UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT |
For the transition period from __________ to __________
Commission file number:
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of Company or organization) |
| (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
Registrant’s telephone number: (
Securities registered under Section 12(b) of the Exchange Act:
Title of each class |
| Name of each exchange on which registered |
The |
Securities registered under Section 12(g) of the Exchange Act:
Title of each class |
| Name of each exchange on which registered |
Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | Smaller reporting company | ||
(Do not check if a smaller reporting company) | Emerging growth company | ||
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
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:
TABLE OF CONTENTS
PART I | ||||
3 | ||||
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Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 36 | |||
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| 2 |
| Table of Contents |
COSMOS HEALTH INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
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| March 31, 2025 |
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| December 31, 2024 |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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Accounts receivable, net |
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Accounts receivable - related party |
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Marketable securities |
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Inventory |
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Loans receivable |
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Loans receivable - related party |
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Prepaid expenses and other current assets |
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Prepaid expenses and other current assets - related party |
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TOTAL CURRENT ASSETS |
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Property and equipment, net |
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Goodwill and intangible assets, net |
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Loans receivable - long term portion |
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Loans receivable - related party - long term |
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Operating lease right-of-use asset |
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Financing lease right-of-use asset |
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Advances for building's acquisition |
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Other assets |
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Other assets - related party |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable and accrued expenses |
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Accounts payable and accrued expenses - related party |
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Accrued interest |
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Lines of credit |
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Notes payable |
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Notes payable - related party |
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Loans payable - related party |
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Operating lease liability, current portion |
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Financing lease liability, current portion |
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Other current liabilities |
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TOTAL CURRENT LIABILITIES |
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Notes payable - long term portion |
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Operating lease liability, net of current portion |
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Financing lease liability, net of current portion |
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Other liabilities |
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TOTAL LIABILITIES |
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Commitments and Contingencies (see Note 14) |
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STOCKHOLDERS' EQUITY: |
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Common stock, $ |
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Additional paid-in capital |
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Subscription receivable |
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Treasury stock, at cost, |
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Accumulated deficit |
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Accumulated other comprehensive loss |
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TOTAL STOCKHOLDERS' EQUITY |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
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| $ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
| Table of Contents |
COSMOS HEALTH INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | ||||||||
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| Three Months Ended March 31, |
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| 2024 |
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REVENUE |
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COST OF GOODS SOLD |
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GROSS PROFIT |
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OPERATING EXPENSES |
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General and administrative expenses |
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Salaries and wages |
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Sales and marketing expenses |
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Research and development costs |
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Depreciation and amortization expense |
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TOTAL OPERATING EXPENSES |
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LOSS FROM OPERATIONS |
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OTHER INCOME (EXPENSE) |
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Other income (expense), net |
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Interest expense |
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Interest income |
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Gain on equity investments, net |
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Foreign currency transaction, net |
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TOTAL OTHER INCOME (EXPENSE), NET |
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LOSS BEFORE INCOME TAXES |
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INCOME TAX EXPENSE |
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NET LOSS |
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NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS |
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OTHER COMPREHENSIVE INCOME (LOSS) |
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Foreign currency translation adjustment, net |
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TOTAL COMPREHENSIVE INCOME (LOSS) |
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| $ | ( | ) | |
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BASIC NET LOSS PER SHARE |
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| $ | ( | ) |
DILUTED NET LOSS PER SHARE |
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| $ | ( | ) |
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
| Table of Contents |
COSMOS HEALTH INC. | ||||||||||||||||||||||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||||||||||||
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| Accumulated |
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| Common Stock |
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| Additional |
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| Treasury Stock |
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| Other |
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| Total |
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| No. of Shares |
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| Value |
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| Paid-in Capital |
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| Subscription Receivable |
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| No. of Shares |
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| Value |
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| Accumulated Deficit |
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| Comprehensive Loss |
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| Stockholders' Equity |
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Balance at January 1, 2024 |
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Foreign currency translation adjustment, net |
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| - |
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| - |
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Proceeds from sale of common stock, net of financing fees of $19,467 |
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Shares issued in lieu of cash |
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| - |
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Shares issued pursuant to warrant exchange agreement |
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| - |
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Stock-based compensation |
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| - |
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Net loss |
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| - |
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| - |
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Balance at March 31, 2024 |
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| Common Stock |
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| Additional |
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| Treasury Stock |
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| Other |
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| Total |
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| No. of Shares |
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| Value |
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| Paid-in Capital |
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| Subscription Receivable |
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| No. of Shares |
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| Value |
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| Accumulated Deficit |
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| Comprehensive Loss |
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| Stockholders' Equity |
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Balance at January 1, 2025 |
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| $ | ( | ) |
| $ | ( | ) |
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Foreign currency translation adjustment, net |
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Stock-based compensation |
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Shares issued pursuant to warrant exchange agreement |
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Debt exchanges |
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Net loss |
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Balance at March 31, 2025 |
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| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
| Table of Contents |
COSMOS HEALTH INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net Loss |
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| $ | ( | ) |
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities: |
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Depreciation and amortization expense |
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Amortization of right-of-use assets |
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Bad debt expense |
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Lease expense |
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Interest on finance leases |
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Stock-based compensation |
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Deferred income taxes |
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Gain on net change in fair value of equity investments |
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Changes in assets and liabilities: |
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Accounts receivable |
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Accounts receivable - related party |
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Inventory |
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Prepaid expenses and other assets |
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Prepaid expenses and other current assets - related party |
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Accounts payable and accrued expenses |
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Accounts payable and accrued expenses - related party |
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Accrued interest |
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Lease liabilities |
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Other current liabilities |
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Other liabilities |
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NET CASH USED IN OPERATING ACTIVITIES |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Proceeds from loan receivable |
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Purchase of intangible assets |
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Sale of intangible assets |
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Purchase of property and equipment |
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NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Payment of note payable |
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Proceeds from note payable |
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Payment of related party loan |
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Payment of lines of credit |
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Proceeds from lines of credit |
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Proceeds from the issuance of common stock |
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Payments of financing fees |
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Payments of finance lease liability |
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NET CASH PROVIDED BY FINANCING ACTIVITIES |
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Effect of exchange rate changes on cash |
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NET CHANGE IN CASH |
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CASH AT BEGINNING OF PERIOD |
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CASH AT END OF PERIOD |
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Supplemental Disclosure of Cash Flow Information |
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Cash paid during the year: |
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Interest |
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Supplemental Disclosure of Non-Cash Investing and Financing Activities |
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Closing of acquisition of Cloudscreen |
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Common stock issued to employees |
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Common stock issued to consultants |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
NOTE 1 – BASIS OF PRESENTATION
The terms “COSM,” “we,” the “Company,” the “Group” and “us” as used in this report refer to Cosmos Health Inc. The accompanying unaudited condensed consolidated balance sheet as of March 31, 2025 and unaudited condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2025 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 the management of COSM, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025, 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, 2024, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (“Form 10-K”). The accompanying condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited financial statements filed in our Form 10-K and is included for comparison purposes on the accompanying balance sheet.
Going Concern
The Company’s unaudited 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 period ended March 31, 2025, the Company had revenue of $
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 12 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. The exclusive distribution agreement signed for its Sky Premium Life products in the United Arab Emirates (“UAE”) and the significant orders already received, are expected to substantially strengthen its operating cash flow. Furthermore, the Company intends to vertically integrate the supply chain distribution network. On top of that, the Company plans to access the capital markets further in order to raise additional funds through equity and/or debt offerings. More specifically, commencing from August 2025, the Company will be eligible to utilize an S-3 registration statement, (12 months following the date that the Company had regained compliance with Listing Rule 5250(c)(1) (the “Filing Rule”)), to be in a position to raise equity capital more efficiently in conjunction with utilizing potential equity proceeds by its outstanding warrants. Management’s plans also include postponing certain debt repayments, through achieving favorable amendments to its debt facilities and in parallel intends to make substantial efforts to receive additional debt financing. Moreover, the Company’s management is considering of postponing certain repayments of suppliers and creditors. 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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| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
NOTE 2 – ORGANIZATION AND NATURE OF BUSINESS
Cosmos Health Inc. and its subsidiaries (Nasdaq: COSM), (“us”, “we”, the “Group”, or the “Company”) are an international healthcare group headquartered in Chicago, Illinois. 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 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, the UAE 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. On November 14, 2013, we changed our name to Cosmos Holdings Inc., 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 used to focus 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 EEA (European Economic Area) and distributor of Sky Premium Life nutraceutical products in the UK. On December 19, 2018, the Company acquired Cosmofarm S.A. (“Cosmofarm”), a pharmaceutical wholesaler specializing in the distribution and export of pharmaceutical products through its extensive pharmacies network. On April 3, 2023, the Company completed the acquisition of ZipDoctor Inc. (“ZipDoctor”), a telehealth company, a direct-to-consumer subscription-based telemedicine platform. On June 30, 2023, the Company acquired Laboratories Holdings (Cyprus) Limited (“Cana”), which wholly owned an operating subsidiary, Pharmaceutical Laboratories Cana S.A. (“Cana SA”), a Greek pharmaceutical company that manufactures, sells, distributes, and markets original branded products researched and developed by leading global pharmaceutical and healthcare companies.
