UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, ~~2022~~2023

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

For the transition period from ___________ to ___________

Commission file number: 000-54436

COSMOS ~~HOLDINGS~~HEALTH INC.

(Exact name of registrant as specified in its charter)

Nevada		27-0611758
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

141 West Jackson Blvd, Suite 4236 Chicago, Illinois		60604
(Address of principal executive offices)		(Zip Code)

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

N/A

(Former name, former address and former three months, if changed since last report)

Title of Each Class

Trading Symbol

Name of Each Exchange

On Which Registered

Common Stock, $.001 par value

COSM

The Nasdaq Capital Market

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

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

Applicable only to Corporate Issuers:

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

AsIndicate the number of ~~May 17, 2022, there were 19,106,625 shares issued and 18,719,201~~ shares outstanding of each of the registrant’s classes of common ~~stock.~~stock, as of the latest practicable date: 10,620,670 as of May 16, 2023.

COSMOS ~~HOLDINGS~~HEALTH INC.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited).	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3534

Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	4342

Item 4.	Controls and Procedures.	4342

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	4544

Item 1A	Risk Factors	4544

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	4544

Item 3.	Defaults Upon Senior Securities.	4544

Item 4.	Mine Safety Disclosures.	4544

Item 5.	Other Information.	4544

Item 6.	Exhibits.	4645

SIGNATURES		4746

Table of Contents

~~COSMOS HOLDINGS, INC.~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

March 31, 2022

December 31, 2021

(Unaudited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$ 1,010,427

$ 286,487

Accounts receivable, net

26,094,450

26,858,114

Accounts receivable - related party

2,844,572

2,901,300

Marketable securities

12,551

11,468

Inventory

4,007,977

3,147,276

Loans receivable

375,195

377,590

Prepaid expenses and other current assets

1,944,720

2,987,687

Prepaid expenses and other current assets - related party

4,368,794

3,263,241

Operating lease right-of-use asset

775,545

834,468

Financing lease right-of-use asset

192,822

211,099

TOTAL CURRENT ASSETS

41,627,053

40,878,730

Property and equipment, net

1,777,889

1,888,052

Goodwill and intangible assets, net

464,630

485,767

Loans receivable - long term portion

4,227,268

4,410,689

Other assets

909,581

915,250

Deferred tax assets

767,267

850,774

TOTAL ASSETS

$ 49,773,688

$ 49,429,262

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable and accrued expenses

$ 11,781,189

$ 12,126,626

Accounts payable and accrued expenses - related party

220,887

599,125

Accrued interest

1,033,866

1,019,889

Lines of credit

4,362,327

4,743,557

Convertible notes payable, net of unamortized discount of $191,085 and $258,938, respectively

448,915

381,062

Derivative liability - convertible note

30,664

45,665

Notes payable

6,143,075

5,462,504

Notes payable - related party

455,035

464,264

Loans payable

1,000,000

1,000,000

Loans payable - related party

1,703,881

1,293,472

Taxes payable

1,192,178

1,324,722

Operating lease liability, current portion

158,359

138,450

Financing lease liability, current portion

71,861

73,078

Other current liabilities

1,193,683

1,255,824

TOTAL CURRENT LIABILITIES

29,795,920

29,928,238

Share settled debt obligation

1,554,590

1,554,590

Lines of credit - long-term portion

185,872

366,171

Notes payable - long term portion

6,885,806

12,356,384

Operating lease liability, net of current portion

617,183

696,015

Financing lease liability, net of current portion

131,016

148,401

TOTAL LIABILITIES

39,170,387

45,049,799

Commitments and Contingencies (see Note 14)

0

0

MEZZANINE EQUITY

Preferred stock, $0.001 par value; 100,000,000 shares authorized:

Series A preferred stock, stated value $1,000 per share, 6,000,000 shares authorized; 6,000 and 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021; liquidation preference of $6,000,000 and $0, respectively

5,452,300

0

STOCKHOLDERS' EQUITY:

Common stock, $0.001 par value; 300,000,000 shares authorized; 18,611,980 and 17,544,509 shares issued and 18,224,556 and 17,157,085 outstanding as of March 31, 2022 and December 31, 2021, respectively

18,611

17,544

Additional paid-in capital

40,648,106

39,675,753

Treasury stock, 387,424 and 387,424 shares as of March 31, 2022 and December 31, 2021

(816,707 )

(816,707 )
Accumulated deficit

(34,142,159 )

(34,345,506 )
Accumulated other comprehensive loss

(556,850 )

(151,621 )

TOTAL STOCKHOLDERS' EQUITY

5,151,001

4,379,463

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY

$ 49,773,688

$ 49,429,262

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

COSMOS HEALTH INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2023			December 31, 2022
	(Unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	12,037,647		$	20,749,683
Accounts receivable, net		22,561,797			22,761,990
Accounts receivable - related party		2,754,756			2,830,595
Marketable securities		16,433			14,881
Inventory		4,299,538			3,451,868
Loans receivable		388,463			377,038
Loans receivable - related party		505,983			427,920
Prepaid expenses and other current assets		2,936,054			1,967,527
Prepaid expenses and other current assets - related party		5,135,078			3,463,401

TOTAL CURRENT ASSETS		50,635,749			56,044,903

Property and equipment, net		1,821,837			1,817,025
Goodwill and intangible assets, net		694,484			706,914
Loans receivable - long term portion		3,754,587			3,792,034
Loans receivable - related party - long term		8,396,630			3,851,280
Operating lease right-of-use asset		1,115,526			821,069
Financing lease right-of-use asset		389,837			291,762
Other assets		1,207,538			713,634

TOTAL ASSETS	$	68,016,188		$	68,038,621

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	10,897,943		$	11,918,997
Accounts payable and accrued expenses - related party		787,251			205,360
Accrued interest		53,445			275,547
Lines of credit		4,710,314			5,758,737
Convertible notes payable, net of unamortized discount of $0 and $258,938, respectively		-			100,000
Derivative liability - convertible note		-			54,293
Notes payable		781,958			2,158,417
Notes payable - related party		11,089			10,912
Loans payable - related party		13,029			12,821
Taxes payable		457,686			126,855
Operating lease liability, current portion		195,812			167,393
Financing lease liability, current portion		123,267			97,097
Other current liabilities		520,622			862,440

TOTAL CURRENT LIABILITIES		18,552,416			21,748,869

Share settled debt obligation		-			1,554,590
Notes payable - long term portion		2,727,548			2,859,570
Operating lease liability, net of current portion		919,711			653,673
Financing lease liability, net of current portion		279,674			206,407
Other liabilities		1,156,642			1,358,803
TOTAL LIABILITIES		23,635,991			28,381,912

Commitments and Contingencies (see Note 14)		-			-

MEZZANINE EQUITY
Preferred stock, $0.001 par value; 100,000,000 shares authorized:
Series A preferred stock, stated value $1,000 per share, 6,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2023 and December 31, 2022; dividends of $372,414		372,414			372,414

STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value; 300,000,000 shares authorized; 10,620,470 and 10,605,412 shares issued and 10,605,172 and 10,589,915 outstanding as of March 31, 2023 and December 31, 2022, respectively		10,621			10,606
Additional paid-in capital		112,302,825			112,205,952
Subscription receivable		(108	)		(4,750,108	)
Treasury stock, 15,497 shares as of March 31, 2023 and December 31, 2022, respectively		(816,707	)		(816,707	)
Accumulated deficit		(66,692,676	)		(66,232,813	)
Accumulated other comprehensive loss		(796,172	)		(1,132,635	)

TOTAL STOCKHOLDERS' EQUITY		44,007,783			39,284,295

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY	$	68,016,188		$	68,038,621

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

Table of Contents

~~COSMOS HOLDINGS, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~(Unaudited)~~

Three Months Ended March 31,

2022

2021

REVENUE

$ 13,071,800

$ 11,619,076

COST OF GOODS SOLD

11,179,868

10,617,741

GROSS PROFIT

1,891,932

1,001,335

OPERATING EXPENSES

General and administrative expenses

868,639

1,688,712

Salaries and wages

521,471

531,556

Sales and marketing expenses

146,949

405,092

Depreciation and amortization expense

112,622

107,073

TOTAL OPERATING EXPENSES

1,649,681

2,732,433

INCOME (LOSS) FROM OPERATIONS

242,251

(1,731,098 )

OTHER INCOME (EXPENSE)

Other expense, net

(54,812 )

(178,211 )
Interest expense

(584,176 )

(731,826 )
Interest income

64,827

0

Non-cash interest expense

(260,527 )

(50,109 )
Gain on equity investments, net

1,678

440

Gain on extinguishment of debt

1,004,124

445,636

Change in fair value of derivative liability

15,001

61,373

Foreign currency transaction, net

(159,352 )

(306,020 )
TOTAL OTHER INCOME (EXPENSE), NET

26,763

(758,717 )

INCOME (LOSS) BEFORE INCOME TAXES

269,014

(2,489,815 )

BENEFIT FROM (PROVISION FOR) INCOME TAXES

(65,667 )

315,912

NET INCOME (LOSS)

203,347

(2,173,903 )

Deemed dividend on warrants

(5,788,493 )

0

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

(5,585,146 )

(2,173,903 )

OTHER COMPREHENSIVE LOSS

Foreign currency translation adjustment, net

(405,229 )

(473,578 )

TOTAL COMPREHENSIVE LOSS

$ (5,990,375 )

$ (2,647,481 )

BASIC NET LOSS PER SHARE

$ (0.31 )

$ (0.14 )
DILUTED NET LOSS PER SHARE

$ (0.31 )

$ (0.14 )

Basic

17,755,516

15,034,219

Diluted

17,755,516

15,034,219

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

COSMOS HEALTH INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)

	Three Months Ended March 31,
	2023			2022

REVENUE	$	12,349,777		$	13,071,800

COST OF GOODS SOLD		11,392,700			11,179,868

GROSS PROFIT		957,077			1,891,932

OPERATING EXPENSES
General and administrative expenses		2,089,014			868,639
Salaries and wages		949,451			521,471
Sales and marketing expenses		467,263			146,949
Depreciation and amortization expense		102,521			112,622
TOTAL OPERATING EXPENSES		3,608,249			1,649,681

GAIN (LOSS) FROM OPERATIONS		(2,651,172	)		242,251

OTHER INCOME (EXPENSE)
Other expense, net		5,743			(54,812	)
Interest expense		(134,373	)		(584,176	)
Interest income		183,416			64,827
Non-cash interest expense		-			(260,527	)
Gain on equity investments, net		1,293			1,678
Gain on extinguishment of debt		1,908,513			1,004,124
Change in fair value of derivative liability		3,384			15,001
Foreign currency transaction gain (loss), net		196,035			(159,352	)
TOTAL OTHER INCOME, NET		2,164,011			26,763

INCOME (LOSS) BEFORE INCOME TAXES		(487,161	)		269,014

INCOME TAX BENEFIT (EXPENSE)		27,298			(65,667	)

NET INCOME (LOSS)		(459,863	)		203,347

Deemed dividend on issuance of warrants		-			(5,788,493	)

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS		(459,863	)		(5,585,146	)

OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net		336,463			(405,229	)

TOTAL COMPREHENSIVE LOSS	$	(123,400	)	$	(5,990,375	)

BASIC NET LOSS PER SHARE	$	(0.04	)	$	(7.86	)
DILUTED NET LOSS PER SHARE	$	(0.04	)	$	(7.86	)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		10,615,075			710,221
Diluted		10,615,075			710,221

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

Table of Contents

~~COSMOS HOLDINGS, INC.~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) AND MEZZANINE EQUITY~~

Accumulated

Preferred Stock

Common Stock

Additional

Treasury Stock

Other

Total

No. of Shares

Value

No. of Shares

Value

Paid-in Capital

No. of Shares

Value

Accumulated
Deficit

Comprehensive Income (Loss)

Stockholders' Deficit

Balance at January 1, 2021

-

$ 0

13,485,128

$ 13,484

$ 14,333,285

(415,328 )

$ (611,854 )

$ (18,750,824 )

$ 854,896

$ (4,161,013 )
Foreign currency translation adjustment, net

-

0

-

0

0

-

0

0

(473,578 )

(473,578 )
Sale of treasury stock to third party

-

0

-

0

249,350

65,000

650

0

0

250,000

Restricted stock issued to a consultant

-

0

1,800,000

1,800

1,187,650

1,189,450

Conversion of notes payable into shares of common stock

-

0

781,819

782

2,563,582

-

0

0

0

2,564,364

Net loss

-

0

-

0

0

-

0

(2,173,903 )

0

(2,173,903 )
Balance at March 31, 2021

-

$ 0

16,066,947

$ 16,066

$ 18,333,867

(350,328 )

$ (611,204 )

$ (20,924,727 )

$ 381,318

$ (2,804,680 )

Accumulated

Preferred Stock

Common Stock

Additional

Treasury Stock

Other

Total

No. of Shares

Value

No. of Shares

Value

Paid-in Capital

No. of Shares

Value

Accumulated
Deficit

Comprehensive Loss

Stockholders' Equity

Balance at January 1, 2022

-

$ 0

17,544,509

$ 17,544

$ 39,675,753

(387,424 )

$ (816,707 )

$ (34,345,506 )

$ (151,621 )

$ 4,379,463

Foreign currency translation adjustment, net

-

0

-

0

0

-

0

0

(405,229 )

(405,229 )
Issuance of Series A preferred stock, net of issuance costs of $547,700

6,000

5,452,300

-

0

0

-

0

0

0

0

Conversion of notes payable into shares of common stock

-

0

238,000

238

973,182

-

0

0

0

973,420

Cashless exercise of warrants

-

0

829,471

829

(829 )

-

0

0

0

0

Net income

-

0

-

0

0

-

0

203,347

0

203,347

Balance at March 31, 2022

6,000

$ 5,452,300

18,611,980

$ 18,611

$ 40,648,106

$ (387,424 )

$ (816,707 )

$ (34,142,159 )

$ (556,850 )

$ 5,151,001

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

COSMOS HEALTH INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND MEZZANINE EQUITY (Unaudited)

																							Accumulated
	Preferred Stock				Common Stock				Additional						Treasury Stock								Other			Total
	No. of Shares		Value		No. of Shares		Value		Paid-in Capital			Subscription Receivable			No. of Shares		Value			Accumulated Deficit			Comprehensive Loss			Stockholders' Equity

Balance at January 1, 2022		-	$	-		701,780	$	702	$	39,692,595		$	-			15,497	$	(816,707	)	$	(34,345,506	)	$	(151,621	)	$	4,379,463
Foreign currency translation adjustment, net		-		-		-		-		-			-			-		-			-			(405,229	)		(405,229	)
Issuance of Series A preferred stock, net of issuance costs of $547,700		6,000		5,452,300		-		-		-			-			-		-			-			-			-
Conversion of notes payable into shares of common stock		-		-		9,520		10		973,410			-			-		-			-			-			973,420
Cashless exercise of warrants		-		-		33,179		33		(829	)		-			-		-			-			-			-
Net income		-		-		-		-		-			-			-		-			203,347			-			203,347
Balance at March 31, 2022		6,000	$	5,452,300		744,479		745		40,665,176			-			15,497	$	(816,707	)	$	(34,142,159	)	$	(556,850	)	$	5,151,001


																							Accumulated
	Preferred Stock				Common Stock				Additional						Treasury Stock								Other			Total
	No. of Shares		Value		No. of Shares		Value		Paid-in Capital			Subscription Receivable			No. of Shares		Value			Accumulated Deficit			Comprehensive Loss			Stockholders' Equity

Balance at January 1, 2023		-	$	372,414		10,605,412	$	10,606	$	112,205,952		$	(4,750,108	)		15,497	$	(816,707	)	$	(66,232,813	)	$	(1,132,635	)	$	39,284,295
Foreign currency translation adjustment, net		-		-		-		-		-			-			-		-			-			336,463			336,463
Proceeds from sale of common stock		-		-		-		-		-			4,750,000			-		-			-			-			4,750,000
Shares issued in lieu of cash		-		-		15,258		15		96,873			-			-		-			-			-			96,888
Net loss		-		-		-		-		-			-			-		-			(459,863	)		-			(459,863	)
Balance at March 31, 2023		-	$	372,414		10,620,670	$	10,621	$	112,302,825		$	(108	)		15,497	$	(816,707	)	$	(66,692,676	)	$	(796,172	)	$	44,007,783

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

Table of Contents

~~COSMOS HOLDINGS, INC.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

Three Months Ended March 31,

2022

2021

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$ 203,347

$ (2,173,903 )
Adjustments to Reconcile Net Income (Loss) to Net Cash Used In Operating Activities:

Depreciation and amortization expense

93,042

80,318

Amortization of right-of-use assets

19,580

26,755

Amortization of debt discounts and accretion of debt

260,527

50,109

Lease expense

54,124

64,543

Interest on finance leases

3,507

4,453

Stock-based compensation

0

1,189,450

Deferred income taxes

62,594

(329,586 )
Gain on extinguishment of debt

(1,004,124 )

(445,636 )
Change in fair value of the derivative liability

(15,001 )

(61,373 )
(Gain) loss on change in fair value of equity investments

(1,678 )

440

Changes in Assets and Liabilities:

Accounts receivable

226,934

729,802

Accounts receivable - related party

(10,967 )

197,334

Inventory

(934,400 )

(246,664 )
Prepaid expenses and other assets

141,119

(1,088,881 )
Prepaid expenses and other current assets - related party

(1,183,403 )

(196,436 )
Other assets

0

157,915

Accounts payable and accrued expenses

300,913

847,525

Accounts payable and accrued expenses - related party

(370,694 )

25,996

Accrued interest

20,356

438,149

Lease liabilities

(54,241 )

(36,772 )
Taxes payable

(107,462 )

0

Other current liabilities

(23,438 )

122,081

Other liabilities

(17,911 )

(20,958 )
NET CASH USED IN OPERATING ACTIVITIES

(2,337,276 )

(665,339 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from loan receivable

91,661

0

Purchase of property and equipment

(4,438 )

(2,310 )
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

87,223

(2,310 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of convertible note payable

0

(180,000 )
Proceeds from convertible note payable

0

100,000

Payment of note payable

(2,263,471 )

0

Payment of related party loan

(22,432 )

(65,761 )
Proceeds from related party loan

460,034

398,457

Payment of lines of credit

(6,244,162 )

(6,219,899 )
Proceeds from lines of credit

5,779,114

6,123,067

Proceeds from issuance of Series A Preferred Stock

5,452,300

0

Payments of finance lease liability

(22,622 )

(25,746 )
Financing fees

(224,320 )

0

Proceeds from sale of treasury stock

0

250,000

NET CASH PROVIDED BY FINANCING ACTIVITIES

2,914,441

380,118

Effect of exchange rate changes on cash

59,552

90,943

NET CHANGE IN CASH

723,940

(196,588 )

CASH AT BEGINNING OF PERIOD

286,487

628,395

CASH AT END OF PERIOD

$ 1,010,427

$ 431,807

Supplemental Disclosure of Cash Flow Information

Cash paid during the period:

Interest

$ 281,889

$ 208,565

Income tax

$ 0

$ 0

Supplemental Disclosure of Non-Cash Investing and Financing Activities

Conversion of notes payable to common stock

$ 973,420

$ 2,564,364

Deemed dividend on warrants upon issuance of Series A preferred stock

$
5,788,493

$
-

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

COSMOS HEALTH INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended March 31,
	2023			2022

