EXHIBIT 99.1
Cosmofarm LTD
(A wholly-owned subsidiary of DEEPDAE Ltd)
Financial Statements
December 31, 2017 and 2016
1 |
TABLE OF CONTENTS
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Independent Auditor's Report |
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Balance Sheets |
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Statements of Operations and Comprehensive Loss |
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Statements of Changes in Stockholders' Equity (Deficit) |
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Statements of Cash Flows |
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| 7 |
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Notes to Financial Statements |
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2 |
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors and Stockholders
Cosmofarm LTD
Athens, Greece
We have audited the accompanying financial statements of Cosmofarm LTD, a wholly-owned subsidiary of DEEPDAE Ltd (the ‘‘Company’’) (a Greek corporation), which comprise the balance sheets as of December 31, 2017 and 2016, and the related statements of operations and comprehensive loss, stockholders’ deficit and cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cosmofarm LTD as of December 31, 2017 and 2016, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
| ArmaninoLLP San Francisco, California March 5, 2019 |
3 |
COSMOFARM LTD | |||
BALANCE SHEETS |
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| December 31, 2017 |
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| December 31, 2016 |
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ASSETS | ||||||||
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Current assets |
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Cash and cash equivalents |
| $ | 317,635 |
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| $ | 186,012 |
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Short-term securities available-for-sale |
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| 6,372 |
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| 4,357 |
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Accounts receivable, net |
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| 2,929,014 |
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| 1,929,510 |
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Accounts receivable - related party |
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| - |
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| 200,892 |
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Inventory |
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| 785,891 |
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| 384,687 |
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Prepaid expenses and other current assets |
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| 189,475 |
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| 129,542 |
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Total current assets |
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| 4,228,387 |
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| 2,835,000 |
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Other assets |
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| 470,717 |
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| 6,820 |
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Long-term securities available-for-sale |
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| 114,948 |
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| 100,360 |
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Property, plant, and equipment, net |
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| 259,877 |
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| 253,062 |
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Deferred tax assets |
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| 216,150 |
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| 159,012 |
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Total assets |
| $ | 5,290,079 |
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| $ | 3,354,254 |
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LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
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Current liabilities |
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Accounts payable and accrued expenses |
| $ | 2,961,324 |
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| $ | 1,893,827 |
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Customer advances |
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| 909,676 |
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| 298,064 |
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Lines of credit |
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| 1,085,836 |
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| 797,082 |
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Capital lease obligations, current portion |
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| 33,405 |
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| 31,454 |
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Other current liabilities |
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| 100,299 |
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| 80,014 |
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Total current liabilities |
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| 5,090,540 |
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| 3,100,441 |
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Capital lease obligations, net of current portion |
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| 50,880 |
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| 74,131 |
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Other liabilities |
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| 200,547 |
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| 193,011 |
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Total liabilities |
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| 5,341,967 |
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| 3,367,583 |
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Stockholders' deficit |
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Common stock, no par value; 11,667 shares authorized, issued and outstanding |
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| 381,056 |
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| 381,056 |
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Additional paid in capital |
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| 46,982 |
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| 46,838 |
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Accumulated other comprehensive loss |
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| (69,627 | ) |
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| (89,940 | ) |
Accumulated deficit |
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| (410,299 | ) |
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| (351,283 | ) |
Total stockholders' deficit |
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| (51,888 | ) |
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| (13,329 | ) |
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Total liabilities and stockholders' deficit |
| $ | 5,290,079 |
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| $ | 3,354,254 |
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The accompanying notes are an integral part of these financial statements.