Acquisition Accounting
Cloudscreen
On January 23, 2024, the Company completed the acquisition of Cloudscreen, a cutting-edge Artificial Intelligence (AI) powered platform. The acquisition is pursuant to the purchase agreement announced on October 11, 2023. Cloudscreen is a multimodal platform specialized in drug repurposing, a process that involves uncovering new target proteins or indications for existing drugs for use in treating different diseases. The total purchase price amounted to $
ZipDoctor
On April 3, 2023, the Company completed the acquisition of ZipDoctor Inc. (“ZipDoctor”), a telehealth company for a total sum of $
During the year ended December 31, 2024, the Company recognized an impairment charge of $
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| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
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 ($
Buildings Acquisitions
On April 24, 2023, the Company purchased a building for a total sum of $
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 $
Cana
On June 30, 2023, the Company acquired Cana Laboratories Holding (Cyprus) Limited (“Cana”), which wholly owned an operating subsidiary, Pharmaceutical Laboratories Cana S.A. (“Cana SA”) for €800,000 ($
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Bargain purchase gain |
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| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
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 unaudited condensed consolidated financial statements have been prepared in accordance with 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 Laboratories Holdings (Cyprus) Limited and ZipDoctor Inc. The Group’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The consolidated financial statements reflect the consolidation of all entities in which the Company has control, as determined by the ability to direct the activities that significantly affect the entities’ economic performance. 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.
Use of Estimates
The preparation of the 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 and, as such, 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.
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| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
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 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’s 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. In accordance with ASC 326 and the Current Expected Credit Loss (CECL) framework, the Company has elected to apply the practical expedient available for its trade receivables, which are short-term in nature and do not contain a significant financing component. The Company applies a loss-rate method for calculating expected credit losses (“ECL”) on accounts receivable, based on a combination of historical experience, industry data, and adjustments for current conditions and reasonable and supportable forecasts. Receivables are grouped into four aging buckets, with loss rates applied as follows: 1% for receivables aged 0–30 days, 2% for receivables aged 31–60 days, 3% for receivables aged 61–90 days, and 5% for receivables aged over 90 days. These loss rates are based on management’s expectations, which are further supported by external benchmarks, due to the Company’s limited history of actual write-offs. The resulting provision for expected credit losses is recognized in net income and is included in “General and administrative expenses”. Receivables that are deemed uncollectible are written off against the allowance when it is determined that they are no longer recoverable.
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).
Accounts Receivable, net
Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts against gross accounts receivable, prepaid expenses and other current assets and other assets 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 March 31, 2025 and December 31, 2024, the Company’s allowance for doubtful accounts was $
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Balance as of January 1st, 2025 |
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Balance as of March 31, 2025 |
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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 March 31, 2025 and December 31, 2024, the Company had a VAT net receivable balance of $
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| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
Inventory
Inventory is stated at the lower-of-cost or net realizable value using the weighted average 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, and 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. No significant judgments have been applied in estimating the selling price of our inventory.
Property and Equipment, net
Property 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:
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Computers and software |
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Depreciation expense was $
Property and Equipment additions
Property and Equipment additions are recognized as assets when it is probable that future economic benefits associated with the asset will flow to the entity and the cost of the asset can be measured reliably. Additions are initially measured at cost, which includes all costs directly attributable to bringing the asset to its working condition and location for its intended use. This may include purchase price, freight, installation, and any directly attributable professional fees. They are capitalized if their cost exceeds a certain threshold. The threshold is determined based on materiality considerations. Costs below the threshold are typically expensed as incurred. After initial recognition, additions are measured at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated systematically over the estimated useful life of the asset. They are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying amount exceeds the recoverable amount, an impairment loss is recognized, and the carrying amount of the asset is adjusted accordingly. Borrowing costs directly attributable to the acquisition, construction, or production of qualifying assets, including Property and Equipment additions, are capitalized as part of the cost of those assets.
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COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
Intangibles, net
Intangible assets with definite useful lives are recorded on the basis of cost and are amortized on a straight-line basis over their estimated useful lives. The Company uses a useful life of 5 years for an import/export license and a useful life of 10 years for the pharmaceutical and nutraceutical products licenses included in Note 4 as “Licenses”. A useful life of 10 years is also used for the platforms included in Note 4 as “Software” and the customer bases. 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 March 31, 2025 and December 31, 2024, no revision to the remaining amortization period of the intangible assets was made.
Amortization expense was $
Impairment of Long-Lived Assets
In accordance with ASC 360-10, Long-lived Assets, property and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. For the three months ended March 31, 2025, and 2024, the Company has recorded no impairment charge.
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COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
Equity Method Investment
For those investments in common stock or in-substance common stock in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, the investment is accounted for under the equity method. The Company records its share in the earnings of the investee and is included in “Equity earnings of affiliate” in the consolidated statement of operations. The Company assesses its investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable and recognizes an impairment loss to adjust the investment to its then current fair value.
Investments in Equity Securities
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 sale in current operations are reported as a component of current assets on the accompanying consolidated balance sheets. Equity securities that are not considered available for use in current operations would be reported as a component of long-term assets on the accompanying consolidated balance sheets. For equity securities with no readily determinable fair value, the Company elects a measurement alternative to fair value. Under this alternative, the Company measures the investments at cost, less any impairment, and adjusted for changes resulting from observable price changes in transactions for identical or similar investments of the investee. The election to use the measurement alternative is made for each eligible investment.
As of March 31, 2025, investments consisted of
Fair Value Measurement
The Company applies ASC 820, Fair Value Measurements and Disclosures, (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements.
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.
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.
Our financials also included the following financial instruments as of March 31, 2025 and December 31, 2024: cash, accounts receivable, inventory, prepaid expenses, loans receivable, accounts payable, notes payable and lines of credit. Except for the loans receivable which carry fixed interest rates, the carrying value of the remaining instruments, approximates fair value due to their short-term nature.
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COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
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 current liabilities 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) | Identification of the Contract: The Company identifies a contract with a customer when it enters into an agreement that creates enforceable rights and obligations. |
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| 2) | Identification of Performance Obligations: The Company identifies distinct performance obligations within each contract, which represent promises to transfer goods or services to the customer. |
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| 3) | Determination of Transaction Price: The Company determines the transaction price, which represents the amount of consideration to which it expects to be entitled in exchange for transferring promised goods or services to the customer, excluding any amounts collected on behalf of third parties. |
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| 4) | Allocation of Transaction Price: The Company allocates the transaction price to each distinct performance obligation based on its standalone selling price. If the standalone selling price is not observable, the Company estimates it using an appropriate method. |
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| 5) | Recognition of Revenue: Revenue is recognized when (or as) the Company satisfies a performance obligation by transferring a promised good or service to the customer. This typically occurs at a point in time or over time, depending on the nature of the performance obligation. |
Wholesale revenue and sales of own branded nutraceutical and pharmaceutical products
The Company has contracts or signed partnership forms (usual in the wholesale sector of the pharma industry) with its customers, stipulating the enforceable rights and obligations. The Company is responsible for transferring the goods to the customer’s location, which represents its sole performance obligation. Thus, the transaction price, which is predetermined in most of the products sold, is exclusively allocated to this performance obligation. Revenue is recognized at a single point in time, which is upon issuance of the corresponding sales invoice. The Company has assessed the impact of the items invoiced but not delivered to the customer’s location as of March 31, 2025 and December 31, 2024 and deemed that it had no material effect.
Pharma manufacturing
The Company has active contracts with its customers, stipulating the enforceable rights and obligations. The Company is responsible for the manufacturing and the packaging of specific products assigned by its customers, which represents its performance obligations to which the Company allocates the transaction price determined. The customers are responsible for providing the raw materials to the Company. Revenue is recognized over a period of time, which is during the production and packaging period of the respective products. As of March 31, 2025 and 2024 there were no products or batches of products for which the production or packaging phase was in progress.
Medihelm SA
Effective January 1, 2023, and pursuant to the distribution agreement with Medihelm SA (“Medihelm”), the exclusive distributor of the Company’s proprietary line of nutraceutical products, the Company determined that the transaction price for sales to Medihelm was variable in nature. In accordance with ASC 606, Revenue from Contracts with Customers, and specifically ASC 606-10-32-5, the Company applied the “expected value” method to estimate the transaction price, subject to the constraint on variable consideration.
This approach was necessitated by the existence of significant overdue receivables from Medihelm, which raised substantial doubt regarding full collectability of the contractual amounts. The Company reassessed the estimate of the transaction price at each reporting date, considering changes in facts and circumstances.
There was no impact on revenue recognition for the three-month period ended March 31, 2025 and no further adjustments to variable consideration were necessary.
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COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
Stock-based Compensation
The Company records stock-based compensation in accordance with ASC 718, Stock Compensation (“ASC 718”) and Staff Accounting Bulletin No. 107 (“SAB 107”) 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.”
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
We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized. Our review includes evaluating both positive (e.g., sources of taxable income) and negative (e.g., recent historical losses) evidence that could impact the realizability of our deferred tax assets. At March 31, 2025, we believe our United Kingdom and Greece deferred tax assets will not be realized, as such, we did not record a reversal on the full valuation approach we followed during the year ended December 31, 2024.
Leases
The Company accounts for leases in accordance with ASC 842. For all leases, the Company recognizes a right-of-use (ROU) asset and a lease liability on the balance sheet. The ROU asset represents the Company's right to use the underlying asset for the lease term, and the lease liability represents the obligation to make lease payments arising from the lease, both measured at the present value of future lease payments. Lease payments are recognized as an operating expense on a straight-line basis over the lease term. The interest on the lease liability and the amortization of the ROU asset are recognized separately in the income statement. Initial direct costs incurred by the Company in negotiating and securing leases are capitalized and amortized over the lease term on a straight-line basis. 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.
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COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
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 remuneration 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. The amount of the liability as of March 31, 2025 and December 31, 2024, was $
Basic and Diluted Net Loss per Common Share
Basic income per share is calculated by dividing the 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.