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$	(459,863	)	$	203,347
Adjustments to Reconcile Net Income to Net Cash Used In Operating Activities:
Depreciation and amortization expense		71,811			93,042
Amortization of finance right-of-use assets		30,710			19,580
Lease expense		55,354			54,124
Amortization of debt discounts and accretion of debt		-			260,527
Bad debt expense		181,321			-
Shares issued in lieu of cash		96,888			-
Interest imputed on finance leases		6,219			3,507
Deferred income taxes		2,829			62,594
Gain on extinguishment of debt		(1,908,513	)		(1,004,124	)
Change in fair value of the derivative liability		(3,384	)		(15,001	)
Gain on net change in fair value of equity investments		(1,293	)		(1,678	)
Changes in assets and liabilities:
Accounts receivable		385,809			226,934
Accounts receivable - related party		131,531			(10,967	)
Inventory		(776,554	)		(934,400	)
Prepaid expenses and other current assets		(1,461,343	)		141,119
Prepaid expenses and other current assets - related party		(1,597,170	)		(1,183,403	)
Accounts payable and accrued expenses		(1,154,718	)		300,913
Accounts payable and accrued expenses - related party		581,176			(370,694	)
Accrued interest		(223,534	)		20,356
Taxes payable		324,243			(107,462	)
Operating lease liabilities		(55,538	)		(54,241	)
Other current liabilities		(348,828	)		(23,438	)
Other liabilities		(221,326	)		(17,911	)
NET CASH USED IN OPERATING ACTIVITIES		(6,344,173	)		(2,337,276	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from loan receivable		92,603			91,661
Issuance on loan receivable - related party		(4,553,030	)		-
Purchase of property and equipment		(26,028	)		(4,438	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(4,486,455	)		87,223

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of convertible note payable		(100,000	)		-
Payment of note payable		(1,245,022	)		(2,263,471	)
Payment of related party loan		-			(22,432	)
Proceeds from related party loan		-			460,034
Payment of lines of credit		(5,452,321	)		(6,244,162	)
Proceeds from lines of credit		4,325,744			5,779,114
Proceeds from issuance of Series A Preferred Stock		-			5,452,300
Proceeds from the issuance of common stock		4,750,000			-
Payments of finance lease liability		(35,596	)		(22,622	)
Payments of financing fees		-			(224,320	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		2,242,805			2,914,441

Effect of exchange rate changes on cash		(124,213	)		59,552

NET CHANGE IN CASH AND CASH EQUIVALENTS		(8,712,036	)		723,940

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		20,749,683			286,487
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	12,037,647		$	1,010,427

Supplemental Disclosure of Cash Flow Information

Cash paid during the year:
Interest	$	588,051		$	281,889
Income tax	$	-		$	-

Supplemental Disclosure of Non-Cash Investing and Financing Activities

Conversion of notes payable to common stock	$	-		$	973,420
Deemed dividend on warrants upon conversion of convertible debt	$	-		$	5,788,493

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

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COSMOS ~~HOLDINGS,~~HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, ~~2022~~2023

NOTE 1 – BASIS OF PRESENTATION

The terms “COSM,” “we,” “the Company,” “Group” and “us” as used in this report refer to Cosmos ~~Holdings,~~Health, Inc. The accompanying unaudited condensed consolidated balance sheet as of March 31, ~~2022~~2023 and unaudited condensed consolidated statements of operations and comprehensive income for the three months ended March 31, ~~2022~~2023 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management of COSM, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, ~~2022,~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022,~~2023, or any other period. These unaudited consolidated financial statements and notes should be read in conjunction with the financial statements for the year ended December 31, ~~2021,~~2022, included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (“Form 10-K”). The accompanying condensed consolidated balance sheet as of December 31, ~~2021~~2022 has been derived from the audited financial statements filed in our Form 10-K and is included for comparison purposes in the accompanying balance sheet.

NOTE 2 – ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN

Cosmos Health Inc. and its subsidiaries 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 ~~publicly traded international pharmaceutical company with extensive~~broad line of branded generics and ~~established~~OTC medications. In addition, the group is involved in the healthcare distribution ~~network across the EU~~sector through its subsidiaries ~~Decahedron (UK), SkyPharm (Greece)~~in Greece and ~~Cosmofarm (Greece). We are~~the UK, serving retail pharmacies and wholesale distributors. The Company is strategically focusing on the research and development (“R&D”) of novel patented nutraceuticals (Intellectual Property) and specialized root extracts as well as on the R&D of proprietary complex generics and innovative OTC products. The Company has developed a ~~diversified~~global distribution platform and ~~vertically integrated broad line pharmaceutical company with our own proprietary line of branded nutraceuticals.~~is currently expanding throughout Europe, Asia and North America. The Company has offices and distribution centers in Thessaloniki and Athens, Greece and Harlow, UK.

The Company was incorporated in the State of Nevada under the name Prime Estates and Developments, Inc. on July 21, 2009, and on November ~~14, 2013,~~29, 2022, we changed our name to Cosmos ~~Holdings,~~Health Inc. Through its acquisition of Amplerissimo Ltd, on September 27, 2013, the Company changed its principal activities into trading of products, providing representation, and provision of consulting services to various sectors. On August 1, 2014, the Company formed SkyPharm S.A., a Greek Company (“SkyPharm”), a subsidiary that focuses on the trading, sourcing and export of nutraceutical and pharmaceutical products. In February 2017, the Company acquired Decahedron Ltd., a UK Company (“Decahedron”) which is a fully licensed second-generation wholesaler specializing in imports and exports of generics and OTC pharmaceutical products within the EEA and ~~its primary activity is the distribution, import and export~~distributor of ~~pharmaceuticals.~~

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

UK. On December 19, 2018, the Company ~~completed the purchase of all of the capital stock of~~acquired Cosmofarm, ~~Ltd.,~~ a pharmaceutical wholesaler ~~based~~specializing in ~~Athens, Greece.~~the distribution and export of pharmaceutical products through its extensive pharmacies network.

~~Going Concern~~

The Company’s condensed 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 ofOn March 17, 2023, the Company asannounced that it had entered into a going concern. For the three months ended March 31, 2022, the Company had revenue of $13,071,800, net income of $203,347 and net cash used in operations of $2,337,276. Additionally, as of March 31, 2022, the Company had working capital of $11,831,133, an accumulated deficit of $34,142,159, and stockholders’ equity of $5,151,001. It is management’s opinion that these conditions raise substantial doubt about the Company’s abilitydefinitive agreement to ~~continue as~~acquire ZipDoctor Inc., a ~~going concern~~telehealth company for a ~~period~~total sum of ~~twelve months from~~$150,000 in cash. The Sale and Purchase Agreement (“SPA”) was signed on March 17, 2023, and the ~~date of this filing.~~

The Company has undergone strategic review processes to help find a definitive solution to the Company’s accumulated deficit constraints. Options under consideration in the strategic review process include, but are not limited to, securing new debt, exchange debt to equity, restructuring current debt facilities from short term to long term and taking the proper actions for new fund raising.transaction closed on April 3, 2023 (see Note 17).

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COSMOS ~~HOLDINGS,~~HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, ~~2022~~2023

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

The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund its operations. If the Company is unable to obtain adequate capital, it could be forced to curtail development of operations.

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

Summary of Significant Accounting Policies

Basis of Financial Statement Presentation

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

Principles of Consolidation

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

Transactions in and Translations of Foreign Currency

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

Use of Estimates

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

The Effects of COVID-19

Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.

The Effects of War in the Ukraine

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

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COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2023

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of March 31, ~~2022,~~2023 and December 31, ~~2021,~~2022, there were ~~no cash equivalents.~~

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~~COSMOS HOLDINGS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2022~~$6,995,287 and $0 held in Treasury bills with a maturity of less than 3 months.

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

~~Reclassifications to Prior Period Financial Statements and Adjustments~~

Certain reclassifications have been made in the Company’s financial statements of the prior period to conform to the current year presentation. As of December 31, 2021, $7,393 in accumulated depreciation has been reclassified from property and equipment to accumulated amortization of goodwill and intangible assets and $4,772 was reclassified from prepaid expenses and other current assets to marketable securities on the unaudited condensed consolidated balance sheet. For the three months ended March 31, 2021, $531,556 was reclassified from general and administrative expenses to salaries and wages on the unaudited condensed consolidated statements of operations and comprehensive income. Additionally, for the three months ended March 31, 2021, $1,333 was reclassified from customer deposits to other current liabilities on the unaudited condensed consolidated statement of cash flows. These reclassifications have no impact on previously reported net income.

Account Receivable, net

Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts against gross accounts receivable reflects the best estimate of probable losses inherent in the receivables’ portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. AtAs of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company’s allowance for doubtful accounts was ~~$1,668,893~~$7,614,237 and ~~$1,702,743,~~$7,309,311, respectively.

Tax Receivable

The Company pays Value Added Tax (“VAT”) or similar taxes (“input VAT”), income taxes, and other taxes within the normal course of its business in most of the countries in which it operates related to the procurement of merchandise and/or services it acquires and/or on sales and taxable income. The Company also collects VAT or similar taxes on behalf of the government (“output VAT”) for merchandise and/or services it sells. If the output VAT exceeds the input VAT, this creates a VAT payable to the government. If the input VAT exceeds the output VAT, this creates a VAT receivable from the government. The VAT tax return is filed on a monthly basis offsetting the payables against the receivables. In observance of EU regulations for intra-EU cross-border sales, our subsidiaries in Greece, SkyPharm and Cosmofarm, do not charge VAT for sales to wholesale drug distributors registered in other European Union member states. ~~The net VAT receivable is recorded in prepaid expense and other current assets on the condensed consolidated balance sheets.~~ As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had a VAT net receivable balance of $243,424 and a net payable balance of ~~$376,656 and $400,616~~$79,373 respectively, recorded in the condensed consolidated balance sheet as prepaid expenses and other current assets and accounts payable and accrued ~~expenses.~~expenses, respectively.

Inventory

Inventory is stated at the lower-of-cost or net realizable value using the weighted average FIFO method. Inventory consists primarily of finished goods and packaging materials, i.e., packaged pharmaceutical products and the wrappers and containers they are sold in. A periodic inventory system is maintained by 100% count. Inventory is replaced periodically to maintain the optimum stock on hand available for immediate shipment.

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

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~~COSMOS HOLDINGS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2022~~

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:

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

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COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2023

Depreciation expense was ~~$84,884~~$65,629 and ~~$71,471~~$84,884 for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively.

~~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.

Goodwill and Intangibles, net

The Company periodically reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. ~~Specifically,~~First, under step 0, we determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Following, if step 0 fails, goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology to estimate the fair value of a reporting unit. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit.

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

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~~COSMOS HOLDINGS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2022~~

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 its pharmaceuticals and nutraceuticals products license. The Company evaluates the remaining useful life of intangible assets annually to determine whether events and circumstances warrant a revision to the remaining amortization period. If the estimate of the intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over that revised remaining useful life. As of March 31, ~~2022,~~2023, no revision to the remaining amortization period of the intangible assets was made.

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COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2023

Amortization expense was ~~$8,158~~$21,058 and $8,158 for the three months ended March 31, 2023 and 2022, respectively.

Impairment of Long-Lived Assets

In accordance with ASC 360-10, Long-lived Assets, property and ~~2021, respectively.~~equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.

Equity Method Investment

For those investments in common stock or in-substance common stock in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, the investment is accounted for under the equity method. The Company will record its share in the earnings of the investee and will include it within the condensed consolidated statement of operations. The Company assesses its investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable and recognizes an impairment loss to adjust the investment to its then current fair value. See Note 3, for additional detail.

Investments in Equity Securities

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

As of March 31, ~~2022,~~2023, investments consisted of (i) 3,000,000 shares, which traded at a closing price of $0 per share or a value of $0 of ICC International Cannabis Corp and (ii) 16,666 shares which traded at a closing price of ~~$0.41~~$0.49 per share or value of ~~$6,822~~$8,099 of National Bank of Greece. Additionally, the Company has ~~$5,729~~$8,333 in equity securities of Pancreta Bank, which are revalued annually. ~~See Note 3, for additional investments in equity securities.~~

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.

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COSMOS ~~HOLDINGS,~~HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, ~~2022~~2023

The following tables presents assets that are measured and recognized at fair value as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, on a recurring basis:

March 31, 2022

Total
Carrying

Level 1

Level 2

Level 3

Value

Marketable securities – ICC International Cannabis Corp.

$ -

$ -

-

$ -

Marketable securities – National Bank of Greece

6,822

-

-

6,822

Equity securities – Pancreta Bank

-

5,729

-

5,729

$ 6,822

$ 5,729

$ 12,551

	March 31, 2023						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – Pancretan Bank	$	8,334		-		-	$	8,334
Marketable securities – National Bank of Greece		8,099		-		-		8,099
	$	16,433					$	16,433

December 31, 2021

Total
Carrying

Level 1

Level 2

Level 3

Value

Marketable securities – ICC International Cannabis Corp.

$ -

$ -

-

$ -

Marketable securities – National Bank of Greece

6,696

-

-

6,696

Equity securities – Pancreta Bank

-

4,772

-

4,772

$ 6,696

$ 4,772

$ 11,468

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

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

Derivative Instruments

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

Customer Advances

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

~~Table of Contents~~

~~COSMOS HOLDINGS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2022~~

Revenue Recognition

In accordance with ASC 606, Revenue from Contracts with Customers, the Company uses a five-step model for recognizing revenue by applying the following steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, including the constraint on variable consideration, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the performance obligations are satisfied by transferring the promised goods to the customer. Once these steps are met, revenue is recognized upon transfer of the product to the customer.

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COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2023

Commencing from January 1, 2023, and pursuant to the agreement with Medihelm, the exclusive distributor of the Company’s own proprietary line of nutraceuticals, the Company considers the transaction price to be variable and records an estimate of the transaction price, subject to the constraint for variable consideration. The Company is basing the change in transaction price with the exclusive distributor through assessment of significant overdue receivables from the exclusive distributor, which the Company reassessed during the 3-month period ended March 31, 2023. Essentially, the Company applies the “expected value” model under ASC 606-10-32-5 and has applied specific constraints to revenue due from the customer at the end of each reporting period. Following the application of the “expected value” model the Company deferred an amount of $112,515 and recorded it against the sales to Medihelm for the three-month period ended March 31, 2023. The Company does not consider that sales to any other customer include a variable component as of March 31, 2023.

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.”

Foreign Currency Translation and Transactions

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

Gains or losses from foreign currency transactions (transactions denominated in a currency other than the entity’s local currency) are included in other income (expense) in the condensed consolidated statements of operations and comprehensive income (loss).

Income Taxes

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

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

We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized. Our review includes evaluating both positive (e.g., sources of taxable income) and negative (e.g., recent historical losses) evidence that could impact the realizability of our deferred tax assets. ~~At March31, 2022 the Company has maintained a valuation allowance against all net deferred tax assets in each jurisdiction in which it is subject to income tax.~~

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COSMOS ~~HOLDINGS,~~HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, ~~2022~~2023

The Company uses a “more likely than not” criterion for recognizing the income tax benefit of uncertain tax positions and establishing measurement criteria for income tax benefits. The Company has evaluated the impact of these positions and due to the fact that the Company undergoes an annual certified audit each year in lieu of an audit by the Greek tax authorities, the Company has not taken any tax positions that warrant accrual under ASC-740-10.

Retirement and Termination Benefits

Under Greek labor law, employees are entitled to lump-sum compensation in the event of termination or retirement. The amount depends on the employee’s work experience and renumeration as of the day of termination or retirement. If an employee remains with the company until full-benefit retirement, the employee is entitled to a lump-sum equal to 40% of the compensation to be received if the employee were to be dismissed on the same day. The Company periodically reviews the uncertainties and judgments related to the application of the relevant labor law regulations to determine retirement and termination benefits obligations of its Greek subsidiaries. The Company has evaluated the impact of these regulations and has identified a potential retirement and termination benefits liability.

Basic and Diluted Net Loss per Common Share

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

Three Months Ended
March 31,

2022

2021

Weighted average number of common shares outstanding-Basic

17,755,516

15,034,219

Potentially dilutive common stock equivalents

-

-

Weighted average number of common and equivalent shares outstanding - Diluted

17,755,516

15,034,219

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

	March 31, 2023		March 31, 2022
Warrants		4,194,236		117,976
Options		-		1,480
Convertible Notes		-		29,602
Total		4,194,236		149,058

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~~

On October 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. The new guidance creates an exception to the general recognition and measurement principles of ASC 805, Business Combinations. The new guidance should be applied prospectively and is effective for all public business entities for fiscal years beginning after December 15, 2022 and include interim periods. The guidance is effective for all other entities for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effects of the adoption of ASU No. 2021-08 on its consolidated financial statements.

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COSMOS ~~HOLDINGS,~~HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, ~~2022~~2023

In May 2021, the FASB issued ASU 2021-04—Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’sRecent Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2021, and interim periods with fiscal years beginning after December 15, 2021. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the effects of the adoption of ASU No. 2021-04 on its consolidated financial statements.Pronouncements

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

NOTE 3 – ~~MARKETABLE SECURITIES~~EQUITY METHOD INVESTMENTS

Distribution and Equity Agreement

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

The Distribution and Equity Acquisition Agreement iswas to remain in effect indefinitely unless Marathon fails to provide Market Competitive (as defined) product pricing and Marathon has not become profitable within five (5) years of the agreement. On March 20, 2023, the Company sent a termination notice to Marathon, which became effective on April 19, 2023 as a result of Marathon’s failure to satisfy these conditions. The transaction closed on May 22, 2018 after the due diligence period, following which the Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in common shares of the Company if it ~~fails~~failed to meet certain performance milestones. The Company iswas entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000. The Company was also given the right to nominate one director to the Marathon board of directors.

The Company had accounted for its obligation to issue a variable number of the Company’s Common Shares as Share-settled debt obligation in accordance with ASC 480 measured at fair value or the settlement amount of $1,554,590 (CAD $2 million). On March 20, 2023, the Company’s legal counsel provided notice to Marathon Global Inc, that the Company terminated the Equity agreement dated on March 19, 2018, pursuant to Section 3.2. Accordingly, the Company recorded a gain on extinguishment of debt of $1,554,590 due to the write-off of the share settled debt obligation, for the period ended March 31, 2023.

Since Marathon was a newly formed entity with no assets and no activity, the Company attributed no value to the 5 million shares in Marathon which was received as consideration for the distribution services. As described ~~below,~~in Note 3, the Company exchanged the Marathon shares in May and July 2018.

~~Share Exchange Agreements~~

On May 17, 2018, the Company entered into a Share Exchange Agreement (the “SEA”) with Marathon, ICC International Cannabis Corp (“ICC”) formerly known as Kaneh Bosm Biotechnology Inc. (“KBB”) and certain other sellers of Marathon capital stock. Under the SEA, the Company transferred 2.5 million shares in Marathon to ICC, a corporation incorporated under the laws of the Province of British Columbia and a public reporting issuer on the Canadian Securities Exchange, in exchange for 5 million shares of ICC. The Company accounted for the exchange at fair value and recognized a gain on exchange of its investment in Marathon of $1,953,000 in the year ended December 31, 2018.

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

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~~COSMOS HOLDINGS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2022~~

The Company determined the fair value of both exchanges based on an actively quoted stock price of ICC received in exchange for the Marathon shares. The Company continues to fair value its investment in ICC with changes recognized in earnings each period and was recorded as an unrealized gain on exchange of investment during the six months ended March 31, 2022 of $0. The value of the investments as of March 31, 2022 and December 31, 2021, was $0 and $0, respectively.