4 |
COSMOFARM LTD STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
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| Years Ended December 31, |
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| 2017 |
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| 2016 |
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Revenues, net |
| $ | 14,029,175 |
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| $ | 12,928,966 |
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Cost of revenues |
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| 13,195,326 |
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| 12,089,231 |
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Gross profit |
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| 833,849 |
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| 839,735 |
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Selling, general and administrative expenses |
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| 709,658 |
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| 710,952 |
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Income from operations |
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| 124,191 |
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| 128,783 |
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Other expense, net |
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Other income |
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| 5,184 |
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| 40,609 |
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Other expense |
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| (74,357 | ) |
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| (28,288 | ) |
Interest expense |
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| (116,786 | ) |
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| (127,194 | ) |
Other expense, net |
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| (185,959 | ) |
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| (114,873 | ) |
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Income (loss) before provision (benefit) for income taxes |
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| (61,768 | ) |
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| 13,910 |
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Provision (benefit) for income taxes |
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| (2,896 | ) |
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| 18,903 |
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Net loss |
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| (58,872 | ) |
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| (4,993 | ) |
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Other comprehensive income (loss) |
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Unrealized gain (loss) on securities |
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| 1,512 |
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| (86,110 | ) |
Foreign currency translation adjustment |
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| 18,801 |
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| (3,830 | ) |
Other comprehensive income (loss) |
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| 20,313 |
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| (89,940 | ) |
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Comprehensive loss |
| $ | (38,559 | ) |
| $ | (94,933 | ) |
The accompanying notes are an integral part of these financial statements.
5 |
COSMOFARM LTD | ||||||||||||
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) |
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| Accumulated Other |
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| Common Stock |
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| Additional |
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| Comprehensive |
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| Accumulated |
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| Shares |
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| Amount |
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| Paid-In Capital |
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| Income (Loss) |
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| Deficit |
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| Total |
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Balance, December 31, 2015 |
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| 11,667 |
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| $ | 381,056 |
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| $ | 46,838 |
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| $ | - |
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| $ | (346,290 | ) |
| $ | 81,604 |
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Unrealized loss on securities |
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| - |
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| - |
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| - |
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| (86,110 | ) |
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| - |
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| (86,110 | ) |
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Foreign currency translation adjustment |
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| - |
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| - |
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| - |
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| (3,830 | ) |
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| - |
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| (3,830 | ) |
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Net loss |
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| - |
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| - |
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| - |
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| - |
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| (4,993 | ) |
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| (4,993 | ) |
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Balance, December 31, 2016 |
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| 11,667 |
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| 381,056 |
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| 46,838 |
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| (89,940 | ) |
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| (351,283 | ) |
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| (13,329 | ) |
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Internal transfer |
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| - |
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| - |
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| 144 |
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| - |
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| (144 | ) |
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| - |
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Unrealized gain on securities |
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| - |
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| - |
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| - |
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| 1,512 |
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| - |
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| 1,512 |
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Foreign currency translation adjustment |
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| - |
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| - |
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| - |
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| 18,801 |
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| - |
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| 18,801 |
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Net loss |
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| - |
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| - |
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| - |
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| - |
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| (58,872 | ) |
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| (58,872 | ) |
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Balance, December 31, 2017 |
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| 11,667 |
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| $ | 381,056 |
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| $ | 46,982 |
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| $ | (69,627 | ) |
| $ | (410,299 | ) |
| $ | (51,888 | ) |
The accompanying notes are an integral part of these financial statements.