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Weighted average number of common and equivalent shares outstanding – Diluted |
|
|
|
|
|
| ||
The following table summarizes potential common shares that were excluded as their effect is anti-dilutive:
|
| March 31, 2025 |
|
| March 31, 2024 |
| ||
Warrants |
|
|
|
|
|
| ||
Total |
|
|
|
|
|
| ||
Common stock equivalents are included in the diluted income per share calculation only when option exercise prices are lower than the average market price of the common shares for the period presented.
Recent Accounting Pronouncements
There were no new material accounting standards issued in the first fiscal quarter of 2025.
| 17 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
NOTE 3 – EQUITY METHOD INVESTMENTS
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
NOTE 4 – PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following at March 31, 2025 and December 31, 2024:
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
Land |
| $ |
|
|
|
| ||
Buildings and improvements |
|
|
|
|
|
| ||
Leasehold improvements |
|
|
|
|
|
| ||
Vehicles |
|
|
|
|
|
| ||
Furniture, fixtures and equipment |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Less: Accumulated depreciation and amortization |
|
| ( | ) |
|
| ( | ) |
Total |
| $ |
|
|
|
| ||
| 18 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
NOTE 5 – INTANGIBLE ASSETS
Goodwill and intangible, net assets consist of the following at March 31, 2025 and December 31, 2024:
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
License |
| $ |
|
|
|
| ||
Trade name / mark |
|
|
|
|
|
| ||
Customer base |
|
|
|
|
|
| ||
Software |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Less: Accumulated amortization & impairment |
|
|
|
|
|
|
|
|
License |
|
| ( | ) |
|
| ( | ) |
Trade name / mark |
|
| ( | ) |
|
| ( | ) |
Customer base |
|
| ( | ) |
|
| ( | ) |
Software |
|
| ( | ) |
|
| ( | ) |
Subtotal |
|
|
|
|
|
| ||
Goodwill |
|
|
|
|
|
| ||
Total |
| $ |
|
|
|
| ||
At March 31, 2025, the estimated aggregate amortization expense for intangible assets subject to amortization for each of the five succeeding fiscal years is as follows:
Year |
| Amount |
| |
2026 |
| $ |
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
2030 |
|
|
| |
Thereafter |
|
|
| |
Total |
| $ |
| |
NOTE 6 – LOAN RECEIVABLE
On October 30, 2021, the Company entered into an agreement for a ten-year loan with Medihelm SA to memorialize €4,284,521 ($
| 19 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
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 three months ended March 31, 2025, and 2024.
The Company’s Greek subsidiaries are governed by the income tax laws of Greece. The corporate tax rate in Greece is
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
As of March 31, 2025, and 2024, 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 March 31, 2025, and December 31, 2024, the Company has maintained a valuation allowance against all net deferred tax assets in the United States, Greece, and the UK.
For the three months ended March 31, 2025, and 2024, the Company has not recorded any tax benefits/expenses in any jurisdiction where it is subject to income tax.
NOTE 8 – CAPITAL STRUCTURE
Preferred Stock
The Company is authorized to issue
Treasury stock
As of March 31, 2025 and December 31, 2024, the Company held
| 20 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
On January 24, 2023 the Company announced that its Board of Directors has approved a share repurchase program with authorization to purchase up to $
Common Stock
The Company is authorized to issue
Issuance of Common Stock
Between January 13, 2025, and March 4, 2025, the Company issued an aggregate of
On September 26, 2024, the Company had entered into a Warrant Inducement Letter (the “Letter”) with an investor pursuant to which the Company issued
Warrant Classification
The Company determines the classification of its warrants upon issuance by identifying the instrument issued to determine if it is debt or equity classified. The Company determined its warrants meet the scope exception in ASC 815-10 and are equity classified because, (a) the warrant is indexed to the Company’s own stock, (b) require settlement in equity shares, and (c) the Company has enough authorized and unissued 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 son of Grigorios Siokas, the Company’s CEO and principal shareholder, who also served as a principal of Doc Pharma S.A. in the past.
| 21 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
Prepaid expenses and other current assets – related party
As of March 31, 2025 and December 31, 2024, the Company had a prepaid balance of $
Accounts payable and accrued expenses - related party
As of March 31, 2025 and December 31, 2024, the Company had an accounts payable balance to Doc Pharma of $
Accounts receivable - related party
Additionally, the Company had a receivable balance of $
Sales and Purchases
During the three months ended March 31, 2025 and 2024, the Company purchased a total of $
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-month advance notice. Doc Pharma is exclusively responsible for supplying the raw materials and packaging required to manufacture the final product. However, it is 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
For the three months ended March 31, 2025 and 2024, the Company has purchased €208,568 ($
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.
| 22 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 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 ($
On December 29, 2023, the Company approved the purchase of additional 19 generic licenses from Doc Pharma, of a total value of €3,200,000 ($
Loans receivable - related party
The balance of prepaid expenses due Doc Pharma as of December 31, 2022, had increased to €7,103,706 ($
As of March 31, 2025 and December 31, 2024, the loan had a current portion of €712,200 ($
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 December 31, 2023. The Secured Promissory Note discussed below was included in consideration transferred upon acquisition.
Loans receivable - Related Party - Long Term
On February 28, 2023 (Issue Date), the Company signed a Secured Promissory Note with Cana Laboratories Holdings (Cyprus) Limited (the “Holder”), whereby the Holder borrowed the sum of €4,100,000 ($
| 23 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
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 years ended December 31, 2023 and 2022, the Company paid Panagiotis Kozaris an additional sum of $
Basotho Investment Limited
Basotho Investment Limited is considered a related party once Panagiotis Kozaris (former general operational manager and current employee of Cosmofarm SA) is one of its directors.
General and administrative expenses
On November 21, 2023, the Company issued
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 three-month peirod ended March 31, 2025 and 2024 the Company’s net sales to Pharmacy & More amounted to $
The Company plans to acquire Pharmacy & More within fiscal year 2025. Upon acquisition, the Company intends to offset the outstanding receivable balance with the corresponding purchase price and additionally plans to make Pharmacy & More the first shop-in-shop of its own branded line of nutraceutical products, Sky Premium Life® (SPL).
Other Related Parties
Additionally, the Company has the following material related-party balances as of March 31, 2025: a) a balance of $
| 24 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
Notes Payable – Related Party
A summary of the Company’s related party notes payable as of March 31, 2025 and December 31, 2024 is presented below:
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
|
|
|
|
|
|
| ||
Beginning Balance |
| $ |
|
| $ |
| ||
Payments |
|
|
|
|
|
| ||
Foreign currency translation |
|
|
|
|
| ( | ) | |
Ending Balance |
| $ |
|
| $ |
| ||
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 March 31, 2025 and December 31, 2024, the Company had a principal balance of €10,200 ($
The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the three months ended March 31, 2025, the Company recorded a foreign currency translation loss of $
Loans Payable – Related Party
A summary of the Company’s related party loans payable as of March 31, 2025 and December 31, 2024 is presented below:
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
|
|
|
|
|
|
| ||
Beginning balance |
| $ |
|
| $ |
| ||
Proceeds |
|
|
|
|
|
|
| |
Payments |
|
| ( | ) |
|
| ( | ) |
Set-offs |
|
|
|
|
|
| ||
Foreign currency translation |
|
|
|
|
| ( | ) | |
Ending balance |
| $ |
|
| $ |
| ||
| 25 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
Grigorios Siokas
From time to time, Grigorios Siokas loans the Company funds in the form of non-interest bearing, no-term loans. As of March 31, 2025 and December 31, 2024 the Company had an outstanding principal balance under these loans of $
The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the three months ended March 31, 2025, the Company recorded a loss of $
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 March 31, 2025 and December 31, 2024 is presented below:
|
| March 31, 2025 |
|
| December 31, 2024 |
| ||
National |
| $ |
|
| $ |
| ||
Alpha |
|
|
|
|
|
| ||
Pancreta |
|
|
|
|
|
| ||
Attica Bank |
|
|
|
|
|
| ||
EFG |
|
|
|
|
|
| ||
Ending balance |
| $ |
|
| $ |
| ||
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 6% line of credit was $
The cumulative maximum borrowing allowed for the COSME 1 Facility and COSME 2 Facility (collectively, the "Facilities") was $
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 $
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 March 31, 2025 and December 31, 2024 was $
The Company maintains a line of credit with EGF ("EGF LOC"), which is renewed annually and has a current interest rate of 4.49% plus 3-month Euribor. The maximum borrowing allowed as of March 31, 2025 and December 31, 2024, was $
On January 27, 2025, the Company entered into a bond loan agreement with Attica Bank,
| 26 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
Under the aforementioned line of credit agreements, the Company is required to maintain certain financial ratios and covenants. As of March 31, 2025, and December 31, 2024, 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 for the three months ended March 31, 2025 and 2024, was $
NOTE 11 – NOTES PAYABLE
A summary of the Company’s third-party debt as of and for the nine months ended March 31, 2025, and the year ended December 31, 2024 is presented below:
March 31, 2025 |
| Trade Facility |
|
| Third Party |
|
| COVID Loans |
|
| Total |
| ||||
Beginning balance, December 31, 2024 |
| $ |
|
|
|
|
|
|
|
|
|
| ||||
Proceeds |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Payments |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |
Foreign currency translation |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Ending balance, March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Notes payable - long-term |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |
Notes payable - short-term |
| $ |
|
|
|
|
|
|
|
|
|
| ||||
December 31, 2024 |
| Trade Facility |
|
| Third Party |
|
| COVID Loans |
|
| Total |
| ||||
Beginning balance, December 31, 2023 |
| $ |
|
|
|
|
|
|
|
|
|
| ||||
Proceeds |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Payments |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Foreign currency translation |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Ending balance, December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Notes payable – long-term |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) | |
Notes payable - short-term |
| $ |
|
|
|
|
|
|
|
|
|
| ||||
Our outstanding debt as of March 31, 2025 is repayable as follows: | ||||
|
| March 31, 2025 |
| |
2026 |
| $ |
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 |
|
|
| |
2030 and thereafter |
|
|
| |
Total debt |
|
|
| |
Less: notes payable - current portion |
|
| ( | ) |
Notes payable - long term portion |
| $ |
| |
| 27 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
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.