Since no value was attributed to the 33 1/3% equity ownership interest in Marathon received as consideration for the distribution services, the Company would receive variable consideration in future for its services under the Distribution and Equity Acquisition Agreement, if certain milestones are achieved. Refer to Note 12 for the accounting associated with the cash of CAD $2 million received upfront. Variable consideration to be received in the future upon achieving the gross sales milestones described above, is constrained as the Company estimates that it is probable that a significant reversal of revenue could occur. In assessing the constraint, the Company considered its limited experience with the Products, new geographic markets and similar transactions, which affect the Company’s ability to estimate the likelihood of a probable revenue reversal. Therefore, no revenue has been recognized for the period ended March 31, 2022. The Company will continue to reassess variable consideration at each reporting period and update the transaction price when it becomes probable that a significant revenue reversal would not occur.

As of March 31, 2022, in addition to the 3,000,000 ICC shares valued at $0, as noted above, marketable securities also consisted of the following: 16,666 shares which traded at a closing price of $0.41 per share or value of $6,822 of National Bank of Greece. Additionally, the Company has $5,729 in equity securities of Pancreta Bank, which are revalued annually. The Company recorded a net unrealized gain on the fair value of these investments of $1,678 during the three months ended March 31, 2022.

CosmoFarmacy LP

In September 2019, the Company entered into an agreement with an unaffiliated third party to incorporate CosmoFarmacy L.P. for the purpose of providing strategic management consulting services and the retail trade of pharmaceutical products, and OTC to pharmacies. CosmoFarmacy was incorporated with a 30-year term through May 31, 2049. The unaffiliated third party is the general partner (the “GP”) of the limited partnership and is responsible for management and decision-making associated with CosmoFarmacy. The initial share capital was set to EUR 150,000 ($163,080) which was later increased to EUR ~~500,000.~~500,000 ($543,600). The GP contributed the pharmacy license (the “License”) valued at EUR 350,000 (30-year term) to operate the business of CosmoFarmacy in exchange for a 70% equity ownership. The Company is a limited partner and contributed cash of EUR 150,000 ($163,080) for the remaining 30% equity ownership. CosmoFarmacy is not publicly traded and the Company’s investment has been recorded using the equity method of accounting. The value of the investment as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022, was ~~$166,395~~$163,080 and ~~$169,770,~~$160,470, respectively, and is included in “Other assets” inon the ~~accompanying~~Company’s condensed consolidated balance ~~sheet.~~sheets.

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COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2023

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

March 31,
2022

December 31,
2021

Leasehold improvements

$ 508,920

$ 519,278

Vehicles

94,735

96,657

Furniture, fixtures and equipment

2,027,470

2,065,100

Computers and software

140,452

141,490

2,771,577

2,822,525

Less: Accumulated depreciation and amortization

(993,688 )

(934,473 )
Total

$ 1,777,889

$ 1,888,052

~~Table of Contents~~

~~COSMOS HOLDINGS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2022~~

	March 31, 2023			December 31, 2022
Leasehold improvements	$	512,843		$	502,882
Vehicles		109,732			107,976
Furniture, fixtures and equipment		1,997,337			1,945,207
Computers and software		146,041			138,783
		2,765,953			2,694,848
Less: Accumulated depreciation and amortization		(944,116	)		(877,823	)
Total	$	1,821,837		$	1,817,025

NOTE 5 – GOODWILL AND INTANGIBLE ASSETS

Intangible assets consist of the following at:

	March 31, 2022			December 31, 2021			March 31, 2023			December 31, 2022
License	$	339,860		$	345,739		$	652,853		$	643,204
Trade name / mark		36,997			36,997			36,997			36,997
Customer base		176,793			176,793			176,793			176,793
		553,650			559,529			866,642			856,994
Less: Accumulated amortization		(138,717	)		(123,459	)		(221,856	)		(199,777	)
Subtotal		414,933			436,070			644,787			657,217
Goodwill		49,697			49,697			49,697			49,697
Total	$	464,630		$	485,767		$	694,484		$	706,914

At March 31, 2023, the estimated aggregate amortization expense for intangible assets subject to amortization for each of the five succeeding fiscal years is as follows:

Year	Amount
2023	$	71,056
2024		79,719
2025		74,868
2026		44,361
2027		44,361
Thereafter		330,422
Total amortization	$	644,787

NOTE 6 – LOAN RECEIVABLE

On October 30, 2021, the Company entered into an agreement for a ten-year loan with ~~a third-party~~Medihelm SA to memorialize €4,284,521 ($4,849,221) in prepayments the Company had made. The prepayments to Medihelm SA had been made in accordance with the parallel export business, through which Medihelm supplied and would supply SkyPharm SA with branded pharmaceuticals. This business is no longer in place for the Company and thus the Company entered into this agreement with Medihelm SA in order for the outstanding amount to be settled. Interest is calculated at a rate of 5.5% per annum on a 360-day basis. Under the terms of the agreement, the Company is to receive 120 equal payments over the term of the loan. As of December 31, ~~2021,~~2022, the Company had a short-term receivable balance of ~~$377,590~~$377,038 and a long-term receivable balance of ~~$4,410,689~~$3,792,034 under this loan. During the three months ended March 31, ~~2022,~~2023, the Company received ~~€81,696~~€86,305 ($~~90,626)~~93,831) in principal payments such that as of March 31, ~~2022,~~2023, the Company had a short-term receivable balance of ~~$375,195~~$388,463 and a long-term receivable balance of ~~$4,227,268~~$3,754,587 under this loan. The Company also received €45,212 ($49,154) in interest payments during the three months ended March 31, 2023.

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COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2023

NOTE 7 – INCOME TAXES

The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company had no U.S. taxable income for the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022.

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

The Company’s United Kingdom subsidiaries are governed by the income tax laws of the United Kingdom. The corporate tax rate in the United Kingdom is 19% on income reported in the statutory financial statements after appropriate tax adjustments.

As of March 31, ~~2022~~2023 and ~~2021,~~2022, the Company’s effective tax rate differs from the U.S. federal statutory tax rate primarily due to a valuation allowance recorded against net deferred tax assets in in the United ~~States.~~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~~ax 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, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company has maintained a valuation allowance against all net deferred tax assets in the United States, ~~only. Foreign valuation allowances were reversed on December 31, 2020.~~Greece, and the UK.

For the three months ended March 31, ~~2022~~2023, and ~~2021,~~2022, the Company has recorded a tax benefit (expense) in any jurisdiction where it is subject to income tax, in the amount of ($~~65,667)~~27,298) and ~~$315,912,~~$65,667, respectively, on the condensed consolidated statement of ~~operations~~operation and comprehensive ~~income (loss).~~

~~Table of Contents~~

~~COSMOS HOLDINGS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2022~~loss.

NOTE 8 – CAPITAL STRUCTURE

Preferred Stock

The Company is authorized to issue 100 million shares of preferred stock, of which 6,000,000 are designated as Series A convertible preferred stock. The preferred stock has a liquidation preference over the common stock and ~~are~~is non-voting. As of March 31, ~~2022~~2023 and December 31, ~~2021, 6,000~~2022, all Series A convertible preferred stock had been converted and ~~0, respectively,~~no preferred shares ~~have been issued.~~were issued and outstanding.

Major Rights & Preferences of Series A Preferred Stock

On and effective October 4, 2021, the Company amended and restated its articles of incorporation (the ~~Amended~~“Amended and Restated Articles”) and filed a certificate of designation (the “COD”) for its Series A Preferred Stock (the “Series A Preferred Stock”) with the State of Nevada.

The Amended and Restated Articles allow the Company’s Board of Directors the authority to authorize the issuance of preferred stock from time to time in one or more classes or series by resolution. On February 23, 2022, the Company filed Correction No. 1 to the COD. On July 28, 2022, the Company filed an Amendment to the COD with the State of Nevada to allow a holder to waive application of the Beneficial Ownership Limitation with respect to the conversion of Series A Preferred Stock.

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COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2023

The Series A Preferred Stock iswas initially convertible into the Company’s ~~Common Stock~~common stock as determined by dividing the number of shares of Series A Preferred Stock to be converted by the lower of (i) ~~$4.00~~$75.00 or (ii) 80% of the average volume weighted average price for the Company’s ~~Common Stock~~common stock for the five (5) trading days ~~prior to~~immediately following the ~~date~~effectiveness of ~~Uplisting, subject to a floor of $3.00~~the registration statement concerning the shares (the “Conversion Price”). On June 14, 2022, the Conversion Price was reset to $15.54 per share.

~~The holders~~Each holder was entitled to receive dividends in shares of ~~the~~ Series A Preferred Stock ~~are not entitled to dividends~~ or ~~to receive distributions~~cash determined based on the stated value of each Series A Preferred Stock at the dividend rate of 8.0% per year. As of March 31, 2023 and December 31, 2022, the cumulative accrued dividend has been recorded as mezzanine equity in the ~~event~~amount of ~~liquidation, dissolution~~$372,414. The Company has not issued shares of Series A Preferred Stock or ~~winding up~~cash for the accrued dividends as of ~~the Company, either voluntary or involuntary.~~March 31, 2023.

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

The Private Placement consisted of the sale of 6,000 shares of the Company’s Series A Convertible Preferred Stock, or the Series A Shares, at a price of ~~$1.000~~$1,000 per share, and ~~2,000,000~~80,000 warrants to purchase shares of common stock, or the Warrants, for aggregate gross proceeds of approximately $6 million. The Warrants ~~are~~were initially exercisable to purchase shares of common stock at ~~$3.30~~$82.50 per share, or 110% of the Series A Shares initial conversion price and will expire five and one-half years following the initial exercise date of the Warrants. The Company determined that the ~~2,000,000~~80,000 warrants ~~are~~were additional value being distributed to the preferred stockholders and presented the warrants’ fair value of $5,788,493 as a deemed dividend on issuance of warrants in the ~~unaudited~~ condensed consolidated statements of operations and comprehensive ~~income (loss).~~loss. The warrants were valued using the Black-Scholes option pricing model with the following terms: a) exercise price of ~~$3.30,~~$82.50, b) common stock fair value of ~~$3.42,~~$85.50, c) volatility of 118%, d) discount rate of ~~$1.71%~~1.71%, e) term of 5.50 years and e)f) dividend rate of 0%.

The closing of the Private Placement occurred on February 28, 2022. As a condition to the closing of the sale, the Company’s common stock received conditional approval for listing and trading on the Nasdaq Capital Market and commenced trading on February 28, 2022, under the trading symbol, COSM. Concurrent with the issuance of the Series A Shares, the Company executed a registration rights agreement (the “Registration Rights Agreement”) to register the resale of the shares of common stock issuable upon conversion of the Series A Shares and the shares of common stock issuable upon exercise of the warrants issued in connection with the Series A Shares. The Company iswas required to file its initial registration statement within 45 days following February 28, 2022. The Effectiveness Date iswas required to be 60 days after February 28, 2022, or 75 days following the SEC’s full review, and any additional registration statements that may be required are to be filed within 20 days following the date required by the SEC. ~~If the~~The Company ~~fails~~failed to timely file its initial registration statement ~~or any additional registration statement, or otherwise comply with the requirements of the Registration Rights Agreement, the Company shall pay~~and thus paid each holder 2% of the subscription amount in ~~cash until cured, with an additional penalty of 18% if the cash payment is not made within seven days of the cash payable date.~~cash.

~~The Series A Shares rank senior to all~~Treasury stock

As of ~~the Company’s Common Stock~~March 31, 2023 and ~~any other equity securities that~~December 31, 2022, the Company ~~may issue in the~~held 15,497 shares at a cost of $816,707. Shares of our common stock that are repurchased are classified as treasury stock pending future ~~with respect to payment of dividends~~use and distribution of assets upon liquidation, dissolution or winding up. While the Series A Shares are outstanding, the Company may not amend, alter or change adversely the powers, preferences or rights given to the Series A Shares, create, or authorize the creation of, any additional class or series of capital stock of the Company (or any security convertible into or exercisable for any class or series of capital stock of the Company), including any class or series of capital stock of the Company that ranks superior to or in parity with the Series A Shares, alter, amend, modify, or repeal its Articles of Incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series A Shares, increase or decreasereduce the number of ~~authorized~~ shares ~~of Series A Shares, any agreement, commitment or transaction that would result~~outstanding used in ~~a Change of Control, any sale or disposition of any material assets outside of~~calculating earnings per share. Cosmos may repurchase shares from time to time through open market purchases in accordance with applicable securities laws and other restrictions. No repurchases took place within the ~~ordinary course of business of~~3-month period ended March 31, 2023 and 2022.

On January 24, 2023 the Company ~~any material change~~announced that its Board of Directors has approved a share repurchase program with authorization to purchase up to $3 million of its common stock. Cosmos may repurchase shares from time to time through open market purchases in accordance with applicable securities laws and other restrictions. No repurchases took place within the principal business of the Company, including the entry into any new line of business or exit of any current line of business, and circumvent a right or preference of the Series A Shares. Any holder of the Series A Shares shall have the right by written election to the Company to convert all or any portion of the outstanding Series A Preferred Shares. Immediately upon effectiveness of a registration statement registering for resale all of the Registrable Securities (as defined in the Registration Rights Agreement), all outstanding Series A Preferred Shares shall automatically convert into Common Stock, subject to certain beneficial ownership limitations.3-month period ended March 31, 2023.

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COSMOS ~~HOLDINGS,~~HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, ~~2022~~2023

Mezzanine Equity

The Series A Shares ~~are~~were recorded ~~as mezzanine equity in accordance with ASC 480~~ at its initial net carrying value in the amount of $5,452,300. The Series A Shares ~~are~~were recorded as mezzanine equity in accordance with ASC 480 ~~because~~as the Company ~~may be~~was potentially obligated to issue a variable number of shares at a fixed price known at inception and there iswas no maximum number of shares that could potentially be issued upon conversion. In this instance, cash settlement would ~~be presumed and the Series A Shares are classified as mezzanine equity in accordance with ASC 480-10-S99.~~have been presumed. Immediately upon effectiveness of the registration statement registering for resale of all the common stock issuable under the Series A Shares, all outstanding Series A Shares ~~shall~~were automatically ~~convert~~converted into common stock.

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

Common Stock

The Company is authorized to issue 300 million shares of common stock. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had ~~18,611,980~~10,620,470 and ~~17,544,509~~10,605,412 shares of our common stock issued, respectively, and ~~18,224,556~~10,605,172 and ~~17,157,085~~10,589,915 shares outstanding, respectively.

~~Consulting Agreement~~Reverse split

~~The~~On December 15, 2022 the Company ~~entered into~~announced a ~~Consulting Agreement (the “Agreement”) effective as of February 5, 2021,~~reverse stock split with a ~~non-affiliated consultant (the “Consultant”).~~ratio of 1-for-25 (one-for-twenty five) effective at the opening of the business day on Friday, December 16, 2022. The ~~Company engaged~~reverse stock split was authorized at the ~~Consultant to perform consulting services relating to Company management, debt structure, business plans~~Company’s Annual General Meeting (“AGM”) on December 2, 2022 and ~~business development in connection with any capitalization transactions involving~~was approved by the Company’s Board of Directors on December 15, 2022.

Issuance of common stock

During the 3-month period ended March 31, 2023 the Company and any newly created or existing entities. The Agreement is for a term of nine (9) months with an initial term of ninety (90) days (the “Initial Term”). The Agreement is terminable by the Company for any reason upon written notice at any time after the Initial Term.

~~The Company agreed to pay Consultant and its assignees an aggregate of 1,800,000 restricted shares of Common Stock, earned at the rate of 200,000 shares per month, which shall be~~ issued and fully paid for in consideration of the Consultant’s considerable expertise and experience and its commitment to work for the Company. However, in the event the Agreement is terminated for any reason after the Initial Term, the shares are subject15,258 to a ~~claw back~~consultant for ~~any months remaining after the Termination Date.~~services rendered. The shares were valued and expensed on the date of issuance and are separately presented in the ~~agreement at $3.28 per share or $5,904,000, which was be amortized over the term~~condensed consolidated statement of ~~the agreement. As~~changes in stockholders’ equity and mezzanine as “Shares issued in lieu of ~~March 31, 2022 and 2021, the Company has expensed $0 and $1,189,451 under the agreement.~~cash”.

~~Debt Exchange Agreements~~

As of February 5, 2021, The Company entered into an Amended and Restated Debt Exchange Agreement (the “Agreement”) with the “Lender that provided for the issuance by the Company of 781,819 shares of common stock (the “Exchange Shares”), at the rate of $3.85 per share, in exchange for an aggregate of $3,010,000 principal amount of existing loans made by the Lender to the Company (See Note 11). The market price at the time this Agreement was negotiated was $3.28 per share and the Company recorded a gain on debt extinguishment of $445,636 during the three months ended March 31, 2021. As of March 31, 2021, the Company recorded $2,564,363 as an equity increase related to the extinguishment of debt.

Debt Conversions

During the ~~three months~~period ended March 31, 2022, the Company issued ~~238,000~~9,520 shares of common stock upon the conversion of $1,190,000 of notes payable. The Company recorded $973,420 as a capital contribution and an increase in equity related to the conversion of the $1,190,000 reduced by $216,580 recorded as a gain upon extinguishment of debt upon modification. The $216,580 gain upon extinguishment was determined using the fair value of the Company of ~~$4.09~~$102.25 per share at the extinguishment commitment date.

Exercise of Warrants

During the three months ended March 31, 2022, the Company issued 33,179 shares of common stock upon the cashless exercise of 109,952 warrant shares.

No options warrants or other potentially dilutive securities have been issued during the three months ended March 31, 2023.

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COSMOS ~~HOLDINGS,~~HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, ~~2022~~ 2023

~~Exercise of Warrants~~

~~During the three months ended March 31, 2022, the Company issued 829,471 shares of common stock upon the cashless exercise of 2,748,797 warrant shares.~~

~~Potentially Dilutive Securities~~

~~No options warrants or other potentially dilutive securities other than those disclosed above have been issued as of March 31, 2022.~~

NOTE 9 – RELATED PARTY TRANSACTIONS

Doc Pharma ~~S.A.~~S.A.

Prepaid expenses and other current assets – related party

As of March 31, 2023, and December 31, 2022, the Company ~~has~~had a prepaid balance of ~~$4,368,794~~$4,940,863 and ~~an accounts payable balance of $220,518, resulting in a net prepaid balance of $4,148,276~~$3,320,345 to Doc Pharma S.A. related to purchases of inventory. ~~Additionally,~~

Accounts payable and accrued expenses - related party

As of March 31, 2023, and December 31, 2022, the Company ~~has a receivable~~had an accounts payable balance of ~~$2,844,572. As of December 31, 2021, the Company has a prepaid balance of $3,263,241 to Doc Pharma S.A.~~$8,882 and $201,991.

Accounts receivable - related ~~to purchases of inventory.~~ party

Additionally, the Company had a receivable balance of ~~$2,901,300~~$1,886,890 and ~~an accounts payable balance~~$2,070,570 from Doc Pharma S.A as of ~~$565,756~~March 31, 2023, and December 31, 2022, respectively.

Sales and Purchases

During the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the Company purchased a total of ~~$687,382~~$450,911 and ~~$589,261~~$687,382 of products from Doc Pharma S.A., respectively. During the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 the Company had ~~$383,688~~$627 and ~~$290,598, in~~$383,688 revenue from Doc Pharma S.A., respectively.

