Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 14, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | COSMOS HOLDINGS INC. | |
Entity Central Index Key | 0001474167 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Sep. 30, 2022 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Entity Common Stock Shares Outstanding | 83,797,481 | |
Document Quarterly Report | true | |
Entity File Number | 000-54436 | |
Entity Incorporation State Country Code | NV | |
Entity Tax Identification Number | 27-0611758 | |
Entity Interactive Data Current | Yes | |
Entity Address Address Line 1 | 141 West Jackson Blvd, Suite 4236 | |
Entity Address Address Line 2 | Suite 4236 | |
Entity Address City Or Town | Chicago | |
Entity Address State Or Province | IL | |
Entity Address Postal Zip Code | 60604 | |
City Area Code | 312 | |
Local Phone Number | 536-3102 | |
Security 12b Title | Common Stock, $.001 par value | |
Trading Symbol | COSM | |
Security Exchange Name | NASDAQ | |
Document Transition Report | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 312,385 | $ 286,487 |
Accounts receivable, net | 25,252,750 | 26,858,114 |
Accounts receivable - related party | 1,997,427 | 2,901,300 |
Marketable securities | 9,987 | 11,468 |
Inventory | 3,983,023 | 3,147,276 |
Loans receivable | 340,092 | 377,590 |
Prepaid expenses and other current assets | 1,816,583 | 2,987,687 |
Prepaid expenses and other current assets - related party | 4,121,184 | 3,263,241 |
Operating lease right-of-use asset | 760,180 | 834,468 |
Financing lease right-of-use asset | 255,556 | 211,099 |
TOTAL CURRENT ASSETS | 38,849,167 | 40,878,730 |
Property and equipment, net | 1,449,961 | 1,888,052 |
Goodwill and intangible assets, net | 682,408 | 485,767 |
Loans receivable - long term portion | 3,553,039 | 4,410,689 |
Other assets | 824,829 | 915,250 |
Deferred tax assets | 261,971 | 850,774 |
TOTAL ASSETS | 45,621,375 | 49,429,262 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 11,408,585 | 12,126,626 |
Accounts payable and accrued expenses - related party | 322,824 | 599,125 |
Accrued interest | 1,853,357 | 1,019,889 |
Lines of credit | 4,924,655 | 4,743,557 |
Convertible notes payable, net of unamortized discount of $0 and $258,938, respectively | 625,000 | 381,062 |
Derivative liability - convertible note | 40,663 | 45,665 |
Notes payable | 12,391,919 | 5,462,504 |
Notes payable - related party | 401,299 | 464,264 |
Loans payable | 1,000,000 | 1,000,000 |
Loans payable - related party | 1,538,088 | 1,293,472 |
Taxes payable | 1,051,827 | 1,324,722 |
Operating lease liability, current portion | 155,432 | 138,450 |
Financing lease liability, current portion | 83,545 | 73,078 |
Other current liabilities | 1,106,897 | 1,255,824 |
TOTAL CURRENT LIABILITIES | 36,904,091 | 29,928,238 |
Share settled debt obligation | 1,554,590 | 1,554,590 |
Lines of credit - long-term portion | 194,132 | 366,171 |
Notes payable - long term portion | 1,026,049 | 12,356,384 |
Operating lease liability, net of current portion | 604,746 | 696,015 |
Financing lease liability, net of current portion | 181,899 | 148,401 |
TOTAL LIABILITIES | 40,465,507 | 45,049,799 |
Commitments and Contingencies (see Note 14) | 0 | 0 |
STOCKHOLDERS' EQUITY: | ||
Common stock, $0.001 par value; 300,000,000 shares authorized; 26,365,404 and 17,544,509 shares issued and 25,977,980 and 17,157,085 outstanding as of September 30, 2022 and December 31, 2021, respectively | 26,365 | 17,544 |
Additional paid-in capital | 61,194,291 | 39,675,753 |
Treasury stock, 387,424 shares as of September 30, 2022 and December 31, 2021 | (816,707) | (816,707) |
Accumulated deficit | (54,345,250) | (34,345,506) |
Accumulated other comprehensive loss | (2,614,866) | (151,621) |
TOTAL STOCKHOLDERS' EQUITY | 3,443,833 | 4,379,463 |
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY | 45,621,375 | 49,429,262 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' 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; 1,500 and 0 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively; liquidation preference of $1,868,567 and $0, respectively | $ 1,712,035 | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Convertible notes payable, net of unamortized discount | $ 0 | $ 258,938 |
STOCKHOLDERS' DEFICIT | ||
Common stock, shares par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 26,365,404 | 17,544,509 |
Common stock, shares outstanding | 25,977,980 | 17,157,085 |
Preferred stock, shares par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Treasury stock | 387,424 | 387,424 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, shares par value | $ 1,000 | $ 1,000 |
Preferred stock, shares authorized | 6,000,000 | 6,000,000 |
Preferred stock, shares issued | 1,500 | 0 |
Preferred stock, shares outstanding | 1,500 | 0 |
Preferred stock, Liquidation Preference | 1,868,567 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) | ||||
REVENUE | $ 12,016,098 | $ 13,595,418 | $ 38,296,402 | $ 40,061,419 |
COST OF GOODS SOLD | 10,232,201 | 11,249,848 | 32,774,701 | 34,677,671 |
GROSS PROFIT | 1,783,897 | 2,345,570 | 5,521,701 | 5,383,748 |
OPERATING EXPENSES | ||||
General and administrative expenses | 1,335,033 | 2,427,085 | 3,192,137 | 6,708,796 |
Salaries and wages | 576,118 | 683,129 | 1,675,068 | 1,786,954 |
Sales and marketing expenses | 103,979 | 41,715 | 496,371 | 586,440 |
Depreciation and amortization expense | 112,879 | 108,192 | 334,349 | 323,678 |
TOTAL OPERATING EXPENSES | 2,128,009 | 3,260,121 | 5,697,925 | 9,405,868 |
INCOME (LOSS) FROM OPERATIONS | (344,112) | (914,551) | (176,224) | (4,022,120) |
OTHER INCOME (EXPENSE) | ||||
Other expense, net | (5,431) | (122,477) | (60,558) | (340,103) |
Interest expense | (461,945) | (670,282) | (1,541,937) | (2,182,715) |
Non-cash interest expense | (295,846) | (353,303) | (772,180) | (492,391) |
Gain on equity investments, net | 359 | 38 | 415 | 317 |
Gain on extinguishment of debt | 0 | 350,008 | 1,004,124 | 795,644 |
Change in fair value of derivative liability | 628 | 125,621 | (6,627) | 213,490 |
Foreign currency transaction, net | (468,362) | (183,036) | (984,401) | (392,472) |
TOTAL OTHER EXPENSE, NET | (1,230,597) | (853,431) | (2,361,164) | (2,398,230) |
LOSS BEFORE INCOME TAXES | (1,574,709) | (1,767,982) | (2,537,388) | (6,420,350) |
PROVISION FOR INCOME TAXES | (398,066) | (168,561) | (473,296) | (69,152) |
NET LOSS | (1,972,775) | (1,936,543) | (3,010,684) | (6,489,502) |
Deemed dividend on issuance of warrants | 0 | 0 | (5,788,493) | 0 |
Deemed dividend on downround of warants | 0 | 0 | (8,480,379) | 0 |
Deemed dividend on downround of preferred stock | 0 | (8,189,515) | ||
Deemed dividend on preferred stock | (19,607) | (372,414) | ||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | (1,992,382) | (1,936,543) | (25,841,485) | (6,489,502) |
OTHER COMPREHENSIVE LOSS | ||||
Foreign currency translation adjustment, net | (1,029,141) | (214,216) | (2,463,245) | (687,510) |
TOTAL COMPREHENSIVE LOSS | $ (3,021,523) | $ (2,150,759) | $ (28,304,730) | $ (7,177,012) |
BASIC NET LOSS PER SHARE | $ (0.08) | $ (0.11) | $ (1.17) | $ (0.40) |
DILUTED NET LOSS PER SHARE | $ (0.08) | $ (0.11) | $ (1.17) | $ (0.40) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | ||||
Basic | 25,806,871 | 17,136,735 | 22,013,556 | 16,103,193 |
Diluted | 25,806,871 | 17,136,735 | 22,013,556 | 16,103,193 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) AND MEZZANINE EQUITY (Unaudited) - USD ($) | Total | Preferred Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Common Stock |
Balance, shares at Dec. 31, 2020 | 415,328 | 13,485,128 | |||||
Balance, amount at Dec. 31, 2020 | $ (4,161,013) | $ 0 | $ (611,854) | $ 14,333,285 | $ (18,750,824) | $ 854,896 | $ 13,484 |
Foreign currency translation adjustment, net | (473,578) | 0 | $ 0 | 0 | 0 | (473,578) | 0 |
Sale of treasury stock to third party, shares | 65,000 | ||||||
Sale of treasury stock to third party, amount | 250,000 | 0 | $ 650 | 249,350 | 0 | 0 | $ 0 |
Restricted stock issued to a consultant, shares | 1,800,000 | ||||||
Restricted stock issued to a consultant, amount | 1,189,450 | 0 | 1,187,650 | $ 1,800 | |||
Conversion of notes payable into shares of common stock, shares | 781,819 | ||||||
Conversion of notes payable into shares of common stock, amount | 2,564,364 | 0 | 0 | 2,563,582 | 0 | 0 | $ 782 |
Net loss | (2,173,903) | 0 | $ 0 | 0 | (2,173,903) | 0 | $ 0 |
Balance, shares at Mar. 31, 2021 | 350,328 | 16,066,947 | |||||
Balance, amount at Mar. 31, 2021 | (2,804,680) | 0 | $ (611,204) | 18,333,867 | (20,924,727) | 381,318 | $ 16,066 |
Balance, shares at Dec. 31, 2020 | 415,328 | 13,485,128 | |||||
Balance, amount at Dec. 31, 2020 | (4,161,013) | 0 | $ (611,854) | 14,333,285 | (18,750,824) | 854,896 | $ 13,484 |
Net loss | (6,489,502) | ||||||
Stock-based compensation | 5,147,076 | ||||||
Balance, shares at Sep. 30, 2021 | 293,208 | 17,332,628 | |||||
Balance, amount at Sep. 30, 2021 | 4,650,961 | 0 | $ (439,844) | 30,146,413 | (25,240,326) | 167,386 | $ 17,332 |
Balance, shares at Mar. 31, 2021 | 350,328 | 16,066,947 | |||||
Balance, amount at Mar. 31, 2021 | (2,804,680) | 0 | $ (611,204) | 18,333,867 | (20,924,727) | 381,318 | $ 16,066 |
Foreign currency translation adjustment, net | 284 | 0 | 0 | 0 | 0 | 284 | 0 |
Restricted stock issued to a consultant, amount | 1,968,000 | 0 | 0 | 1,968,000 | 0 | 0 | 0 |
Net loss | (2,379,056) | 0 | 0 | 0 | (2,379,056) | 0 | $ 0 |
Conversion of related party debt, shares | 500,000 | ||||||
Conversion of related party debt, amount | 3,000,000 | 0 | 0 | 2,999,500 | 0 | 0 | $ 500 |
Forgiveness of related party debt | 600,000 | 0 | $ 0 | 0 | 0 | 0 | $ 0 |
Balance, shares at Jun. 30, 2021 | 350,328 | 16,566,947 | |||||
Balance, amount at Jun. 30, 2021 | 384,548 | 0 | $ (611,204) | 23,901,367 | (23,303,783) | 381,602 | $ 16,566 |
Foreign currency translation adjustment, net | (214,216) | 0 | 0 | 0 | 0 | (214,216) | 0 |
Restricted stock issued to a consultant, amount | 1,989,626 | 0 | 0 | 1,989,626 | 0 | 0 | $ 0 |
Conversion of notes payable into shares of common stock, shares | 321,300 | ||||||
Conversion of notes payable into shares of common stock, amount | 1,314,117 | 0 | 0 | 1,313,796 | 0 | 0 | $ 321 |
Net loss | (1,936,543) | 0 | 0 | 0 | (1,936,543) | 0 | $ 0 |
Conversion of related party debt, shares | 375,000 | ||||||
Conversion of related party debt, amount | 2,250,000 | 0 | $ 0 | 2,249,625 | 0 | 0 | $ 375 |
Cancellation of treasury shares, shares | 57,120 | (57,120) | |||||
Cancellation of treasury shares, amount | 0 | 0 | $ 171,360 | (171,303) | 0 | 0 | $ (57) |
Conversions of convertible note payable, shares | 126,501 | ||||||
Conversions of convertible note payable, amount | 569,429 | 0 | 0 | 569,302 | 0 | 0 | $ 127 |
Beneficial conversion feature discount related to convertible notes payable | 294,000 | 0 | $ 0 | 294,000 | 0 | 0 | $ 0 |
Balance, shares at Sep. 30, 2021 | 293,208 | 17,332,628 | |||||
Balance, amount at Sep. 30, 2021 | 4,650,961 | 0 | $ (439,844) | $ 30,146,413 | (25,240,326) | 167,386 | $ 17,332 |
Balance, shares at Dec. 31, 2021 | 387,424 | 17,544,509 | |||||
Balance, amount at Dec. 31, 2021 | 4,379,463 | 0 | 39,675,753 | $ (816,707) | (34,345,506) | (151,621) | $ 17,544 |
Foreign currency translation adjustment, net | (405,229) | 0 | 0 | 0 | 0 | (405,229) | $ 0 |
Conversion of notes payable into shares of common stock, shares | 238,000 | ||||||
Conversion of notes payable into shares of common stock, amount | 973,420 | 0 | 0 | 973,182 | 0 | 0 | $ 238 |
Net loss | 203,347 | 0 | 0 | 0 | 203,347 | 0 | 0 |
Adjustments for prior periods from adopting ASU 2020-06 | (240,752) | $ 0 | 0 | (294,000) | 53,248 | 0 | |
Issuance of Series A preferred stock, net of issuance costs of $547,700, shares | 6,000 | ||||||
Issuance of Series A preferred stock, net of issuance costs of $547,700, amount | 0 | $ 5,452,300 | 0 | 0 | 0 | $ 0 | |
Cashless exercise of warrants, shares | 829,471 | ||||||
Cashless exercise of warrants, amount | 0 | $ 0 | 0 | $ (829) | 0 | 0 | $ 829 |
Balance, shares at Mar. 31, 2022 | 6,000 | (387,424) | 18,611,980 | ||||
Balance, amount at Mar. 31, 2022 | 4,910,249 | $ 5,452,300 | (816,707) | $ 40,354,106 | (34,088,911) | (556,850) | $ 18,611 |
Balance, shares at Dec. 31, 2021 | 387,424 | 17,544,509 | |||||
Balance, amount at Dec. 31, 2021 | 4,379,463 | $ 0 | 39,675,753 | $ (816,707) | (34,345,506) | (151,621) | $ 17,544 |
Net loss | (3,010,684) | ||||||
Stock-based compensation | 27,221 | ||||||
Balance, shares at Sep. 30, 2022 | 1,500 | (387,424) | 26,365,404 | ||||
Balance, amount at Sep. 30, 2022 | 3,443,833 | $ 1,712,035 | (816,707) | $ 61,194,291 | (54,345,250) | (2,614,866) | $ 26,365 |
Balance, shares at Mar. 31, 2022 | 6,000 | (387,424) | 18,611,980 | ||||
Balance, amount at Mar. 31, 2022 | 4,910,249 | $ 5,452,300 | (816,707) | $ 40,354,106 | (34,088,911) | (556,850) | $ 18,611 |
Foreign currency translation adjustment, net | (1,028,875) | 0 | 0 | 0 | 0 | (1,028,875) | 0 |
Restricted stock issued to a consultant, amount | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Net loss | (1,241,256) | 0 | 0 | 0 | (1,241,256) | 0 | 0 |
Forgiveness of related party debt | 0 | 0 | 0 | 0 | 0 | 0 | $ 0 |
Cashless exercise of warrants, shares | 455,316 | ||||||
Cashless exercise of warrants, amount | 0 | $ 0 | 0 | (455) | 0 | 0 | $ 455 |
Conversion of Series A preferred stock, shares | (3,034) | 4,892,222 | |||||
Conversion of Series A preferred stock, amount | 2,427,693 | $ (2,427,693) | 2,422,801 | $ 4,892 | |||
Conversion of convertible debt, shares | 39,339 | ||||||
Conversion of convertible debt, amount | 38,144 | 0 | 0 | 38,105 | 0 | 0 | $ 39 |
Deemed dividend upon downround of preferred stock and warrants | 0 | 0 | 0 | 16,669,894 | (16,669,894) | 0 | 0 |
Deemed dividend on preferred stock | 0 | 0 | 0 | 352,807 | (352,807) | 0 | 0 |
Stock-based compensation | 24,101 | $ 0 | 0 | $ 24,101 | 0 | 0 | $ 0 |
Balance, shares at Jun. 30, 2022 | 2,966 | (387,424) | 23,998,857 | ||||
Balance, amount at Jun. 30, 2022 | 5,130,056 | $ 3,024,607 | 59,861,359 | $ 59,861,359 | (52,352,868) | (1,585,725) | $ 23,997 |
Foreign currency translation adjustment, net | (1,029,141) | 0 | 0 | 0 | 0 | (1,029,141) | 0 |
Net loss | (1,972,775) | $ 0 | 0 | 0 | (1,972,775) | 0 | $ 0 |
Conversion of Series A preferred stock, shares | (1,466) | 2,359,047 | |||||
Conversion of Series A preferred stock, amount | 1,332,180 | $ (1,332,179) | 1,329,820 | 1,329,820 | 0 | 0 | $ 2,360 |
Deemed dividend on preferred stock | (19,607) | 19,607 | 0 | 0 | (19,607) | 0 | 0 |
Stock-based compensation | 3,120 | $ 0 | 3,112 | $ 3,112 | 0 | 0 | $ 8 |
Stock-based compensation, shares | 7,500 | ||||||
Balance, shares at Sep. 30, 2022 | 1,500 | (387,424) | 26,365,404 | ||||
Balance, amount at Sep. 30, 2022 | $ 3,443,833 | $ 1,712,035 | $ (816,707) | $ 61,194,291 | $ (54,345,250) | $ (2,614,866) | $ 26,365 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (3,010,684) | $ (6,489,502) |
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities: | ||
Depreciation and amortization expense | 273,415 | 243,410 |
Amortization of right-of-use assets | 60,934 | 80,268 |
Amortization of debt discounts and accretion of debt | 772,180 | 492,391 |
Lease expense | 158,406 | 146,831 |
Interest on finance leases | 11,645 | 9,995 |
Stock-based compensation | 27,221 | 5,147,076 |
Deferred income taxes | 490,460 | 62,606 |
Gain on extinguishment of debt | (1,004,124) | (795,644) |
Change in fair value of the derivative liability | 6,627 | (213,490) |
(Gain) loss on net change in fair value of equity investments | (415) | 3,586 |
Changes in assets and liabilities: | ||
Accounts receivable | (2,255,383) | (5,122,888) |
Accounts receivable - related party | 481,941 | 464,223 |
Inventory | (1,392,884) | (481,409) |
Prepaid expenses and other assets | 117,498 | (2,839,134) |
Prepaid expenses and other current assets - related party | (1,413,967) | 1,064,000 |
Other assets | 0 | 157,920 |
Accounts payable and accrued expenses | 1,692,704 | 2,040,097 |
Accounts payable and accrued expenses - related party | (216,456) | 83,645 |
Accrued interest | 881,347 | 217,904 |
Lease liabilities | (158,788) | (104,126) |
Taxes payable | (101,909) | 0 |
Other current liabilities | 27,900 | 303,779 |
Other liabilities | 0 | (20,807) |
NET CASH USED IN OPERATING ACTIVITIES | (4,552,332) | (5,549,269) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from loan receivable | 267,205 | 0 |
Purchase of property and equipment | (37,137) | (521,758) |
Sale of fixed assets | 12,859 | 0 |
Purchase of intangible assets | (311,859) | (313,667) |
NET CASH USED IN INVESTING ACTIVITIES | (68,932) | (835,425) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payment of convertible note payable | 0 | (529,000) |
Proceeds from convertible note payable | 0 | 600,000 |
Payment of related party note payable | 0 | (3,473) |
Payment of note payable | (2,454,143) | (300,364) |