No principal repayments were made during the three-month period ended March 31, 2025. As of March 31, 2025, the Company had an outstanding principal balance of €1,350,000 ($
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 ($
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 ($
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 ($
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 ($
| 28 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
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 ($
Cloudscreen Promissory Note
On January 23, 2024, the Company completed the acquisition of Cloudscreen, a cutting-edge Artificial Intelligence (AI) powered platform. The total purchase price amounted to $
July 29, 2024 Debt Agreement
On July 29, 2024 the Company entered into an agreement with a third-party lender in the principal amount of €400,000 ($
December 20, 2024 Debt Agreement
On December 20, 2024 the Company entered into an agreement with a third-party lender in the principal amount of €400,000 ($
January 27, 2025 Debt Agreement
On January 27, 2025,
COVID-19 Loans
On May 12, 2020, the Company’s wholly owned subsidiary, SkyPharm SA, was granted a loan from the Greek government in the amount of €300,000 (approximately $
On June 24, 2020, the Company’s subsidiary, Decahedron, received a loan £50,000 ($
None of the above loans were made by any related parties.
| 29 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
NOTE 12 – LEASES
Operating Leases
The Company’s weighted-average remaining lease term relating to its operating leases is
The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of March 31, 2025:
Maturity of Operating Lease Liability |
|
|
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 and thereafter |
|
|
| |
Total undiscounted operating lease payments |
| $ |
| |
Less: Imputed interest |
|
| ( | ) |
Present value of operating lease liabilities |
| $ |
| |
The Company incurred lease expense, due to amortization of operating lease right-of-use assets, of $
Finance Leases
The Company’s weighted-average remaining lease term relating to its finance leases is
The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s finance leases as of March 31, 2025:
Maturity of Lease Liability |
|
|
| |
2026 |
|
|
| |
Total undiscounted finance lease payments |
| $ |
| |
Less: Imputed interest |
|
| ( | ) |
Present value of finance lease liabilities |
| $ |
| |
| 30 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
The Company had financing cash flows used in finances leases of $
The Company incurred interest expense on its finance leases of $
NOTE 13 – OTHER LIABILITIES
As of March 31, 2025 the Company’s other liabilities primarily consist of obligations to local tax authorities, payroll taxes, fines, and other miscellaneous liabilities.
The significant components of other liabilities are as follows:
| · | The Company’s Greek subsidiaries have $ |
|
|
|
| · | Payroll and other tax-related current liabilities amount to $ |
|
|
|
| · | A provision of $ |
|
|
|
| · | A provision of $ |
|
|
|
| · | Customer prepayments totaling $ |
Liabilities that are due within 12 months from the balance sheet date are classified under “Other Current Liabilities. “Obligations that extend beyond 12 months are classified as “Other Non-Current Liabilities.”
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 March 31, 2025, the following litigations were pending. None of the below is expected to have a material financial or operational impact.
Tax Audit-Related Fine – Cosmofarm
A payment request was issued by the Greek court in relation to a fine arising from a tax audit of Cosmofarm for the financial year 2014. The fine was imposed under Law No. 483/16.12.2020. Cosmofarm appealed the decision under Law No. 11541/09.03.2021; however, the appeal was dismissed 120 days after its submission. The Company settled additional taxes and fines related to this matter in the amount of €91,652 ($
Criminal Cases Related to Dishonored Checks
| · | On January 25, 2023, a criminal case involving dishonored checks issued by Cosmofarm’s customer, Filippou, was heard at the Z’ Three-Member Misdemeanor Court of Athens. The case was postponed to November 27, 2023, when the defendant was tried and found guilty. |
|
|
|
| · | On October 23, 2023, a criminal case involving dishonored checks issued by Cosmofarm’s customer, Kafantaris, was heard at the Sixth Single-Member Misdemeanor Court of Athens. The case was postponed to January 26, 2024, when the defendant was convicted under Decision No. 1599/2024. |
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| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
Appeal Against Decision 1389/2021 – Eleutheria Drakopoulou
On January 26, 2023, the Company’s appeal against Eleutheria Drakopoulou and Decision No. 1389/2021 of the Single-Member Court of First Instance of Athens was heard at the Athens Court of Appeal. The appeal was partially accepted. The Court ordered the return of the fee to the appellants, dismissed the action against the third defendant (Kozaris), and accepted the action against the first and second defendants (Kastrantas & Cosmofarm). The case was settled in two equal installments by Cosmofarm SA, of €35,000 ($
Pending Lawsuits Against Euaggelismos & Pananikolaou Hospitals
The Company’s subsidiary, Cana Laboratories, has two pending lawsuits against Euaggelismos Hospital for unpaid bills totaling €526,436. A court date has been scheduled for one of the lawsuits on December 11, 2024, while the other remains unscheduled. The matter is currently pending a court decision. Based on legal counsel’s assessment, it is considered highly probable that the losing party will appeal the decision once it is rendered. However, counsel has also indicated that the collection of the full amount awarded to the Company is considered highly probable.
There is also an unasserted claim against Papanikolaou Hospital, for a total sum of €89,300 due to unpaid bills, which will be asserted through a lawsuit. Court date is not set yet. The opinion of our legal advisor is that the success of the case and the collection of the aforementioned amount is probable and as of now negotiations are taking place in the direction of out-of-court settlement.
Both claims have been classified under “Other assets” within non-current assets in the Company’s consolidated balance sheets as of March 31, 2025.
Employment Dispute – Cana Laboratories
A lawsuit filed on April 5, 2018, by a former employee against the Company’s subsidiary, Cana, before the Athens Court of First Instance, sought the nullification of the termination of employment and compensation for unpaid wages and moral damages. Following multiple appeals, Judgment No. 1192/2024 was issued on September 26, 2023, requiring Cana to reinstate the former employee, with a penalty of €200 per day for non-compliance. According to the Company’s legal counsel, for the penalty to be enforceable, the former employee must file a new lawsuit requesting reinstatement. As of the date of this report, no such lawsuit or request for reinstatement has been received.
Lease Dispute
A lawsuit has been filed against the Company’s subsidiary, Cana, seeking restitution of a leased property, payment of approximately €13,190 in outstanding rent, and €8,488 in compensation for use of the property. The Company has settled the monetary claims in full, rendering that portion of the case moot. However, the claim for restitution of the leased property remains pending and is expected to be accepted by the court.
Claims for Recovery of Receivables
The Company’s subsidiary, Cosmofarm SA, is in the process of initiating legal action to recover approximately €20,301 in unpaid invoices from a certain customer. The hearing is expected to be scheduled in 2026. Based on legal counsel’s assessment, the claim is anticipated to be upheld. In addition, Cosmofarm SA is preparing to file two further lawsuits for the recovery of €15,143 and €15,255, respectively, related to unpaid invoices concerning two customers. Both hearings are expected to be scheduled in 2026, and legal counsel similarly anticipates favorable outcomes in both cases.
Advisory Agreements
On November 21, 2023, the Company entered into certain consulting agreements with four third-party consultants for the provision of a variety of services such as digital marketing, advisory services relating to target acquisitions and M&As and other additional services as described in the respective agreements. The agreements have duration from ten to 18 months and the consultants will solely receive stock consideration for the services rendered. More precisely, they have been awarded a total of
On July 1, 2024 the Company entered into a consulting agreement with a third-party consultant for the provision of a variety of services such as preparation of press releases and other publications, relationship management and other additional services as described in the respective agreement. The agreement has a duration of 16 months and the consultant will solely receive stock consideration for the services rendered. More precisely, they have been awarded a total of
The corresponding stock-based compensation expense is accrued evenly over the term of the agreements. For the three-month periods ended March 31, 2025 and 2024 the Company has recorded $
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COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
Research and Development Agreements
The Company entered into a Research & Development agreement with Doc Pharma S.A. on May 17, 2021. Under this agreement, Doc Pharma is responsible for the research, development, design, registration, copy rights and licenses of 250 nutritional supplements for the final products called Sky Premium Life®. More specifically, Doc Pharma is responsible for the product development and the Company has added 165 of such products codes in its portfolio as of March 31, 2025. The licenses purchased by Doc Pharma SA are capitalized and included in “Goodwill and intangible assets, net” of the Company’s Consolidated Balance Sheets as of March 31, 2025. Thus, no relevant R&D expense had been charged to the Company’s Consolidated Statements of Operations and Comprehensive income (Loss), concerning this agreement.