Other Agreements

On October 10, 2020, the Company entered into a contract manufacturer outsourcing ~~“CMO”~~(“CMO”) agreement with ~~DocPharma~~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 5 years however either party may terminate the agreement at any time giving six-months advance notice. Doc Pharma is exclusively responsible for supplying the raw materials and packaging required to manufacture the final product. However, they are not responsible for potential delays that may arise, concerning their import. Doc Pharma is obliged 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”~~(“MoQ”) of 1,000 pieces per product code. Both parties have agreed that the Company will deposit 60% of the total cost upon agreement and assignment and 40% of the total cost including VAT charge upon the delivery date. The prices are indicative and are subject to amendments if the cost of the raw material or the production cost change. ~~As of~~

For the three months ended March 31, 2023 and 2022, the Company has purchased ~~€ 461,453~~€347,461 ($401,786) and €461,453 ($517,566), respectively, in inventory related to this agreement.

On May 17, 2021, Doc Pharma and the Company entered into a Research and Development “R(“R&D”) agreement whereby Doc Pharma will be responsible for the research, development, design, registration, copy rights and licenses of 250 nutritional supplements for the final products called Sky Premium Life^®. These products will be sold in Greece and abroad. The total cost of this project will be €1,425,000 plus VAT and will be done over three phases as follows: Design & Development (€725,000); Control and Product Manufacturing (€250,000) and Clinical Study and Research (€450,000). ~~In the year ended~~SkyPharm has bought in total as of December 31, ~~2021, SkyPharm bought 67~~2022, 81 licenses at value of ~~€261,300~~€554,500 ($~~289,860) from Doc Pharma~~593,204) which ~~was the 18.33%~~is 38.91% of the total cost. No additional licenses were purchased during the 3-month period ended March 31, 2023. The agreement will be terminated on December 31, 2025.

Loans receivable - related party

The balance of prepaid expenses due Doc Pharma SA as of December 31, 2022, had increased to €7,103,706 ($7,599,545), which was mainly attributable to the prepayments SkyPharm SA made in accordance with the CMO agreement and the extensive orders and sales of the SPL products the Company expects to achieve within 2023, mainly through its Amazon channels in the UK, Singapore, Canada and other countries. However, as the benefit from a significant portion of the prepaid balance would not have been realized within a 12-month period, the Company opted to secure a portion of the outstanding prepaid balance through a loan agreement. SkyPharm S.A. (the “Lender”) entered into a loan agreement with Doc Pharma S.A. (the “Borrower”) for €4,000,000 ($4,279,200), all of which was financed through the outstanding prepaid balance. The duration of the loan will be for a 10-year period up to December 1, 2032 (the “Maturity Date”). The loan will bear a fixed interest rate of 5.5% payable on a monthly basis and will be repayable in 120 equal instalments of €33,333.33 ($35,660). The loan may be prepaid anytime during its in full or partially based on the Company’s product requirements and other factors, without Doc Pharma incurring any prepayment penalty. As of March 31, 2023 and December 31, 2022, the loan had a current portion of €410,400 ($446,187) and €400,000 ($427,720) and a non-current portion of €3,589,600 ($3,902,613), and €3,600,000 ($3,851,280) respectively, which is classified as loans receivable – related party as of March 31, 2023. For the 3-month period ended March 31, 2023 and the Company has recorded interest income of €55,000 ($59,796) relating to this loan which had not been paid as of March 31, 2023.

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COSMOS ~~HOLDINGS,~~HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, ~~2022~~2023

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

Cana Holdings Laboratories Holding Limited

Loans receivable - related party - long term

On February 28,2023 (Issue Date) the Company signed a Secured Promissory Note with Cana Laboratories Holding (Cyprus) Limited (the “Holder”), whereby the Holder borrowed the sum of €4,100,000 ($4,457,520) from the Company. Interest on the Principal Amount under this Note shall accrue at a rate equal to Five Percent (5%) plus 1 month LIBOR per annum (4.77% as of March 31, 2023). The maturity date (“Maturity Date”) of this Note shall be five (5) years from the Issue Date. The Principal Amount, as well as all accrued interest shall be due and payable on the Maturity Date. During the three months ended March 31, 2023, the Company recorded interest income of €34,015 ($36,497).

Cana is considered a related party, since the Company has signed a binding letter of intent and an SPA for the acquisition of Cana. The acquisition is expected to be completed within 2023.

Panagiotis Kozaris

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 3-month period ended March 31, 2023 and March 31, 2022, the Company paid Panagiotis Kozaris an additional sum of $51,159 and $0 respectively for shares owned, however, no SPA for these funds has been executed as of March 31, 2023. The Company intends to execute a cumulative SPA for these amounts during 2023. The total balances owed of $194,215 and $143,056 are included in prepaid expenses and other current assets – related party, on the accompanying condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.

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

Maria Kozari

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 3-month periods ended March 31, 2023 and 2022 the Company’s net sales to Pharmacy & More amounted to $118,987 and $113,621 respectively. As of March 31, 2023 and December 31, 2022 the Company’s outstanding receivable balance due from the pharmacy amounted to $867,866 (€798,258) and $760,025 (€710,436), respectively, and are included in accounts receivable - related party, on the accompanying condensed consolidated balance sheets.

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 SA.

Notes Payable – Related Party

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COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2023

A summary of the Company’s related party notes payable activity as of and for the three and twelve month periods ended March 31, ~~2022~~2023 and December 31, ~~2021~~2022 is presented below:

	March 31, 2022			December 31, 2021			March 31, 2023		December 31, 2022

Beginning balance	$	464,264		$	501,675		$	10,912	$	464,264
Payments								-		(472,920	)
Foreign currency translation		(9,229	)		(37,411	)		177		(19,568	)
Ending balance	$	455,035		$	464,264		$	11,089	$	10,912

Grigorios Siokas

On December 20, 2018, the €1,500,000 ($1,718,400) note payable, originally borrowed pursuant to a Loan Agreement with a third-party lender, dated March 16, 2018, was transferred to Grigorios Siokas. The note ~~bears~~bore an interest rate of 4.7% per annum, originally matured on March 18, 2019 pursuant to the original agreement ~~and~~which was extended ~~until~~to December 31, ~~2021. The note is not in default~~2021, and ~~the maturity date has been extended~~ again ~~until~~to December 31, 2023. ~~As of~~During the year ended December 31, ~~2021~~2022, the Note was paid in full and as of March 31, 2023 the Company had an outstanding balance of ~~€400,000 ($452,720) and accrued interest of €177,313 ($200,683).~~$0. As of March 31, 2023 and December 31, 2022 the Company ~~has an outstanding balance of €400,000 ($443,720) and~~had accrued interest of ~~€181,948~~€22,891 ($~~201,835).~~24,887) and €192,891 ($206,355) outstanding related to this loan, classified under accrued interest, in the Company’s condensed consolidated balance sheets.

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

Dimitrios Goulielmos

On November 21, 2014, the Company entered into an agreement with Dimitrios Goulielmos, as amended on November 4, 2016. Pursuant to the amendment, this loan has no maturity date and is non-interest bearing. As of March 31, 2023 and December 31, ~~2021,~~2022, the Company had a principal balance of €10,200 ($~~11,544). A principal balance of~~11,089) and €10,200 ($~~11,315) remained as of March 31, 2022.~~10,912), respectively.

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

The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the three months ended March 31, ~~2022,~~2023, the Company recorded a ~~gain~~loss of ~~$9,229.~~$177.

Loans Payable – Related Party

A summary of the Company’s related party loans payable during the three months ended March 31, ~~2022,~~2023, and the year ended December 31, ~~2021~~2022 is presented below:

March 31, 2022

December 31, 2021

Beginning balance

$ 1,293,472

$ 1,629,246

Proceeds

456,085

6,377,156

Payments

(22,186 )

(133,552 )
Conversion of debt

-

(6,000,000 )
Settlement of lawsuit

-

(600,000 )
Foreign currency translation

(23,490 )

20,623

Ending balance

$ 1,703,881

$ 1,293,472

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~~COSMOS HOLDINGS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2022~~

	March 31, 2023		December 31, 2022

Beginning balance	$	12,821	$	1,293,472
Proceeds		-		3,635,756
Payments		-		(4,851,678	)
Foreign currency translation		208		(64,729	)
Ending balance	$	13,029	$	12,821

Grigorios Siokas

From time to time, Grigorios Siokas loans the Company funds in the form of non-interest bearing, no-term loans. As of December 31, ~~2021,~~2022, the Company had an outstanding principal balance under these loans of ~~$1,293,472~~$12,821 in loans payable to Grigorios Siokas. As of March 31, 2023 the Company had an outstanding principal balance of $13,029.

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~~During the three months ended~~

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, ~~2022, the Company borrowed additional proceeds of €321,000 ($356,085), and $100,000 and repaid €20,000 ($22,186) of these loans.~~2023

The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the three months ended March 31, ~~2022~~2023 the Company recorded a ~~gain~~loss of ~~$23,490.~~$208.

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, ~~2022~~2023 and December 31, ~~2021~~2022 is presented below:

	March 31, 2022			December 31, 2021			March 31, 2023		December 31, 2022
National	$	2,887,143		$	3,265,236		$	2,383,647	$	3,103,605
Alpha		927,008			947,333			803,142		991,492
Pancreta		417,671			489,985			1,093,420		1,232,128
National – COVID		316,377			407,174
Subtotal		4,548,199			5,109,728
Reclassification of National-COVID – Long-term		(185,872	)		(366,171	)
EGF								430,105		431,512
Ending balance	$	4,362,327		$	4,743,557		$	4,710,314	$	5,758,737

The line of credit with National Bank of Greece is renewed annually with current interest rates of 6.00%, 4.35% (“COSME 2” facility), and 4.35% ~~(plus~~plus the 6-month Euribor plus any contributions currently in force by law on certain lines of ~~credit),~~credit (“COSME 1” facility).

The maximum borrowing allowed for the 6% line of credit was ~~$3,300,168~~$3,234,420 and ~~$2,489,960~~$3,182,655 as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The outstanding balance of the facility was ~~$1,833,394~~$1,471,908 and ~~$2,185,413,~~$2,118,952, as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The maximum borrowing allowed for the ~~4.35%~~COSME 1 and COSME 2 lines of credit, was ~~$1,109,300~~$1,087,200 and ~~$1,131,800~~$1,069,800 as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The outstanding balance of the facilities was ~~$1,053,749~~$911,739 and ~~$1,079,823~~$984,653 as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The line of credit with Alpha Bank of Greece is renewed annually with a current interest rate of 6.00%. The maximum borrowing allowed was ~~$1,109,300~~$1,087,200 and ~~$1,131,800~~$1,069,800 as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The outstanding balance of the facility was ~~$927,008~~$803,142 and ~~$947,333,~~$991,429, as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

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~~COSMOS HOLDINGS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2022~~

The Company entered into a line of credit with Pancreta Bank on February 23, 2021. The line of credit is renewed annually with a current interest rate of 6.10%. The maximum borrowing allowed as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~$554,650~~$1,511,208 and ~~$565,900,~~$1,487,022, respectively. The outstanding balance of the facility as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022 was ~~$417,671~~$1,093,420 and ~~$489,985,~~$1,232,128, respectively.

~~Interest expense for the three months ended~~The Company entered into a line of credit with EGF on June 6, 2022. The line of credit is renewed annually with a current interest rate of 4.49%. The maximum borrowing allowed as of March 31, 2023 and December 31, 2022 was $434,880 and ~~2021,~~$427,920, respectively. The outstanding balance of the facility as of March 31, 2023 and December 31, 2022 was ~~$17,175~~$430,105 and ~~$16,501,~~$431,512, respectively.

Under the agreements, the Company is required to maintain certain financial ratios and covenants. ~~These lines of credit were assumed in the Company’s acquisition of Cosmofarm.~~ As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company was in compliance with these ratios and covenants.

The above lines of credit are guaranteed and backed by customer receivable ~~checks and they are not considered to be a direct debt obligation for the Company.~~checks. They are a type of factoring, where the postponed customer checks are assigned by the Company to the bank, in order to be financed at a pre-agreed rate.

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~~COVID-19 Government Funding~~

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2023

Interest expense for ~~three months~~the three-months ended March 31, 2023 and 2022, was $19,435 and ~~2021 was $413 and $0,~~$17,175, respectively.

NOTE 11 – CONVERTIBLE DEBT

A summary of the Company’s convertible debt atactivity as of and for the 3 and 12 months ended March 31, ~~2022~~2023 and December 31, ~~2021~~2022 is presented below:

March 31, 2022

December 31, 2021

Beginning balance convertible notes

$ 640,000

$ 1,447,000

New notes

0

625,000

Payments

0

(907,000 )
Conversion to common stock

0

(525,000 )
Subtotal notes

640,000

640,000

Debt discount at year end

(191,085 )

(258,938 )
Convertible note payable, net of discount

$ 448,915

$ 381,062

~~All of the convertible debt is classified as short-term within the consolidated balance sheet as it all matures and will be paid back within fiscal year 2022.~~

	March 31, 2023			December 31, 2022

Beginning balance convertible notes	$	100,000		$	640,000
Payments		(100,000	)		(525,000	)
Conversion to common stock		-			(15,000	)
Convertible notes payable	$	-		$	100,000

December 21, 2020 Securities Purchase Agreement

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

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~~COSMOS HOLDINGS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2022~~

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

~~During the year ended December 31, 2021,~~On May 1, 2022 the Company ~~converted an aggregate total~~issued 1,574 shares of ~~$525,000 in~~common stock to convert the outstanding principal and ~~$25,144 in~~ accrued interest ~~and fees into 213,382 shares~~balance of $26,515 to equity. Following the conversion, the outstanding balance of the ~~Company’s common stock at an average price per share of $2.58.~~above Note is $0. Upon conversion, the ~~213,382~~1,574 shares were issued at a fair value of ~~$959,024~~$38,144 which was recorded as equity. Accordingly, upon conversion, the Company reduced its ~~outstanding debt by $550,144, reduced its~~ derivative liability by $284,169, and recorded a loss on extinguishment of $124,711. As of March 31, 2022 and December 31, 2021, the Company had a principal balance of $15,000 each period and had accrued approximately $7,000 in interest expense each period.$11,629.

The Company determined that the embedded conversion feature of the convertible promissory note meets the definition of a ~~beneficial conversion feature and a~~ derivative liability which is accounted for separately. The Company determined a ~~beneficial conversion feature and~~ derivative liability exists ~~because The Company measured the beneficial conversion feature’s intrinsic value on December 16, 2020,~~ and determined that the embedded derivative was valued at $456,570 which was recorded as a debt discount, and together with the original issue discount and transaction expenses of $43,000, in the aggregate of $499,570, is being amortized over the life of the loan. As of ~~March~~December 31, 2022 ~~and December 31, 2021 and $568,826 and $494,973, respectively,~~the full amount of the debt discount has been amortized. AsTherefore, as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the fair value of the derivative liability was ~~$3,949 and $5,822, respectively.~~$0. For the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the Company ~~record~~recorded a ~~gain~~loss on the change in fair value of the derivative of ~~$1,873~~$0 and ~~$44,215,~~a gain of $1,873, respectively.

January 7, 2021 Subscription Agreement

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

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~~Upon~~

COSMOS HEALTH INC.

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2023

However, the ~~consummation~~listing to NEO Stock Exchange did not occur. As of December 31, 2022, the Company had a ~~NEO listing,~~principal balance of $100,000 and had accrued $13,740 in interest expense. During the ~~total principal and accrued interest outstanding on~~three months ended March 31, 2023, the ~~note will convert into shares of~~Company paid the ~~Company’s common stock at a 25% discount to the prices of the common shares sold~~balance in the financing to be conducted in conjunction with the NEO listing. In the event that a NEO listing is not consummated on or before October 31, 2021, the note holder will have the option, in part or in full, to have the note repaid with interest, or convert the note into Company common stock at a 25% discount to the 30-day volume-weighted average price of the Common Shares on the most senior stock exchange in North American on which the common shares are trading prior to conversion.full.

The Company determined that the embedded conversion feature of the convertible promissory note meets the definition of a ~~beneficial conversion feature and a~~ derivative liability which is accounted for separately. The Company measured the ~~beneficial conversion feature’s intrinsic value on January 7, 2021, and determined that the~~ embedded derivative ~~was~~ valued at $62,619 which was recorded as a debt discount and additional paid-in capital and iswas being amortized over the life of the loan. As of ~~March~~December 31, 2022, ~~and December 31, 2021, $62,619 of~~ the debt discount ~~has~~had been fully amortized. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the fair value of the derivative liability was ~~$26,716~~$0 and ~~$39,843,~~$54,293, respectively. For the three months ended March 31, 2023 and 2022, the Company recorded a loss of $3,384 and a gain of ~~$13,127~~$13,128, respectively, from the change in fair value of derivative liability as other income in the condensed consolidated statements of operations and comprehensive ~~income (loss).~~loss.

The Company considered both the note payable and conversion feature separately and upon settlement. The Company re-valued the conversion feature to fair value and applied extinguishment accounting as the debt has now been settled. Because the conversion feature is extinguished upon settling the note, the value of the conversion feature goes though debt extinguishment debt and the Company recorded a gain on settlement of debt. During the three months ended March 31, 2023, the Company recorded a gain on extinguishment of debt of $50,909.

Convertible Promissory Note and Securities Purchase Agreement

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

~~Convertible Promissory Note~~

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

Upon the consummation of aour Nasdaq listing in 2022, the total principal and accrued interest outstanding on the note ~~will~~would convert into shares of the Company’s common stock at a 30% discount to the prices of the common shares sold in the financing to be conducted in conjunction with ~~the~~our Nasdaq listing, subject to a conversion floor of ~~$3.00. The~~$75.00. However, the Company, determined that the embedded conversion feature of the convertible promissory note meets the definition of a beneficial conversion feature which is accounted for separately. The Company measured the beneficial conversion feature’s intrinsic value on September 17, 2021, at $294,000 which, togetherupon agreement with the ~~OID of $25,000 was recorded as a debt discount~~third party, did not convert the note and ~~is being amortized over the life of the loan. For the year ended December 31, 2021, $60,063 of the debt discount has been amortized.~~ fully repaid it in cash on October 21, 2022.

As of December 31, ~~2021,~~2022, the Company ~~had accrued a principal~~repaid the remaining outstanding balance of ~~$525,000, had accrued $15,166 in interest expense,~~the note and ~~had remaining debt discount~~thus its outstanding balance as of ~~$258,937 which resulted in a net convertible note payable~~the end of ~~$266,063.~~

the period was $0. For the three months ended March 31, ~~2022, $127,916 of the debt discount has been amortized. As of March 31,~~2023 and 2022, the Company ~~had accrued a principal balance~~recorded amortization of ~~$525,000, had accrued $28,291~~debt discount in the amount of $0 and $127,916, respectively, which is included in non-cash interest expense on the accompanying condensed statements of operations and ~~had remaining debt discount of $191,084 which resulted in a net convertible note payable of $333,916.~~

~~Table of Contents~~

~~COSMOS HOLDINGS, INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~March 31, 2022~~comprehensive loss.