Proceeds from note payable | 490,365 | 578,850 |
Payment of related party loan | (557,361) | (122,716) |
Proceeds from related party loan | 973,424 | 5,830,757 |
Payment of loans payable | 0 | 390,000 |
Payment of lines of credit | (16,348,941) | (18,281,863) |
Proceeds from lines of credit | 17,206,099 | 18,139,012 |
Proceeds from issuance of Series A Preferred Stock | 5,452,300 | 0 |
Payments of finance lease liability | (71,172) | (75,801) |
Payments of financing fees | (212,728) | 0 |
Proceeds from sale of treasury stock | 0 | 250,000 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 4,477,843 | 6,475,402 |
Effect of exchange rate changes on cash | 169,318 | 314,772 |
NET CHANGE IN CASH | 25,898 | 405,480 |
CASH AT BEGINNING OF PERIOD | 286,487 | 628,395 |
CASH AT END OF PERIOD | 312,385 | 1,033,875 |
Cash paid during the period: | ||
Interest | 317,449 | 208,565 |
Income tax | 0 | 0 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Cancellation of treasury shares | 0 | 171,360 |
Discounts related to beneficial conversion features of convertible debentures | 0 | 294,000 |
Conversion of convertible notes payable to common stock | 959,025 | 350,000 |
Conversion of notes payable to common stock | 973,420 | 3,878,160 |
Deemed dividend on warrants upon conversion of convertible debt | 5,788,493 | 0 |
Deemed dividend on preferred stock and warrants upon trigger of downround feature | 16,669,894 | 0 |
Deemed dividend upon cumulative dividend on preferred stock | 372,414 | 0 |
Conversion of Series A preferred stock | 2,427,693 | 0 |
Conversion of convertible debt | $ 38,144 | $ 0 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2022 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION The terms “COSM,” “we,” “the Company,” and “us” as used in this report refer to Cosmos Holdings, Inc. The accompanying unaudited condensed consolidated balance sheet as of September 30, 2022 and unaudited condensed consolidated statements of operations and comprehensive income for the three months ended September 30, 2022 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management of COSM, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, 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, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (“Form 10-K”). The accompanying condensed consolidated balance sheet as of December 31, 2021 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. |
ORGANIZATION, NATURE OF BUSINES
ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN | 9 Months Ended |
Sep. 30, 2022 | |
ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN | |
ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN | NOTE 2 – ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN Cosmos Holdings Inc. (d/b/a Cosmos Health, Inc.) (Nasdaq: COSM) is an international healthcare group headquartered in Chicago, Illinois. The group is engaged in the nutraceuticals sector through its own proprietary lines of products “Sky Premium Life” and “Mediterranation”. The Company is operating in the pharmaceutical sector as well, through the provision of a broad line of branded generics and OTC medications. In addition, the group is involved in the healthcare distribution sector through its subsidiaries in Greece and the UK, serving retail pharmacies and wholesale distributors. Cosmos Holdings Inc. 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. Cosmos has developed a global distribution platform and is currently expanding throughout Europe, Asia and North America. Cosmos Holdings 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, we changed our name to Cosmos Holdings, Inc. On August 2, 2022, the Company filed a Fictitious Firm Name Certificate in Nevada to do business under the name Cosmos Health, Inc. and will seek shareholder approval on December 2, 2022 at the annual shareholders meeting to amend its Articles of Incorporation for the name change. 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 distributor of Sky Premium Life nutraceutical products in the UK. 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 of the Company as a going concern. For the nine months ended September 30, 2022, the Company had revenue of $38,296,402, net loss of $3,010,684 and net cash used in operations of $4,552,332. Additionally, as of September 30, 2022, the Company had working capital of $1,945,076, an accumulated deficit of $54,345,250, and stockholders’ equity of $3,443,833. It is management’s opinion that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of this filing. The Company 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. 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. 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 intercompany balances and transactions have been eliminated. 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. 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. We will continue monitoring the social, political, regulatory and economic environment in Ukraine and Russia, and will consider further actions as appropriate. 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 September 30, 2022 and December 31, 2021, there were no cash equivalents. The Company maintains bank accounts in the United States denominated in U.S. Dollars, in Greece denominated in Euros, U.S. Dollars and Great Britain Pounds (British Pounds Sterling), and in Bulgaria denominated in Euros. The Company also maintains bank accounts in the United Kingdom, denominated in Euros and Great Britain Pounds (British Pounds Sterling). 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. Account Receivable, net Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts against gross accounts receivable reflects the best estimate of probable losses inherent in the receivables’ portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. At September 30, 2022 and December 31, 2021, the Company’s allowance for doubtful accounts was $1,858,427 and $1,702,743, 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 September 30, 2022 and December 31, 2021, the Company had a VAT net payable balance of $641,441 and $400,616 respectively, recorded in the condensed consolidated balance sheet as accounts payable and accrued expenses. Inventory Inventory is stated at the lower-of-cost or net realizable value using the weighted average method. Inventory consists primarily of finished goods and packaging materials, i.e., packaged pharmaceutical products and the wrappers and containers they are sold in. A periodic inventory system is maintained by 100% count. Inventory is replaced periodically to maintain the optimum stock on hand available for immediate shipment. The Company writes down inventories to net realizable value based on physical condition, expiration date, current market conditions, as well as forecasted demand. The Company’s inventories are not highly susceptible to obsolescence. Many of the Company’s inventory items are eligible for return to our suppliers when pre-agreed product requirements, including, but not limited to, physical condition and expiration date, are not met. Property and Equipment, net Property and equipment are stated at cost, less accumulated depreciation. Depreciation is 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 Depreciation expense was $83,214 and $68,852 for the three months ended September 30, 2022 and 2021, respectively and $248,670 and $218,664 for the nine months ended September 30, 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, goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology to estimate the fair value of a reporting unit. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. On December 19, 2018, as a result of the acquisition of Cosmofarm, the Company recorded $49,697 of goodwill. Intangible assets with definite useful lives are recorded on the basis of cost and are amortized on a straight-line basis over their estimated useful lives. The Company uses a useful life of 5 years for 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 September 30, 2022, no revision to the remaining amortization period of the intangible assets was made. Amortization expense was $36,982 and $8,339 for the three months ended September 30, 2022 and 2021, respectively and $53,389 and $24,746 for the nine months ended September 30, 2022 and 2021, respectively. Equity Method Investment For those investments in common stock or in-substance common stock in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, the investment is accounted for under the equity method. The Company 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. 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 consolidated balance sheets. Equity securities that are not considered available for use in current operations would be reported as a component of long-term assets in the accompanying consolidated balance sheets. For equity securities with no readily determinable fair value, the Company elects a measurement alternative to fair value. Under this alternative, the Company measures the investments at cost, less any impairment, and adjusted for changes resulting from observable price changes in transactions for identical or similar investments of the investee. The election to use the measurement alternative is made for each eligible investment. As of September 30, 2022, 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 $0.30 per share or value of $4,934 of National Bank of Greece. Additionally, the Company has $5,053 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. The following tables presents assets that are measured and recognized at fair value as of September 30, 2022 and December 31, 2021, on a recurring basis: September 30, 2022 Total Carrying Level 1 Level 2 Level 3 Value Marketable securities – ICC International Cannabis Corp. $ - $ - - $ - Marketable securities – National Bank of Greece 4,934 - - 4,934 Equity securities – Pancreta Bank - 5,053 - 5,053 $ 4,934 $ 5,053 $ 9,987 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 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 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. Customer Advances The Company receives prepayments from certain customers for pharmaceutical products prior to those customers taking possession of the Company’s products. The Company records these receipts as customer advances until it has met all the criteria for recognition of revenue including passing control of the products to its customer, at such point, the Company will reduce the customer advances balance and credit the Company’s revenues. Revenue Recognition In accordance with ASC 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, (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. 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 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. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders’ 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 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 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 September 30, 2022, we believe our United Kingdom deferred tax assets will not be realized, as such, we recorded a $288,870 valuation allowance. We believe that there is sufficient positive evidence to conclude that it is more likely than not that Greek deferred tax assets are realizable. 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. Based upon the available evidence, 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 Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Weighted average number of common shares outstanding-Basic 25,806,871 17,136,735 22,013,556 16,103,193 Potentially dilutive common stock equivalents - - - - Weighted average number of common and equivalent shares outstanding - Diluted 25,806,871 17,136,735 22,013,556 16,103,193 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. Accounting Standard Adopted The Company has adopted Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), effective as of January 1, 2022, using the modified retrospective transition method which, among other things, simplifies the accounting for convertible instruments by eliminating the requirement to separate conversion features from the host contract. Consequently, a convertible debt instrument is accounted for as a single liability measured at its amortized cost and interest expense will be recognized at the coupon rate. The adoption resulted in the elimination of the debt discount that had been recorded within equity (see Note 11, “Convertible Debt”). Correction of an Immaterial Error During the three-month period ended June 30, 2022, the Company concluded it should have adopted ASU 2020-06 on January 1, 2022. The Company is now retrospectively adopting ASU 2020-06 as of January 1, 2022 in this Form 10-Q with a cumulative catch-up adjustment. The net impact of the adjustments was recorded as a reduction to the January 1, 2022 balance of additional paid-in capital in the amount of $294,000 and a reduction in accumulated deficit in the amount of $53,248, as presented in the statement of stockholders’ equity, and a reduction in discount on convertible notes payable in the amount of $240,752. The Company has concluded the impact to form 10-Q for the three-month period ended March 31, 2022 to be immaterial to the financial statements and recorded a catchup/correcting adjustment in the current Form 10-Q. Recent Accounting Pronouncements In 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. 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’s 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 adopted ASU No. 2021-04 on January 1, 2 |
MARKETABLE SECURITIES
MARKETABLE SECURITIES | 9 Months Ended |
Sep. 30, 2022 | |
MARKETABLE SECURITIES | |
MARKETABLE SECURITIES | NOTE 3 – MARKETABLE SECURITIES Distribution and Equity Agreement On March 19, 2018, the Company entered into a Distribution and Equity Acquisition Agreement with Marathon Global Inc. (“Marathon”), a company incorporated in the Province of Ontario, Canada. Marathon was formed to be a global supplier of cannabis, cannabidiol (CBD) and/or any cannabis extract products, extracts, ancillaries and derivatives (collectively, the “Products”). The Company was appointed the exclusive distributor of the Products initially throughout Europe and on a non-exclusive basis wherever else lawfully permitted. The Company has no present intention to distribute any Products under this Agreement in the United States or otherwise participate in cannabis operations in the United States. The Company intends to await further clarification from the U.S. Government on cannabis regulation prior to determining whether to enter the domestic market. The Distribution and Equity Acquisition Agreement is to remain in effect indefinitely unless Marathon fails to provide Market Competitive (as defined) product pricing and Marathon has not become profitable within five (5) years of the agreement. The transaction closed on May 22, 2018 after the due diligence period, following which the Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in common shares of the Company if it fails to meet certain performance milestones. The Company is entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000. The Company was also given the right to nominate one director to the Marathon board of directors. Since Marathon 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, 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. 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 nine months ended September 30, 2022 of $0. The value of the investments as of September 30, 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 the 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 September 30, 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 September 30, 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 $0.30 per share or value of $4,934 of National Bank of Greece. Additionally, the Company has $5,053 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 $415 during the nine months ended September 30, 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 which was later increased to EUR 500,000. The GP contributed the pharmacy license (the “License”) valued at EUR 350,000 (30-year term) to operate the business of CosmoFarmacy in exchange for a 70% equity ownership. The Company is a limited partner and contributed cash of EUR 150,000 for the remaining 30% equity ownership. CosmoFarmacy is not publicly traded and the Company’s investment has been recorded using the equity method of accounting. The value of the investment as of September 30, 2022 and December 31, 2021 was $146,745 and $169,770, respectively, and is included in “Other assets” in the accompanying condensed consolidated balance sheet. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2022 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment consists of the following: September 30, 2022 December 31, 2021 Leasehold improvements $ 456,780 $ 519,278 Vehicles 71,877 96,657 Furniture, fixtures and equipment 1,776,457 2,065,100 Computers and software 125,333 141,490 2,430,447 2,822,525 Less: Accumulated depreciation and amortization (980,486 ) (934,473 ) Total $ 1,449,961 $ 1,888,052 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | NOTE 5 – GOODWILL AND INTANGIBLE ASSETS Intangible assets consist of the following at: September 30, 2022 December 31, 2021 License $ 592,467 $ 345,739 Trade name / mark 36,997 36,997 Customer base 176,793 176,793 806,257 559,529 Less: Accumulated amortization (173,546 ) (123,459 ) Subtotal 632,711 436,070 Goodwill 49,697 49,697 Total $ 682,408 $ 485,767 |