On June 25, 2022, the Company signed a research and development (“R&D”) agreement with a third party(CloudPharm PC), through which the Company assigned to the third party the development of new products and services in the field of health, focusing on the human intestinal microbiome. The project includes two phases. Phase 1 has a 20-month duration and its cost amounts to EUR 758,000 ($
On January 23, 2024, the Company completed the acquisition of Cloudscreen, a cutting-edge Artificial Intelligence (AI) powered platform. The acquisition is pursuant to the purchase agreement announced on October 11, 2023. Cloudscreen is a multimodal platform specialized in drug repurposing, a process that involves uncovering new target proteins or indications for existing drugs for use in treating different diseases. The total purchase price amounted to $
On December 3, 2024, the Company and the National Hellenic Research Foundation (NHRF) (Contractor) signed a Research Study Agreement. NHRF will conduct an in vitro study to support modifications to an invention, pursuant to the prior agreement involving CloudPharm PC (signed on June 15, 2022). NHRF ensures scientific rigor, provides updates, and maintains confidentiality. Cosmos Health provides necessary support and documentation. Rights to the research protocol belong to CloudPharm PC, NHRF, and Cosmos Health, while NHRF retains control over its methodologies. NHRF cannot publish findings without Cosmos Health’s approval and cannot use the study for other purposes. The total fee to by paid by the Company amounts to €60,000 plus VAT, payable in three installments. For the 3-month period ended March 31, 2025, the Company incurred EUR 15,000 ($
On December 6, 2024, the Company signed an Independent Contractor Agreement with a third-party contractor (the “Contractor”). The Contractor will provide oncology research and development services exclusively to the Company. The contract lasts three years (December 5, 2024 – December 5, 2027) and may be extended by mutual agreement. The Company may terminate the contract immediately for specific causes, including felony conviction, fraud, or loss of medical license. Either party may terminate the contract with 30 days' written notice. Certain compensation obligations will remain even after termination. The monthly consideration to be paid to the Contractor is based on the commencement of the Clinical Trials and New Drugs Applications and additional cash and stock consideration is payable based on certain milestones. None of the milestones were met as of March 31, 2025, and thus the Company has incurred no expenses as of the end of the period.
On December 31, 2024, the Company signed an agreement with a related party, DocPharma SA (the “Licensor”), through which the Company obtained a royalty-bearing, exclusive worldwide license to actively commercialize the patents owned by the Licensor, through research and preclinical and clinical trials for the useful life of the patents, or for 20 years, whichever is longer. The patents, filed in 2016 and 2017 respectively, cover innovative treatments for cancer. The terms of the agreement include an initial payment of EUR 500,000 due by the end of 2024, followed by fixed annual payments of EUR 350,000 during the five-year Start-Up Term from 2025 to 2030. After the Start-Up Term, the Company will pay a 1.5% royalty on annual net sales of licensed products covered by an issued patent. Moreover, the Company retains an optional buy-out right for a total amount of EUR 7,500,000, which can be exercised with 60 days' notice and a 60-day close period. The Company also has the right to sublicense the patents. For the 3-month period ended March 31, 2025, the Company incurred no royalties concerning this agreement.
NOTE 15 – STOCK OPTIONS AND 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 “2022 Plan”), that includes reserving
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. For the three-month periods ended March 31, 2025 and 2024, the Company recorded share-based compensation expense of $
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COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
On August 21, 2023, the Board adopted, subject to stockholder approval, the Cosmos Health Inc. 2023 Omnibus Equity Incentive Plan (the “2023 Plan”). The 2023 Plan is designed to enable the flexibility to grant equity awards to our officers, employees, non-employee directors and consultants and to ensure that we can continue to grant equity awards to eligible recipients at levels determined to be appropriate by the Board and/or the Compensation Committee. Subject to certain adjustments (as provided in Section 4.2 of the 2023 Plan) and exception (as provided in Section 5.6(b) of the 2023 Plan), the maximum number of shares reserved for issuance under the Plan (including incentive share options) is
On September 16, 2024, the Company’s Board of Directors approved incentive stock awards for the CEO, the CFO, certain officers and directors and other key employees of the Company pursuant to the 2023 Plan.
Warrant Anti-Dilution Adjustment and Deemed Dividend
As of March 31, 2025, there were
A summary of the Company’s warrant activity for the nine months ended March 31, 2025 and the year ending December 31, 2024 is as follows:
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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:
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COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2025
NOTE 17 – SEGMENT REPORTING
A. Basis for segmentation
The Group operates through various operating segments, which include the wholesale sector, the pharmaceutical manufacturing sector, the nutraceuticals and pharmaceuticals sector and other, with only the first three of them being reportable segments based on the criteria (quantitative thresholds) of ASC 280. The financial information utilized by our Chief Operating Decision Maker (“CODM”), which is our CEO, for resource allocation and performance evaluation is included within the operating segments described above. The reconciling items presented in the tables below are excluded from the segment data provided to the Chief Operating Decision Maker (“CODM”). The “Other” category primarily consists of corporate expenses incurred by the Group’s parent entity, including, but not limited to, costs related to SEC legal and compliance matters, executive compensation, audit and review fees, and other corporate overhead expenses.
B. Information about reportable segments
The table below presents information about the Company's reportable segments for the three-month period ended March 31, 2025. The accounting policies followed in the preparation of the reportable segments are the same with those followed in the preparation of the Company's condensed consolidated financial statements.
Three-month period ended March 31, 2025
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The following summary describes the operations of each reportable segment:
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NOTE 18 – SUBSEQUENT EVENTS
Between April 21, 2025, and April 24, 2025, the Company issued an aggregate of
On May 6, 2025, the Company received a notice from the Nasdaq Stock Market LLC indicating that it had not regained compliance with the $1.00 minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2) by the initial deadline of May 5, 2025. However, the Company was granted an additional 180-day compliance period, through November 3, 2025, to meet the requirement. The extension was granted based on the Company’s continued compliance with all other initial listing standards for the Nasdaq Capital Market and its intent to cure the deficiency, including through a potential reverse stock split if necessary.
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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, 2024 (“Form 10-K”) and this Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.
Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.
We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.
Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
Overview
Summary
We are diversified, vertically integrated global healthcare group, owner of proprietary pharmaceutical and nutraceutical brands, generics, manufacturer and distributor of healthcare products, engaged in research & development of innovative medicines and repurposing drugs as well as operator of a telehealth platform. The Company, through its subsidiaries, is operating within the pharmaceutical industry and in order to compete successfully in the healthcare industry, must demonstrate that its products offer medical benefits as well as cost advantages. Currently, most of the products that the Company is trading, compete with other products already on the market in the same therapeutic category, and are subject to potential competition from new products that competitors may introduce in the future.
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Revenue sources
Full Line Wholesaler
As a full line pharmaceutical wholesaler, we distribute a comprehensive range of pharmaceutical products, including prescription medications, over-the-counter (OTC) drugs, medical devices, food supplements, nutraceuticals, cosmetics and other healthcare products, to various businesses within the healthcare sector such as retail pharmacies, hospitals, private clinics and other wholesale pharmaceutical distributors.
Branded Pharmaceuticals & Generics
We are engaged in the production, promotion, distribution and sale of licensed branded generics and OTC products throughout Europe by our subsidiaries in Greece and UK. Our capital efficient business model is based on infrastructure, efficiency and scale. We believe that there is a significant growth on opportunities through product additions and geographic expansion.
Healthcare Distribution
We conduct direct distribution and sales of pharmaceuticals, medical devices, branded generics and OTC products. Our automated and GDP licensed distribution facilities ensure all medications reach their destination daily on an efficient and secure way. Our network exceeds over 1,500 pharmacies in Greece. We have created an upgraded and high-end distribution center in Greece due to our Robotic systems and integrated automations (“ROWA” robotics).
Nutraceutical
We have created and developed our own proprietary branded nutraceutical products, named “Sky Premium Life®” which was launched in 2018 and “Mediterranation®” which was launched in 2022. Utilizing unique formulations, and specialized extraction processes which follow strict pharmaceutical standards, our proprietary lines of nutraceuticals aim for excellence. We have a full portfolio of fast-moving and specialty formulas with more than 160 product codes including vitamins, minerals and other herbal extracts. Our nutraceutical products are manufactured exclusively by Doc Pharma. Our nutraceutical products have penetrated several markets within 2022 and 2023 through digital channels such as Amazon and Tmall. We focus on nutraceutical products because we foresee it as a market with high growth opportunities due to its large market size and margin contribution as the demand for nutraceutical products is increasing globally.
Regulations and Licenses
Decahedron received its Wholesale Distribution Authorization for human use on February 5, 2021, from the UK Medicines and Healthcare Products Regulatory Agency (“MHRA”) in accordance with Regulation 18 of the Human Medicines Regulations 2012 (SI 2012/1916) and it is subject to the provisions of those Regulations and the Medicines Act 1971. This License will continue to remain in force from the date of issue by the Licensing Authority unless cancelled, suspended, revoked or varied as to the period of its validity or relinquished by the authorization holder.
Cosmofarm received its Wholesale Distribution Authorization for human use on February 15, 2019, from the National Organization for Medicines. The license is valid for a period of five years and pursuant to the EU directive of (2013/C343/01). Also, Cosmofarm was granted with GDP certificate on November 11, 2019.
Our subsidiary, Cana SA, is a holder of Good Manufacturing Practices license (GMP), which means that it is certified for fulfilling the minimum standards that a medicines manufacturer must meet in the production processes.
Our subsidiaries are ISO 9001 certified for a management system for the trade and distribution of pharmaceuticals. As part of the certification process by the International Organization for Standardization, we need to be compliant with the General Data Protection Regulation (“GDPR”) adopted by the European Union in May 2018. GDPR applies to the processing of personal data of persons in the EU by a controller or processor.