Derivative Liabilities

The table below provides a summary of the changes in fair value, including net transfers in and/or out of all financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, ~~2022:~~2023:

Amount

Balance on January 1, 2022

$ 45,665

Issuances to debt discount

0

Reduction of derivative related to conversions

0

Change in fair value of derivative liabilities

(15,001 )
Balance on March 31, 2022

$ 30,664

The fair value of the derivative conversion features and warrant liabilities as of March 31, 2022 and December 31, 2021 were calculated using a Monte-Carlo option model valued with the following assumptions:

March 31,

December 31,

2022

2021

Dividend yield

0 %

0 %
Expected volatility

87.9 %

106.8%-107.3
%
Risk free interest rate

1.40 %

0.41%-0.44
%
Contractual terms (in years)

.50

.50 – .52

~~NOTE 12 – DEBT~~
~~A summary of the Company’s third-party debt as of March 31, 2022 and December 31, 2021 presented below:~~
March 31, 2022

Loan
Facility

Trade
Facility

Third
Party

COVID
Loans

Total

Beginning balance

$ 1,299,784

$ 6,207,010

$ 10,077,977

$ 234,117

$ 17,818,888

Proceeds

0

-

-

-

-

Payments

(124,242 )

(107,894 )

(2,030,814 )

(2,262,950 )
Conversion of debt

(1,190,000 )

-

-

(1,190,000 )
Recapitalized upon debt modification

-

(198,040 )

(1,204,356 )

-

(1,402,396 )
Accretion of debt

78,445

-

-

78,445

Foreign currency translation

54,861

(41,505 )

(21,433 )

(5,029 )

(13,106 )
Subtotal

118,848

5,859,571

6,821,374

229,088

13,028,881

Notes payable - long-term

-

-

(6,664,025 )

(221,781 )

(6,885,806 )
Notes payable - short-term

$ 118,848

$ 5,859,571

$ 157,349

$ 7,307

$ 6,143,075

Amount

Balance on January 1, 2023

$ 54,293

Reduction of derivative related to conversions

(50,909 )
Change in fair value of derivative liabilities

(3,384 )
Balance on March 31, 2023

$ -

25
Table of Contents

COSMOS ~~HOLDINGS,~~HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, ~~2022~~2023

December 31, 2021

Loan
Facility

Trade
Facility

Third
Party

COVID
Loans

Total

Beginning balance

$ 3,302,100

$ 6,446,000

$ 12,631,284

$ 435,210

$ 22,814,594

Proceeds

-

-

565,900

-

565,900

Payments

(141,475 )

(57,835 )

(62,878 )

(3,233 )

(265,421 )
Conversion of debt

(1,606,500 )

-

(3,010,000 )

-

(4,616,500 )
Recapitalized upon debt modification

(86,670 )

-

-

-

(86,670 )
Debt forgiveness

-

-

-

(169,770 )

(169,770 )
Foreign currency translation

(167,671 )

(181,155 )

(46,329 )

(28,090 )

(423,245 )
Subtotal

1,299,784

6,207,010

10,077,977

234,117

17,818,888

Notes payable - long-term

-

(2,450,000 )

(9,854,906 )

(51,478 )

(12,356,384 )
Notes payable - short-term

$ 1,299,784

$ 3,757,010

$ 223,071

$ 182,639

$ 5,462,504

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

Our outstanding debt as of March 31, 2022 is repayable as follows:

March 31, 2022

2022

$ 4,116,483

2023

9,699,419

2024

253,694

2025

227,261

2026 and thereafter

140,923

Total debt

14,437,780

Less: fair value adjustments to assumed debt obligations

(1,408,899 )
Less: notes payable - current portion

(6,143,075 )
Notes payable - long term portion

$ 6,885,806

December 31,
2022
Dividend yield
0 %
Expected volatility
87.9%-157.2
Risk free interest rate
1.46%-3.75
Contractual terms (in years)
1.25 - .75
NOTE 12 – DEBT
A roll forward of the Company’s third-party debt for the three months ended March 31, 2023 is presented below:
March 31, 2023

Trade
Facility

Third
Party

COVID
Loans

Total

Beginning balance 12/31/22

$ 3,305,532

$ 1,505,078

$ 207,377

$ 5,017,987

Payments

(1,153,365 )

(86,561 )

(5,096 )

(1,245,022 )
Debt forgiveness

(306,637 )

-

-

(306,637 )
Foreign currency translation

29,890

11,409

1,879

43,178

Ending balance 3/31/23

1,875,420

1,429,926

204,160

3,509,506

Notes payable - long-term

(1,549,260 )

(1,002,288 )

(176,000 )

(2,727,548 )
Notes payable - short-term

$ 326,160

$ 427,638

$ 28,160

$ 781,958

Our outstanding debt as of March 31, 2023, is repayable as follows:

March 31,
2023

2023

$ 802,622

2024

806,824

2025

1,613,928

2026

174,947

2027 and thereafter

111,185

Total debt

3,509,506

Less: notes payable–- current portion

(781,958 )
Notes payable–- long term portion

$ 2,727,548

26
Table of Contents
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2023

Loan Facility Agreement

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

·•
Issue on August 4, 2021, ~~321,300~~12,852 shares of common stock to settle $1,606,500 (€1,350,000) of debt. The Company recorded a gain on settlement of $292,383 upon the issuance of the ~~321,300 shares~~12,852 shares; and

·•
Agreed to issue no more than ~~238,000~~9,520 shares of common stock upon approval of the listing of the Company’s common stock ~~to the~~on Nasdaq to settle $1,190,000 (€1,000,000) of debt. The Company issued these shares on February 28, 2022. Upon issuance of the ~~238,000~~9,520 shares of common stock, the Company recorded a gain on extinguishment of debt in the amount of $216,580 determined using the fair value of the Company’s common stock at the commitment date of ~~$4.09~~$102.25 per share.

The Company ~~evaluated~~incurred non-cash interest expense of $6,642 during the ~~August 4, 2021, exchange agreement for debt modification in accordance with ASC 470-50 and concluded that~~period ended December 31, 2022 concerning the debt ~~qualified for~~extinguishment. The principal debt ~~extinguishment because a substantial conversion feature~~balance was ~~added to~~paid in full during the debt terms. Upon extinguishment, the Company recorded a loss upon extinguishment in the amount of $6,642 and recorded the new debt at fair value based on the present value of future cash flows using a discount rate of 11.66%.year ended December 31, 2022. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the ~~Company has~~outstanding principal balance on the debt was $0, and had accrued interest expense of ~~$16,849~~$18,527 and ~~$4,414, respectively, and the principal balance of the debt is $118,848 and $1,299,784, respectively, which is classified as Notes payable on the unaudited condensed consolidated balance sheet.~~
26
~~Table of Contents~~
~~COSMOS HOLDINGS, INC.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
~~March 31, 2022~~
The debt is subject to acceleration in an Event of Default (as defined in the Notes). This agreement is secured by a personal guaranty of Grigorios Siokas, which is secured by a pledge of 1,000,000 shares of common stock of the Company owned by Mr. Siokas.$12,853, respectively.

Trade Facility Agreements

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

On October 17, 2018, the Company entered into a further amended agreement with Synthesis whereby the current balance on the TFF as of October 1, 2018, which was €4,866,910 ($5,629,555) and related accrued interest of €453,094 ($524,094) would be split into two principal balances of Euro €2,000,000 ($2,316,000), (the "EURO Loan") and USD ~~$4,000,000.~~$4,000,000, the "USD Loan". Interest on both the ~~new balances~~EURO Loan and USD Loan commenced on October 1, 2018, at 6% per annum plus one-month Euribor ~~when it is positive, on the Euro balance~~(2.49% as of March 31, 2023), and 6% ~~per annum~~ plus one-month ~~Libor on the USD balance.~~
~~The USD $4,000,000 loan matured on August~~LIBOR (4.77% as of date of March 31, ~~2021. On March 3~~^rd ~~2022, the Company entered into an extension to the facility agreement. Based on the updated repayment terms, the facility’s final repayment date was extended to January 2023.~~2023), respectively.

On December 30, 2020, the Company transferred the ~~Euro €2,000,000 loan~~EURO Loan to a new third-party lender. The terms remained the same except interest ~~will now accrue~~accrues at 5.5% per annum plus ~~Euribor.~~one-month Euribor (2.49% as of March 31, 2023). The principal iswas scheduled to be repaid in a total of five quarterly installments beginning October 31, 2021 of ~~50,000 Euro~~€50,000 ($54,360) each with a final repayment of ~~1,800,000~~€1,800,000 ($1,956,960) Euro payable on ~~the earlier of 24 months after December 30, 2020 or~~ October 31, 2022.
During the year ended December 31, 2021, the Company repaid $56,508 of the €2,000,000 balance such that as of December 31, 2021, the Company had principal balances of €1,950,000 ($2,207,010) and $4,000,000 under the agreements, of which $2,450,000 is classified as notes payable-long term on the consolidated balance sheet and the Company had accrued $10,466 in interest expense related to these agreements.

On March 3, 2022, the Company entered into a modification agreement to extend the maturity date to January 10, 2023 and payments under the ~~$4,000,000 loan. The loan was considered a~~USD Loan. During June 2022, the Company agreed with the Lender to postpone the repayment of an installment of $500,000 due on June 30, 2022 (based on the modification ~~under ASC 470-50 because~~agreement signed on March 3, 2022) until January 2023. During September 2022, the ~~change in~~Company agreed with the ~~present value~~Lender to postpone the repayment of ~~cash flows is less than 10%.~~the outstanding balance on the USD Loan of $3,950,000, plus unpaid accrued interest until January 2023. The Company capitalized fees paid upon modification of ~~$200,000~~€200,000 ($221,060) that are being amortized over the life of the loan. The Company incurred non-cash interest expense of $23,820 during the three-month period ended March 31, 2022 concerning the above capitalized fees.
During the ~~three months~~year ended ~~March~~December 31, 2022, the Company repaid ~~$55,465~~€175,000 ($187,215) of the ~~€1,950,000 balance~~EURO Loan and ~~$50,059~~$2,593,363 of the ~~$4,000,000 balance~~USD Loan such that as of ~~March~~December 31, 2022, the Company had principal balances of ~~€1,900,000~~€1,775,000 ($~~2,107,670)~~1,898,895) and ~~$3,751,901~~$1,406,637 under the agreements, ~~which are recorded as short term.~~respectively. As of March 31, 2022, the Company had accrued $81,813 in interest expense related to these agreements.
On December 21, 2022 the USD Loan was assigned to GIB Fund Solutions ICAV (the “Fund”). On January 31, 2023, the Company paid $1,100,000 to the Fund under a full and final settlement agreement for the USD Loan, recording a gain on extinguishment of debt of $306,637 relating to the waiver of the unpaid balance. Additionally, the Company repaid €50,000 ($54,360) of the EURO Loan during the 3-month period ended March 31, 2023. As of March 31, 2023 the Company had an outstanding principal balance of €1,725,000 ($1,875,420), of which $1,549,260 is classified as notes payable-long term on the condensed consolidated balance sheets. As of March 31, 2023, the Company had accrued $14,380 in interest expense related to these agreements.
On December 22, 2022, Skypharm SA signed an agreement for the extension of the payments and an increase in interest rate due under the EURO loan, that was extended to be repaid with a balloon payment now due on October 31, 2025. This extension was agreed upon in writing on December 22, 2022 with a retroactive modification date to October 31, 2022 (the original maturity date).
27
Table of Contents
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2023

Third Party Debt

On November 16, 2015, the Company entered into a Loan Agreement with Panagiotis Drakopoulos, the Company’s former Director and former Chief Executive Officer, pursuant to which the Company borrowed €40,000 ($42,832) as a note payable from Mr. Drakopoulos. The note ~~bears~~bore an interest rate of 6% per annum and was due and payable in full on November 15, 2016. As of December 31, ~~2021,~~2022, the Company had an outstanding principal balance of €8,000 ($~~9,054)~~8,558) and accrued interest of ~~€6,318~~€6,797 ($~~7,151)~~7,271). AsDuring the three months ended March 31, 2023, the Company paid the outstanding balance of €8,000. Therefore, as of March ~~31,2022,~~31, 2023, the balance due is $0. Mr Drakopoulos is not considered a related party since he is no longer employed by the Company ~~had an outstanding principal balance of €8,000 ($8,874)~~ and ~~accrued interest of €6,439 ($7,143).~~currently holds no equity position in the Company.

May 18, 2020, July 3, 2020, and August 4, 2020 Senior Promissory Notes
~~May 18, 2020 Senior Promissory Note~~
On May 18, 2020, the Company executed a Senior Promissory Note (the “May 18 Note”) in the principal amount of $2,000,000 payable to an unaffiliated third-party lender. The May 18 Note bears interest at the rate of eighteen (18%) percent per annum, paid quarterly in arrears. The May 18 Note matured on December 31, 2020.
27
~~Table of Contents~~
~~COSMOS HOLDINGS, INC.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
~~March 31, 2022~~
The May 18 Note is subject to acceleration in an Event of Default. Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the May 18 Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection. As of December 31, 2021 the Company had a principal balance of $2,000,000 on this note, which is classified as Notes payable – long term portion on the consolidated balance sheet.
~~July 3, 2020 Senior Promissory Note~~
On July 3, 2020, the Company executed a Senior Promissory Note (the “July 3 Note”) in the principal amount of $5,000,000 payable to an unaffiliated third-party lender. The July 3 Note bears interest at the rate of eighteen (18%) percent per annum, paid quarterly in arrears. The July 3 Note matures on June 30, 2022 unless in default.
The July 3 Note is subject to acceleration in an Event of Default (as defined). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the July 3 Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection.
The Company used the proceeds from the July 3 Note to repay the principal outstanding on the May 5 Note ($2,000,000), the May 8 Note ($2,000,000), and the February Note ($1,000,000). As of December 31, 2021, the Company had a principal balance of $5,000,000 on this note, which is classified as Notes payable – long term portion on the consolidated balance sheet.
~~As of December 31, 2021, the Company had accrued an aggregate total of $210,574 in interest expense related to these loans.~~
~~August 4, 2020 Senior Promissory Note~~
On August 4, 2020, the Company executed a Senior Promissory Note (the “August 4 Note”) in the principal amount of $3,000,000 payable to an unaffiliated third-party lender. The August 4 Note bears interest at the rate of eighteen (18%) percent per annum, paid quarterly in arrears. The August 4 Note matured on December 31, 2020.
The August 4 Note is subject to acceleration in an Event of Default (as defined). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the August 4 Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection.
On October 29, 2020, the Company entered into a debt exchange agreement with the lender whereby the Company issued 259,741 shares of common stock at the rate of $3.85 per share in exchange for an aggregate of $1,000,000 principal amount of the existing loan. The fair market value of the Company’s common stock on the date of exchange was $3.11 per share and as such, the Company recorded a gain of $192,205. Interest continued to accrue on the remaining debt and the converted amount until December 31, 2020. As of December 31, 2020, the Company had a principal balance of $2,000,000 on this note and prepaid interest of $8,514. As of December 31, 2021, the Company had a principal balance of $2,000,000 on this note, which is classified as Notes payable – long term portion on the consolidated balance sheet, and $60,166 in accrued interest expense.

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

On February 23, 2022, the Company entered into modification agreements to extend the due dates of the May 18 Note, July 3 Note, and August 4 Note to June 30, 2023 of $9,000,000, in the aggregate. The Company paid restructuring fees totaling $506,087 upon modification. The Company determined the modification should be recorded as debt extinguishment in accordance with ASC 470 because the present value of the remaining cash flows under the terms of the new debt instrument is at least 10% different from the present value of the remaining cash flows under the terms of the original instrument. The Company recorded the new debt at fair value in the amount of $7,706,369 and a gain upon extinguishment in the amount of $787,544. During the year ended December 31, 2022, the Company repaid the aggregate principal balance of $7,000,000 and the aggregate accrued interest related to these notes in full. During the three months ended March 31, 2022 the Company ~~made principal payments in the amount of $2,000,000 and~~ recorded non-cash interest expense in the amount of $89,275 for the ~~accretion~~amortization of ~~debt. As~~debt issuance costs.
June 23, 2020 Debt Agreement
On June 23, 2020, the Company’s subsidiary, Cosmofarm, entered into an agreement with the “National Bank of Greece SA” (the “Bank”) to borrow a maximum of €500,000 ($611,500). The note has a maturity date of sixty (60) months from the date of the first disbursement, which includes a grace period of nine months. The total amount of the initial proceeds was paid in 3 equal monthly installments. The note is interest bearing from the date of receipt and is payable every three (3) months at an interest rate of 3.06% plus 3-month Euribor (2.78% as of March 31, 2023). The outstanding balance was €294,118 ($319,765) and €323,529 ($346,112) on March 31, 2023 and December 31, 2022, respectively of which $191,859 and $220,253, is classified as Notes payable - long-term portion respectively, on the accompanying condensed consolidated balance sheets. During the three months ended March 31, 2023, the Company ~~had a~~repaid €29,412 ($31,976) of the principal balance of $5,795,644 in relation to the May 18 Note, July 3 Note, and August 4 Note, in the aggregate. As of March 31, 2022, the Company has accrued an aggregate total of $443,341 of accrued interest on these notes, in the aggregate.balance.

28
~~Table of Contents~~
~~COSMOS HOLDINGS, INC.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
~~March 31, 2022~~
November 19, 2020 Debt Agreement

On November 19, 2020, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($611,500). The note matures on November 18, 2025 and bears an annual interest rate, based on a 360-day year, of 3.3% plus .6% plus 6-month Euribor when Euribor is positive. ~~Pursuant to the terms of the agreement, there is a six-month grievance from the first deposit date, which was November 19, 2020, for principal repayment.~~ The principal is to be repaid in 18 quarterly installments of ~~€27,000 with the first payment due 9 months from the first deposit.~~€27,778 ($30,210).  During the year ended December 31, ~~2021,~~2022, the Company repaid ~~€55,556~~€111,111 ($~~62,878)~~118,867) of the principal and as of December 31, ~~2021,~~2022, the Company ~~has~~had accrued interest of ~~$5,642~~$8,069 related to this note and a principal balance of ~~€444,444~~€333,333 ($~~503,022)~~356,600), of which ~~$377,270~~$237,733 is classified as Notes payable – long term portion on the accompanying condensed consolidated balance sheet. During the three months ended March 31, ~~2022,~~2023, the Company repaid €27,778 ($~~30,814)~~30,200) of the principal and as of March 31, ~~2022,~~2023, the Company has accrued interest of ~~$4,815~~€2,516 ($2,735) related to this note and a principal balance of ~~€416,667~~€305,556 ($~~462,208)~~332,200), of which ~~$429,582~~$211,400 is classified as Notes payable – long term portion on the accompanying condensed consolidated balance ~~sheet~~sheet.

July 30, 2021 Debt Agreement

On July 30, 2021, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($578,850). The note matures on August 5, 2026 and bears an annual interest rate that applies to 60% of the principal of the note that is based on a 365-day year, of 5.84% plus 3-month Euribor when Euribor is positive. Pursuant to the terms of the agreement, there is a ~~six-month~~nine-month grace period for principal repayment during which interest is accrued. The principal is to be repaid in 18 quarterly installments of ~~€27,000~~€27,778 commencing three months from the end of the grace period. During the year ended December 31, 2022, the Company repaid €77,985 ($83,428) of the principal balance. As of December 31, ~~2021,~~2022, the Company ~~has~~had accrued interest of ~~$3,100~~€2,509 ($2,728) and a principal balance of ~~€500,000~~€422,016 ($~~565,900)~~451,472), of which ~~$477,637~~$336,788 is classified as ~~Notes~~notes payable – long term portion on the accompanying condensed consolidated balance sheet. During the three months ended March 31, 2023, the Company repaid €26,451 ($28,758) of the principal. As of March 31, ~~2022,~~2023, the Company has accrued interest of ~~$3,042~~€4,136 ($4,947) and a principal ~~balance~~ of ~~€500,000~~€395,564 ($~~554,650)~~430,057), of which ~~$438,799~~$312,520 is classified as Notes payable – long term portion on the accompanying condensed consolidated balance sheet.