LOAN RECEIVABLE
LOAN RECEIVABLE | 9 Months Ended |
Sep. 30, 2022 | |
LOAN RECEIVABLE | |
LOAN RECEIVABLE | NOTE 6 – LOAN RECEIVABLE On October 30, 2021, the Company entered into an agreement for a ten-year loan with Medihelm 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 entered to 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, the Company had a short-term receivable balance of $377,590 and a long-term receivable balance of $4,410,689 under this loan. During the nine months ended September 30, 2022, the Company received €251,190 ($245,739) in principal payments such that as of September 30, 2022, the Company had a short-term receivable balance of $340,092 and a long-term receivable balance of $3,553,039 under this loan. The Company also received €144,523($141,387) in interest payments during the nine months ended September 30, 2022. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 7 – INCOME TAXES The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company had no U.S. taxable income for the nine months ended September 30, 2022 and 2021. 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 September 30, 2022 and 2021, the Company’s effective tax rate differs from the U.S. federal statutory tax rate primarily due to a valuation allowance recorded against net deferred tax assets in in the United States and the United Kingdom. We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized. Our review includes evaluating both positive (e.g., sources of taxable income) and negative (e.g., recent historical losses) evidence that could impact the realizability of our deferred tax assets. As of September 30, 2022, we believe that it is more likely than not that the benefit from our United Kingdom deferred tax assets will not be realized, as such, we recorded a $288,870 valuation allowance. We believe that there is sufficient positive evidence to conclude that it is more likely than not that Greek deferred tax assets are realizable. The Company continues to maintain a valuation allowance against all net deferred tax assets in the United States. Foreign valuation allowances were reversed on December 31, 2020. For the three months ended September 30, 2022, and 2021, the Company has recorded tax expense in any jurisdiction where it is subject to income tax, in the amount of $398,066 and $168,561, respectively, on the condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2022, and 2021, the Company has recorded tax expense in the amount of $473,296 and $69,152, respectively, on the condensed consolidated statements of operations and comprehensive loss. |
CAPITAL STRUCTURE
CAPITAL STRUCTURE | 9 Months Ended |
Sep. 30, 2022 | |
CAPITAL STRUCTURE | |
CAPITAL STRUCTURE | NOTE 8 – CAPITAL STRUCTURE Preferred Stock The Company is authorized to issue 100 million shares of preferred stock, of which 6,000,000 are designated as Series A convertible preferred stock. The preferred stock has a liquidation preference over the common stock and is non-voting. As of September 30, 2022 and December 31, 2021, 6,000 and 0, preferred shares have been issued, respectively, and 1,500 and 0, shares remain outstanding, respectively. Major Rights & Preferences of Series A Preferred Stock On and effective October 4, 2021, the Company amended and restated its articles of incorporation (the “Amended and Restated Articles”) and filed a certificate of designation (the “COD”) for its Series A Preferred Stock (the “Series A Preferred Stock”) with the State of Nevada. On February 23, 2022, the Company filed Correction No. 1 to the COD. On July 28, 2022, the Company filed an Amendment to the COD with the State of Nevada to allow a holder to waive application of the Beneficial Ownership Limitation with respect to the conversion of Series A Preferred Stock. The 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. With respect to payment of dividends and distribution of assets upon liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, all shares of the Series A Preferred Stock will rank: (i) senior to all of the Company’s Common Stock and any other equity securities that the Company may issue in the future, (ii) equal to any other equity securities that the Company may issue in the future, the terms of which specifically provide that such equity securities are on parity or senior to the Series A Preferred Stock (“Parity Securities”), (iii) junior to all other equity securities the Company issues, the terms of which specifically provide that such equity securities rank senior to the Series A Preferred Stock, and (iv) junior to all of the Company’s existing and future indebtedness; without the prior written consent of the Majority Holders. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company (a “Liquidation”), the Holders of shares of Series A Preferred Stock shall be first entitled to receive out of the assets of the Company available for distribution to its shareholders. Each Holder shall not be entitled to vote with holders of outstanding shares of Common Stock, voting together as a single class, with respect to any and all matters presented to the stockholders of the Company for their action or consideration, except as provided by law or as set forth in the COD. The holders of Series A Preferred Stock are entitled to receive dividends paid and distributions made to the holders of Common Stock to the same extent as if the holders of Series A Preferred Stock had converted such shares into shares of Common Stock. The Series A Preferred Stock was initially convertible into the Company’s Common Stock as determined by dividing the number of shares of Series A Preferred Stock to be converted by the lower of (i) $3.00 or (ii) 80% of the average volume weighted average price for the Company’s Common Stock for the five (5) trading days immediately following the effectiveness of the registration statement concerning the shares (the “Conversion Price”). On June 14, 2022, the Conversion Price was reset to $0.62152 per share. On February 28, 2022, the Company entered into a securities purchase agreement, or the Purchase Agreement, with certain investors and an insider for a private placement of the Company’s securities (the “Private Placement”). The Private Placement consisted of the sale of 6,000 shares of the Company’s Series A Convertible Preferred Stock, or the Series A Shares, at a price of $1,000 per share, and 2,000,000 warrants to purchase shares of common stock, or the Warrants, for aggregate gross proceeds of approximately $6 million. The Warrants were initially exercisable to purchase shares of common stock at $3.30 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 warrants are additional value being distributed to the preferred stockholders and presented the warrants’ fair value of $5,788,493 as a deemed dividend in the unaudited condensed consolidated statements of operations and comprehensive loss. The warrants were valued using the Black-Scholes option pricing model with the following terms: a) exercise price of $3.30, b) common stock fair value of $3.42, c) volatility of 118%, d) discount rate of $1.71%, and e) dividend rate of 0%. The closing of the Private Placement occurred on February 28, 2022. As a condition to the closing of the sale, the Company’s common stock received conditional approval for listing and trading on the Nasdaq Capital Market and commenced trading on February 28, 2022, under the trading symbol, COSM. Concurrent with the issuance of the Series A Shares, the Company executed a registration rights agreement (the “Registration Rights Agreement”) to register the resale of the shares of common stock issuable upon conversion of the Series A Shares and the shares of common stock issuable upon exercise of the warrants issued in connection with the Series A Shares. The Company was required to file its initial registration statement within 45 days following February 28, 2022. The Effectiveness Date was required to be 60 days after February 28, 2022, or 75 days following the SEC’s full review, and any additional registration statements that may be required are to be filed within 20 days following the date required by the SEC. If the Company fails 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 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. The Company filed its initial registration statement on May 25, 2022, and thus accrued for liquidated damages payable to the Holders in the amount of $187,970, calculated as described above, for both the late filing of the registration statement (event) and the 1 st The Series A Shares rank senior to all of the Company’s Common Stock and any other equity securities that the Company may issue in the future with respect to payment of dividends 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 decrease the number of authorized shares of Series A Shares, any agreement, commitment or transaction that would result in a Change of Control, any sale or disposition of any material assets outside of the ordinary course of business of the Company, any material change in 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 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 Shares shall automatically convert into Common Stock, subject to certain beneficial ownership limitations. Mezzanine Equity The Series A Shares are 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 recorded as mezzanine equity in accordance with ASC 480 as the Company may be obligated to issue a variable number of shares at a fixed price known at inception and there is 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. 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 automatically convert into common stock. As of September 30, 2022, 4,500 of the Series A Shares have been converted into 7,251,269 shares of common stock in accordance with the terms of the agreements and thus an amount of $4,081,974 was reclassified from mezzanine equity to common stock and additional paid-in capital, in the aggregate. Common Stock The Company is authorized to issue 300 million shares of common stock. As of September 30, 2022 and December 31, 2021, the Company had 26,365,404 and 17,544,509 shares of our common stock issued, respectively, and 25,977,980 and 17,157,085 shares outstanding, respectively. Consulting Agreement The Company entered into a Consulting Agreement (the “Agreement”) effective as of February 5, 2021, with a non-affiliated consultant (the “Consultant”). The Company engaged the Consultant to perform consulting services relating to Company management, debt structure, business plans and business development in connection with any capitalization transactions involving the Company and any newly created or existing entities. The Agreement was for a term of nine (9) months with an initial term of ninety (90) days (the “Initial Term”). The Agreement was 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 subject to a claw back for any months remaining after the Termination Date. The shares were valued on the date of the agreement at $3.28 per share or $5,904,000, which was be amortized over the term of the agreement. As of the nine months ended September 30, 2022 and 2021, the Company has expensed $0 and $5,147,076, respectively, under the agreement. Debt Conversions During the nine months ended September 30, 2022, the Company issued 238,000 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 per share at the extinguishment commitment date. On May 1, 2022, the Company issued 39,339 shares of common stock to convert $26,515 principal and accrued interest. Following the conversion, the outstanding balance of the above Note was $0. Upon conversion, the 39,339 shares were issued at a fair value of $38,144 which was recorded as equity. Accordingly, upon conversion, the Company reduced its derivative liability by $11,629 (see Note 11). Exercise of Warrants During the nine months ended September 30, 2022, the Company issued 1,284,787 shares of common stock upon the cashless exercise of 3,488,171 warrants. Issuance of Warrants On May 25, 2022, the Company granted 33,333 warrants to a third party based on a settlement agreement signed on May 25, 2022 as a compensation concerning the services the third party provided for the Private Placement closed on February 28, 2022. The Company recorded stock-based compensation in the amount of $24,101 upon issuance of the warrants valued using the Black-Scholes option pricing model with the following assumptions: a) common stock fair value of $1.07, b) exercise price of $3.30, c) term of 5.51 years, d) volatility of 107.3%, e) dividend rate of 0%, and d) discount rate of 2.71%. On June 7, 2022, the Company issued 8,619,127 warrants upon triggering the down round protection feature in relation to the warrants issued in connection with the Series A shares with an exercise price of $0.62152 and a term of approximately 5 years. Additionally, the Company lowered the exercise price of the 2,000,000 warrants then outstanding from $3.30 to $0.62152 per common share upon triggering the down round protection. The Company recorded a deemed dividend in the amount of $8,480,379 in relation to the down round protection feature for the incremental value of the shares issued and lowered exercise price valued using the Black-Scholes option pricing model with the following assumptions: a) common stock fair value of $1.07, b) old exercise price of $3.30 and revised exercise price of $0.62152, c) term of 5.24 years, d) volatility of 121.47%, e) dividend rate of 0%, and d) discount rate of 2.99%. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 9 – RELATED PARTY TRANSACTIONS Doc Pharma S.A. As of September 30, 2022, the Company has a prepaid balance of $4,121,184 and an accounts payable balance of $319,162, resulting in a net prepaid balance of $3,802,022 to Doc Pharma S.A. related to purchases of inventory. Additionally, the Company has a receivable balance of $1,971,530. As of December 31, 2021, the Company has a prepaid balance of $3,263,241 to Doc Pharma S.A. related to purchases of inventory. Additionally, the Company had a receivable balance of $2,901,300 and an accounts payable balance of $565,756. During the three months ended September 30, 2022 and 2021, the Company purchased a total of $412,216 and $761,551 of products from Doc Pharma S.A., respectively. During the three months ended September 30, 2022 and 2021 the Company had $401,179 and $44,950 in revenue from Doc Pharma S.A., respectively. During the nine months ended September 30, 2022 and 2021, the Company purchased a total of $1,672,002 and $2,164,913 of products from Doc Pharma S.A., respectively. During the nine months ended September 30, 2022 and 2021 the Company had $819,896 and $835,914, in revenue from Doc Pharma S.A., respectively. On October 10, 2020, the Company entered into a contract manufacturer outsourcing “CMO” agreement with DocPharma 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 ® On May 17, 2021, Doc Pharma and the Company entered into a Research and Development “R&D” agreement whereby Doc Pharma will be responsible for the research, development, design, registration, copy rights and licenses of 250 nutritional supplements for the final products called Sky Premium Life ® 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. Notes Payable – Related Party A summary of the Company’s related party notes payable as of September 30, 2022 and December 31, 2021 is presented below: September 30, 2022 December 31, 2021 Beginning balance $ 464,264 $ 501,675 Foreign currency translation (62,965 ) (37,411 ) Ending balance $ 401,299 $ 464,264 Grigorios Siokas On December 20, 2018, the €1,500,000 ($1,718,400) note payable, originally borrowed pursuant to a Loan Agreement with a third-party lender, dated March 16, 2018, was transferred to Grigorios Siokas. The note bears an interest rate of 4.7% per annum, matured on March 18, 2019 pursuant to the original agreement and was extended until December 31, 2021. The note is not in default and the maturity date has been extended again until December 31, 2023. As of December 31, 2021 the Company had an outstanding balance of €400,000 ($452,720) and accrued interest of €177,313 ($200,683). As of September 30, 2022, the Company has an outstanding balance of €400,000 ($391,320) and accrued interest of €191,342 ($187,190). 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 December 31, 2021, the Company had a principal balance of €10,200 ($11,544). A principal balance of €10,200 ($9,979) remained as of September 30, 2022. 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 nine months ended September 30, 2022, the Company recorded a gain of $62,965. Loans Payable – Related Party A summary of the Company’s related party loans payable during the nine months ended September 30, 2022, and the year ended December 31, 2021 is presented below: September 30, 2022 December 31, 2021 Beginning balance $ 1,293,472 $ 1,629,246 Proceeds 923,534 6,377,156 Payments (518,659 ) (133,552 ) Conversion of debt - (6,000,000 ) Settlement of lawsuit - (600,000 ) Foreign currency translation (160,259 ) 20,623 Ending balance $ 1,538,088 $ 1,293,472 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, the Company had an outstanding principal balance under these loans of $1,293,472 in loans payable to Grigorios Siokas. During the nine months ended September 30, 2022, the Company borrowed additional proceeds of €584,600 ($571,914), and $351,620 and repaid €453,500 ($443,659) and $75,000 of these loans. The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the nine months ended September 30, 2022 the Company recorded a gain of $160,259. 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. |