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General Risks
Supply chain disruption is a growing concern for the European pharmaceutical industry as it increasingly looks to cut costs by relying on ‘emerging markets’, where standards can be lower in terms of compliance, ethics and health and safety. Our business depends on the timely supply of materials, services and related products to meet the demands of our customers, which depends, in part, on the timely delivery of materials and services from suppliers and contract manufacturers. Significant or sudden increases in demand for our products, as well as worldwide demand for the raw materials and services we require to manufacture and sell our products, may result in a shortage of such materials or may cause shipment delays due to transportation interruptions or capacity constraints. Such shortages or delays could adversely impact our suppliers’ ability to meet our demand requirements. Difficulties in obtaining sufficient and timely supply of materials or services can have an adverse impact on our manufacturing operations and our ability to meet customer demand.
We may also experience significant interruptions of our manufacturing operations, delays in our ability to deliver products, increased costs or customer order cancellations as a result of:
| · | the failure or inability to accurately forecast demand and obtain sufficient quantities of quality raw materials on a cost-effective basis; |
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| · | natural disasters or other events beyond our control (such as earthquakes, utility interruptions, tsunamis, hurricanes, typhoons, floods, storms or extreme weather conditions, fires, regional economic downturns, regional or global health epidemics, pandemics, geopolitical turmoil, increased trade restrictions between the U.S. and China and other countries, social unrest, political instability, terrorism, or acts of war) in locations where we or our customers or suppliers have manufacturing or other operations. |
Hikes in the price of medicine and their impact on the sustainability of the healthcare systems are garnering more and more attention. European regulators are willing to play their part in safeguarding continued access to safe and effective medicines. Regulators can speed up the approval of branded pharmaceuticals and biosimilars to boost competition and drive down prices.
Cuts in healthcare spending have been frequently occurring since the financial crises of the late of 2000’s. Europe’s slow recovery has been uneven, with austerity and economic uncertainty, especially in the EU’s poorer member states, such as Greece.
Distribution and Trade Agreements
On July 1, 2021, the Company’s subsidiary, SkyPharm SA, entered into an exclusive distribution agreement with a company based in Germany (“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 a 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 (“Distributor B”). Based on the agreement, SkyPharm sells 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 provides platform operation services to SkyPharm. The services provided by Distributor B 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 (“Distributor C”). Based on the agreement, Distributor C is appointed as the exclusive representative for the promotion and distribution of our proprietary nutraceutical products Sky Premium Life® in Greece.
During July 2021, the Company’s subsidiary Decahedron Ltd created a distribution page on Amazon UK, through which it sells, advertises and promotes our own proprietary branded nutraceutical product line Sky Premium Life®, directly to final consumers.
On September 22, 2022, the Company entered into a distribution agreement with a third party in order to become the distributor of Monkeypox Virus Real-Time PCR Detection Kits. Cosmos has exclusive distribution rights for Greece and Cyprus, with the opportunity to distribute the test kits across Europe on a non-exclusive basis.
On June 27, 2024, the Company signed an exclusive distribution agreement (the “Agreement”) with Pharmalink for its Sky Premium Life products in the UAE. As part of the Agreement, Pharmalink will be responsible for all key functions, including sales and marketing, regulatory affairs, logistics, supply, and distribution of Sky Premium Life® products in the UAE. Cosmos Health has secured its first purchase order from Pharmalink for 130,000 units and anticipates receiving orders of more than 500,000 units in the first year and in excess of 3,000,000 units over the next five years.
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Acquisitions and Co-Ventures
ZipDoctor
On September 28, 2022, the Company entered into a non-binding letter of intent (“LOI”) agreement to wholly acquire ZipDoctor Inc., a company that possesses a direct-to-consumer subscription-based telemedicine platform, that expects to provide its customers affordable, unlimited, 24/7 access to board certified physicians and licensed mental and behavioral health counselors and therapists. The current parent company of the acquiree will continue to manage all its aspects of the day-to-day operations, including product development, marketing, and operational support.
On March 17, 2023, the Company 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 Cana Laboratories Holdings (Cyprus) Limited (“Cana”), which wholly owned an operating subsidiary, Pharmaceutical Laboratories Cana S.A. (“Cana SA”). 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 SA 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 the 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 on 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.
Cloudscreen
On January 23, 2024, the Company completed the acquisition of Cloudscreen, a cutting-edge Artificial Intelligence (AI) powered platform. The acquisition is pursuant to the purchase agreement announced on October 11, 2023. Cloudscreen is a multimodal platform specialized in drug repurposing, a process that involves uncovering new target proteins or indications for existing drugs for use in treating different diseases. The total purchase price amounted to $637,080 and consisted of 280,000 shares of common stock with a fair value of $319,200 and an amount of $317,880 to be settled in cash during 2024 based on the Promissory Note signed on October 10, 2023. 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 $637,080 as another asset related to the technology platform acquired. The total amount was reclassified to “Goodwill and intangible assets, net” in January 2024 with the closing of the agreement (refer to Notes 2 & 5).
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Results of Operations
Three Months Ended March 31, 2025 and 2024
Revenue and net loss
For the three months ended March 31, 2025, the Company reported revenue of $13,712,528 and a net loss of $818,097, compared to revenue of $14,584,473 and a net loss of $1,866,690 for the corresponding period in 2024.
The decrease in net loss of approximately $1,048,593 is primarily attributable to a significant improvement in gross profit, driven by a shift in the Company’s revenue mix toward higher-margin product lines. In particular, the nutraceutical segment of our subsidiary, SkyPharm SA, recorded substantial growth during the period, contributing positively to overall gross profitability.
Revenue for the three-month period ended March 31, 2025, decreased by approximately 5.98% compared to the same period in 2024. This decline is predominantly due to unfavorable foreign exchange movements, specifically the depreciation of the euro against the U.S. dollar, which negatively impacted the translation of euro-denominated revenues. Additionally, a marginal decrease in sales from our wholesale subsidiary, Cosmofarm SA, contributed modestly to the overall revenue decline.
Cost of Goods Sold
For the three-month periods ended March 31, 2025 and 2024, the Company reported cost of goods sold (“COGS”) of $11,662,729 and $13,250,847, respectively, representing a decrease of $1,588,118 or approximately 11.99%. This decrease in COGS is primarily attributable to a shift in the Company’s revenue mix toward higher-margin product lines, particularly the nutraceuticals segment, which generally carries lower direct costs relative to other product categories. The reduction in COGS is also broadly aligned with the overall decline in revenues during the same period, thus maintaining consistency in the Company’s cost structure relative to sales performance.
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
For the three months ended March 31, 2025, the Company reported gross profit of $2,049,799, representing an increase of 53.7% compared to the same period in 2024. This significant improvement in gross profit is primarily attributable to a favorable shift in the Company’s revenue composition, with a greater proportion of sales generated from higher-margin product lines—most notably, those within the nutraceuticals segment. Additionally, the increase in gross profit corresponds with a reduction in COGS for the period, further reinforcing the positive impact of the evolving product mix on the Company’s margin performance.
Operating Expenses
For the three-month period ended March 31, 2025, total operating expenses amounted to $2,882,944, compared to $3,169,734 for the corresponding period in 2024, representing a decrease of $286,790, or approximately 9.05%. This decrease was primarily driven by reductions in personnel and marketing-related expenditure, as outlined below:
| · | Salaries and Wages: Personnel expenses decreased to $1,040,019 for the three-month period ended March 31, 2025, compared to $1,258,179 in the prior-year period. This reduction reflects the impact of cost containment initiatives and a more efficient allocation of human resources. |
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| · | Sales and Marketing Expenses: The Company recorded a significant decline in sales and marketing costs, particularly those associated with its branded nutraceutical portfolio. These expenses decreased by 83.78% compared to the first quarter of 2024, consistent with management’s strategic decision to temporarily scale back investment in brand promotion and advertising activities during the period under review. |
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| · | Depreciation and Amortization: Depreciation and amortization expenses remained relatively stable, amounting to $320,349 in the first quarter of 2025 versus $319,787 in the corresponding period of 2024. |
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| · | General and Administrative Expenses: General and administrative costs increased modestly to $1,478,702 in the current period, up $60,564 or 4.27% from $1,418,138 in the prior-year quarter. The increase is primarily attributable to professional service fees. |
Overall, the reduction in operating expenses reflects the Company’s continued focus on disciplined cost management while aligning spending with its strategic priorities.
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Other Income (Expense)
For the three-month period ended March 31, 2025, the Company recorded other expense of $68,137, compared to other income of $191,824 for the same period in 2024. This represents a net unfavorable variance of $259,961, or 135.52% year-over-year. The variance is primarily attributable to the recognition of non-recurring charges and prior-period adjustments during the current period, which were not present in the comparative quarter. These one-off items had a material impact on the classification of other income and expense, thereby reversing the net favorable position recorded in the prior year.
Interest Income & Expenses
For the three-month period ended March 31, 2025, interest expense totalled $187,107, representing an increase of $18,435, or 10.93%, compared to $168,672 for the prior period ended March 31, 2024. The increase was primarily driven by new debt facilities, entered into by our subsidiary Cosmofarm SA.
Interest income for the three-month period ended March 31, 2025, was $91,326, reflecting a decrease of $14,439, or 13.65%, compared to $105,765 for the three-month period ended March 31, 2024. This decline was primarily due to the receipt of loan repayments during 2024, which reduced outstanding loan receivable balances and, consequently, interest earned on them.
Foreign currency translation adjustment, net
For the three-month period ended March 31, 2025, the Company recorded a foreign currency translation adjustment gain of $1,031,268, compared to a loss of $599,276 in the corresponding period of the prior year. The improvement is partially attributable to favourable movements in foreign exchange rates during the current reporting period, which positively impacted the translation of the financial statements of foreign subsidiaries. It should be noted that during the year 2024, the Company’s Parent, Cosmos Health Inc., executed a share capital increase of €18,400,000 ($20,345,432) in favour of its subsidiary, SkyPharm SA. This transaction had a substantial adverse impact on the accumulated comprehensive loss as of December 31, 2024, due to the nature of foreign currency translation under ASC 830, where equity-related transactions are translated using historical exchange rates. The exchange rate applied at the time of the capital contribution was less favourable than the year-end rate, leading to a significant unrealized currency loss on intercompany balances that is reflected in other comprehensive income. The combined effect of these factors contributed to the period-over-period fluctuation in the foreign currency translation adjustment recognized in other comprehensive income.