28
Table of Contents
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2023
June 9, 2022 Debt Agreement
On June 9, 2022 the Company entered into an agreement with a third-party lender in the principal amount of €320,000 ($335,008), the “Note”. The Note matures on June 16, 2027 and bears an annual interest rate of 3.89% plus an additional rate of 0.60%, plus the 3-month Euribor (2.78% as of March 31, 2023). Pursuant to the agreement, there is a twelve-month grace period for principal repayment during which interest is accrued. The principal is to be repaid in 17 equal quarterly installments of €18,824 commencing on June 30, 2023. As of March 31, 2023 and December 31, 2022 the Company has accrued interest of €3,532 ($3,840) and €7,707 ($8,379), respectively, and an outstanding balance of €320,000 ($347,904), of which $286,509 and $281,924, respectively, is classified as Notes payable – long term portion on the accompanying condensed consolidated balance sheets.
August 29, 2022 Promissory Note
On August 29, 2022, the Company entered into a promissory note for the principal amount of $166,667. The Company received $150,000 in cash and recorded $16,667 as an original issue discount upon issuance. The promissory note matures on the earlier of (a) December 27, 2022, or (b) the date the Company completes a debt or equity financing of at least $1,000,000. The debt carried an annual interest rate of 12% which was due upon maturity. As of December 31, 2022, the Company had repaid the principal balance in full and had a balance of $5,041 in accrued interest related to this note. The Company repaid the outstanding interest during the 3-month period ended March 31, 2023 and thus the balance of both principal and interest as of March 31, 2023 is $0.
COVID-19 ~~Government~~ Loans

On May 12, 2020, the Company’s subsidiary, SkyPharm, was granted and on May 22, 2020 ~~the Company~~ received a €300,000 ($366,900) loan from the Greek government. The loan will be repaid in 40 equal monthly installments beginning on ~~January 1, 2022 and bears an interest rate of 0.94% per annum.~~July 29, 2022. As a condition to the loan, the Company was required to retain the same number of employees until October 31, 2020. ~~During the year ended December 31, 2021, the Company received a waiver of 50% forgiveness of the loan and recorded $177,450 as other income.~~ As of December ~~31, 2021 the principal balance was $169,770. As of March~~ 31, 2022, the principal balance was ~~$166,395.~~$150,441. During the three months ended March 31, 2023, the Company repaid €4,688 ($5,096) of the principal balance. The outstanding balance as of March 31, 2023 is €135,938 ($147,791).

On June 24, 2020, the Company received a loan £50,000 ($68,310) from the United Kingdom government. The loan has a ~~six-year~~ten-year maturity and bears interest at a rate of 2.5% per annum beginning 12-months after the initial ~~disbursement.~~disbursement, which was on July 10, 2020. The Company may prepay this loan without penalty at any time. ~~The Company repaid £2,335 ($3,233) of principal during the year ended December 31, 2021, and the balance as of December 31, 2021 was £47,665 ($64,347).~~ As of ~~March~~December 31, 2022, the principal balance was ~~£47,665~~£47,144 ($~~62,693)~~56,936).
~~Distribution and Equity Agreement~~
As ~~discussed in Note 3 above,~~of March 31, 2023, the ~~Company entered into a Distribution and Equity Acquisition Agreement with Marathon. The Company~~principal balance was appointed the exclusive distributor of the Products (as defined) initially throughout Europe and on a non-exclusive basis wherever else lawfully permitted. As consideration for its services, Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in Common Shares of the Company if it fails to meet certain performance milestones. The Company is entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000.£45,573 ($56,369).


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COSMOS ~~HOLDINGS,~~HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, ~~2022~~2023
As discussed in Note 3, the Company attributed no value to the shares received in Marathon pursuant to (a) above. In relation to the CAD $2 million cash received noted in (b) above, the Company accounted for its obligation to issue a variable number of the Company’s Common Shares as Share-settled debt obligation in accordance with ASC 480 measured at fair value or the settlement amount of $1,554,590 (CAD $2 million). If settlement were to occur on December 31, 2019, the Company would be required to issue 635,829 common shares to settle its debt obligation. The Company could be obligated to potentially issue an unlimited number of common shares to settle its Share-settled debt obligation. If such events were to occur, the Company would be required to increase its authorized share capital and since increasing the authorized share capital is within the control of the Company, as our CEO controls greater than 50% of the outstanding common stock of the Company, the original classification of equity-classified financial

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

NOTE 13 – LEASES

The Company has various operating and finance lease agreements with terms up to 10 years, ~~comprising leases~~for various types of property and equipment (such as office space ~~cars leases for the distribution of pharmaceutical products, equipment hires,~~and vehicles) etc. Some leases include options to purchase, terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.

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

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

Operating Leases

The Company’s weighted-average remaining lease term relating to its operating leases is ~~6.47~~5.23 years, with a weighted-average discount rate of 6.74%.

The Company incurred lease expense, ~~for its~~due to amortization of operating ~~leases~~lease right-of-use assets, of ~~$54,124~~$55,354 and ~~$65,577~~$54,124 which was included in “General and administrative expenses,” for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

The following table presents information about the amount ~~timing~~ and ~~uncertainty~~timing of cash flows arising from the Company’s operating leases as of March 31, ~~2022.~~2023:

Maturity of Lease Liability

Remainder of 2022

$ 154,095

Maturity of Operating Lease Liability:

2023

177,914

$ 197,540

2024

108,485

264,035

2025

108,485

190,379

2026

153,712

Thereafter

408,810

581,964

Total undiscounted operating lease payments

$ 957,789

$ 1,387,630

Less: Imputed interest

(182,247 )

(272,107 )
Present value of operating lease liabilities

775,542

1,115,523

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COSMOS ~~HOLDINGS,~~HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, ~~2022~~ 2023
Finance leases

The Company’s weighted-average remaining lease term relating to its finance leases is ~~2.93~~3.34 years, with a weighted-average discount rate of 6.74%., based on the interest rate implicit in the lease.

The following table presents information about the amount ~~timing~~ and ~~uncertainty~~timing of cash flows arising from the Company’s finance leases as of March 31, ~~2022.~~2023:

Maturity of Lease Liability

Remainder of 2022

$ 62,941

Maturity of Finance Lease Liability

2023

73,387

$ 112,406

2024

56,654

133,861

2025

26,870

103,586

2026

77,014

Thereafter

3,694

23,474

Total undiscounted finance lease payments

$ 223,546

$ 450,341

Less: Imputed interest

(20,669 )

(47,400 )
Present value of finance lease liabilities

$ 202,877

$ 402,941

The Company incurred interest expense on its finance leases of $6,219 and $3,507 which was included in “Interest ~~expense,”~~expense”, on the accompanying condensed statements of operations and comprehensive loss for the three months ended March 31, ~~2022.~~2023 and 2022, respectively. The Company incurred amortization expense on its finance leases of $30,710 and $19,580, which was included in “Depreciation and amortization ~~expense,”~~expense”, on the accompanying condensed statements of operations and comprehensive loss for the three months ended March 31, ~~2022.~~2023 and 2022, respectively. The total cash used for the Company’s finance leases for the three months ended March 31, 2023 and March 31, 2022 amounted to ~~$22,358.~~$35,596 and $22,622 respectively and is solely related to lease payments.

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, ~~2022,~~2023, the following ~~litigations~~litigation matters were pending. None of the below is expected to have a material financial or operational impact.

Solgar ~~Inc. is suing~~Inc, a competitor of the Company, sued SkyPharm SA for product homogeneity regarding the nutraceutical line ~~"Sky~~“Sky Premium ~~Life"~~Life”. As a result, Solgar requested the prohibition for SkyPharm to manufacture, import and sell, market or in any way possess and distribute, including ~~Internet~~internet sales and advertise in any way in the Greek market of ~~"Sky~~“Sky Premium ~~Life"~~Life” due to homogeneity with ~~Solgar's~~Solgar’s products. Lawsuit with data no 4545/2021 of the company "Solgar Inc." against SkyPharm before the Court of First Instance of Thessaloniki, according to which Solgar Inc. requests to prohibit SkyPharm SA's use of the nutraceutical line "Sky Premium Life" packages as its characteristics are similar to Solgar Inc.’s and is also seeking the withdrawal of existing ones from the market. Solgar Inc. has further requested to be awarded compensation for non-pecuniary damage amounting to ~~20,000€ (financial obligation)~~€20,000 ($21,744). The case was heard on January 28, 2022, and the ~~Company is awaiting a decision. The lawyer assesses that the outcome~~decision numbered 8842/2022 of the ~~trial's decision will be positive for SkyPharm SA.~~court of Thessaloniki was issued, which, accepted our claims and dismissed the Solgar’s Inc. lawsuit.
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COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2023

~~Compilation and submission of a memorandum against the National Medicines Agency with no. 127351/16.12.2021 document.~~ On July 22, 2015, the National Medicines Agency approved the license of wholesale sale of pharmaceutical products ~~of the pharmaceutical company~~ under the name SkyPharm SA with set validity at five years and an expiration date of July 22, ~~2022.~~2020. Subsequently, SkyPharm SA on June 15, 2020, legally and timely submitted the application for renewal of the wholesale license of pharmaceutical products to the National Medicines ~~Agency even though the period under review is characterized by the Covid - 19 pandemic~~Agency. The National Medicines Agency did not respond, therefore the Company asked ~~from the lawyer to immediately ask~~ for ~~the~~an immediate decision ofon the renewal. Two months after the filing of no. 3459 / 15.01.2021 letter ~~of the attorney~~ and almost nine months after the no. 627615.06.2020 company application for the renewal, ~~and~~ the National Medicines Agency replied by rejecting the renewal request on March 9, 2021 (ref. 62769 / 20-25.02.2021). In addition, document No. 127351-16.12.2021 of EOF (Greek National Medicines Organization) to SkyPharm states that after an inspection of EOF at the premises of ~~the company "Doc Pharma", SkyPharm~~Doc Pharma, we did not have a wholesale license ~~in force~~ in violation of article 106 par. 1b and par. 1c of the ministerial decision D.YG3a / GP.32221 / ~~29-4-2019 and issued invoices dated February 26, 2021 and March 8, 2021).~~29-4-2019. The National Medicines Agency has not yet ~~replied to~~provided update on the ~~renewal request.~~
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~~COSMOS HOLDINGS, INC.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
~~March 31, 2022~~implications of the renewal’s rejection.

~~Order for~~There has been a payment request by the Greek court, which ~~derived from~~relates to a fine ~~related to~~arising from Cosmofarm’s SA tax audit ~~that concerns~~for financial year 2014. The ~~ruling~~law with no. 483/16.12.2020 was used by the court against Cosmofarm ~~SA.~~SA (the “defendant”). The defendant appealed against the decision byusing the ~~ruling~~law with no.11541/~~09.03.2021.This~~09.03.2021. This appeal was dismissed ~~due~~after 120 days from its submission to ~~inactive passage of 120 days. Because of this inactive passage, Cosmofarm appealed against Greek tax authorities, no.6704/29.11.2021. There was~~the court. Additionally, there had been an obligation for payment of additional tax and fines ~~imposition~~related to this matter in the amount of ~~91,652.27€ that Cosmfarm~~€91,652 ($99,644), which the defendant has already ~~paid and claim~~settled. However, the defendant has claimed back the respective amount through appeal. As of March 31, 2023, the ~~appeal (financial claim). The~~ trial is still pending. ~~The lawyer assesses that they cannot assume the final outcome of this case.~~

Advisory Agreements

On July 1, 2021, the Company entered into a two-year advisory agreement with a third party (the “Consultant”) for advisory and consulting services related to the Company’s intention to become listed on ~~NASDAQ.~~Nasdaq. Peter Goldstein, a then director of the Company is a principal of the Consultant. As consideration for services rendered, ~~the Company will pay the consultant $4,000 a month until the Company commences trading on NASDAQ. Upon NASDAQ~~and successful Nasdaq listing, the Company ~~shall pay $10,000 per month, with $4,000 per month~~ paid ~~on a monthly basis and $6,000 per month accrued until such time as the Company raises an aggregate of $10,000,000. In addition, the consultant will receive a~~$100,000. The $100,000 bonus ~~upon NASDAQ listing~~was incurred and ~~when the Company has raised an aggregate of $10,000,000.~~settled within 2022. Finally, the ~~Company has agreed that the~~ Consultant ~~shall receive~~received a total of ~~250,000~~10,000 shares of the Company’s common stock, ~~50,000~~2,000 of such shares that have been previously issued pursuant to previous agreements and ~~200,000~~additional 15,258 shares ~~to be~~that were issued ~~when~~on February 2, 2023, based on the ~~Company commences trading~~amendment signed on ~~NASDAQ.~~ February 1, 2023.
Research and Development Agreements

On ~~July 7, 2021,~~June 26, 2022, the Company ~~entered into an~~signed a research and development (R&D) agreement with a ~~non-exclusive financial advisor~~third party, through which the Company assigns to the third party the development of new products and ~~placement agent.~~services in the field of health, focusing on the human intestinal microbiome. The ~~term~~cost of the ~~agreement~~projects amount to EUR 820,000 ($891,504) which is ~~a minimum of 45 days~~allocated to certain phases. The amount will be due and will continue until 5 business days following the date in which a party receives written notice from the other party of termination. As consideration for services rendered, the Company shall pay: a) a cash fee equal to 10%payable upon completion of the ~~gross proceeds of any securities sold~~corresponding phases. The Company records the corresponding R&D expense based on the project’s progress, which is actually invoiced by the third party in the ~~offering payable at closing of~~relevant period. No such costs were incurred for the offering from the gross proceeds of the offering; b) 1% of the gross proceeds of any securities sold in the offering payable at closing of the offering from the gross proceeds of the offering for unaccountable expenses; c) warrants to purchase shares of the Company’s common stock equal to 10% of the number of shares issued in the offering3-month period ended March 31, 2023 or to be issued thereafter upon conversion of any convertible securities issued in the offering. These warrants will have a 5-year term and an exercise price equal to the price per share of common stock sold in the offering or conversion or exercise price into common stock of any convertible security sold and will have the same provisions, terms, conditions, rights and preferences as the securities sold in the offering; d) a cash fee equal to 10% of the exercise price of all securities constituting warrants, options or other rights to purchase securities sold in the offering payable only upon exercise. 2022.
NOTE 15 – WARRANTS
Omnibus Equity Incentive Plan

On ~~July 7, 2021,~~September 19, 2022 the Company ~~entered into~~held a ~~6-month agreement with a non-exclusive agent, advisor or underwriter in any offering~~Board of ~~securities~~Directors meeting, whereas, the Board of ~~the Company. At the closing of any offering the Company will compensate the agent: a) a cash fee or as~~Directors had elected to adopt an underwritten offering an underwriter discount equal to 7% of the aggregate gross proceeds raised in each offering. For all investors referred directly to the Company by the agent, a cash fee or as an underwritten offering an underwriter discount equal to 5% of the aggregate gross proceeds invested by such investors. b) the Company shall issue to the agent or its designees at each closing, warrants to purchase shares of the Company’s common stock equal to 5% of the aggregate number ofOmnibus Equity Incentive Plan (the “Plan”), that includes reserving 200,000 shares of common stock ~~placed in each offering. c) out of~~eligible for issuance under the ~~proceeds of each closing,~~Plan to be registered on a Form S-8 Registration Statement with the ~~Company also agreed~~SEC. The Plan is designed to ~~pay~~enable the ~~agent up~~flexibility to ~~$35,000 for non-accountable expenses (up~~grant equity awards to ~~$50,000 for a public offering) along with up~~the Company’s officers, employees, non-employee directors and consultants and to ~~$50,000 for fees and expenses of legal counsel and other out-of-pocket expenses (increase~~ensure that it can continue to upgrant equity awards to $100,000 for public offerings) plus additional miscellaneous costs. The agent would also have the right of first refusal from the date of the agreement until the 12-month anniversary following consummation of any offerings for total proceeds ofeligible recipients at ~~least $3 million raised by investors introduced~~levels determined to be appropriate by the ~~agent.~~Board and/or the Compensation Committee. According to the Proxy Statement filed with the SEC on October 20, 2022 the Plan received final approval by the Company’s stockholders at the Annual Meeting of Stockholders held on December 2, 2022.

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COSMOS ~~HOLDINGS,~~HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, ~~2022~~2023

~~NOTE 15 – STOCK OPTIONS AND WARRANTS~~Warrants

As of March 31, ~~2022,~~2023, there were ~~0 options~~4,194,236 warrants classified within equity outstanding and ~~exercisable.~~
~~A summary of the Company’s option activity during the three months ended March 31, 2022 is presented below:~~

Weighted

Weighted

Average

Average

Remaining

Aggregate

Number of

Exercise

Contractual

Intrinsic

Options

Shares

Price

Term

Value

Balance outstanding, January 1, 2022

37,000

$ 1.32

0.01

$ 75,850

Granted

-

-

-

-

Forfeited

-

-

-

-

Exercised

-

-

-

-

Expired

(37,000 )

-

-

-

Balance outstanding, March 31, 2022

-

$ 0

-

$ 0

Exercisable, March 31, 2022

-

$ 0

-

$ 0

~~As of March 31, 2022, there were 2,949,411 warrants outstanding and 2,949,411~~4,194,236 warrants exercisable with 4,180,902 warrants having expiration dates from May 2023 through ~~August 2027.~~December 2027 and 13,334 warrants with no expiration date.

A summary of the Company’s warrant activity during the three months ended March 31, ~~2022~~2023 is presented below:

Weighted

Weighted

Average

Average

Remaining

Aggregate

Number of

Exercise

Contractual

Intrinsic

Warrants

Shares

Price

Term

Value

Balance outstanding, January 1, 2022

3,698,238

$ 2.02

2.03

$ 4,992,621

Granted

2,000,000

0

-

-

Forfeited

-

-

-

-

Exercised

(2,748,797 )

-

-

-

Expired

-

-

-

-

Balance outstanding, March 31, 2022

2,949,441

$ 2.89

4.24

$ 113,933

Exercisable, March 31, 2022

2,949,411

$ 2.89

4.24

$ 113,933

Weighted

Weighted

Average

Average

Remaining

Aggregate

Number of

Exercise

Contractual

Intrinsic

Warrants

Shares

Price

Term

Value

Balance outstanding, January 1, 2023

4,194,236

$ 8.31

5.04

$ 2,562,600

Balance outstanding, March 31, 2023

4,194,236

$ 8.31

4.80

$ 913,209

Exercisable, March 31, 2023

4,194,236

$ 8.31

4.80

$ 913,209

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:

March 31,

March 31,

Country

2023

2022

Greece

11,914,231

13,009,038

Cyprus

33,315

UK

402,231

51,426

Croatia

-

11,336

Total

$ 12,349,777

$ 13,071,800

NOTE 17 – SUBSEQUENT EVENTS
Acquisition of a Telehealth Company
On March 17, 2023, the Company announced that it has entered into a definitive agreement to acquire ZipDoctor Inc., a telehealth company for a total sum of $150,000, settled in cash. The Sale and Purchase Agreement (“SPA”) was signed on March 17, 2023, and the transaction closed on April 3, 2023.
Purchase of Building
On May 3, 2023, the Company acquired the entire property which houses the operations of its wholly owned subsidiary CosmoFarm Pharmaceuticals ("CosmoFarm"). The property comprises a 3-story building, that is 2,700 square meters (or approximately 29,063 square feet) in size. The purchase price was €966,000 (or approximately $1,068,000).
Conclusion of Stock Purchase Agreement
On May 8, 2023, the Company entered into a Stock Purchase Agreement with the owners of one hundred (100%) percent of the equity (the “Shares”) of Pharmaceutical Laboratories Cana S.A. (“Cana Holdings”). The Purchase Price of the Shares is €800,000 ($869,760) and 46,377 shares of Cosmos restricted common stock at an issuance price of $17.25 per share or $800,000 for a total purchase price of $1,669,760.
Cana Holdings is a Greek pharmaceutical company that manufactures, sells, distributes, and markets original branded products researched and developed by leading global pharmaceutical and healthcare companies.
As previously described on February 28, 2023, the Company issued a €4,100,000 ($4,497,017) five-year senior secured promissory note, classified as loans receivable - related party on the accompanying condensed consolidated balance sheet, to Cana Holdings. The closing of this transaction is conditioned upon: (i) the satisfactory completion of due diligence; (ii) delivery of auditors’ financial statements of Cana Holdings as of December 31, 2022; (iii) receipt by the Company of all required approvals, covenants and waivers; (iv) indebtedness of Cana Holdings shall not exceed €1,000,000 ($1,087,200) (exclusive of the Note); (v) payment of the Purchase Price and delivery of the Shares; (vi) no material adverse changes in the business of Cana Holdings; and (vii) customary closing conditions.

