
Loan principal balance													$ 1,898,895
Shares issued											13,068,693	13,068,693	10,605,412
Final repayment											1,965,600
June 23, 2020 [Member] | National Bank of Greece SA [Member]
Outstanding principal loan balance											$ 289,059	$ 289,059	$ 249,035
Interest rate description									The note is interest bearing from the date of receipt and is payable every three (3) months at an interest rate of 3.06% plus 3-month Euribor (3.6% as of September 30, 2023)
Repayments of debt												93,388
Debt amount received from related party									$ 611,500
Notes payable long term											124,517	$ 124,517	220,253
Maturity date									60 days
August 29, 2022 [Member] | Promissory Notes [Member]
Accrued interest expenses													5,041
Agreement description												the Company entered into a promissory note for the principal amount of $166,667. The Company received $150,000 in cash and recorded $16,667 as an original issue discount upon issuance. The promissory note matured on the earlier of (a) December 27, 2022, or (b) the date the Company completes a debt or equity financing of at least $1,000,000
Interest rate														12.00%
July 14, 2023 [Member] | Promissory Notes [Member]
Outstanding principal loan balance											1,034,798	$ 1,034,798	0
Agreement description												the Company entered into an agreement with a third-party lender in the principal amount of €1,000,000 ($1,123,700), the “Note”. The Note matures on July 31, 2028 and bears an annual interest rate of 2.46% plus the 3-month Euribor (3.6% as of September 30, 2023). Pursuant to the agreement, there is a nine-month grace period for interest and principal repayment. The principal is to be repaid in 18 equal quarterly installments of €55,556 commencing on May 2, 2024
Notes payable long term											917,198	$ 917,198	0
Full and Final Settlement Agreement [Member]
Payment of loan			$ 1,100,000
Gain on extinguishment of debt			306,637
Repayment of loan			$ 52,920
Outstanding principal loan balance											1,825,740	1,825,740
Note payable long term											1,349,460	1,349,460
Accrued interest expenses											58,825	58,825
Senior Promissory Notes [Member]
Gain on extinguishment of debt					$ 787,544
Non cash interest expense											295,846	772,180
Aggregate amount of senior promissory notes					9,000,000								7,000,000
Fee payment					506,087
New debt amount fair value					$ 7,706,369
Debt Exchange Agreement [Member]
Outstanding principal loan balance							$ 611,500				0	0	0
Accrued interest expenses							$ 8,069				0	0	12,853
Repayments of debt												88,200	118,867
Agreement description							bears an annual interest rate, based on a 360-day year, of 3% plus .6% plus 6-month Euribor when Euribor is positive (3.93% as of September 30, 2023). The principal is to be repaid in 18 quarterly installments of €27,778 ($30,333)
Accrued expenses											0	0
Notes payable long term											147,000	147,000	237,733
Shares issued																12,852
Gain on settlement of debt upon shares issuance																$ 292,383
Common stock shares issuable upon listing on nasdaq																9,520
Settlement of debt, shares issuable upon listing on nasdaq																$ 1,190,000
Settlement of debt																$ 1,606,500
Gain from extinguishment of debt				$ 216,580
Principal amount of existing loan											264,600	264,600	356,600
Upon issuance of common stock				9,520
Maturity of note							Nov. 18, 2025
July 30, 2021 Debt Agreement [Member]
Outstanding principal loan balance											363,652	363,652	451,472
Accrued interest expenses											8,449	8,449	2,728
Repayments of debt												83,009	83,428
Agreement description						The note matures on August 5, 2026 and bears an annual interest rate that applies to 60% of the principal of the note that is based on a 365-day year, of 5.84% plus 3-month Euribor when Euribor is positive (3.93% as of September 30, 2023). Pursuant to the terms of the agreement, there is a nine-month grace period
Notes payable long term											247,186	247,186	336,788
Covid Ninteen [Member]
Outstanding principal loan balance											133,954	133,954	150,441
Loan received from related party		$ 366,900
Debt principal balance											14,884	14,884
Covid Ninteen [Member] | United Kingdom Government [Member]
Interest rate								2.50%
Loan prinipal amount											51,824	51,824	56,936
June 9, 2022 Debt Agreement One [Member]
Outstanding principal loan balance											296,352	296,352			$ 4,000,000
Repayments of debt												$ 42,336
Agreement description												the Company entered into an agreement with a third-party lender in the principal amount of €320,000 ($335,008), the “Note”. The Note matures on June 16, 2027 and bears an annual interest rate of 3.89% plus an additional rate of 0.60%, plus the 3-month Euribor (3.6% as of September 30, 2023). Pursuant to the agreement, there is a twelve-month grace period for principal repayment during which interest is accrued. The principal is to be repaid in 17 equal quarterly installments of €18,824 commencing on June 30, 2023
Accured interest expense											4,407	$ 4,407	8,379
Notes payable long term											216,661	216,661	281,924
Synthesis Facility Agreement [Member] | TFF [Member]
Outstanding principal loan balance																		$ 5,629,555
Accrued expenses																		524,094
Synthesis Facility Agreement [Member] | TFF [Member] | Principal Balance One [Member]
Debt instrument, accrue interest rate																	5.50%
Debt intrument split, principal balance																		$ 2,316,000
Synthesis Facility Agreement [Member] | TFF [Member] | Principal balance 2 [Member]
Stated interest rate																		6.00%
Debt split, balance																		$ 4,000,000
Loan Agreement [Member] | Panagiotis Drakopoulos [Member]
Outstanding principal loan balance											$ 0	$ 0	8,558
Accrued expenses													$ 7,271
Short term debt borrowing capacity										$ 42,832
Interest rate										6.00%