Liquidity and Capital Resources
As of March 31, 2025 compared with December 31, 2024
As of March 31, 2025, the Company had positive working capital of $1,259,012, compared to a negative working capital of $296,193 as of December 31, 2024. The improvement in working capital is primarily attributable to higher inventory levels and increased accounts receivable as of March 31, 2025. These increases reflect the Company’s focus on supporting sales growth and ensuring product availability. In addition, the reduction in related party accounts payable contributed to the improved position, following debt-to-equity conversions executed by our Chief Executive Officer, Mr. Grigorios Siokas, during the period. The Company believes its current working capital is adequate to meet short-term obligations.
Cash Flow from Operating Activities
As of March 31, 2025, the Company reported net cash of $742,881, compared to net cash of $315,105 as of December 31, 2024, reflecting an increase of $427,776. The improvement in net cash was primarily driven by financing cash inflows during the period, notably the proceeds from a new debt facility entered into by the Company’s wholly-owned subsidiary, Cosmofarm SA. For the three-month period ended March 31, 2025, the Company used net cash of $186,316 in operating activities, a significant improvement compared to the net cash used of $3,412,103 in the same period of the prior year. The marginally negative operating cash flow during the period is primarily attributable to consolidated operating losses, predominantly incurred at the Parent Company level. The impact of changes in working capital items on operating cash flows was limited and not a material driver of the overall cash utilization. The notable decrease in operating cash outflows compared to the prior period was mainly due to the reduction in the Company’s net loss during the period. Additionally, in the comparative period of 2024, significant cash outflows had occurred in the form of operating investments, particularly in the form of prepayments for inventory and product purchases, which were not repeated at the same magnitude during the current period.
Cash Flow from Investing Activities
For the three-month period ended March 31, 2025, the Company used $7,069 in net cash for investing activities, compared to net cash provided by investing activities of $126,454 in the prior-year equivalent period. The cash outflows for the current period were immaterial and primarily reflect limited investment activity. The variance compared to the prior period is largely attributable to the absence of principal and interest receipts from the Company’s loans receivable, which had contributed to investing inflows during the three-month period ended March 31, 2024. As of the date of this report, the Company expects to recover the outstanding principal and accrued interest related to such loans within the next few months.
Cash Flow from Financing Activities
For the three-month period ended March 31, 2025, the Company generated $560,862 in net cash from financing activities, compared to $206,942 during the same period in 2024. The increase in net cash from financing activities was primarily driven by lower debt repayments and new financing arrangements. Debt repayments totalled $184,153 in the first quarter of 2025, a significant reduction compared to $364,354 in the prior-year period. In addition, during the first quarter of 2025, the Company’s subsidiary, Cosmofarm SA, entered into a new debt facility, which provided proceeds of $737,177. Equity financing activity during the three-month period ended March 31, 2024 included gross proceeds of $649,039 from two Prospectus Supplements to the Company’s Registration Statement on Form S-3. There were no comparable equity raises in the 2025 period. Furthermore, the Company generated $19,538 in net proceeds from its Lines of Credit during the first quarter of 2025. These inflows contributed to strengthening the Company’s liquidity position and funding ongoing operational needs.
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We anticipate using cash in our bank account as of March 31, 2025, 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 obliged 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 unaudited 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 period ended March 31, 2025, the Company had revenue of $13,712,528, net loss of $818,097 and net cash used in operations of $186,316. Additionally, as of March 31, 2025, the Company had positive working capital of $1,259,012, an accumulated deficit of $114,840,372, and stockholders’ equity of $25,951,712. 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 12 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 12 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. The exclusive distribution agreement signed for its Sky Premium Life products in the United Arab Emirates (“UAE”) and the significant orders already received, are expected to substantially strengthen its operating cash flow. Furthermore, the Company intends to vertically integrate the supply chain distribution network. On top of that, the Company plans to access the capital markets further in order to raise additional funds through equity offerings. More specifically, commencing from August 2025, the Company will be eligible to utilize an S-3 registration statement, (12 months following the date that the Company had regained compliance with Listing Rule 5250(c)(1) (the “Filing Rule”)), to be in a position to raise equity capital more efficiently in conjunction with utilizing potential equity proceeds by its outstanding warrants. Management’s plans also include postponing certain debt repayments, through achieving favorable amendments to its debt facilities and in parallel intends to make substantial efforts to receive additional debt financing. Moreover, the Company’s management is considering of postponing certain repayments of suppliers and creditors. 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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Strategic Plan
Our strategic plan, which strikes a balance between growth and sustainability, emphasizes synergies, vertical integration, operational efficiencies, R&D, brand expansion, and the global growth of our distribution network and facilities.
We intend to continue to pursue active ongoing acquisitions. In fact, many of our acquisitions entail exploring opportunities, with discounted assets through business combinations or joint ventures, all to enhance our distribution network. We will expand our R&D division which is a platform and incubator to develop new patented pharmaceuticals and proprietary innovative nutraceutical products. To foster organic growth, we will enhance our business development and marketing efforts, pursue global expansion via prominent retailers, pharmacies and e-commerce platforms, and recapture lost markets such as the infant and baby care categories. In addition, we will invest in the expansion of our production capacity and global network of facilities to boost sales of our brands, engage in contract manufacturing with large multinational pharmaceutical companies, produce pharma grade ethanol for hospitals, and expand into new large markets capitalizing on our comparative advantages. Last but not least, we aim to strategically invest in key personnel, from seasoned export managers to highly skilled scientists, to ensure we have the necessary expertise at our fingertips.
Growth Strategy
Our main strategy initiative is focused on continuing our progress in becoming a global healthcare company through the development of a lean, efficient and vertically integrated operating model, as well as, to expand our portfolio of our own branded nutraceutical and pharmaceutical products, grow our customer base and achieve our growth stabilization in this new market and gain an adequate size in the global pharmaceutical market. We are committed to serving our customers while continuing to innovate and provide products that make a difference in the lives of individuals. We strive to maximize our shareholders’ value by adapting to market realities and customer needs. Our strategy involves the enhancement of our manufacturing capacities and building a multinational network or wholesalers, distributors, and pharmacies and simultaneously continuing to expand the portfolio of innovative products that we distribute to that network.
We are committed to driving organic growth at attractive margins by improving execution, optimizing cash flow and leveraging our strong market position, while maintaining a streamlined cost structure throughout each of our businesses. We continue to further align our organization to our customers’ needs in a more seamless and unified way, while supporting corporate strategy and accelerating growth.
In 2024 and during the three-month period ended March 31, 2025, we continued to execute on the core elements of our “Growth Strategy”, which remains as follows:
| - | High Marking Segments: delivering on our growth areas and high-margin segments, we continued to show strong performance of our key proprietary brands such as Sky Premium Life® (“SPL”), Mediterranation® and C-Sept® / C-Scrub® with launches into new fast growing geographical regions. |
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| - | Generic Pharmaceuticals: focusing on our generic medicines’ capital with a view on a global commercial reach, focused portfolio and pipeline footprint, we continued to optimize our generics business and build a strong pipeline that will allow us to leverage our assets, know-how and sales network. |
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| - | Manufacturing of Pharmaceuticals: directing our manufacturing business by optimizing our production facilities and establishing a global footprint in the pharmaceutical fields of contract manufacturing organization (CMO) and contract development and manufacturing organization (CDMO). |
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| - | Global Networks, leveraging our extensive global network to access new markets and business segments, amplifying our reach and impact. We aim to expand and consort our sales distribution networks of our proprietary brands through strategic agreements in new regions and territories, such as the UAE and other GCC countries, Eastern Europe etc., while strengthening our market share in core markets. |
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| - | Corporate Reorganization: through vertical integration and efficiency, a corporate reorganization is underway to streamline costs and enhance asset and resource utilization through the integration of business units. A key component of this plan is to achieve operational efficiencies and economies of scale through organic growth and a cost optimization initiative aimed at significantly reducing recurring operating expenses and while maintaining the Company's growth outlook. |
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| - | Innovation: stepping up innovation through taken steps to deliver innovative products pipeline, by accelerating our R&D efforts on IP-driven products such as the CCX0722 obesity and weight management pill, CCDL24 an innovative treatment for gastrointestinal disorders, CNS, Prostate, Ovarian and Colorectal cancer treatments. Finally, our recently acquired AI-driven drug repurposing platform “Cloudscreen®”, aims to address major health challenges in various treatment areas. |
We have made several strategic acquisitions of companies, products and technologies to complement our internal growth and expertise. These acquisitions have strengthened our core product technology infrastructure by providing additional manufacturing, marketing, and research and development capabilities, including the ability to manufacture our products, other product components and services.
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While the Company intends to pursue these milestones, there may be circumstances where for valid business reasons or due to factors beyond the control of the Company, a reallocation of efforts may be necessary or advisable.
The Company intends to spend the funds available to strengthen working capital, inventories, intangible assets, acquisitions, research and development, sales and marketing expenses. Due to the uncertain nature of the industry in which the Company operates, projects may be frequently reviewed and reassessed. Accordingly, while it is currently intended by management that the available funds will be expended as set forth above, actual expenditures may in fact differ from these amounts and allocations.