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Table of Contents

~~COSMOS HOLDINGS, INC.~~
~~Notes to Unaudited Condensed Consolidated Financial Statements~~
~~March 31, 2022~~
~~The following table presents our revenue disaggregated by country for the three months ended:~~

March 31,

March 31,

Country

2022

2021

Germany

0

13,613

Greece

13,009,038

11,453,496

Italy

0

15,727

Denmark

0

54,686

Cyprus

0

14,723

UK

51,426

66,831

Croatia

11,336

0

Total

$ 13,071,800

$ 11,619,076

~~NOTE 17 – SUBSEQUENT EVENTS~~
~~Conversion of Principal and Accrued Interest~~
On May 1, 2022 the Company issued 39,339 shares of common stock to convert $26,515 principal and accrued interest in accordance with a convertible promissory note issued to Platinum Point Capital LLC. Following the conversion, the outstanding balance of the above Note is $0.
~~Departure and Appointment of Board Members~~
Effective April 28, 2022, Peter Goldstein resigned from the Board of Directors (the “Board”) the Company and from the Board’s audit committee. Mr. Goldstein’s resignation did not result from any disagreement concerning any matter relating to the Company’s operations, policies or practices.
~~On April 28, 2022, the Board appointed Dr. Anastasios Aslidis to the Board of Directors and as a member of the Board’s audit committee.~~
~~Exercise of Warrants~~
~~On April 27, 2022, the Company issued 455,316 shares of common stock upon the cashless exercise of 739,374 warrant shares.~~
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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, ~~2021~~2022 (“Form 10-K”) and this Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2022.~~2023.

Forward-Looking Statements

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

We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements and are including this statement for purposes of complying with those safe-harbor 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

Cosmos Holdings, Inc. was formed as a Nevada incorporation on July 07, 2009, under the name of Prime Estates & Developments Inc. Effective September 27, 2013, we acquired 100% ownership of Amplerissimo Ltd., a private company whose principal activities included providing consulting services to various industries. On November 14, 2013, we changed our name to Cosmos Holdings, Inc. and changed our focus and business strategy to the healthcare and pharmaceutical industry. The Company, through Amplerissimo Ltd, formed SkyPharm S.A. on August 1, 2014, a Greek corporation which focuses on the trading of nutraceutical products. On February 10, 2017, we acquired 100% ownership of Decahedron Ltd., a United Kingdom company, which is a fully licensed wholesaler of pharmaceutical products, and its primary activity is the trading, distribution, import and export of pharmaceuticals and nutraceuticals. In addition, on December 19, 2018, the Company acquired 100% ownership of Cosmofarm Ltd, a Greek company which is a pharmaceutical wholesaler and networks with over 1,500 pharmacies.
~~Cosmos Holdings Inc is~~We are an international ~~pharmaceutical~~healthcare company with a proprietary line of nutraceuticals and distributor of branded and generic pharmaceuticals, nutraceuticals, OTC medications and medical devices. The Company uses a differentiated operating model based on a lean, nimble and decentralized structure, with an emphasis on acquisitions of established companies and our ability to maintain better pharmaceutical assets than others. This operating model and the execution of ~~its~~our corporate strategy are designed to enable the Company to achieve sustainable growth and create added value for our shareholders. In particular, ~~the Company aims~~we look to enhance ~~its~~our pharmaceutical and over-the-counter product lines by acquiring or licensing rights to additional products and regularly evaluate selective company acquisition opportunities. The Company, through its subsidiaries, is operating within the pharmaceutical industry and in order to compete successfully in the healthcare industry, must demonstrate that its products offer medical benefits as well as cost advantages. Currently, most of the products that the Company is trading, compete with other products already onin 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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~~The Company continues~~We continue to rapidly expand ~~its~~our distribution network worldwide and open new markets for ~~its~~our proprietary line of branded pharmaceuticals, nutraceuticals, and nutraceuticals through ~~its~~our distribution channels and ~~ecommerce~~e-commerce marketplace. ~~The Company uses its~~We use our extensive network with direct access to Europe’s primary sales channels for pharmaceuticals and nutraceuticals, which includes over 160 pharmaceutical wholesale distributors in Europe’s largest markets, over 40,000 pharmacies in Europe and 1,500 pharmacies in Greece. ~~The Company achieves~~We achieve stable supply of pharmaceuticals from ~~Doc Pharma~~DocPharma, a related party, which enhances ~~its~~our ability to scale ~~its~~our expansion. ~~It receives~~We receive full priority in the production of nutraceuticals and volumes. ~~Its~~Our full production in Greece ensures a decisive ~~production cost~~production-cost advantage whilst ~~it secures~~we secure additional discounts by leveraging ~~its~~our purchasing scale.

Our focus on investing in technology enhances yield cost savings and economies of scale the safety, distribution and warehousing efficiency and reliability, as a result of 0% error selection rate and acceleration order fulfillment.
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Revenue sources

The Company operates in ~~the wholesale~~nutraceuticals industry, distribution of ~~branded pharmaceutical products, over the counter (“OTC”) products, medical devices, vitamins~~pharmaceuticals and ~~a variety of nutraceuticals, including its proprietary label.~~healthcare distribution.

~~Import/Export of Branded pharmaceuticals~~Pharmaceuticals

We ~~conduct wholesale import~~are engaged in the promotion, distribution and ~~export~~sale of licensed branded ~~pharmaceutical~~generics and OTC products throughout Europe by our ~~subsidiaries. We source licensed pharmaceuticals from wholesalers at a lower cost, primarily~~subsidiaries in Greece and ~~the U.K. and sell to other European wholesalers.~~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.

~~Full-line Wholesale~~Healthcare Distribution

We conduct direct distribution and sales of pharmaceuticals, medical devices, branded ~~pharmaceuticals~~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.~~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~~fast-moving and specialty formulas with ~~at least 75~~more than 80 product codes including vitamins, minerals and other herbal extracts. ~~We expect to reach the number of 150 product codes by the end of 2022.~~ Our nutraceutical products are manufactured exclusively by Doc Pharma, a related party of the Company. Our nutraceutical products have penetrated several markets within ~~2021~~2022 and 2023 through digital channels such as Amazon and Tmall.
We focus on nutraceutical products because we foresee it as a ~~relatively under-penetrated~~ market ~~throughout Europe~~ with ~~potential of~~ high ~~growth~~grow opportunities due to its large market size and margin contribution as the demand for nutraceutical products is increasing globally.
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~~Branded pharmaceuticals~~
We are engaged in the promotion, distribution and sale of branded pharmaceutical products throughout Europe. Through a related company , we have the distribution rights to over 70 fast-moving pharmaceutical products. There is a significant growth on opportunities through product additions and geographic expansion

Regulations and Licenses

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

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

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

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

~~The Effects of COVID-19 on Our 2021 Operations~~Distribution and Trade Agreements

On July 1, 2021 the Company’s subsidiary SkyPharm SA, entered into an exclusive distribution agreement with a company based in Germany the “Distributor A”, whereas SkyPharm appointed Distributor A to be the responsible Partner for the distribution, promotion, trade marketing, logistics and sale of the nutraceuticals manufactured and supplied by SkyPharm (Sky Premium Life®), in the territories of Austria and Germany. Distributor A places purchase orders with SkyPharm at the company’s address and the purchase order is necessary to initiate any shipment.
On July 7, 2021 SkyPharm SA signed a trade agreement with a company specializing in e-commerce mall advice and operation, henceforward referred as “Distributor B”. Based on the agreement, SkyPharm will sell its own branded products Sky Premium Life ® to final consumers through the e-commerce store opened by Distributor B on Tmall International MALL and Distributor B will provide platform operation services to SkyPharm. The ~~World Health Organization~~services provided by Distributor B will include mall construction, mall operation and network promotion, along with collection, settlement, customer service, logistics and distribution.
On November 25, 2021 SkyPharm SA signed a trade agreement with a wholesaler which operates in the storage, distribution, trading and promotion of pharmaceutical products) henceforward referred as “Distributor C”. Based on the agreement Distributor C is appointed as the exclusive representative for the promotion & distribution of our proprietary nutraceutical products Sky Premium Life®, in Greece.
During July 2021, the Company’s subsidiary Decahedron Ltd, created a distribution page on Amazon UK, through which it sells, advertises and promotes our own proprietary branded nutraceutical product line “Sky Premium Life®, directly to final consumers.
On September 22, 2022, the Company entered into a distribution agreement with a third party in order to become the distributor of Monkeypox Virus Real-Time PCR Detection Kits. Cosmos will have exclusive distribution rights for Greece and Cyprus, with the opportunity to distribute the test kits across Europe on a non-exclusive basis.
Acquisitions and Co-Ventures
On September 28, 2022, the Company the Company entered into a non-binding letter of intent (“~~WHO”~~LOI”) ~~declared~~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 ~~coronavirus outbreak~~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 ~~pandemic~~definitive agreement to acquire ZipDoctor Inc. for a total sum of $150,000. The Sale and Purchase Agreement (“SPA”) was signed on March ~~11, 2020. Since~~17, 2023, and the ~~outbreak~~transaction closed on April 3, 2023.
On May 8, 2023, the Company entered into a Stock Purchase Agreement with the owners of one hundred (100%) percent of the equity (the “Shares”) of Pharmaceutical Laboratories Cana S.A. (“Cana Holdings”). The purchase price for the shares for each of 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.
Cana Holdings is a Greek pharmaceutical company that manufactures, sells, distributes, and markets original branded products researched and developed by leading global pharmaceutical and healthcare companies.
As previously announced on February 28, 2023, the Company issued a five-year senior secured promissory note (the “Note”) in ~~China in~~the principal amount of €4,100,000 to Cana Holdings. The closing of this transaction is conditioned upon: (i) the satisfactory completion of due diligence; (ii) delivery of auditors’ financial statements of Cana Holdings as of December ~~2019, COVID-19 has expanded its impact to Europe, where all of our operations reside as well as our employees, suppliers and customers. To date, our operations have been adversely affected~~31, 2022; (iii) receipt by the ~~following COVID-19 risks:~~Company of all required approvals, covenants and waivers; (iv) indebtedness of Cana Holdings shall not exceed €1,000,000 (exclusive of the Note); (v) payment of the Purchase Price and delivery of the Shares; (vi) no material adverse changes in the business of Cana Holdings; and (vii) customary closing conditions.

~~Adverse Risks~~On October 27, 2022, the Company signed an LOI with a holding company engaged in the development, marketing, manufacturing, acquisition, operation, and sale of a broad spectrum of nutritional and related products to enter into a co-venture relationship pursuant to a definitive distribution agreement to develop commercial opportunities relating to the marketing, distribution, and sale of nutraceutical products on a world-wide basis. This LOI is non-binding and subject to good faith negotiation, preparation, and execution of a definitive agreement mutually satisfactory to both parties.
o
~~Drug shortages due to ban of exports~~
o
~~Problems/restrictions in supply chain~~
o
~~Logistics delays o Restrictions on employees’ ability to work o Liquidity issues (AR/AP) – payment delays and new government regulations for freezing payment terms~~
o
~~National or EU long lasting recession~~

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Subsequent to year-end, management has identified opportunities as listed below, that could balance, at least in part, the adverse effects of COVID-19 during the fiscal year-end 2020 and 2021. However, there can be no assurance that this will occur prior to a vaccine and treatment becoming effective.
~~Opportunities~~
~~Management’s Expectations Regarding COVID-19~~
Management believes that there could be a positive long-term outcome from COVID-19, which could result in an increase in sales of OTC branded products, nutraceuticals, antibacterial products, gloves, oximeters, thermometers and medical masks. However, there is no guarantee of such results. Therefore, we will increase R&D as we are aiming to innovate and create new products in order to help combat against COVID-19. We have adapted our strategy in response to COVID-19 and will continue to do so, since we are expecting the impact of COVID-19 to continue for the next 12 months.
~~What Effect Will COVID-19 Have on the Company’s Disclosure Controls~~
Management does not believe COVID-19 will have a significant effect on our disclosure controls as there have been no changes to date. Our operations have continued at a normal pace, at least 95% of our staff continue to work on site and those staff who are working remotely have no impact on our disclosure controls.

Results of Operations

Three Months Period Ended March 31, ~~2022~~2023 and ~~2021~~2022

Revenue

The Company had revenue of $12,349,777 and $13,071,800 ~~and $11,619,076 (an increase~~(a decrease of ~~12.5%~~5.52%) for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively.The increase in the 3-month period is mainly due to the organic growth attributed to our subsidiary, Cosmofarm, which continued the expansion and sales programs at the local level, and to the significantly higher sales volume of SkyPharm, due to the increased demand for its own branded nutritional supplements named (“Sky Premium Life^®~~”), which resulted in achieving $524,000 more in sales compared to Q1 2021 (an increase of 49.29%).~~ The Company had a net ~~income~~loss of ~~$203,347~~$459,863 on revenue of ~~$13,071,800~~$12,349,777 versus a net loss of ~~$2,173,903~~$5,585,146 on revenue of ~~$11,619,076~~$13,071,800 for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively. The Company’s revenue remained relatively stable, although the effect of the foreign exchange rates was negative for the three-month period ended March 31, 2023 compared to the three-month period ended March 31, 2022.

Cost of Goods Sold

The Company had costs of goods sold of ~~$11,179,868~~$11,392,700 versus ~~$10,617,741~~$11,179,868 (an increase of ~~5.29%~~1.9%) for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~The increase in the 3-month is primarily due to the increase in revenue. However, the costs~~Cost of goods sold ~~were increased by just 5.29% compared to a revenue increase of 12.5%, due to~~remained stable, which is in accordance with the ~~higher dependence of~~revenues movement for the ~~Company on the nutraceuticals’ revenue stream, which historically achieves higher margins than the wholesale one.~~3-month period ended March 31, 2023 and March 31, 2022.
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Our future revenue growth is expected to continue to be affected by various factors such as industry growth trends, including drug utilization, the introduction of new innovative brand therapies, the likely increase in the number of branded pharmaceutical products that will be available over the next few years’ price increases and price deflation, general economic conditions, including the effects of the current conflict in the Ukraine, the coronavirus in the United Kingdom and the member states of European Union, competition within the industry, customer consolidation, changes in pharmaceutical manufacturer pricing and distribution policies and practices, increased downward pressure on government and other third party reimbursement rates to our customers, and changes in government rules and regulations.

Gross Profit

The Company had gross profit of $957,077 versus $1,891,932 ~~versus $1,001,335 (an increase~~(a decrease of ~~88.94%~~49.41%) for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. The ~~increase~~decrease in gross profit for the ~~3-month~~three-month period is attributable to the decreased and discounted sales of SkyPharm’s nutritional supplements, pursuant to an effort of substantially decrease the receivable balances. Since nutraceuticals is a high margin revenue ~~increase in conjunction with~~stream, this contributed to the ~~higher~~decreased gross profit ~~margins achieved due to~~for the ~~significant increase in nutraceuticals revenue stream.~~period.

Operating Expenses

The Company had general and administrative costs of ~~$868,639~~$2,089,014 and ~~$1,688,712,~~$868,639 salaries and wages expenses of ~~$521,471~~$949,451 and ~~$531,556,~~$521,471, sales and marketing expenses of ~~$146,949~~$467,263 and ~~$405,092~~$146,949 and depreciation and amortization expense of ~~$112,622~~$102,521 and ~~$107,073~~$112,622 for a net operating ~~income of $242,251 and~~ loss of ~~$1,731,098~~$2,651,172 and a net operating gain of $242,251 (an increase of ~~114%)~~112.85% in Operating Expenses) for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022, respectively. The ~~decrease~~increase in operating expenses is primarily attributed to management’s compensation and increased advertising costs during the ~~stock-based compensation related to a consulting agreement entered into in February 2021 and included in the general and administrative expenses for the~~three-month period ended March 31, ~~2021, as well as the significant decrease in sales and marketing expenses of approximately 64%.~~2023.

Other Income (Expense)

The ~~Company’s other income (expense) was primarily comprised of~~Company had interest expense related to notes payable ~~and convertible notes payable~~of $134,373 versus $584,176 ~~versus $731,826,~~and non-cash interest expense related to the amortization of debt discount of $0 versus $260,527 ~~versus $50,109,~~for the three months ended March 31, 2023 and 2022, respectively. The decrease in interest expense is attributable to the significant debt repayments that took place within December 2022. Moreover, a gain on ~~extinguishment~~equity investments of ~~debt of $1,004,124 due to a debt extension that took place on March 3~~^rd~~, 2022~~$1,293 versus ~~a gain of $445,636,~~$1,678 and a change in fair value of derivative liability of ~~$15,001~~$3,384 versus ~~$61,373~~$15,001 due to agreements on convertible debentures ~~interest income of $64,827~~were recorded during the three-month periods ended March 31, 2023 and 2022. The net foreign currency gain amounted to $196,035 versus ~~$0 and~~ a ~~foreign currency~~ loss of $159,352 and interest income amounted to $183,416 versus ~~a gain of $306,020~~$64,827 for the three months ended March 31, 2023 and 2022, respectively. The change to foreign currency gain is derived from the positive movement of the foreign exchange rates and ~~2021, respectively. Also, The~~the increase in interest income is attributable to the Company’s ~~other expense was $54,812~~treasury bills and loans receivable balances, that were not in place as of March 31, 2022. Additionally, a gain on debt extinguishment relating to the write-off of a share settled debt obligation and the forgiveness of a Note’s payable balance of $1,908,513 versus ~~other expense~~a gain of ~~$178,211~~$1,004,124 were recorded for the three months ended March 31, 2023 and 2022. Finally, the Company’s other income was $5,743 versus other expense of $54,812 for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively.
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Unrealized Foreign Currency losses

The Company had an unrealized foreign currency gain of $336,463 versus loss of $405,229, ~~versus a loss~~attributable to the positive movement of ~~$473,578~~the exchange rates during the three-month period ended March 31, 2023 and a net comprehensive loss of ~~$5,990,375~~$123,400 versus a loss of ~~$2,647,481~~$5,990,375 for the three months ended March 31, 2023 and 2022, ~~and 2021, respectively.~~respectively, which mainly derives from the deemed dividends on the issuance of warrants of $5,788,493 recorded during the three-month period ended March 31, 2022.
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Liquidity and Capital Resources

As of March 31, ~~2022,~~2023, the Company had working capital of ~~$11,831,133~~$32,083,333 compared to ~~$10,950,492~~$34,296,034 as of December 31, ~~2021.~~2022.