6 |
COSMOFARM LTD | |||
STATEMENTS OF CASH FLOWS |
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| Years Ended December 31, |
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| 2017 |
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| 2016 |
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Cash flows from operating activities |
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Net loss |
| $ | (58,872 | ) |
| $ | (4,993 | ) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities |
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Depreciation and amortization |
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| 33,889 |
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| 29,378 |
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Deferred taxes |
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| (57,138 | ) |
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| (1,069 | ) |
Loss on disposal of property, plant and equipment |
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| - |
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| 6,740 |
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Changes in operating assets and liabilities |
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Accounts receivable, net |
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| (575,547 | ) |
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| 178,929 |
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Accounts receivable - related party |
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| 215,280 |
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| (14,390 | ) |
Inventory |
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| (323,626 | ) |
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| (10,504 | ) |
Prepaid expenses and other current assets |
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| (570,245 | ) |
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| 37,357 |
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Accounts payable |
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| 687,999 |
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| (142,335 | ) |
Customer advances |
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| 611,612 |
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| - |
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Other current liabilities |
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| 8,789 |
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| (5,178 | ) |
Net cash provided by (used in) operating activities |
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| (27,859 | ) |
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| 73,935 |
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Cash flows from investing activities |
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Purchase of securities |
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| - |
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| (221,380 | ) |
Purchase of property, plant and equipment |
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| (7,642 | ) |
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| (2,339 | ) |
Net cash used in investing activities |
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| (7,642 | ) |
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| (223,719 | ) |
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Cash flows from financing activities |
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Borrowings on lines of credit |
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| 2,138,127 |
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| 2,638,896 |
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Payments of lines of credit |
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| (1,968,877 | ) |
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| (2,432,297 | ) |
Principal payments under capital lease obligations |
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| (33,707 | ) |
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| (23,400 | ) |
Net cash provided by financing activities |
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| 135,543 |
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| 183,199 |
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Increase in cash |
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| 100,042 |
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| 33,415 |
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Effect of exchange rates on cash |
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| 31,581 |
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| (6,637 | ) |
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Beginning cash balance |
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| 186,012 |
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| 159,234 |
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Ending cash balance |
| $ | 317,635 |
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| $ | 186,012 |
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Other supplemental cash flow information |
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Cash paid for interest |
| $ | 109,558 |
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| $ | 122,195 |
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Cash paid for taxes |
| $ | 21,627 |
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| $ | 9,116 |
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7 |
Cosmofarm LTD
Notes to Financial Statements
December 31, 2017 and 2016
_________________________
1. | Organization and Summary of Significant Accounting Policies |
General and operations
Cosmofarm LTD (“the Company”) is a private company, incorporated in 1994 in Greece with registration number (G.E.MI.) No.1767501000.
The Company is wholly owned by DEEPDAE Ltd which is a Holding Company based in Cyprus.
Cosmofarm is a fully licensed pharmaceutical wholesale company, located in the vast area of Athens. The Company is approved and authorized by the National Organization for Medicines under Good Distribution Practices to distribute a variety of pharmaceutical products. Cosmofarm has an active clientele network of more than 520 pharmacies and clinics, and over 250 vendors of pharmaceutical and wholesale companies.
The Company conducts its business within the pharmaceutical industry and specifically is acting as a wholesaler of branded and generic pharmaceutical and over-the-counter (“OTC”) products.
The pharmaceutical industry is highly competitive and is subject to comprehensive government regulations. Many factors may significantly affect the Company’s sales of its products, including, but not limited to, efficacy, safety, price and cost-effectiveness, marketing effectiveness, product labeling, quality control and quality assurance as well as our research and development of new products.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Management bases its estimates on historical experience and on various other factors it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Accordingly, actual results could differ from those estimates.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents.
Investments
The Company maintains investments in marketable securities and securities which are available-for-sale. The marketable securities are carried at fair value with unrealized gains and losses included in the statement of operations and the accumulated other comprehensive income (loss) in the statement of stockholders’ deficit.
8 |
Cosmofarm LTD
Notes to Financial Statements
December 31, 2017 and 2016
_________________________
1. | Organization and Summary of Significant Accounting Policies (continued) |
Accounts receivable
The Company grants trade credit to its customers. Receivables are valued at management’s estimate of the amount that will ultimately be collected. An allowance for doubtful accounts, if any, is based on specific identification of uncollectible accounts and the Company’s historical collection experience. At December 31, 2017 and 2016, the Company’s allowance for doubtful accounts was $493,691 and $361,735, respectively.
Inventory
Inventory is stated at the lower of cost (determined on a first-in, first-out method) or net realizable value. The Company periodically reviews its inventories for potential slow-moving or obsolete items and writes down specific items to net realizable value as appropriate.
Property, plant, and equipment
Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. Assets not yet placed in use are not depreciated.