LINES OF CREDIT
LINES OF CREDIT | 9 Months Ended |
Sep. 30, 2022 | |
LINES OF CREDIT | |
LINES OF CREDIT | NOTE 10 – LINES OF CREDIT A summary of the Company’s lines of credit as of September 30, 2022 and December 31, 2021 is presented below: September 30, 2022 December 31, 2021 National $ 2,664,679 $ 3,265,236 Alpha 809,447 947,333 Pancreta 1,013,595 489,985 National – COVID 302,516 407,174 EGF 328,550 - Subtotal 5,118,787 5,109,728 Reclassification of National-COVID – Long-term (194,132 ) (366,171 ) Ending balance $ 4,924,655 $ 4,743,557 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 the 6-month Euribor plus any contributions currently in force by law on certain lines of credit), (“COSME 1” facility). The maximum borrowing allowed for the 6% line of credit was $2,910,443 and $2,489,960 as of September 30, 2022 and December 31, 2021, respectively. The outstanding balance of the facility was $1,838,806 and $2,185,413, as of September 30, 2022 and December 31, 2021, respectively. The maximum borrowing allowed for the 4.35% lines of credit, was $978,300 and $1,131,800 as of September 30, 2022 and December 31, 2021, respectively. The outstanding balance of the facilities was $825,873 and $1,079,823 as of September 30, 2022 and December 31, 2021, 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 $978,300 and $1,131,800 as of September 30, 2022 and December 31, 2021, respectively. The outstanding balance of the facility was $809,447 and $947,333, as of September 30, 2022 and December 31, 2021, respectively. 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 September 30, 2022 and December 31, 2021 was $1,359,837 and $565,900, respectively. The outstanding balance of the facility as of September 30, 2022 and December 31, 2021, was $1,013,595 and $489,985, respectively. 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 September 30, 2022 was $391,320. The outstanding balance of the facility as of September 30, 2022 was $328,550. Interest expense for the three months ended September 30, 2022 and 2021, was $13,804 and $11,656, respectively and for the nine months ended September 30, 2022 and 2021, was $136,222 and $165,245, 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 September 30, 2022 and December 31, 2021, 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. 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. COVID-19 Government Funding Interest expense for nine months ended September 30, 2022 and 2021 was $330 and $0, respectively. |
CONVERTIBLE DEBT
CONVERTIBLE DEBT | 9 Months Ended |
Sep. 30, 2022 | |
CONVERTIBLE DEBT | |
CONVERTIBLE DEBT | NOTE 11 – CONVERTIBLE DEBT A summary of the Company’s convertible debt at September 30, 2022 and December 31, 2021 is presented below: September 30, 2022 December 31, 2021 Beginning balance convertible notes $ 640,000 $ 1,447,000 Proceeds - 625,000 Payments - (907,000 ) Conversion to common stock (15,000 ) (525,000 ) Subtotal notes 625,000 640,000 Debt discount at year end - (258,938 ) Convertible note payable, net of discount $ 625,000 $ 381,062 All of the convertible debt is classified as short-term within the condensed consolidated balance sheet as it all matures and will be paid back within fiscal year 2022. December 21, 2020 Securities Purchase Agreement On December 21, 2020 the Company entered into a convertible promissory note with Platinum Point Capital, LLC (the “Holder”, “Lender” or “Platinum”) pursuant to a Securities Purchase Agreement (the “SPA”). The Company issued the $540,000 Note in exchange for $500,000 in cash and included a $40,000 Original Issue Discount (“OID”) and paid $3,000 in financing costs. The principal amount together with interest at the rate of eight percent (8.0%) per annum, compounded annually (the “Interest Rate”), will be paid to the Lenders on or before the Maturity Date (December 31, 2021 or as defined below). Accrued interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed. In the event that on or before the Maturity Date, the Note either (i) had not been converted or have not been otherwise satisfied in full or (ii) an Event of Default (as defined in the SPA) occurs, then the applicable rate of interest on the outstanding amount of the Note since inception shall be the Interest Rate plus eighteen percent (18.0%), the Default Interest. Unless previously converted, the principal and accrued interest on the Note is due and payable in cash (USD) upon the earlier of (i) December 31, 2021, (ii) a Change of Control (as defined in the SPA) or (iii), an Event of Default (collectively, the “Maturity Date”). During the year ended December 31, 2021, the Company converted an aggregate total of $525,000 in principal and $25,144 in accrued interest and fees into 213,382 shares of the Company’s common stock at an average price per share of $2.58. Upon conversion, the 213,382 shares were issued at a fair value of $959,024 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. On May 1, 2022 the Company issued 39,339 shares of common stock to convert $26,515 principal and accrued interest. Following the conversion, the outstanding balance of the above Note is $0. Upon conversion, the 39,339 shares were issued at a fair value of $38,144 which was recorded as equity. Accordingly, upon conversion, the Company reduced its derivative liability by $11,629 (see Note 8). The Company determined that the embedded conversion feature of the convertible promissory note meets the definition of a derivative liability which is accounted for separately. The Company determined a derivative liability exists and determined that the embedded derivative was valued at $456,570 which was recorded as a debt discount, and together with the original issue discount and transaction expenses of $43,000, in the aggregate of $499,570, is being amortized over the life of the loan. As of September 30, 2022 and December 31, 2021 the full amount of the debt discount has been amortized. As of September 30, 2022 and December 31, 2021, the fair value of the derivative liability was $0 and $5,822, respectively. For the nine months ended September 30, 2022 and 2021, the Company record a loss on the change in fair value of the derivative of $5,807 and a gain of $111,581, 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 an interest rate of 8% per annum and matured on the earlier of (i) consummation of the Company listing its common shares on the NEO Stock Exchange or (ii) October 31, 2021. Upon the consummation of a NEO listing, the total principal and accrued interest outstanding on the note will convert into shares of the Company’s common stock at a 25% discount to the prices of the common shares sold 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. As of September 30, 2022, the Company had a principal balance of $100,000 and had accrued $13,740 in interest expense. The Company determined that the embedded conversion feature of the convertible promissory note meets the definition of a derivative liability which is accounted for separately. The Company measured the embedded derivative valued at $62,619 which was recorded as a debt discount and additional paid-in capital and is being amortized over the life of the loan. As of September 30, 2022 and December 31, 2021, $62,619 of the debt discount has been amortized. As of September 30, 2022 and December 31, 2021, the fair value of the derivative liability was $40,663 and $39,843, respectively. For the nine months ended September 30, 2022, the Company recorded a loss of $820 from the change in fair value of derivative liability as other income in the consolidated statements of operations and comprehensive income (loss) compared to a gain of $36,122 for the nine-month period ended September 30, 2021. 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 a Nasdaq listing, the total principal and accrued interest outstanding on the note will 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 Nasdaq listing, subject to a conversion floor of $3.00. 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 as of December 31, 2021. The Company measured the beneficial conversion feature’s intrinsic value on September 17, 2021, at $294,000 which, together with the OID of $25,000 was recorded as a debt discount and is being amortized over the life of the loan. On January 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective method. As a result of the adoption, on January 1, 2022, the Company recorded an increase to additional paid-in capital of $294,000 and a decrease to accumulated deficit of $53,248. For the year ended December 31, 2021, $60,063 of the debt discount has been amortized. As of December 31, 2021, the Company had accrued a principal balance of $525,000, had accrued $15,166 in interest expense, and had remaining debt discount of $258,938 which resulted in a net convertible note payable of $266,063. For the nine months ended September 30, 2022, $294,000 of the debt discount was reduced and recorded as a reduction to additional paid-in capital and has been amortized. As of September 30, 2022, the Company had accrued a principal balance of $525,000, had accrued $54,833 in interest expense, and had remaining debt discount of $0 which resulted in a net convertible note payable of $525,000. 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 September 30, 2022: Amount Balance on January 1, 2022 $ 45,665 Issuances to debt discount - Reduction of derivative related to conversions (11,629 ) Change in fair value of derivative liabilities 6,627 Balance on September 30, 2022 $ 40,663 The fair value of the derivative conversion features and warrant liabilities as of September 30, 2022 and December 31, 2021 were calculated using a Monte-Carlo option model valued with the following assumptions: September 30, December 31, 2022 2021 Dividend yield 0 % 0 % Expected volatility 157.2 % 106.8%-107.3% Risk free interest rate 3.75 % 0.41%-0.44% Contractual terms (in years) 0.50 0.50 – 0.52 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2022 | |
DEBT | |
DEBT | NOTE 12 – DEBT A summary of the Company’s third-party debt as of September 30, 2022 and December 31, 2021 presented below: September 30, 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 - - 479,723 - 479,723 Payments (190,622 ) (147,830 ) (2,132,165 ) (4,586 ) (2,475,203 ) Conversion of debt (1,190,000 ) - - (1,190,000 ) Recapitalized upon debt modification (785 ) (51,190 ) (781,752 ) - (833,727 ) Accretion of debt and debt discount 0 - (12,223 ) - (12,223 ) Foreign currency translation 110,335 (299,325 ) (146,201 ) (34,299 ) (369,490 ) Subtotal 28,712 5,708,665 7,485,359 195,232 13,417,968 Notes payable - long-term - - (855,345 ) (170,704 ) (1,026,049 ) Notes payable - short-term $ 28,712 $ 5,708,665 $ 6,630,014 $ 24,528 $ 12,391,919 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 Our outstanding debt as of September 30, 2022 is repayable as follows: September 30, 2022 2022 $ 2,065,142 2023 11,244,009 2024 316,759 2025 320,620 2026 and thereafter 317,388 Total debt 14,263,918 Less: fair value adjustments to assumed debt obligations (845,950 ) Less: notes payable - current portion (12,391,919 ) Notes payable - long term portion $ 1,026,049 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 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 · Agreed to issue no more than 238,000 shares of common stock upon approval of the listing of the Company’s common stock on Nasdaq to settle $1,190,000 (€1,000,000) of debt. The Company issued these shares on February 28, 2022. Upon issuance of the 238,000 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 per share. The Company evaluated the August 4, 2021, exchange agreement for debt modification in accordance with ASC 470-50 and concluded that the debt qualified for debt extinguishment because a substantial conversion feature was added to 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%. As of September 30, 2022 and December 31, 2021, the Company has accrued interest expense of $17,146 and $4,414, respectively, and the principal balance of the debt is $28,711 and $1,299,784, respectively, which is classified as Notes payable on the unaudited condensed consolidated balance sheet. 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. During Q2 2022, the Company informally agreed with the Lender to extend the maturity of the facility to September 30, 2022. During Q3 2022, the maturity of the facility was further informally extended to December 31, 2022. The Company reassessed and adjusted accordingly the accretion of the debt extinguishment effect described above. Trade Facility Agreements On May 12, 2017, SkyPharm entered into a Trade Finance Facility Agreement (the “SkyPharm Facility”) 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 and USD $4,000,000. Interest on the new balances commenced on October 1, 2018, at 6% per annum plus one-month Euribor, when it is positive, on the Euro balance and 6% per annum plus one-month LIBOR on the USD balance. The USD $4,000,000 loan matured on August 31, 2021. On March 3 rd rd On December 30, 2020, the Company transferred the Euro €2,000,000 loan to a new third-party lender. The terms remained the same except interest will now accrue at 5.5% per annum plus Euribor. The principal is to be repaid in a total of five quarterly installments beginning October 31, 2021 of 50,000 Euro each with a final repayment of 1,800,000 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 €50,000 ($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 modification under ASC 470-50 because the change in the present value of cash flows is less than 10%. 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 extension agreement signed on March 3 rd Third Party Debt On November 16, 2015, the Company entered into a Loan Agreement with Panagiotis Drakopoulos, former Director and former Chief Executive Officer, pursuant to which the Company borrowed €40,000 ($42,832) as a note payable from Mr. Drakopoulos. The note bears an interest rate of 6% per annum and was due and payable in full on November 15, 2016. As of December 31, 2021, the Company had an outstanding principal balance of €8,000 ($9,054) and accrued interest of €6,318 ($7,151). As of September 30, 2022, the Company had an outstanding principal balance of €8,000 ($7,826) and accrued interest of €6,675 ($6,530). 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. 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 was 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 18 Note ($2,000,000), the May 18 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 was 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 was 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 nine months ended September 30, 2022, the Company made principal payments in the amount of $2,000,000 and recorded non-cash interest expense in the amount of $290,431 for the accretion of debt. As of September 30, 2022, the Company had a principal balance of $6,218,248 in relation to the May 18 Note, July 3 Note, and August 4 Note, in the aggregate. As of September 30, 2022, the Company has accrued an aggregate total of $1,075,066 of accrued interest on these notes, in the aggregate. 