Product Portfolio
Our product portfolio includes generics and over-the-counter (“OTC”) pharmaceutical products, innovative medicines, as well as nutraceuticals and biocides. This structure enables strong alignment and integration between manufacturing, operations, commercial regions, research & development and our global marketing and portfolio function, optimizing our product lifecycle across therapeutic areas and physical wellbeing.
Generic Medicines
Generic medicines are the chemical and therapeutic equivalents of originator medicines and are typically more affordable in comparison to the originator’s products. Generic medicines are required to meet similar governmental requirements as their brand-name equivalents, such as those relating to current Good Manufacturing Practices (“GMP”), manufacturing processes and health authorities’ inspections, and must receive regulatory approval prior to their sale in any given country. Generic medicines may be manufactured and marketed if relevant patents on their brand-name equivalents (and any additional government-mandated market exclusivity periods) have expired.
We develop, manufacture and sell generic medicines in a variety of dosage forms, including tablets, capsules, liquids, ointments and creams.
Our portfolio of generic medicines includes: 1) ASTO-CHOL (Pravastatin); 2) Diorium (Omeprazole); 3) HEART-FREE (Clopidogrel); 4) the LIPICHOL (Atorvastatin); 5) Miltus (Donepezil); 6) Newzypra (Olanzapine); 7) the PNEUMO-KAST (Montelukast); 8) Sahar (Pioglitazone); 9) VIVALCID (Leucovorin); and 10) the Diabit-is (Sitagliptin).
Nutraceuticals
Nutraceuticals is referring to a broad range of products derived from food sources that provide health benefits in addition to their basic nutritional value. While nutraceuticals are not classified as drugs, they are often used for their therapeutic effects in a manner similar to pharmaceuticals.
Our proprietary nutraceutical brands are Sky Premium Life® (“SPL”) and Mediterranation®. Our portfolio currently includes around 165 SKUs and more specifically product codes such as Vitamins and Minerals, Amino Acids, Botanical and other Herbal extracts used for health prevention and care needs.
Biocides
Our proprietary portfolio of branded biocides and antiseptic soaps comprises of our brands C-Sept® and C-Scrub®. The biocide C-Sept Pro 2% has a broad-spectrum antimicrobial formulation that combines 76% Isopropyl Alcohol and 2% chlorhexidine digluconate as active substances. On the other hand, our antiseptic soap, C-Scrub Wash 4% CHG, contains chlorhexidine digluconate as its active antiseptic substance, which is approved by the World Health Organization for human use. The broad antimicrobial spectrum of C-Scrub Wash 4% CHG encompasses Gram-positive and Gram-negative microbes, fungi, and viruses, and its efficacy has been demonstrated in numerous published clinical studies. C-Scrub Wash 4% CHG significantly reduces bacterial load on the skin with long lasting.
Other Pharmaceutical Products:
Our portfolio of other pharmaceutical products includes brands such as:
| - | Melatonin Spray®; |
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| - | Otikon™; and |
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| - | Bio-bebe®. |
Melatonin Spray®, is recommended for addressing insomnia and jet lag, offering a peaceful sleep. It is manufactured using nanonemulsification technology and primarily contains melatonin, a lipophilic molecule. To increase the absorption of such molecules, nanoemulsification is one of the most effective methods. The absorption of the ingredient increases proportionally with the reduction of the micelle diameter. The diameter of a nanoemulsion micelle ranges between 50 and 300nm.
Otikon™ ear drops, is a class II medical device in the form of ear drops for spray application and contains natural ingredients used to relieve ear pain, remove excess ear wax (cerumen) and improve hearing. The efficacy and safety of Otikon™ ear drops, or naturopathic drops, has been studied in children with ear pain associated with otitis media. Among other ingredients, it contains olive oil, mullein olive oil extract (Verbascum Thapsus), marigold oil extract (Calendula officinalis), St. John’s wort oil extract (Hypericum perforatum) and lavender oil (Lavandula officinalis).
Bio-bebe® is an organic infant care and nutrition brand. All product lines are made exclusively of 100% organic, high-quality ingredients, and are produced with minimal environmental impact. The range includes a variety of baby foods such as organic powder milk, pear, carrot and banana purée, pasta with minced meat, whole grain rice cereals, whole grain cereal porridges and organic rice creams with vanilla milk. Additional brand extensions include baby cosmetics, liquid dish soaps and detergents.
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In line with our growth strategy, we are constantly evaluating and optimizing our products portfolio, including through the sale of certain product rights in our operating or entering areas.
Off Balance Sheet Arrangements
As of March 31, 2025, there were no off-balance sheet arrangements.
Critical Accounting Policies
In December 2001, the SEC requested that all registrants list their most “critical accounting polices” under the Management’s Discussion and Analysis section. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Revenue Recognition: The Company adopted Topic 606 Revenue from Contracts with Customers on January 1, 2018. As a result, it has changed its accounting policy for revenue recognition as detailed in Note 2.
Foreign Currency. Assets and liabilities of all foreign operations are translated at period-end rates of exchange, and the statements of operations are translated at the average rates of exchange for the period. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders’ equity until the entity is sold or substantially liquidated. Gains or losses from foreign currency transactions (transactions denominated in a currency other than the entity’s local currency) are included in net (loss) earnings.
Income Taxes. The Company accounts for income taxes under the asset and liability method, as required by the accounting standard for income taxes, ASC 740. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company is liable for income taxes in Greece and the United Kingdom. The corporate income tax rate is 22% in Greece (tax losses are carried forward for five years effective January 1, 2013) and 25% in United Kingdom. Losses may also be subject to limitation under certain rules regarding change of ownership.
We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized. Our review includes evaluating both positive (e.g., sources of taxable income) and negative (e.g., recent historical losses) evidence that could impact the realizability of our deferred tax assets.
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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 Credit Losses
The Company follows ASC 310 to estimate the allowance for doubtful accounts. Pursuant to FASB ASC paragraph 310-10-35-9, losses from uncollectible receivables shall be accrued when both of the following conditions are met: (a) information available before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) indicates that it is probable that an asset has been impaired at the date of the financial statements, and (b) the amount of the loss can be reasonably estimated. Those conditions may be considered in relation to individual receivables or in relation to groups of similar types of receivables. If the conditions are met, accrual shall be made even though the receivables that are uncollectible may not be identifiable. The Company reviews individually each trade receivable for collectability and performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and general economic conditions that may affect a client’s ability to pay. Bad debt expense is included in general and administrative expenses, if any.
Inventory Reserves
Our merchandise inventories are made up of finished goods and are valued at the lower of cost or market using the weighted-average cost method. Average cost includes the direct purchase price, net of vendor allowances and cash discounts, of merchandise inventory. We record valuation reserves on an annual basis for merchandise damage and defective returns, merchandise items with slow-moving or obsolescence exposure and merchandise that has a carrying value that exceeds market value. These reserves are estimates of a reduction in value to reflect inventory valuation at the lower of cost or market. The reserve for merchandise returns is based upon the determination of the historical net realizable value of products sold from our returned goods inventory or returned to vendors for credit. Our reserve for merchandise returns includes amounts for returned product on-hand as well as for new merchandise on-hand that we estimate will ultimately become returned goods inventory after being sold based on historical return rates.
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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.
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 below:
| · | The Company has a lack of proper segregation of duties. |
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| · | The Company’s internal control structure lacks multiple levels of review and oversight and does not have appropriate IT General Controls (ITGCs) for the applications used in the Financial Reporting process, caused by lack of design of relevant controls and overall IT risk management. |
We are in the process of remediating all material weaknesses present in our internal controls and we plan to have completed the remediation by December 31, 2025.
- The Company has a lack of proper segregation of duties.
We are in the process of updating the organizational chart in order to reallocate roles among personnel and emphasize sharing the responsibilities of key business processes by distributing the discrete functions of these processes to multiple people and departments.
- The Company’s internal control structure lacks multiple levels of review and oversight and does not have appropriate IT General Controls (ITGCs) for the applications used in the Financial Reporting process, caused by lack of design of relevant controls and overall IT risk management.
We are in the process of developing multiple levels of review based on job responsibilities and level of personnel. For example, management reviews whether the bank reconciliations are being prepared on a timely basis by the preparer and whether there are discrepancies between the general ledger and the bank statements. Another example is the review of management accounting information by the CFO and his authorization for material transactions and adjustments. Furthermore, we are in the process of assessing a new financial reporting application that will be used by all the companies of the Group and would be able to support, process financially relevant information, provide financially relevant reporting and house financially relevant interfaces and application controls in order for us to more efficiently establish IT General Controls to a single and more reliable application.
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Changes in Internal Controls Over Financial Reporting
There were no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
Our Audit Committee is in the 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. 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.
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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, 2024.
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 and Use of Proceeds.
None. Previously reported on Form 8-K.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the three months ended March 31, 2025, 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 | |
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| Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
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| Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
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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).** | |
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101.SCH | Inline XBRL Taxonomy Extension Schema Document.** | |
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101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.** | |
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101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.** | |
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101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document.** | |
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101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.** | |
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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. |
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** | 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. |
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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. | |||
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Date: May 15, 2025 | By: | /s/ Grigorios Siokas | |
Grigorios Siokas | |||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
Date: May 15, 2025 | By: | /s/ Georgios Terzis |
|
Georgios Terzis |
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| Chief Financial Officer |
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| (Principal Financial Officer, And Principal Accounting Officer) |
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EXHIBIT INDEX
Exhibit No. | Document Description | |
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| Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
|
| |
| Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
|
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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.** | |
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101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.** | |
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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. |
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** | 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. |
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