The Company had cash and cash equivalents of ~~$1,010,427~~$12,037,647 versus ~~$286,487~~$20,749,683 as of March 31, ~~2022~~2023 and December ~~2021,~~2022, respectively. The Company had net cash used in operating activities of ~~$2,337,276~~$6,344,173 and ~~$665,339~~$2,337,276 for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. The Company has devoted substantially all of its cash resources to expand through organic business growth and has incurred significant general and administrative expenses in order to enable the financing and growth of its business and operations.

The Company had net cash used in investing activities of $4,486,455 and net cash provided by investing activities of ~~$94,550 and net cash used in investing activities of $2,310~~$87,223 during the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. For the three months ended March 31, ~~2022~~2023 the net cash ~~provided by~~used in investing activities was mainly attributable to the ~~proceeds from~~outflow of the loan receivable ~~from~~to a ~~third~~related party.

The Company had net cash provided by financing activities of ~~$2,914,441~~$2,242,805 versus ~~$380,118~~$2,914,441 during the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively. The net cash increase in the 3-month period ended om March 31, 2022 is mainly attributable to the net proceeds of $5,452,300 of the preferred stock offering on February 28, 2022 less the payments made for the loans and notes payable.

For the period ended March 31, ~~2022,~~2023, the Company ~~also~~ received proceeds from lines of credit of ~~$5,779,114~~$4,325,744 and payments of lines of credit of ~~$6,244,162,~~$5,452,321, for a net decrease on the line of credit of ~~$465,048.~~$1,126,577.

We anticipate using cash in our bank account as of March 31, ~~2022,~~2023, cash generated from debt or equity financing, from investing activities or from management loans, to the extent that funds are available to do so to conduct our business in the upcoming year. Management is not obligated to provide these or any other funds. If we fail to meet these requirements, we may lose the qualification for quotation and our securities would no longer trade on ~~the over-the-counter markets.~~Nasdaq 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.
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Plan of Operation in the Next Twelve Months

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

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

Our plan for our own branded nutraceuticals is to enlarge our portfolio up to 150 SKUs by the end of ~~2022~~2023 including more basic line formulas to cover more customer needs of any age, advanced formulations, formulas based on herbs and further clinical studies with ~~R&D~~research and development for further products. Our plan for geographic expansion in distributing and market penetration in EU, Asia, USA, and Canada is based on exclusive distributors, wholesalers, ecommerce, development of franchising model, alliances and acquisitions of nutraceutical companies.

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

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

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

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

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

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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 (e.g., the COVID-19 pandemic), a reallocation of efforts may be necessary or advisable. Although the Company does not currently anticipate that the COVID-19 pandemic will cause material delays in the timelines or estimates set out above, due to the evolving nature of COVID-19 and its impacts, these timelines and estimates may require adjustment in the future.

The Company intends to spend the funds available to ~~it in~~strengthen working capital, inventories, intangible assets, acquisitions, ~~R&D,~~research and development, sales and marketing expenses. Due to the uncertain nature of the industry in which the Company ~~will operate,~~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.

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Off Balance Sheet Arrangements
As of March 31, ~~2022,~~2023, there were no off-balance sheet arrangements.

Critical Accounting Policies

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

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

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

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

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

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

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We recognize the impact of an uncertain tax position in our financial statements if, in management’s judgment, the position is not ~~more-likely-then-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 ~~Holdings~~Health Inc., which are applicable to future taxable income in the United States (if any). Additionally, the Company has income tax liabilities in the United Kingdom. The income tax assets and liabilities are not able to be netted. We therefore reserve the income tax assets applicable to the United States but recognize the income tax liabilities in Greece and the United Kingdom. Losses may also be subject to limitation under certain rules regarding change of ownership.

Accounts Receivable and Allowance for Doubtful Accounts
The Company follows ASC 310 to estimate the allowance for doubtful accounts. Pursuant to FASB ASC paragraph 310-10-35-9, losses from uncollectible receivables shall be accrued when both of the following conditions are met: (a) information available before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) indicates that it is probable that an asset has been impaired at the date of the financial statements, and (b) the amount of the loss can be reasonably estimated. Those conditions may be considered in relation to individual receivables or in relation to groups of similar types of receivables. If the conditions are met, accrual shall be made even though the receivables that are uncollectible may not be identifiable. The Company reviews individually each trade receivable for collectability and performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and general economic conditions that may affect a client’s ability to pay. Bad debt expense is included in general and administrative expenses, if any.
Inventory Reserves
Our merchandise inventories are made up of finished goods and are valued at the lower of cost or market using the weighted-average cost method. Average cost includes the direct purchase price, net of vendor allowances and cash discounts, of merchandise inventory. We record valuation reserves on an annual basis for merchandise damage and defective returns, merchandise items with slow-moving or obsolescence exposure and merchandise that has a carrying value that exceeds market value. These reserves are estimates of a reduction in value to reflect inventory valuation at the lower of cost or market. The reserve for merchandise returns is based upon the determination of the historical net realizable value of products sold from our returned goods inventory or returned to vendors for credit. Our reserve for merchandise returns includes amounts for returned product on-hand as well as for new merchandise on-hand that we estimate will ultimately become returned goods inventory after being sold based on historical return rates.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

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

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

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

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 partially effective. The Management is committed to remediate the material weaknesses identified in the Form 10K, which include lack of segregation of duties and lack of internal controls structure review. As part of this commitment, the Management has ~~hired additional individuals in the~~assigned to finance ~~team in order to assign~~personnel responsibilities on key processes in order to examine and improve operating practices, perform extensive financial control and financial risk management processes, as well as to define and develop new policies and controls in order to improve the accuracy of the disclosures. In addition, the Internal Auditors of the Company are in the process of developing further procedures to ensure the effectiveness of internal controls and the accuracy and completeness of financial reporting. The Company will evaluate the controls and procedures on a quarterly basis and judge what weaknesses to be remediated based on materiality and circumstances.

42
Table of Contents
Changes in Internal Controls Over Financial Reporting

During the most recently completed fiscal year, there has been no change in our internal control over financial reporting that has materially affected or is reasonably likely to materially affect it.
.
Our Audit Committee is in process of evaluating our existing controls and procedures, ~~whilst~~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 ~~Holdings~~Health Inc. On April 28, 2022, Dr Anastasios Aslidis was elected to serve on the Board of Directors and was appointed as a ~~member~~chair of the Audit Committee, replacing Mr Peter Goldstein, who submitted his resignation on the same date. Our three independent directors, Anastasios Aslidis, John Hoidas and Demetrios Demetriades serve on the Audit Committee. ~~Primary~~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 ~~Securities and Exchange Commission (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.
43
~~Table of Contents~~

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.

4443
Table of Contents

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, ~~2021.~~2022.

Item 1A. Risk Factors

~~Not applicable.~~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.

None.

4544
Table of Contents

Item 6. Exhibits.

(a) Exhibits.

Exhibit No.
Document Description

31.1*

Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*
Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*
Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS
XBRL Instance Document**

101.SCH
XBRL Taxonomy Extension Schema Document**

101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document**

101.DEF
XBRL Taxonomy Extension Definition Linkbase Document**

101.LAB
XBRL Taxonomy Extension Label Linkbase Document**

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

**
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

4645
Table of Contents

SIGNATURES

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

Cosmos ~~Holdings~~Health Inc.

Date: May ~~17, 2022~~16, 2023
By:
/s/ Grigorios Siokas
Grigorios Siokas

Chief Executive Officer

(Principal Executive Officer)

Date: May ~~17, 2022~~16, 2023
By:
/s/ Georgios Terzis

Georgios Terzis

Chief Financial Officer

(Principal Financial Officer,
And Principal Accounting
Officer)

4746
Table of Contents

EXHIBIT INDEX

Exhibit No.
Document Description

31.1*

Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*
Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS
XBRL Instance Document**

101.SCH
XBRL Taxonomy Extension Schema Document**

101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document**

101.DEF
XBRL Taxonomy Extension Definition Linkbase Document**

101.LAB
XBRL Taxonomy Extension Label Linkbase Document**

101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document**

Exhibit 101
Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.**
___________
*
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

**
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

48
47

	March 31, 2022			December 31, 2021
	(Unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	1,010,427		$	286,487
Accounts receivable, net		26,094,450			26,858,114
Accounts receivable - related party		2,844,572			2,901,300
Marketable securities		12,551			11,468
Inventory		4,007,977			3,147,276
Loans receivable		375,195			377,590
Prepaid expenses and other current assets		1,944,720			2,987,687
Prepaid expenses and other current assets - related party		4,368,794			3,263,241
Operating lease right-of-use asset		775,545			834,468
Financing lease right-of-use asset		192,822			211,099

TOTAL CURRENT ASSETS		41,627,053			40,878,730

Property and equipment, net		1,777,889			1,888,052
Goodwill and intangible assets, net		464,630			485,767
Loans receivable - long term portion		4,227,268			4,410,689
Other assets		909,581			915,250
Deferred tax assets		767,267			850,774

TOTAL ASSETS	$	49,773,688		$	49,429,262

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	11,781,189		$	12,126,626
Accounts payable and accrued expenses - related party		220,887			599,125
Accrued interest		1,033,866			1,019,889
Lines of credit		4,362,327			4,743,557
Convertible notes payable, net of unamortized discount of $191,085 and $258,938, respectively		448,915			381,062
Derivative liability - convertible note		30,664			45,665
Notes payable		6,143,075			5,462,504
Notes payable - related party		455,035			464,264
Loans payable		1,000,000			1,000,000
Loans payable - related party		1,703,881			1,293,472
Taxes payable		1,192,178			1,324,722
Operating lease liability, current portion		158,359			138,450
Financing lease liability, current portion		71,861			73,078
Other current liabilities		1,193,683			1,255,824

TOTAL CURRENT LIABILITIES		29,795,920			29,928,238

Share settled debt obligation		1,554,590			1,554,590
Lines of credit - long-term portion		185,872			366,171
Notes payable - long term portion		6,885,806			12,356,384
Operating lease liability, net of current portion		617,183			696,015
Financing lease liability, net of current portion		131,016			148,401

TOTAL LIABILITIES		39,170,387			45,049,799

Commitments and Contingencies (see Note 14)		0			0

MEZZANINE EQUITY
Preferred stock, $0.001 par value; 100,000,000 shares authorized:
Series A preferred stock, stated value $1,000 per share, 6,000,000 shares authorized; 6,000 and 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021; liquidation preference of $6,000,000 and $0, respectively		5,452,300			0

STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value; 300,000,000 shares authorized; 18,611,980 and 17,544,509 shares issued and 18,224,556 and 17,157,085 outstanding as of March 31, 2022 and December 31, 2021, respectively		18,611			17,544
Additional paid-in capital		40,648,106			39,675,753
Treasury stock, 387,424 and 387,424 shares as of March 31, 2022 and December 31, 2021		(816,707	)		(816,707	)
Accumulated deficit		(34,142,159	)		(34,345,506	)
Accumulated other comprehensive loss		(556,850	)		(151,621	)

TOTAL STOCKHOLDERS' EQUITY		5,151,001			4,379,463

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY	$	49,773,688		$	49,429,262

	Three Months Ended March 31,
	2022			2021

REVENUE	$	13,071,800		$	11,619,076

COST OF GOODS SOLD		11,179,868			10,617,741

GROSS PROFIT		1,891,932			1,001,335

OPERATING EXPENSES
General and administrative expenses		868,639			1,688,712
Salaries and wages		521,471			531,556
Sales and marketing expenses		146,949			405,092
Depreciation and amortization expense		112,622			107,073
TOTAL OPERATING EXPENSES		1,649,681			2,732,433

INCOME (LOSS) FROM OPERATIONS		242,251			(1,731,098	)

OTHER INCOME (EXPENSE)
Other expense, net		(54,812	)		(178,211	)
Interest expense		(584,176	)		(731,826	)
Interest income		64,827			0
Non-cash interest expense		(260,527	)		(50,109	)
Gain on equity investments, net		1,678			440
Gain on extinguishment of debt		1,004,124			445,636
Change in fair value of derivative liability		15,001			61,373
Foreign currency transaction, net		(159,352	)		(306,020	)
TOTAL OTHER INCOME (EXPENSE), NET		26,763			(758,717	)

INCOME (LOSS) BEFORE INCOME TAXES		269,014			(2,489,815	)

BENEFIT FROM (PROVISION FOR) INCOME TAXES		(65,667	)		315,912

NET INCOME (LOSS)		203,347			(2,173,903	)

Deemed dividend on warrants		(5,788,493	)		0

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS		(5,585,146	)		(2,173,903	)

OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment, net		(405,229	)		(473,578	)

TOTAL COMPREHENSIVE LOSS	$	(5,990,375	)	$	(2,647,481	)

BASIC NET LOSS PER SHARE	$	(0.31	)	$	(0.14	)
DILUTED NET LOSS PER SHARE	$	(0.31	)	$	(0.14	)

Basic		17,755,516			15,034,219
Diluted		17,755,516			15,034,219

	March 31, 2022						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	-	$	-		-	$	-
Marketable securities – National Bank of Greece		6,822		-		-		6,822
Equity securities – Pancreta Bank		-		5,729		-		5,729
	$	6,822	$	5,729			$	12,551

	Three Months Ended March 31,
	2022		2021
Weighted average number of common shares outstanding-Basic		17,755,516		15,034,219
Potentially dilutive common stock equivalents		-		-
Weighted average number of common and equivalent shares outstanding - Diluted		17,755,516		15,034,219

	Amount
Balance on January 1, 2022	$	45,665
Issuances to debt discount		0
Reduction of derivative related to conversions		0
Change in fair value of derivative liabilities		(15,001	)
Balance on March 31, 2022	$	30,664

	March 31,			December 31,
	2022			2021
Dividend yield		0	%		0	%
Expected volatility		87.9	%	106.8%-107.3		%
Risk free interest rate		1.40	%	0.41%-0.44		%
Contractual terms (in years)		.50		.50 – .52

March 31, 2022	Loan Facility			Trade Facility			Third Party			COVID Loans			Total
Beginning balance	$	1,299,784		$	6,207,010		$	10,077,977		$	234,117		$	17,818,888
Proceeds		0			-			-			-			-
Payments		(124,242	)		(107,894	)		(2,030,814	)					(2,262,950	)
Conversion of debt		(1,190,000	)		-						-			(1,190,000	)
Recapitalized upon debt modification		-			(198,040	)		(1,204,356	)		-			(1,402,396	)
Accretion of debt		78,445			-						-			78,445
Foreign currency translation		54,861			(41,505	)		(21,433	)		(5,029	)		(13,106	)
Subtotal		118,848			5,859,571			6,821,374			229,088			13,028,881
Notes payable - long-term		-			-			(6,664,025	)		(221,781	)		(6,885,806	)
Notes payable - short-term	$	118,848		$	5,859,571		$	157,349		$	7,307		$	6,143,075

	Amount
Balance on January 1, 2023	$	54,293
Reduction of derivative related to conversions		(50,909	)
Change in fair value of derivative liabilities		(3,384	)
Balance on March 31, 2023	$	-

Our outstanding debt as of March 31, 2022 is repayable as follows:
	March 31, 2022
2022	$	4,116,483
2023		9,699,419
2024		253,694
2025		227,261
2026 and thereafter		140,923
Total debt		14,437,780
Less: fair value adjustments to assumed debt obligations		(1,408,899	)
Less: notes payable - current portion		(6,143,075	)
Notes payable - long term portion	$	6,885,806

	·•	Issue on August 4, 2021, ~~321,300~~12,852 shares of common stock to settle $1,606,500 (€1,350,000) of debt. The Company recorded a gain on settlement of $292,383 upon the issuance of the ~~321,300 shares~~12,852 shares; and

	·•	Agreed to issue no more than ~~238,000~~9,520 shares of common stock upon approval of the listing of the Company’s common stock ~~to the~~on Nasdaq to settle $1,190,000 (€1,000,000) of debt. The Company issued these shares on February 28, 2022. Upon issuance of the ~~238,000~~9,520 shares of common stock, the Company recorded a gain on extinguishment of debt in the amount of $216,580 determined using the fair value of the Company’s common stock at the commitment date of ~~$4.09~~$102.25 per share.

Maturity of Lease Liability
Remainder of 2022	$	154,095
Maturity of Operating Lease Liability:
2023		177,914		$	197,540
2024		108,485			264,035
2025		108,485			190,379
2026					153,712
Thereafter		408,810			581,964
Total undiscounted operating lease payments	$	957,789		$	1,387,630
Less: Imputed interest		(182,247	)		(272,107	)
Present value of operating lease liabilities		775,542			1,115,523

Maturity of Lease Liability
Remainder of 2022	$	62,941
Maturity of Finance Lease Liability
2023		73,387		$	112,406
2024		56,654			133,861
2025		26,870			103,586
2026					77,014
Thereafter		3,694			23,474
Total undiscounted finance lease payments	$	223,546		$	450,341
Less: Imputed interest		(20,669	)		(47,400	)
Present value of finance lease liabilities	$	202,877		$	402,941

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Options	Shares			Price		Term		Value
Balance outstanding, January 1, 2022		37,000		$	1.32		0.01	$	75,850
Granted		-			-		-		-
Forfeited		-			-		-		-
Exercised		-			-		-		-
Expired		(37,000	)		-		-		-
Balance outstanding, March 31, 2022		-		$	0		-	$	0

Exercisable, March 31, 2022		-		$	0		-	$	0

	March 31,		March 31,
Country	2023		2022
Greece		11,914,231		13,009,038
Cyprus		33,315
UK		402,231		51,426
Croatia		-		11,336
Total	$	12,349,777	$	13,071,800

	o	~~Drug shortages due to ban of exports~~

	o	~~Problems/restrictions in supply chain~~

	o	~~Logistics delays o Restrictions on employees’ ability to work o Liquidity issues (AR/AP) – payment delays and new government regulations for freezing payment terms~~

	o	~~National or EU long lasting recession~~

	Subsequent to year-end, management has identified opportunities as listed below, that could balance, at least in part, the adverse effects of COVID-19 during the fiscal year-end 2020 and 2021. However, there can be no assurance that this will occur prior to a vaccine and treatment becoming effective.

	~~Opportunities~~

Exhibit No.		Document Description

31.1*		Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document**

101.SCH		XBRL Taxonomy Extension Schema Document**

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document**

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document**

101.LAB		XBRL Taxonomy Extension Label Linkbase Document**

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document**

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

**	XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

	Cosmos ~~Holdings~~Health Inc.

Date: May ~~17, 2022~~16, 2023	By:	/s/ Grigorios Siokas
		Grigorios Siokas
		Chief Executive Officer
		(Principal Executive Officer)

Date: May ~~17, 2022~~16, 2023	By:	/s/ Georgios Terzis
		Georgios Terzis
		Chief Financial Officer
		(Principal Financial Officer, And Principal Accounting Officer)