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 nine-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 €27,778 with the first payment due 9 months from the first deposit. During the year ended December 31, 2021, the Company repaid €55,556 ($62,878) of the principal and as of December 31, 2021, the Company has accrued interest of $5,642 related to this note and a principal balance of €444,444 ($503,022), of which $377,270 is classified as Notes payable – long term portion on the consolidated balance sheet. During the nine months ended September 30, 2022, the Company repaid €83,333 ($81,525) of the principal and as of September 30, 2022, the Company has accrued interest of $3,901 related to this note and a principal balance of €361,111 ($353,275), of which $244,575 is classified as Notes payable – long term portion on the accompanying condensed consolidated balance 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 nine-month grace period for principal repayment during which interest is accrued. The principal is to be repaid in 18 quarterly installments of €27,778 commencing three months from the end of the grace period. As of December 31, 2021, the Company has accrued interest of $3,100 and a principal balance of €500,000 ($565,900), of which $477,637 is classified as Notes payable – long term portion on the consolidated balance sheet. As of September 30, 2022, the Company has accrued interest of $6,503 and a principal balance of €448,237 ($438,510), of which $334,545 is classified as Notes payable – long term portion on the accompanying condensed consolidated balance sheet. 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 matures on June 16, 2027 and bears an annual interest of 3.89% plus levy of 0.60% plus the 3-month Euribor (when positive). 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 September 30, 2022 the Company has accrued interest of $60 and an outstanding balance of €320,000 ($313,056), of which $276,226 is classified as Notes payable – long term portion on the accompanying condensed consolidated balance sheet. August 29, 2022 Promissory Note On August 29, 2022, the Company entered into a promissory note for the principal amount $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 carries an annual interest rate of 12% which is due upon maturity. During the three and nine months ended September 30, 2022, the Company has recorded amortization of debt discount of $4,444 in relation to the original issue discount. As of September 30, 2022, the Company has recorded $154,444 as note payable for the promissory note. 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 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 September 30, 2022, the principal balance was $142,159. On June 24, 2020, the Company received a loan £50,000 ($68,310) from the United Kingdom government. The loan has a ten-year maturity and bears interest at a rate of 2.5% per annum beginning 12-months after the initial disbursement. 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 September 30, 2022, the principal balance was £47,665 ($53,073). Distribution and Equity Agreement As discussed in Note 3 above, the Company entered into a Distribution and Equity Acquisition Agreement with Marathon. The Company was appointed the exclusive distributor of the Products (as defined) initially throughout Europe and on a non-exclusive basis wherever else lawfully permitted. As consideration for its services, Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in Common Shares of the Company if it fails to meet certain performance milestones. The Company is entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000. As discussed in Note 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 5,181,062 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 financial instruments issued by the Company were not affected. None of the above loans were made by any related parties. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2022 | |
LEASES | |
LEASES | NOTE 13 – LEASES The Company has various lease agreements with terms up to 10 years, comprising leases of office space, cars leases for the distribution of pharmaceutical products, equipment hires, 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 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 5.62 years, with a weighted-average discount rate of 6.74%. The Company incurred lease expense for its operating leases of $158,407 and $196,115 which was included in “General and administrative expenses,” for the nine months ended September 30, 2022 and 2021, respectively. The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of September 30, 2022. Maturity of Lease Liability: Remainder of 2022 $ 48,395 2023 193,582 2024 193,582 2025 127,009 2026 93,721 Thereafter 257,538 Total undiscounted operating lease payments $ 913,827 Less: Imputed interest (153,649 ) Present value of operating lease liabilities 760,178 Finance leases The Company’s weighted-average remaining lease term relating to its finance leases is 1.09 years, with a weighted-average discount rate of 6.74%. The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s finance leases as of September 30, 2022. Maturity of Lease Liability Remainder of 2022 $ 25,931 2023 95,787 2024 81,047 2025 54,516 2026 29,844 Thereafter 9,359 Total undiscounted finance lease payments $ 296,484 Less: Imputed interest (31,040 ) Present value of finance lease liabilities $ 265,444 The Company incurred interest expense on its finance leases of $11,645 which was included in “Interest expense,” for the nine months ended September 30, 2022. The Company incurred amortization expense on its finance leases of $60,935 which was included in “Depreciation and amortization expense,” for the nine months ended September 30, 2022. The total cash used for the Company’s finance leases for the nine months ended September 30, 2022 amounted to $65,263. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 14 – COMMITMENTS AND CONTINGENCIES Legal Matters From time to time, the Company may be involved in litigation relating to claims arising out of the Company’s operations in the normal course of business. As of September 30, 2022, the following litigations were pending. None of the below is expected to have a material financial or operational impact. Solgar Inc. is suing SkyPharm SA for product homogeneity regarding the nutraceutical line “Sky Premium Life”. As a result, Solgar requested the prohibition for SkyPharm to manufacture, import and sell, market or in any way possess and distribute, including Internet sales and advertise in any way in the Greek market of “Sky Premium Life” due to homogeneity with Solgar’s products. 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). The case was heard on January 28, 2022 and the Company is awaiting a decision. 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, 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 The National Medicines Agency did not respond, therefore the Company asked from the lawyer to immediately ask for the decision of 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 to SkyPharm states that after an inspection of EOF at the premises of the company “Doc Pharma”, SkyPharm 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). The National Medicines Agency has not yet replied to the renewal request. Order for payment by the court which derived from a fine related to tax audit that concerns financial year 2014. The ruling with no. 483/16.12.2020 was against Cosmofarm SA. The defendant appealed against the decision by the ruling with no.11541/09.03.2021.This appeal was dismissed due to inactive passage of 120 days. Because of this inactive passage, Cosmofarm appealed against Greek tax authorities, no.6704/29.11.2021. There was an obligation of additional tax and fines imposition of 91,652.27€ that Cosmofarm has already paid and claim back through the appeal (financial claim). As of September 30, 2022, the trial is still pending. Advisory Agreements On July 1, 2021, the Company entered into a two-year advisory agreement with a third party (the “Consultant”) for advisory and consulting services related to the Company’s intention to become listed on NASDAQ. Peter Goldstein, a then director of the Company is a principal of the Consultant. As consideration for services rendered, the Company will pay the consultant $4,000 a month until the Company commences trading on NASDAQ. Upon 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 bonus upon NASDAQ listing and when the Company has raised an aggregate of $10,000,000. Finally, the Company has agreed that the Consultant shall receive a total of 250,000 shares of the Company’s common stock, 50,000 of such shares that have been previously issued pursuant to previous agreements and 200,000 shares to be issued when the Company commences trading on NASDAQ. As of September 30, 2022, 50,000 additional shares have been issued to the Consultant concerning the Company’s listing on Nasdaq. On July 7, 2021, the Company entered into an agreement with a non-exclusive financial advisor and placement agent. The term of the agreement is a minimum of 45 days 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% of the gross proceeds of any securities sold in the offering payable at closing of 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 offering 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. On July 7, 2021, the Company entered into a 6-month agreement with a non-exclusive agent, advisor or underwriter in any offering of securities of the Company. At the closing of any offering the Company will compensate the agent: a) a cash fee or as 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 of shares of common stock placed in each offering. c) out of the proceeds of each closing, the Company also agreed to pay the agent up to $35,000 for non-accountable expenses (up to $50,000 for a public offering) along with up to $50,000 for fees and expenses of legal counsel and other out-of-pocket expenses (increase to up 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 of at least $3 million raised by investors introduced by the agent. On August 25, 2022, the Company signed a 4-month agreement with a consultant for a marketing/media plan and the development of a forward-looking strategy for the Company. The Consultant’s compensation for the above services amounted to $150,000, $75,000 of which, was paid as of September 30, 2022. Research & Development Agreements On June 26, 2022 the Company signed an R&D agreement with a third party, through which the Company assigns the third party the support of the Research and Development department with the implementation of two projects related to the development of new products and services in the field of health focusing on the human intestinal microbiome. The cost of the project amounts to EUR 820,000 and is allocated to certain phases of the projects. It will be due and payable upon completion of the corresponding phases. |
STOCK OPTIONS AND WARRANTS
STOCK OPTIONS AND WARRANTS | 9 Months Ended |
Sep. 30, 2022 | |
STOCK OPTIONS AND WARRANTS | |
STOCK OPTIONS AND WARRANTS | NOTE 15 – STOCK OPTIONS AND WARRANTS As of September 30, 2022, there were 0 options outstanding and exercisable. A summary of the Company’s option activity during the nine months ended September 30, 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, September 30, 2022 - $ - - $ - Exercisable, September 30, 2022 - $ - - $ - As of September 30, 2022, there were 10,862,527 warrants outstanding and 10,862,527 warrants exercisable with expiration dates from May 2023 through August 2027. A summary of the Company’s warrant activity during the nine months ended September 30, 2022 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 10,652,460 0.63 - - Forfeited - - - - Exercised (3,488,171 ) - - - Expired - - - - Balance outstanding, September 30, 2022 10,862,527 $ 0.66 4.84 $ - Exercisable, September 30, 2022 10,862,527 $ 0.66 4.84 $ - Omnibus Equity Incentive Plan On September 19, 2022 the Company held a Board of Directors meeting, whereas, the Board of Directors had elected to adopt an Omnibus Equity Incentive Plan (the “Plan”), that includes reserving 5,000,000 shares of common stock eligible for issuance under the Plan to be registered on a Form S-8 Registration Statement with the SEC. The Plan is designed to enable the flexibility to grant equity awards to the Company’s officers, employees, non-employee directors and consultants and to ensure that it can continue to grant equity awards to eligible recipients at levels determined to be appropriate by the Board and/or the Compensation Committee. According to the Proxy Statement filed with the SEC on October 20, 2022 the Plan will be subject to final approval by the Company’s stockholders at the Annual Meeting of Stockholders that will be held on December 2, 2022. |
DISAGGREGATION OF REVENUE
DISAGGREGATION OF REVENUE | 9 Months Ended |
Sep. 30, 2022 | |
DISAGGREGATION OF REVENUE | |
DISAGGREGATION OF REVENUE | NOTE 16 – DISAGGREGATION OF REVENUE ASC 606-10-50-5 requires that entities disclose disaggregated revenue information in categories (such as type of good or service, geography, market, type of contract, etc.). ASC 606-10-55-89 explains that the extent to which an entity’s revenue is disaggregated depends on the facts and circumstances that pertain to the entity’s contracts with customers and that some entities may need to use more than one type of category to meet the objective for disaggregating revenue. The Company disaggregates revenue by country to depict the nature and economic characteristics affecting revenue. The following table presents our revenue disaggregated by country for the three months ended: September 30, September 30, Country 2022 2021 Germany - (102 ) Greece 11,990,599 13,555,718 Italy - (118 ) Denmark - (488 ) Cyprus - 13,982 UK 26,209 23,318 Croatia (710 ) 3,107 Total $ 12,016,098 $ 13,595,418 The following table presents our revenue disaggregated by country for the nine months ended: September 30, September 30, Country 2022 2021 Germany - 13,515 Greece 38,151,898 39,514,083 Italy - 15,613 Denmark - 54,291 Cyprus - 92,930 UK 118,467 355,977 Croatia 26,037 15,010 Total $ 38,296,402 $ 40,061,419 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS Exchange Warrants Agreement On October 3, 2022, the Company entered into a Warrant Exchange Agreement (the “Exchange Agreement”) to replace its previously structured warrants with new vanilla warrants. The existing holders of Warrants issued as of February 28, 2022, will purchase an aggregate of 21,238,256 shares of Common Stock. They will exchange the existing warrants for new warrants to purchase twice the number of shares of Common Stock. The new warrants will be exercisable at $0.12 per share for a five-year period from the date of issuance. The existing warrants contained anti-dilution protection which effectively prevented future financings. In consideration of the exchange of warrants, the existing holders will receive an aggregate of $2 million from future financings as well as any penalties and liquidated damages and have certain rights of participation in future financings. Public Offering On October 18, 2022, the Company announced the pricing of its “reasonable best efforts” public offering of 62,500,000 shares of common stock (or common stock equivalents), Series A Warrants to purchase 62,500,000 shares of common stock and Series B Warrant to purchase 62,500,000 shares of common stock at a combined price of $0.12 per share and warrants for aggregate gross proceeds of $7.5 million, before deducting placement agent fees and other offering expenses. The closing of the Offering occurred on October 20, 2022. The Company intends to use the net proceeds from the offering for its pending or potential acquisitions, payment of certain liabilities to existing warrant holders, as well as for working capital purposes and general corporate purposes. Proxy statement On October 20, 2022, the Company filed a Proxy Statement to invite the Company’s Stockholders to the Annual Meeting of Stockholders (the “Annual Meeting”) which will be held on December 2, 2022 and the following proposals will be subject to vote: a) Election of five directors to serve until the next Annual Meeting of Stockholders and until their respective successors have been duly elected and qualified, b) Approval of the Company’s equity incentive plan, c) To cast a non-binding, advisory vote on the frequency with which the Company’s shareholders shall have an advisory say on pay vote on the compensation of the Company’s named executive officers, d) To cast a non-binding, advisory vote to approve the compensation of our named executive officers, e) Approval of the amendment to the Company’s Articles of Incorporation to the change the Company’s name, f) To authorize the Board of Directors to amend the Articles of Incorporation to effect a reverse stock split of the Company’s outstanding common stock at their discretion. Repayment of Convertible Promissory Note On October 21, 2022, the Company paid a total of $590,800 to fully repay the outstanding principal and unpaid interest of the $525,000 Convertible Promissory Note which had been signed on September 17, 2021. LOI to Enter in Co-venture Relationship 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. As of November 14, 2022, no binding conditions have been met surrounding this transaction. Filing of S-3/A On November 7, 2022 the Company filed an amended S-3 registration statement which covers the offering, issuance and sales by the Company of up to $50,000,000 in the aggregate of its securities from time to time in one or more offerings and the issuance and sale of up to a maximum aggregate offering price of up to $50,000,000 of the Company’s common stock that may be issued and sold from time to time under a sales agreement with A.G.P. / Alliance Global Partners (the “Sales Agreement”). As of October 28, 2022, there were 84,184,905 shares of Common Stock outstanding, of which 63,893,963 shares were held by non-affiliates. Pursuant to the Rules of the SEC, the 21,297,988 shares, which were registered for sale, represent less than the one-third held by non-affiliates as of October 28, 2022. |