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LEASES (Details) - Operating Lease [Member]	Sep. 30, 2023 USD ($)
2023	$ 54,076
2024	217,112
2025	141,302
2026	99,562
Thereafter	480,361
Total undiscounted operating lease payments	992,413
Less: Imputed interest	(194,734)
Present value of operating lease liabilities	$ 797,679

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LEASES (Details 1) - Finance Lease [Member]	Sep. 30, 2023 USD ($)
2023	$ 41,451
2024	145,743
2025	117,000
2026	91,080
Thereafter	38,385
Total undiscounted finance lease payments	433,659
Less: Imputed interest	(43,027)
Present value of finance lease liabilities	$ 390,632

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LEASES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Operating lease, term of agreements			The Company has various operating and finance lease agreements with terms up to 10 years
Amortization of operating lease right-of-use assets			$ 102,549	$ 60,934
Operating lease expense	$ 50,690	$ 50,209
Operating lease weighted-average remaining lease term			6 days 15 hours
Operating lease, weighted average discount rate			6.74%
Finance lease, weighted average remaining lease term			2 days 19 hours
Finance lease, weighted average discount rate			6.74%
Finance lease, interest expense	6,920	4,012	$ 20,629	11,645
Finance lease, amortization expense	35,452	21,628	102,549	60,935
Finance lease, total cash used	$ 41,094	$ 24,495	118,847	71,172
General and administrative expenses [Member]
Amortization of operating lease right-of-use assets			$ 173,894	$ 158,407

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COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	1 Months Ended		9 Months Ended
	Jun. 26, 2022	Jul. 31, 2021	Sep. 30, 2023
Description of research and development agreement	The cost of the projects amount to EUR 820,000 ($891,504) which is allocated to certain phases. The amount will be due and payable upon completion of the corresponding phases. The Company records the corresponding R&D expense based on the project’s progress, which is actually invoiced by the third party in the relevant period. No such costs were incurred for the three and nine month periods ended September 30, 2023 or 2022
Description for advisory agreement		the Company paid $100,000. The $100,000 bonus was incurred and settled within 2022. Finally, the Consultant received a total of 10,000 shares of the Company’s common stock, 2,000 of such shares that have been previously issued pursuant to previous agreements and additional 15,258 shares that were issued on February 2, 2023, based on the amendment signed on February 1, 2023
Payment of additional tax			$ 99,644
Compensation for non-pecuniary damage amounting			21,744
General and administrative expenses [Member] | National Medicines Agency [Member]
Imposed fine			$ 16,214