The useful lives of the property and equipment are as follows:
Buildings and technical works | 40 years |
Vehicles | 6 to 20 years |
Furniture, fittings and equipment | 10 years |
Machinery | 20 years |
Computers and software | 5 years |
Impairment of long-lived assets
Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows from the use of these assets. When any such impairment exists, the related assets will be written down to fair value. No impairment losses were recorded for the years ended December 31, 2017 and 2016.
9 |
Cosmofarm LTD
Notes to Financial Statements
December 31, 2017 and 2016
_________________________
1. | Organization and Summary of Significant Accounting Policies (continued) |
Revenue recognition
The Company recognizes product revenues when persuasive evidence of an arrangement exists, the price is fixed or determinable, post-shipment obligations are insignificant and collectability is reasonably assured. The Company records revenue when product is shipped and title to products and risk of loss passes to the customer, net of applicable provisions for discounts, returns and allowances. Shipping and handling costs are included in costs of revenues.
Advertising costs
The Company expenses the cost of advertising as incurred. There were no advertising expenses for the years ended December 31, 2017 and 2016.
Income taxes
The tax expense for the year comprises current and deferred tax. The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in Greece.
Deferred tax balances are recognized in respect of all temporary differences that have originated but not reversed by the balance sheet date, except that:
| · | The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and |
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| · | Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met. |
Deferred tax balances are not recognized in respect of permanent differences except in respect of business combinations, when deferred tax is recognized on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
For the fiscal years 2015 and up to 2017, the Company, fulfilling relevant criteria to be subject to tax audit by the statutory auditors, has received Tax Compliance Report, according to article 65A par. 1 of law 4174/2013, having no significant deviations. According to the circular CL. 1006/2016, companies that have been subject to foresaid tax audit are not exempt from the regular tax audit held by the competent tax authorities.
10 |
Cosmofarm LTD
Notes to Financial Statements
December 31, 2017 and 2016
_________________________
1. | Organization and Summary of Significant Accounting Policies (continued) |
Income taxes (continued)
On December 31, 2017, the years up to December 31, 2011 have become time-barred in accordance with the provisions of paragraph 1 of article 36 of Law 4171/2013. The unaudited tax years are the fiscal years 2012 - 2014.
Concentrations of credit risk
Financial instruments which subject the Company to potential credit risk consist of its cash and cash equivalents and accounts receivable. The Company invests with high-credit quality financial institutions. The Company believes the financial risks associated with these financial
instruments are minimal.
The Company sells its products and services to a diversified group of customers, including companies located throughout the world. Credit is extended based on an evaluation of each customer’s financial condition. Credit losses, if any, have been provided for in the financial statements and have generally been within management’s expectations.
For the year ended December 31, 2017, one customer represented 12.44% of total revenue and no customer accounted for more than 10% of accounts receivable. For the year ended December 31, 2016, one customer represented 10.31% of total revenue and no customer accounted more than 10% of accounts receivable.
Other comprehensive income (loss)
Other comprehensive income (loss) consists of unrealized gain (loss) on securities and foreign currency translation adjustments totaling income of $20,313 and a loss of $89,940 during the years ended December 31, 2017 and 2016, respectively.
Fair value measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows:
11 |
Cosmofarm LTD
Notes to Financial Statements
December 31, 2017 and 2016
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1. | Organization and Summary of Significant Accounting Policies (continued) |
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Fair value measurements (continued) |
| (a) | Investments (Level 1) - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. |
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| (b) | Investments (Level 2) - Inputs (other than quoted market prices included in Level 1) that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the instrument’s anticipated life. |
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| (c) | Investments (Level 3) - Unobservable inputs that are supported by little or no market activity and reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. |
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| The carrying amounts of cash and cash equivalents, securities available-for-sale, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the short maturity of these instruments. The carrying amounts of long-term liabilities approximate fair value as these instruments are charged interest based on the prevailing rates.
Foreign currency transactions
The reporting currency of the Company is the U.S. dollar while the functional currency is the Euro. Assets and liabilities of all operations are translated at year-end rates of exchange, and the statements of operations are translated at the average rates of exchange for the year. Gains or losses resulting from translating foreign currency financial statements are accumulated in other comprehensive income (loss) as a separate component of stockholders’ equity (deficit).