ORGANIZATION, NATURE OF BUSIN_2
ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN (Policies) | |
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 of the Company as a going concern. For the nine months ended September 30, 2022, the Company had revenue of $38,296,402, net loss of $3,010,684 and net cash used in operations of $4,552,332. Additionally, as of September 30, 2022, the Company had working capital of $1,945,076, an accumulated deficit of $54,345,250, and stockholders’ equity of $3,443,833. It is management’s opinion that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of this filing. The Company 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. 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. |
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. |
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 intercompany balances and transactions have been eliminated. |
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. 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. We will continue monitoring the social, political, regulatory and economic environment in Ukraine and Russia, and will consider further actions as appropriate. |
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 September 30, 2022 and December 31, 2021, there were no cash equivalents. The Company maintains bank accounts in the United States denominated in U.S. Dollars, in Greece denominated in Euros, U.S. Dollars and Great Britain Pounds (British Pounds Sterling), and in Bulgaria denominated in Euros. The Company also maintains bank accounts in the United Kingdom, denominated in Euros and Great Britain Pounds (British Pounds Sterling). |
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. |
Account receivable, net | Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts against gross accounts receivable reflects the best estimate of probable losses inherent in the receivables’ portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. At September 30, 2022 and December 31, 2021, the Company’s allowance for doubtful accounts was $1,858,427 and $1,702,743, respectively. |
Tax Receivables | The Company pays Value Added Tax (“VAT”) or similar taxes (“input VAT”), income taxes, and other taxes within the normal course of its business in most of the countries in which it operates related to the procurement of merchandise and/or services it acquires and/or on sales and taxable income. The Company also collects VAT or similar taxes on behalf of the government (“output VAT”) for merchandise and/or services it sells. If the output VAT exceeds the input VAT, this creates a VAT payable to the government. If the input VAT exceeds the output VAT, this creates a VAT receivable from the government. The VAT tax return is filed on a monthly basis offsetting the payables against the receivables. In observance of EU regulations for intra-EU cross-border sales, our subsidiaries in Greece, SkyPharm and Cosmofarm, do not charge VAT for sales to wholesale drug distributors registered in other European Union member states. The net VAT receivable is recorded in prepaid expense and other current assets on the condensed consolidated balance sheets. As of September 30, 2022 and December 31, 2021, the Company had a VAT net payable balance of $641,441 and $400,616 respectively, recorded in the condensed consolidated balance sheet as accounts payable and accrued expenses. |
Inventory | Inventory is stated at the lower-of-cost or net realizable value using the weighted average method. Inventory consists primarily of finished goods and packaging materials, i.e., packaged pharmaceutical products and the wrappers and containers they are sold in. A periodic inventory system is maintained by 100% count. Inventory is replaced periodically to maintain the optimum stock on hand available for immediate shipment. The Company writes down inventories to net realizable value based on physical condition, expiration date, current market conditions, as well as forecasted demand. The Company’s inventories are not highly susceptible to obsolescence. Many of the Company’s inventory items are eligible for return to our suppliers when pre-agreed product requirements, including, but not limited to, physical condition and expiration date, are not met. |
Property and Equipment, net | Property and equipment are stated at cost, less accumulated depreciation. Depreciation is 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 Depreciation expense was $83,214 and $68,852 for the three months ended September 30, 2022 and 2021, respectively and $248,670 and $218,664 for the nine months ended September 30, 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, goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology to estimate the fair value of a reporting unit. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. On December 19, 2018, as a result of the acquisition of Cosmofarm, the Company recorded $49,697 of goodwill. Intangible assets with definite useful lives are recorded on the basis of cost and are amortized on a straight-line basis over their estimated useful lives. The Company uses a useful life of 5 years for 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 September 30, 2022, no revision to the remaining amortization period of the intangible assets was made. Amortization expense was $36,982 and $8,339 for the three months ended September 30, 2022 and 2021, respectively and $53,389 and $24,746 for the nine months ended September 30, 2022 and 2021, respectively. |
Equity Method Investment | For those investments in common stock or in-substance common stock in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, the investment is accounted for under the equity method. The Company 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. |
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 consolidated balance sheets. Equity securities that are not considered available for use in current operations would be reported as a component of long-term assets in the accompanying consolidated balance sheets. For equity securities with no readily determinable fair value, the Company elects a measurement alternative to fair value. Under this alternative, the Company measures the investments at cost, less any impairment, and adjusted for changes resulting from observable price changes in transactions for identical or similar investments of the investee. The election to use the measurement alternative is made for each eligible investment. As of September 30, 2022, 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 $0.30 per share or value of $4,934 of National Bank of Greece. Additionally, the Company has $5,053 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. The following tables presents assets that are measured and recognized at fair value as of September 30, 2022 and December 31, 2021, on a recurring basis: September 30, 2022 Total Carrying Level 1 Level 2 Level 3 Value Marketable securities – ICC International Cannabis Corp. $ - $ - - $ - Marketable securities – National Bank of Greece 4,934 - - 4,934 Equity securities – Pancreta Bank - 5,053 - 5,053 $ 4,934 $ 5,053 $ 9,987 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 |
Derivatives 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 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. |
Customer Advances | The Company receives prepayments from certain customers for pharmaceutical products prior to those customers taking possession of the Company’s products. The Company records these receipts as customer advances until it has met all the criteria for recognition of revenue including passing control of the products to its customer, at such point, the Company will reduce the customer advances balance and credit the Company’s revenues. |
Revenue Recognition | In accordance with ASC 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, (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. |
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 Translations and Transactions | Assets and liabilities of all foreign operations are translated at year-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. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders’ 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 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 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 September 30, 2022, we believe our United Kingdom deferred tax assets will not be realized, as such, we recorded a $288,870 valuation allowance. We believe that there is sufficient positive evidence to conclude that it is more likely than not that Greek deferred tax assets are realizable. 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. Based upon the available evidence, 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 Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Weighted average number of common shares outstanding-Basic 25,806,871 17,136,735 22,013,556 16,103,193 Potentially dilutive common stock equivalents - - - - Weighted average number of common and equivalent shares outstanding - Diluted 25,806,871 17,136,735 22,013,556 16,103,193 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. |
Accounting Standard Adopted | The Company has adopted Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), effective as of January 1, 2022, using the modified retrospective transition method which, among other things, simplifies the accounting for convertible instruments by eliminating the requirement to separate conversion features from the host contract. Consequently, a convertible debt instrument is accounted for as a single liability measured at its amortized cost and interest expense will be recognized at the coupon rate. The adoption resulted in the elimination of the debt discount that had been recorded within equity (see Note 11, “Convertible Debt”). |
Correction of an Immaterial Error | During the three-month period ended June 30, 2022, the Company concluded it should have adopted ASU 2020-06 on January 1, 2022. The Company is now retrospectively adopting ASU 2020-06 as of January 1, 2022 in this Form 10-Q with a cumulative catch-up adjustment. The net impact of the adjustments was recorded as a reduction to the January 1, 2022 balance of additional paid-in capital in the amount of $294,000 and a reduction in accumulated deficit in the amount of $53,248, as presented in the statement of stockholders’ equity, and a reduction in discount on convertible notes payable in the amount of $240,752. The Company has concluded the impact to form 10-Q for the three-month period ended March 31, 2022 to be immaterial to the financial statements and recorded a catchup/correcting adjustment in the current Form 10-Q. |
Recent Accounting Pronouncements | In 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. 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’s 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 adopted ASU No. 2021-04 on January 1, 2022, and its adoption did not have a material impact on its financial statements 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 consolidated financial statements. |
ORGANIZATION NATURE OF BUSINESS
ORGANIZATION NATURE OF BUSINESS AND GOING CONCERN (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
ORGANIZATION NATURE OF BUSINESS AND GOING CONCERN (Tables) | |
Schedule of Property and Equipment | Estimated Useful Life Leasehold improvements and technical works Lesser of lease term or 40 years Vehicles 6 years Machinery 20 years Furniture, fixtures and equipment 5–10 years Computers and software 3-5 years |
Schedule of Assets Measured and Recognized at Fair Value on a Recurring Basis | September 30, 2022 Total Carrying Level 1 Level 2 Level 3 Value Marketable securities – ICC International Cannabis Corp. $ - $ - - $ - Marketable securities – National Bank of Greece 4,934 - - 4,934 Equity securities – Pancreta Bank - 5,053 - 5,053 $ 4,934 $ 5,053 $ 9,987 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 |
Schedule of Reconciliation of Basic Shares Outstanding to Fully Diluted Shares Outstanding | Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Weighted average number of common shares outstanding-Basic 25,806,871 17,136,735 22,013,556 16,103,193 Potentially dilutive common stock equivalents - - - - Weighted average number of common and equivalent shares outstanding - Diluted 25,806,871 17,136,735 22,013,556 16,103,193 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and Equipment | September 30, 2022 December 31, 2021 Leasehold improvements $ 456,780 $ 519,278 Vehicles 71,877 96,657 Furniture, fixtures and equipment 1,776,457 2,065,100 Computers and software 125,333 141,490 2,430,447 2,822,525 Less: Accumulated depreciation and amortization (980,486 ) (934,473 ) Total $ 1,449,961 $ 1,888,052 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of Goodwill and Intangible Assets | September 30, 2022 December 31, 2021 License $ 592,467 $ 345,739 Trade name / mark 36,997 36,997 Customer base 176,793 176,793 806,257 559,529 Less: Accumulated amortization (173,546 ) (123,459 ) Subtotal 632,711 436,070 Goodwill 49,697 49,697 Total $ 682,408 $ 485,767 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
RELATED PARTY TRANSACTIONS | |
Schedule of Related Party Notes Payable | September 30, 2022 December 31, 2021 Beginning balance $ 464,264 $ 501,675 Foreign currency translation (62,965 ) (37,411 ) Ending balance $ 401,299 $ 464,264 |
Schedule of Related Party Loans Payable | September 30, 2022 December 31, 2021 Beginning balance $ 1,293,472 $ 1,629,246 Proceeds 923,534 6,377,156 Payments (518,659 ) (133,552 ) Conversion of debt - (6,000,000 ) Settlement of lawsuit - (600,000 ) Foreign currency translation (160,259 ) 20,623 Ending balance $ 1,538,088 $ 1,293,472 |
LINES OF CREDIT (Tables)
LINES OF CREDIT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
LINES OF CREDIT | |
Schedule of Lines of Credit | September 30, 2022 December 31, 2021 National $ 2,664,679 $ 3,265,236 Alpha 809,447 947,333 Pancreta 1,013,595 489,985 National – COVID 302,516 407,174 EGF 328,550 - Subtotal 5,118,787 5,109,728 Reclassification of National-COVID – Long-term (194,132 ) (366,171 ) Ending balance $ 4,924,655 $ 4,743,557 |
CONVERTIBLE DEBT (Tables)
CONVERTIBLE DEBT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
CONVERTIBLE DEBT | |
Schedule of Convertible Debt | September 30, 2022 December 31, 2021 Beginning balance convertible notes $ 640,000 $ 1,447,000 Proceeds - 625,000 Payments - (907,000 ) Conversion to common stock (15,000 ) (525,000 ) Subtotal notes 625,000 640,000 Debt discount at year end - (258,938 ) Convertible note payable, net of discount $ 625,000 $ 381,062 |
Derivative Liabilities | Amount Balance on January 1, 2022 $ 45,665 Issuances to debt discount - Reduction of derivative related to conversions (11,629 ) Change in fair value of derivative liabilities 6,627 Balance on September 30, 2022 $ 40,663 September 30, December 31, 2022 2021 Dividend yield 0 % 0 % Expected volatility 157.2 % 106.8%-107.3% Risk free interest rate 3.75 % 0.41%-0.44% Contractual terms (in years) 0.50 0.50 – 0.52 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
DEBT | |
Summary of Debt | September 30, 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 - - 479,723 - 479,723 Payments (190,622 ) (147,830 ) (2,132,165 ) (4,586 ) (2,475,203 ) Conversion of debt (1,190,000 ) - - (1,190,000 ) Recapitalized upon debt modification (785 ) (51,190 ) (781,752 ) - (833,727 ) Accretion of debt and debt discount 0 - (12,223 ) - (12,223 ) Foreign currency translation 110,335 (299,325 ) (146,201 ) (34,299 ) (369,490 ) Subtotal 28,712 5,708,665 7,485,359 195,232 13,417,968 Notes payable - long-term - - (855,345 ) (170,704 ) (1,026,049 ) Notes payable - short-term $ 28,712 $ 5,708,665 $ 6,630,014 $ 24,528 $ 12,391,919 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 |