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WARRANTS (Details) - Warrants [Member] - USD ($)	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Number of Shares Outstanding	4,188,928	4,194,236
Number of Shares Exercisable	6,124,413
Weighted Average Exercise Price Outstanding	$ 5.40	$ 8.31
Weighted Average Exercise Price Exercisable	$ 6.63
Weighted Average Remaining Contractual Term Outstanding, Beginning	5 years 14 days
Weighted Average Remaining Contractual Term Outstanding, Ending	4 years 9 months 3 days
Weighted Average Remaining Contractual Term Exercisable	4 years 6 months 7 days
Aggregate Intrinsic Value Outstanding	$ 20,934	$ 2,562,600
Aggregate Intrinsic Value Exercisable	$ 20,934

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WARRANTS (Details Narrative) - USD ($)		3 Months Ended	9 Months Ended
	Apr. 03, 2023	Sep. 30, 2023	Sep. 30, 2023	Dec. 31, 2022
Share-based compensation expense		$ 109,636	$ 214,505
Discription of incentive stock awards			The awards are in the form of restricted stock and will vest in two parts: 50% on October 2, 2023 and 50% on October 2, 2024
Total shares of awarded	185,000
Warrants [Member]
Number of Shares Outstanding		4,188,928	4,188,928	4,194,236
Expired dates description			exercisable with 4,175,595 warrants having expiration dates from May 2023 through December 2027 and 13,333 warrants with no expiration date
Number of Shares Exercisable		6,124,412	6,124,412

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DISAGGREGATION OF REVENUE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue	$ 12,823,797	$ 12,016,098	$ 37,537,003	$ 38,296,402
Cyprus [Member]
Revenue	72,754	0	141,402	0
UK [Member]
Revenue	190,614	26,209	1,338,509	0
Greece [Member]
Revenue	12,544,643	11,990,599	36,041,012	38,151,898
Croatia [Member]
Revenue	14,159	(710)	14,159	26,037
USA [Member]
Revenue	210	0	504	0
Ireland [Member]
Revenue	$ 1,417	$ 0	$ 1,417	$ 118,467

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SEGMENT REPORTING (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Total assets	$ 71,525,379		$ 71,525,379		$ 68,038,621
Segment profit / (loss)	(4,254,902)		(5,726,644)
Revenue	12,823,797	$ 12,016,098	37,537,003	$ 38,296,402
Pharma manufacturing [Member]
Total assets	11,892,278		11,892,278		12,624,313
Segment profit / (loss)	(604,790)		(604,790)
Revenue	91,055		91,055
Other [Member]
Total assets	6,077,698		6,077,698		35,272,337
Segment profit / (loss)	(1,082,184)		(1,177,414)
Wholesale [Member]
Total assets	23,728,729		23,728,729		23,605,372
Segment profit / (loss)	(728,986)		(549,841)
Revenue	11,936,166		34,908,505
Nutraceuticals and Pharmaceuticals [Member]
Total assets	29,950,031		29,950,031		$ 32,057,782
Segment profit / (loss)	(1,838,942)		(2,944,599)
Revenue	$ 796,576		$ 2,537,443

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SUBSEQUENT EVENTS (Details Narrative) - Subsequent Events [Member] $ / shares in Units, $ in Millions	Oct. 09, 2023 USD ($) $ / shares shares
Purchase price for the acquisition amounted	$ 318,540
Restricted common stock shares, value	$ 700,000
Restricted common stock shares authorized | shares	280,000
Issuance price | $ / shares	$ 2.50