Gains or losses from foreign currency transactions (transactions denominated in a currency other than the entity’s local currency) are included in net earnings. |
2. | Investments |
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| Investments consisted of the following at December 31,: |
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| 2017 |
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| 2016 |
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Securities, available- for-sale |
| $ | 121,320 |
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| $ | 104,717 |
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Cosmofarm LTD
Notes to Financial Statements
December 31, 2017 and 2016
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3. | Fair Value Disclosures |
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| The following table sets forth by level, within the fair value hierarchy, the Company’s assets at fair value as of December 31, 2017: |
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| Level 1 |
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| Level 2 |
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| Level 3 |
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| Total |
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Securities, available-for-sale |
| $ | 121,320 |
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| $ | - |
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| $ | - |
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| $ | 121,320 |
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The following table sets forth by level, within the fair value hierarchy, the Company’s assets at fair value as of December 31, 2016:
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| Level 1 |
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| Level 2 |
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| Level 3 |
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| Total |
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Securities available-for-sale |
| $ | 104,717 |
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| $ | - |
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| $ | - |
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| $ | 104,717 |
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4. | Inventory |
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| Inventory consists of the following at December 31: |
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| 2017 |
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| 2016 |
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Finished goods |
| $ | 785,891 |
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| $ | 384,687 |
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5. | Property, Plant, and Equipment |
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Property, plant and equipment, net consists of the following at December 31: |
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| 2017 |
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| 2016 |
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Land and buildings |
| $ | 69,197 |
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| $ | 60,861 |
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Equipment under capital lease |
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| 201,964 |
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| 177,633 |
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Mechanical equipment |
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| 9,589 |
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| 8,434 |
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Vehicles |
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| 42,834 |
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| 36,409 |
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Furniture and other equipment |
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| 82,088 |
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| 66,332 |
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| 405,672 |
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| 349,668 |
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Less: Accumulated depreciation |
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| (145,795 | ) |
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| (96,606 | ) |
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| $ | 259,877 |
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| $ | 253,062 |
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Depreciation expense was $33,889 and $29,378 for the years ended December 31, 2017 and 2016, respectively.
Property and equipment includes $201,964 of machinery and equipment financed through leasing arrangements (capital leases) at December 31, 2017. Accumulated amortization of assets under capital leases was $12,532 and $8,591 as of December 31, 2017 and 2016, respectively.
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Cosmofarm LTD
Notes to Financial Statements
December 31, 2017 and 2016
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6. | Lines of Credit |
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The line of credit with National Bank of Greece is being annually renewed with an interest rate of 6.00%. The maximum borrowing allowed was $623,272 at December 31, 2017. The outstanding balance was $152,533 and $255,241 at December 31, 2017 and 2016, respectively. | |
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The line of credit with Alpha Bank of Greece is being annually renewed with an interest rate of 6.00%. The maximum borrowing allowed was $719,160 at December 31, 2017. The outstanding balance was $384,391 and $314,927 at December 31, 2017 and 2016, respectively. | |
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The line of credit with Eurobank of Greece is being annually renewed with an interest rate of 9.00%. The maximum borrowing allowed was $599,300 at December 31, 2017. The outstanding balance was $548,912 and $226,914 at December 31, 2017 and 2016, respectively. | |
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Interest expense for the years ended December 31, 2017 and 2016 was $116,786 and $127,194, respectively. | |
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Under the agreements, the Company is required to maintain certain financial ratios and covenants. During the years ended December 31, 2017 and 2016, the Company was in compliance with these ratios and covenants. | |
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7. | Commitments and Contingencies |
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Capital leases | |
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The Company leases mechanical equipment under capital leases. The following is a schedule of future minimum lease payments, together with the present value of minimum lease payments under capital leases, at December 31, 2017: |
Year Ending December 31 |
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2018 |
| $ | 37,553 |
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2019 |
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| 37,553 |
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2020 |
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| 16,647 |
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| 91,753 |
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Less amount representing interest |
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| (4,468 | ) |
Present value of minimum lease payments |
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| 87,285 |
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Less current portion |
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| (33,405 | ) |
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| $ | 50,880 |
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Interest expense for the years ended December 31, 2017 and 2016 was $5,885 and $7,311, respectively.