Summary of Outstanding Debt | Our outstanding debt as of September 30, 2022 is repayable as follows: September 30, 2022 2022 $ 2,065,142 2023 11,244,009 2024 316,759 2025 320,620 2026 and thereafter 317,388 Total debt 14,263,918 Less: fair value adjustments to assumed debt obligations (845,950 ) Less: notes payable - current portion (12,391,919 ) Notes payable - long term portion $ 1,026,049 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
LEASES | |
Summary of Operating Leases | Maturity of Lease Liability: Remainder of 2022 $ 48,395 2023 193,582 2024 193,582 2025 127,009 2026 93,721 Thereafter 257,538 Total undiscounted operating lease payments $ 913,827 Less: Imputed interest (153,649 ) Present value of operating lease liabilities 760,178 |
Summary of Finance Leases | Maturity of Lease Liability Remainder of 2022 $ 25,931 2023 95,787 2024 81,047 2025 54,516 2026 29,844 Thereafter 9,359 Total undiscounted finance lease payments $ 296,484 Less: Imputed interest (31,040 ) Present value of finance lease liabilities $ 265,444 |
STOCK OPTIONS AND WARRANTS (Tab
STOCK OPTIONS AND WARRANTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
STOCK OPTIONS AND WARRANTS | |
Schedule of Option Activity | 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, September 30, 2022 - $ - - $ - Exercisable, September 30, 2022 - $ - - $ - |
Summary of Warrants Activity | 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 10,652,460 0.63 - - Forfeited - - - - Exercised (3,488,171 ) - - - Expired - - - - Balance outstanding, September 30, 2022 10,862,527 $ 0.66 4.84 $ - Exercisable, September 30, 2022 10,862,527 $ 0.66 4.84 $ - |
DISAGGREGATION OF REVENUE (Tabl
DISAGGREGATION OF REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
DISAGGREGATION OF REVENUE | |
Schedule of Revenue Disaggregation | September 30, September 30, Country 2022 2021 Germany - (102 ) Greece 11,990,599 13,555,718 Italy - (118 ) Denmark - (488 ) Cyprus - 13,982 UK 26,209 23,318 Croatia (710 ) 3,107 Total $ 12,016,098 $ 13,595,418 September 30, September 30, Country 2022 2021 Germany - 13,515 Greece 38,151,898 39,514,083 Italy - 15,613 Denmark - 54,291 Cyprus - 92,930 UK 118,467 355,977 Croatia 26,037 15,010 Total $ 38,296,402 $ 40,061,419 |
ORGANIZATION NATURE OF BUSINE_2
ORGANIZATION NATURE OF BUSINESS AND GOING CONCERN (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Vehicles [Member] | |
Estimated Useful Life | 6 years |
Machinery [Member] | |
Estimated Useful Life | 20 years |
Furniture and Fixtures [Member] | Minimum [Member] | |
Estimated Useful Life | 5 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Estimated Useful Life | 10 years |
Computer Equipment [Member] | Minimum [Member] | |
Estimated Useful Life | 3 years |
Computer Equipment [Member] | Maximum [Member] | |
Estimated Useful Life | 5 years |
Leasehold Improvements and Technical Works [Member] | |
Estimated Useful Life | 40 years |
ORGANIZATION NATURE OF BUSINE_3
ORGANIZATION NATURE OF BUSINESS AND GOING CONCERN (Details 1) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Fair value of assets and liabilities | $ 9,987 | $ 11,468 |
Marketable securities - ICC International Cannabis Corp. [Member] | ||
Fair value of assets and liabilities | 0 | 0 |
Equity securities - Pancreta Bank [Member] | ||
Fair value of assets and liabilities | 5,053 | 4,772 |
Marketable securities - National Bank of Greece [Member] | ||
Fair value of assets and liabilities | 4,934 | 6,696 |
Level 2 [Member] | ||
Fair value of assets and liabilities | 5,053 | 4,772 |
Level 2 [Member] | Marketable securities - ICC International Cannabis Corp. [Member] | ||
Fair value of assets and liabilities | 0 | 0 |
Level 2 [Member] | Equity securities - Pancreta Bank [Member] | ||
Fair value of assets and liabilities | 5,053 | 4,772 |
Level 2 [Member] | Marketable securities - National Bank of Greece [Member] | ||
Fair value of assets and liabilities | 0 | 0 |
Level 3 [Member] | Marketable securities - ICC International Cannabis Corp. [Member] | ||
Fair value of assets and liabilities | 0 | 0 |
Level 3 [Member] | Equity securities - Pancreta Bank [Member] | ||
Fair value of assets and liabilities | 0 | 0 |
Level 3 [Member] | Marketable securities - National Bank of Greece [Member] | ||
Fair value of assets and liabilities | 0 | |
Level 1 [Member] | ||
Fair value of assets and liabilities | 4,934 | 6,696 |
Level 1 [Member] | Marketable securities - ICC International Cannabis Corp. [Member] | ||
Fair value of assets and liabilities | 0 | 0 |
Level 1 [Member] | Equity securities - Pancreta Bank [Member] | ||
Fair value of assets and liabilities | 0 | 0 |
Level 1 [Member] | Marketable securities - National Bank of Greece [Member] | ||
Fair value of assets and liabilities | $ 4,934 | $ 6,696 |
ORGANIZATION NATURE OF BUSINE_4
ORGANIZATION NATURE OF BUSINESS AND GOING CONCERN (Details 2) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
ORGANIZATION NATURE OF BUSINESS AND GOING CONCERN (Tables) | ||||
Weighted average number of common shares outstanding Basic | 25,806,871 | 17,136,735 | 22,013,556 | 16,103,193 |
Weighted average number of common and equivalent shares outstanding - Diluted | 25,806,871 | 17,136,735 | 22,013,556 | 16,103,193 |
ORGANIZATION NATURE OF BUSINE_5
ORGANIZATION NATURE OF BUSINESS AND GOING CONCERN (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
REVENUE | $ 12,016,098 | $ 13,595,418 | $ 38,296,402 | $ 40,061,419 | ||||||
Net loss | (1,972,775) | $ (1,241,256) | $ 203,347 | (1,936,543) | $ (2,379,056) | $ (2,173,903) | (3,010,684) | (6,489,502) | ||
NET CASH USED IN OPERATING ACTIVITIES | (4,552,332) | (5,549,269) | ||||||||
WORKING CAPITAL DEFICIT | 1,945,076 | 1,945,076 | ||||||||
Accumulated deficit | 54,345,250 | 54,345,250 | $ 34,345,506 | |||||||
TOTAL STOCKHOLDERS' EQUITY | 3,443,833 | $ 5,130,056 | $ 4,910,249 | 4,650,961 | $ 384,548 | $ (2,804,680) | 3,443,833 | 4,650,961 | 4,379,463 | $ (4,161,013) |
Allowance for doubtful accounts | 1,858,427 | 1,858,427 | 1,702,743 | |||||||
VAT net payable balance | 641,441 | 641,441 | $ 400,616 | |||||||
Depreciation expense | 83,214 | 68,852 | 248,670 | 218,664 | ||||||
Amortization expense | 36,982 | $ 8,339 | 53,389 | $ 24,746 | ||||||
Reduction in discount on convertible notes payable | (240,752) | |||||||||
Reduction in additional paid-in capital | 294,000 | |||||||||
Reduction in accumulated deficit | $ 53,248 | |||||||||
ICC International Cannabis Corp [Member] | ||||||||||
Equity method investment shares acquired, shares | 3,000,000 | |||||||||
Closing price | $ 0 | |||||||||
Equity method investment shares acquired, value | 0 | $ 0 | ||||||||
National Bank of Greece [Member] | ||||||||||
Equity method investment shares acquired, shares | 16,666 | |||||||||
Closing price | $ 0.30 | |||||||||
National Bank of Greece [Member] | Share Exchange Agreement [Member] | ||||||||||
Equity method investment shares acquired, shares | 16,666 | |||||||||
Closing price | $ 0.30 | |||||||||
Equity method investment shares acquired, value | $ 4,934 | $ 4,934 | ||||||||
Equity method investment shares acquired, shares | 4,934 | |||||||||
Equity securities - Pancreta Bank [Member] | ||||||||||
Additional investments in equity securities | $ 5,053 | |||||||||
Equity securities - Pancreta Bank [Member] | Share Exchange Agreement [Member] | ||||||||||
Additional investments in equity securities | $ 5,053 |
MARKETABLE SECURITIES (Details
MARKETABLE SECURITIES (Details Narrative) $ / shares in Units, € in Millions | 1 Months Ended | 9 Months Ended | |||||
Jul. 16, 2018 USD ($) shares | May 17, 2018 USD ($) shares | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2022 CAD ($) shares | Sep. 30, 2022 EUR (€) shares | Dec. 31, 2021 USD ($) | Jun. 30, 2019 | |
Net unrealized loss on fair value investment | $ 415 | ||||||
Equity securities - Pancreta Bank [Member] | |||||||
Additional investments in equity securities | $ 5,053 | ||||||
Marathon Global Inc. [Member] | Distribution And Equity Acquisition Agreement [Member] | |||||||
Equity interest acquired description | a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services | a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services | a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services | ||||
Cash received upon gross sales | $ 2,750,000 | ||||||
Gross sales | 6,500,000 | ||||||
Marathon Global Inc. [Member] | Distribution And Equity Acquisition Agreement [Member] | Sales One [Member] | |||||||
Cash received upon gross sales | 2,750,000 | ||||||
Gross sales | $ 13,000,000 | ||||||
National Bank of Greece [Member] | |||||||
Equity method investment shares acquired, shares | shares | 16,666 | 16,666 | 16,666 | ||||
Closing price | $ / shares | $ 0.30 | ||||||
Cosmo Farmacy LP [Member] | |||||||
Cash contributed to limited partner | € | € 150,000 | ||||||
Initial share capital increased | € | 500,000 | ||||||
Pharmacy license value | € | € 350,000 | ||||||
Maturity period of license | 30 years | 30 years | 30 years | ||||
Ownership equity | 70% | ||||||
Initial share capital | € | € 150,000 | ||||||
Equity ownership remaining | 30% | ||||||
Investments | $ 146,745 | $ 169,770 | |||||
Share Exchange Agreement [Member] | Equity securities - Pancreta Bank [Member] | |||||||
Additional investments in equity securities | 5,053 | ||||||
Share Exchange Agreement [Member] | Marathon Global Inc. [Member] | |||||||
Gain on exchange of investment | $ 2,092,200 | $ 1,953,000 | |||||
Shares of Marathon transferred by company to KBB | shares | 2,500,000 | ||||||
Share Exchange Agreement [Member] | Kaneh Bosm Biotechnology Inc [Member] | |||||||
Transfer of shares | shares | 2,500,000 | ||||||
Share Exchange Agreement [Member] | Kaneh Bosm Biotechnology Inc [Member] | Canadian Securities Exchange [Member] | |||||||
Exchange of shares | shares | 5,000,000 | ||||||
Share Exchange Agreement [Member] | ICC [Member] | |||||||
Net unrealized loss on fair value investment | 0 | ||||||
Investments | $ 0 | $ 0 | |||||
Exchange of shares | shares | 5,000,000 | ||||||
Description for ownership percentage | 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. | 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 the future for its services under the Distribution and Equity Acquisition Agreement | 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 the future for its services under the Distribution and Equity Acquisition Agreement | 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 the future for its services under the Distribution and Equity Acquisition Agreement | |||
Additional shares issued, amount | shares | 0 | ||||||
Additional shares issued, shares | shares | 3,000,000 | ||||||
Share Exchange Agreement [Member] | National Bank of Greece [Member] | |||||||
Equity method investment shares acquired, value | $ 4,934 | ||||||
Equity method investment shares acquired, shares | shares | 16,666 | 16,666 | 16,666 | ||||
Closing price | $ / shares | $ 0.30 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Property plant and equipment | $ 2,430,447 | $ 2,822,525 |
Less: Accumulated depreciation | (980,486) | (934,473) |
Total | 1,449,961 | 1,888,052 |
Vehicles [Member] | ||
Property plant and equipment | 71,877 | 96,657 |
Leasehold Improvements [Member] | ||
Property plant and equipment | 456,780 | 519,278 |
Furniture and Fixtures [Member] | ||
Property plant and equipment | 1,776,457 | 2,065,100 |
Computer Equipment [Member] | ||
Property plant and equipment | $ 125,333 | $ 141,490 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Goodwill and intangible assets, gross | $ 806,257 | $ 559,529 |
Less: Accumulated Amortization | 173,546 | (123,459) |
Subtotal | 632,711 | 436,070 |
Goodwill | 49,697 | 49,697 |
Total | 682,408 | 485,767 |
Customer Base [Member] | ||
Goodwill and intangible assets, gross | 176,793 | 176,793 |
Trade name / mark [Member] | ||
Goodwill and intangible assets, gross | 36,997 | 36,997 |
License [Member] | ||
Goodwill and intangible assets, gross | $ 592,467 | $ 345,739 |
LOAN RECEIVABLE (Details Narrat
LOAN RECEIVABLE (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Oct. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
LOAN RECEIVABLE (Details Narrative) | ||||
Prepayments of loan | $ 4,849,221 | $ 245,739 | ||
Interest rate | 5.50% | |||
Short-term receivable | 340,092 | $ 377,590 | ||
Long-term receivable | 3,553,039 | $ 4,410,689 | ||
Principal payments | 71,172 | $ 75,801 | ||
Interest payment | $ 141,387 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
INCOME TAXES | ||||
Income tax expense | $ 398,066 | $ 473,296 | $ 168,561 | $ 69,152 |
Valuation allowance | $ 288,870 |
CAPITAL STRUCTURE (Details Narr
CAPITAL STRUCTURE (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||
Jun. 07, 2022 | May 02, 2022 | May 25, 2022 | Feb. 28, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | May 01, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | |||||||||
Restricted shares of Common stock | 1,800,000 | |||||||||||
Stock earned per month | 200,000 | |||||||||||
Expenses during Consulting Agreement | $ 0 | $ 5,147,076 | ||||||||||
Retained agreement descriptions | The shares were valued on the date of the agreement at $3.28 per share or $5,904,000, which was be amortized over the term of the agreement | |||||||||||
Liquidated damages payable | $ 187,970 | |||||||||||
Deemed dividend | $ 8,189,515 | |||||||||||
Conversion price description | from $3.00 to $0.62152 | |||||||||||
Conversion of Debt | $ 1,190,000 | $ 1,190,000 | $ 0 | |||||||||
Extinguishment of debt | $ 216,580 | 216,580 | ||||||||||
Gain Extinguishment of debt | $ 216,580 | |||||||||||
Fair value per share | $ 4.09 | $ 4.09 | ||||||||||
Conversion price | $ 0.62152 | |||||||||||
Issue shares of common stock | 1,284,787 | |||||||||||
Convertible stock | 26,515 | 4,500 | ||||||||||
Conversion of stock in to common stock | 39,339 | 7,251,269 | ||||||||||
Conversion of stock value | $ 38,144 | $ 4,081,974 | ||||||||||
Derivative liability | $ 40,663 | $ 40,663 | $ 11,629 | $ 30,664 | $ 45,665 | $ 460,728 | ||||||
Cashless exercise warrants | 3,488,171 | |||||||||||
Common stock, shares authorized | 300,000,000 | 300,000,000 | 300,000,000 | |||||||||
Common stock, shares issued | 26,365,404 | 26,365,404 | 39,339 | 17,544,509 | ||||||||
Common stock, shares outstanding | 25,977,980 | 25,977,980 | 17,157,085 | |||||||||
Series A preferred stock | $ 5,452,300 | $ 5,452,300 | ||||||||||
Deemed dividend on issuance of warrants | $ 0 | $ 0 | $ (5,788,493) | $ 0 | ||||||||
Issuance of Warrants [Member] | ||||||||||||
Deemed dividend | $ 8,480,379 | |||||||||||
Conversion price description | $3.30 to $0.62152 | |||||||||||
Warrants grant | 8,619,127 | 33,333 | ||||||||||
Stock based compensation | $ 24,101 | |||||||||||
Common stock fair value | $ 1.07 | $ 1.07 | ||||||||||
Exercise price | $ 0.62152 | $ 3.30 | ||||||||||
Volatility | 121.47% | 107.30% | ||||||||||
Dividend rate | 0% | 0% | ||||||||||
Term | 5 years | 5 years 2 months 26 days | ||||||||||
Discount rate | 2.99% | 2.71% | ||||||||||
Principal amount | $ 2,000,000 | |||||||||||
Debt Conversions [Member] | ||||||||||||
Shares issued | 238,000 | 238,000 | ||||||||||
Capital contribution | $ 973,420 | |||||||||||
Series A Preferred Stock [Member] | ||||||||||||
Preferred stock, shares authorized | 6,000,000 | 6,000,000 | 6,000,000 | |||||||||
Preferred stock, shares outstanding | 1,500 | 1,500 | 0 | |||||||||
Preferred stock, Liquidation Preference | 6,000,000 | 6,000,000 | ||||||||||
Preferred stock, shares issued | 6,000 | 6,000 | 0 | |||||||||
Series A Preferred Stock [Member] | Private Placement [Member] | ||||||||||||
Sales of shares | 6,000 | |||||||||||
Warrants | 2,000,000 | |||||||||||
Aggregate gross proceeds warrants | $ 6,000,000 | |||||||||||
Warrants, Description | The Warrants were initially exercisable to purchase shares of common stock at $3.30 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 | |||||||||||
Warrants Black-Scholes option pricing model , Description | The warrants were valued using the Black-Scholes option pricing model with the following terms: a) exercise price of $3.30, b) common stock fair value of $3.42, c) volatility of 118%, d) discount rate of $1.71%, and e) dividend rate of 0% | |||||||||||
Additional value of Warrants | 2,000,000 | |||||||||||
Deemed dividend on issuance of warrants | $ (5,788,493) |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - Notes Payable - Related Party [Member] - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Beginning Balance | $ 464,264 | $ 501,675 |
Foreign currency translation | (62,965) | (37,411) |
Ending Balance | $ 401,299 | $ 464,264 |
RELATED PARTY TRANSACTIONS (D_2
RELATED PARTY TRANSACTIONS (Details 1) - Loans Payable - Related Party [Member] - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Beginning Balance | $ 1,293,472 | $ 1,629,246 |