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Cosmofarm LTD
Notes to Financial Statements
December 31, 2017 and 2016
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7. | Commitments and Contingencies (continued) |
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Contingencies | |
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From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. | |
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Legal proceedings | |
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The Company may be involved in lawsuits, claims, investigations and proceedings that arise in the ordinary course of business. The Company is not currently a party to any legal proceedings the outcome of which, individually or in the aggregate, it believes could have a material adverse effect on its business, financial condition, results of operations or cash flows. | |
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8. | Income Taxes |
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The benefit for tax provision is made of income tax for $31,045 and of net deferred taxes for ($33,941) totaling ($2,896) for the year ending December 31, 2017. | |
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The tax provision is made of income tax for $19,972 and of net deferred taxes for ($1,069) totaling $18,903 for the year ending December 31, 2016. | |
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The components of the net deferred tax assets as of December 31, are as follows: |
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| 2017 |
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| 2016 |
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Net deferred income taxes |
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Provisions for pension benefit obligations |
| $ | 7,082 |
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| $ | 4,896 |
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Impairment of securities available-for-sale |
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| 37,540 |
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| 33,232 |
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Unrealized losses on marketable securities |
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| (110 | ) |
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| 265 |
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Provisions for slow moving inventories |
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| 8,242 |
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| 8,722 |
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Provisions for allowances for bad debts |
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| 84,443 |
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| 52,372 |
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Allowances for cash in hand |
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| 67,678 |
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| 59,525 |
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Discounting of other receivables |
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| 15,580 |
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| - |
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Depreciation of fixed assets |
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| (3,488 | ) |
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| - |
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Net deferred income taxes |
| $ | 216,150 |
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| $ | 159,012 |
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At December 31, 2017, the Company had no net operating loss carryforwards available to reduce future taxable income.
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Cosmofarm LTD
Notes to Financial Statements
December 31, 2017 and 2016
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8. | Income Taxes (continued) |
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The Company periodically reviews the uncertainties and judgments related to the application of complex income tax regulations to determine income tax liabilities in several jurisdictions. The Company uses a “more likely than not” criterion for recognizing the income tax benefit of uncertain tax positions and establishing measurement criteria for income tax benefits. The Company has evaluated the impact of these positions and due to the fact that the fiscal years 2012 - 2014 are unaudited by the Greek tax authorities, a potential tax liability has been identified, which may arise from a prospective tax audit from tax authorities, based on the tax settlement note of years 2007 - 2009. The amount of the liability was $176,127 as of December 31, 2017 and 2016 and has been recorded as a long term liability within the balance sheet. | |
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9. | Related Party Transactions |
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During the years ended December 31, 2017 and 2016, Kozaris Panagiotis and Papadopoulos Dimitris are related parties, as they were the managing directors of the Company although Papadopoulos Dimitris resigned during 2017. Moreover, Kozari Maria is a related party because the managing director, Kozaris Panagiotis is her father. The pharmacy that belongs to the shareholder Arvanitidis Nikos, who is a related party, has purchased pharmaceutical goods from the Company. During the year ended December 31, 2017, the sales of pharmaceutical goods to related parties totaled $100,250. | |
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10. | Subsequent Events |
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| On June 23, 2018, the Company entered into a Stock Purchase Agreement with a strategic investor named Cosmos Holdings Inc. to sell 100% of its shares. In September 2018, the Company received 384,280 Euros from Cosmos Holdings Inc., as a pending investment. These funds will be contributed as share capital increase after the closing of the acquisition and is adequate to support the Company’s organic growth.
The Company has evaluated subsequent events through March 5, 2019, the date which the financial statements were available to be issued. |
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