Proceeds | 923,534 | 6,377,156 |
Payments | (518,659) | (133,552) |
Conversion of debt | 0 | (6,000,000) |
Settlement of lawsuit | 0 | (600,000) |
Foreign currency translations | (160,259) | 20,623 |
Ending Balance | $ 1,538,088 | $ 1,293,472 |
RELATED PARTY TRANSACTIONS (D_3
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Oct. 10, 2020 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 20, 2018 | Dec. 31, 2021 | |
Revenue | $ 12,016,098 | $ 13,595,418 | $ 38,296,402 | $ 40,061,419 | |||||||
Repayment of loans | 0 | 390,000 | |||||||||
Net loss | (1,972,775) | $ (1,241,256) | $ 203,347 | (1,936,543) | $ (2,379,056) | $ (2,173,903) | $ (3,010,684) | (6,489,502) | |||
Interest rate | 10% | ||||||||||
DOC Pharma S.A. [Member] | |||||||||||
Prepaid balance | 4,121,184 | $ 4,121,184 | $ 3,263,241 | ||||||||
Accounts payable balance | 319,162 | 319,162 | 565,756 | ||||||||
Net prepaid balance | 3,802,022 | 3,802,022 | |||||||||
Accounts receivable balance | 1,971,530 | 1,971,530 | 2,901,300 | ||||||||
Payments to purchase products | 412,216 | 761,551 | 1,672,002 | 2,164,913 | |||||||
Revenue | 401,179 | $ 44,950 | 819,896 | $ 835,914 | |||||||
DOC Pharma S.A. [Member] | Outsourcing Agreement [Member] | |||||||||||
Agreement term | 5 years | ||||||||||
Pieces per product | 1,000 | ||||||||||
Inventroy purchase | 289,860 | 289,860 | |||||||||
Grigorios Siokas Three [Member] | |||||||||||
Additional proceeds from debt | 571,914 | ||||||||||
Outstanding principal balance | 1,293,472 | ||||||||||
Repayment of loans | 443,659 | ||||||||||
Net loss | 160,259 | ||||||||||
Grigorios Siokas Four [Member] | |||||||||||
Additional proceeds from debt | 351,620 | ||||||||||
Grigorios Siokas [Member] | |||||||||||
Outstanding principal balance | 391,320 | 391,320 | 452,720 | ||||||||
Maturity date | Mar. 18, 2019 | ||||||||||
Borrowing | $ 1,718,400 | ||||||||||
Accrued interest | 187,190 | 187,190 | 200,683 | ||||||||
Interest rate | 4.70% | ||||||||||
Dimitrios Goulielmos [Member] | |||||||||||
Outstanding principal balance | $ 9,979 | 9,979 | $ 11,544 | ||||||||
Gain incured | $ 62,965 |
LINES OF CREDIT (Details)
LINES OF CREDIT (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Subtotal | $ 5,118,787 | $ 5,109,728 |
Reclassification of National-COVID - Long-term | (194,132) | (366,171) |
Line of credit | 4,924,655 | 4,743,557 |
National [Member] | ||
Line of credit | 2,664,679 | 3,265,236 |
Alpha [Member] | ||
Line of credit | 809,447 | 947,333 |
Pancreta [Member] | ||
Line of credit | 1,013,595 | 489,985 |
National - COVID [Member] | ||
Line of credit | 302,516 | 407,174 |
EGF [Member] | ||
Line of credit | $ 328,550 | $ 0 |
LINES OF CREDIT (Details Narrat
LINES OF CREDIT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Interest expenses, line of credit | $ 13,804 | $ 11,656 | $ 136,222 | $ 165,245 | |
Interest Expense | 461,945 | $ 670,282 | 1,541,937 | 2,182,715 | |
COVID-19 Government Funding [Member] | |||||
Interest Expense | 330 | $ 0 | |||
Line of Credit [Member] | National Bank of Greece Two [Member] | |||||
Borrowing | 978,300 | 978,300 | $ 1,131,800 | ||
Outstanding debt balance | 825,873 | 825,873 | 1,079,823 | ||
Line of Credit [Member] | Alpha Bank of Greece [Member] | |||||
Borrowing | 978,300 | 978,300 | 1,131,800 | ||
Outstanding debt balance | 809,447 | 809,447 | 947,333 | ||
Line of Credit [Member] | Pancreta Bank of Greece [Member] | |||||
Borrowing | 1,359,837 | 1,359,837 | 565,900 | ||
Outstanding debt balance | 1,013,595 | 1,013,595 | 489,985 | ||
National Bank of Greece One [Member] | Line of Credit [Member] | |||||
Borrowing | 2,910,443 | 2,910,443 | 2,489,960 | ||
Outstanding debt balance | 1,838,806 | 1,838,806 | $ 2,185,413 | ||
EGF [Member] | Line of Credit [Member] | |||||
Borrowing | $ 391,320 | 391,320 | |||
Line of credit facility outstanding balance | $ 328,550 |
CONVERTIBLE DEBT (Details)
CONVERTIBLE DEBT (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
CONVERTIBLE DEBT | ||
Beginning balance convertible notes | $ 640,000 | $ 1,447,000 |
Proceeds | 0 | 625,000 |
Payments | 0 | (907,000) |
Conversion to common stock | (15,000) | (525,000) |
Subtotal notes | 625,000 | 640,000 |
Debt discount at year end | 0 | (258,938) |
Convertible note payable net of discount | $ 625,000 | $ 381,062 |
CONVERTIBLE DEBT (Details 1)
CONVERTIBLE DEBT (Details 1) | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
CONVERTIBLE DEBT | |
Beginning balance | $ 45,665 |
Issuances to debt discount | 0 |
Reduction of derivative related to conversions | (11,629) |
Change in fair value of derivative liabilities | 6,627 |
Ending balance | $ 40,663 |
CONVERTIBLE DEBT (Details 2)
CONVERTIBLE DEBT (Details 2) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Dividend yield | 0% | 0% |
Minimum [Member] | ||
Contractual terms (in years) | 6 months | 6 months |
Risk-free interest rate | 3.75% | 0.41% |
Expected volatility | 157.20% | 106.80% |
Maximum [Member] | ||
Contractual terms (in years) | 6 months 7 days | |
Risk-free interest rate | 107.30% | |
Expected volatility | 0.44% |
CONVERTIBLE DEBT (Details Narra
CONVERTIBLE DEBT (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Dec. 21, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | May 01, 2022 | Mar. 31, 2022 | Sep. 17, 2021 | Jul. 14, 2021 | Jan. 07, 2021 | Dec. 31, 2020 | Dec. 16, 2020 | |
Convertible note payable net | $ 525,000 | ||||||||||
Convertible notes payable, principal amount | 100,000 | ||||||||||
Debt discount | 294,000 | ||||||||||
Accrued Interest expense | 13,740 | ||||||||||
Derivative liability | 40,663 | $ 45,665 | $ 11,629 | $ 30,664 | $ 460,728 | ||||||
Interest expense | 340,092 | 377,590 | |||||||||
Accumulated deficit | (54,345,250) | $ (34,345,506) | |||||||||
Extinguishment of debt | 216,580 | ||||||||||
Common Stock | |||||||||||
Average price per share | $ 2.58 | ||||||||||
Accrued interest | $ 25,144 | ||||||||||
Fees into common stock shares | 213,382 | ||||||||||
Securities Purchase Agreement [Member] | |||||||||||
Convertible note payable net | $ 266,063 | ||||||||||
Convertible notes payable, principal amount | 525,000 | ||||||||||
Gain on change in fair value of derivative liability | 820 | $ 36,122 | |||||||||
Outstanding balance | 0 | ||||||||||
Accrued intetest | 15,166 | 26,515 | |||||||||
Amortization of debt discount | 60,063 | ||||||||||
Remaining debt discount | 258,938 | ||||||||||
Derivative liability | $ 11,629 | ||||||||||
Shares issued | 39,339 | ||||||||||
Shares issued at a fair value | $ 38,144 | ||||||||||
Securities Purchase Agreement [Member] | Convertible Promissory Note [Member] | |||||||||||
Amortization of debt discount | 62,619 | ||||||||||
Derivative liability | $ 40,663 | 39,843 | $ 62,619 | ||||||||
Debt original issue discount | $ 40,000 | 25,000 | $ 25,000 | ||||||||
Financing cost | $ 3,000 | ||||||||||
Interest rate | 8% | 10% | |||||||||
Default interest rate | 18% | 8% | |||||||||
Purchase price principal amount | $ 100,000 | ||||||||||
Note issued | $ 540,000 | ||||||||||
Cash proceeds from conversion | $ 500,000 | ||||||||||
Conversion discount to price | 30% | ||||||||||
Beneficial conversion feature's intrinsic value | $ 294,000 | ||||||||||
Note issued upon exchange for cash | $ 500,000 | ||||||||||
Securities Purchase Agreement [Member] | Senior Convertible Note 1 [Member] | Institutional investors [Member] | |||||||||||
Convertible notes payable, principal amount | $ 525,000 | ||||||||||
Derivative liability | 0 | $ 5,822 | $ 284,169 | ||||||||
Shares issued | 213,382 | ||||||||||
Shares issued at a fair value | $ 959,024 | ||||||||||
Interest expense | 54,833 | ||||||||||
Accumulated deficit | (53,248) | ||||||||||
Outstanding debt | 550,144 | ||||||||||
Extinguishment of debt | $ 124,711 | ||||||||||
Debt discount | 294,000 | $ 456,570 | |||||||||
Transaction expenses | 43,000 | ||||||||||
Amortized cost | $ 499,570 | ||||||||||
Gain on the change in fair value of the derivative | 111,581 | ||||||||||
Loss on the change in fair value of the derivative | $ 5,807 |
DEBT (Details)
DEBT (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Beginning balance loans | $ 17,818,888 | $ 22,814,594 |
Proceeds | 479,723 | 565,900 |
Payments | (2,475,203) | (265,421) |
Conversion of debt | (1,190,000) | (4,616,500) |
Recapitalized upon debt modification | (833,727) | (86,670) |
Debt forgiveness | (169,770) | |
Accretion of debt and debt discount | (12,223) | |
Foreign currency translation | (369,490) | (423,245) |
Subtotal | 13,417,968 | 17,818,888 |
Notes payable - long-term | (1,026,049) | (12,356,384) |
Notes payable - short-term | 12,391,919 | 5,462,504 |
Loan Facility [Member] | ||
Beginning balance loans | 1,299,784 | 3,302,100 |
Proceeds | 0 | 0 |
Payments | (190,622) | (141,475) |
Conversion of debt | (1,190,000) | (1,606,500) |
Recapitalized upon debt modification | (785) | (86,670) |
Debt forgiveness | 0 | |
Accretion of debt and debt discount | 0 | |
Subtotal | 28,712 | 1,299,784 |
Notes payable - long-term | 0 | 0 |
Notes payable - short-term | 28,712 | 1,299,784 |
Foreign currency translation | 110,335 | (167,671) |
Third Party [Member] | ||
Beginning balance loans | 10,077,977 | 12,631,284 |
Proceeds | 479,723 | 565,900 |
Payments | (2,132,165) | (62,878) |
Conversion of debt | (3,010,000) | |
Recapitalized upon debt modification | (781,752) | 0 |
Debt forgiveness | 0 | |
Accretion of debt and debt discount | (12,223) | |
Subtotal | 7,485,359 | 10,077,977 |
Notes payable - long-term | (855,345) | (9,854,906) |
Notes payable - short-term | 6,630,014 | 223,071 |
Foreign currency translation | (146,201) | (46,329) |
COVID Loans | ||
Beginning balance loans | 234,117 | 435,210 |
Proceeds | 0 | 0 |
Payments | (4,586) | (3,233) |
Conversion of debt | 0 | 0 |
Recapitalized upon debt modification | 0 | 0 |
Debt forgiveness | (169,770) | |
Accretion of debt and debt discount | 0 | |
Subtotal | 195,232 | 234,117 |
Notes payable - long-term | (170,704) | (51,478) |
Notes payable - short-term | 24,528 | 182,639 |
Foreign currency translation | (34,299) | (28,090) |
Trade Facility [Member] | ||
Beginning balance loans | 6,207,010 | 6,446,000 |
Proceeds | 0 | 0 |
Payments | (147,830) | (57,835) |
Conversion of debt | 0 | 0 |
Recapitalized upon debt modification | (51,190) | 0 |
Debt forgiveness | 0 | |
Accretion of debt and debt discount | 0 | |
Subtotal | 5,708,665 | 6,207,010 |
Notes payable - long-term | 0 | (2,450,000) |
Foreign currency translation | (299,325) | (181,155) |
Notes payable- short -term | $ 5,708,665 | $ 3,757,010 |
DEBT (Details 1)
DEBT (Details 1) | Sep. 30, 2022 USD ($) |
DEBT | |
2022 | $ 2,065,142 |
2023 | 11,244,009 |
2024 | 316,759 |
2025 | 320,620 |
2026 and thereafter | 317,388 |
Total Debt | 14,263,918 |
Less: fair value adjustments to assumed debt obligations | (845,950) |
Less: notes payable - current portion | (12,391,919) |
Notes payable - long term portion | $ 1,026,049 |
DEBT (Details Narrative)
DEBT (Details Narrative) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 03, 2022 USD ($) | Aug. 04, 2021 USD ($) shares | Dec. 30, 2020 USD ($) | Aug. 04, 2020 USD ($) | Jul. 03, 2020 USD ($) | May 12, 2020 USD ($) | Jun. 30, 2021 | Nov. 19, 2020 USD ($) | May 18, 2020 | Oct. 17, 2018 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) shares | Sep. 30, 2022 CAD ($) shares | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | Aug. 29, 2022 USD ($) | Jul. 30, 2021 USD ($) | Oct. 29, 2020 USD ($) $ / shares shares | Dec. 31, 2019 USD ($) | Nov. 16, 2015 USD ($) | |
Stock issued for debt obligation | shares | 5,181,062 | 5,181,062 | ||||||||||||||||||
Accrued and unpaid interest | $ 111,018 | $ 111,018 | ||||||||||||||||||
Debt repayment during period | 50,000 | $ 3,233 | ||||||||||||||||||
Repayment of installment | 500,000 | |||||||||||||||||||
Repayments of debt | 97,830 | 10,466 | ||||||||||||||||||
Capitalized fees | $ 200,000 | |||||||||||||||||||
Debt instruments final payament | $ 1,800,000 | 50,000 | 50,000 | |||||||||||||||||
Debt outstanding amount | 53,073 | $ 53,073 | 64,347 | $ 578,850 | ||||||||||||||||
Percentage of forgiveness | 50% | 50% | ||||||||||||||||||
Forgiveness recorde as other income | $ 177,450 | |||||||||||||||||||
Loan received from related party | $ 366,900 | 142,159 | 169,770 | |||||||||||||||||
Convertible notes payable, principal amount | 1,809,855 | $ 1,809,855 | ||||||||||||||||||
Agreement description | The note matures on August 5, 2026 and bears an annual interest rate that applies to 60% of the principal of the note that is based on a 365-day year, of 5.84% plus 3-month Euribor when Euribor is positive. Pursuant to the terms of the agreement, there is a nine-month grace period for principal repayment during which interest is accrued. The principal is to be repaid in 18 quarterly installments of €27,778 commencing three months from the end of the grace period | Company entered into an agreement with a third-party lender in the principal amount of €320,000 ($335,008). The Note matures on June 16, 2027 and bears an annual interest of 3.89% plus levy of 0.60% plus the 3-month Euribor (when positive). 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 | Company entered into an agreement with a third-party lender in the principal amount of €320,000 ($335,008). The Note matures on June 16, 2027 and bears an annual interest of 3.89% plus levy of 0.60% plus the 3-month Euribor (when positive). 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 | |||||||||||||||||
Interest Rate | 10% | 10% | ||||||||||||||||||
Gains on debt extinguishment | $ 1,004,124 | $ 795,644 | ||||||||||||||||||
Debt outstanding amount | 313,056 | 313,056 | ||||||||||||||||||
Accured interest | 60 | 60 | ||||||||||||||||||
Notes payable long term | 276,226 | $ 276,226 | ||||||||||||||||||
Restricted shares | shares | 1,800,000 | 1,800,000 | ||||||||||||||||||
Debt discount | $ 294,000 | |||||||||||||||||||
July 3, 2020 [Member] | Senior Promissory Notes [Member] | ||||||||||||||||||||
Interest Rate | 18% | 18% | ||||||||||||||||||
Debt outstanding amount | $ 5,000,000 | |||||||||||||||||||
Accrued expenses | 210,574 | |||||||||||||||||||
Notes payable long term | 5,000,000 | |||||||||||||||||||
Debt instrument maturity date | Jun. 30, 2022 | Jun. 30, 2022 | ||||||||||||||||||
Repayment of may five note | 2,000,000 | |||||||||||||||||||
Repayment of may eight note | 2,000,000 | |||||||||||||||||||
Repayment of february note | $ 1,000,000 | |||||||||||||||||||
August 4, 2020 [Member] | Senior Promissory Notes [Member] | ||||||||||||||||||||
Debt instrument maturity date | Dec. 31, 2020 | Dec. 31, 2020 | ||||||||||||||||||
Modification of May 18, 2020, July 3, 2020, and August 4, 2020 Senior Promissory Notes [Member] | ||||||||||||||||||||
Modification agreement amount | $ 9,000,000 | |||||||||||||||||||
Restructuring fees | 506,087 | |||||||||||||||||||
Fair value of debt | 7,706,369 | |||||||||||||||||||
Gains on debt extinguishment | 787,544 | |||||||||||||||||||
Debt principal payment | 2,000,000 | |||||||||||||||||||
Non cash interest expenses | 290,431 | |||||||||||||||||||
Debt outstanding amount | 6,218,248 | 6,218,248 | ||||||||||||||||||
Accured interest | 1,075,066 | $ 1,075,066 | ||||||||||||||||||
August 29, 2022 [Member] | Promissory Notes [Member] | ||||||||||||||||||||
Debt outstanding amount | $ 16,667 | |||||||||||||||||||
Agreement description | the Company entered into a promissory note for the principal amount $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 Company entered into a promissory note for the principal amount $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 | ||||||||||||||||||
Debt discount | 4,444 | $ 4,444 | ||||||||||||||||||
Note payable for the promissory note | 154,444 | $ 154,444 | ||||||||||||||||||
Unaffiliated Third Party [Member] | Senior Promissory Notes [Member] | ||||||||||||||||||||
Debt outstanding amount | $ 3,000,000 | |||||||||||||||||||
Loans payable | $ 4,000,000 | |||||||||||||||||||
Description of loan repayment | 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 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 | 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) | 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) | ||||||||||||||||
Debt Exchange Agreement [Member] | ||||||||||||||||||||
Repayments of debt | $ 81,525 | 62,878 | ||||||||||||||||||
Agreement description | 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 nine-month grievance from the first deposit | |||||||||||||||||||
Debt outstanding amount | $ 611,500 | 353,275 | 353,275 | 503,022 | 565,900 | |||||||||||||||
Accrued expenses | $ 5,642 | 3,901 | 3,901 | 60,166 | $ 8,514 | |||||||||||||||
Notes payable long term | 244,575 | 244,575 | 377,270 | 477,637 | ||||||||||||||||
Shares issued | shares | 321,300 | 259,741 | ||||||||||||||||||
Gain on settlement of debt upon shares issuance | $ 292,383 | $ 192,205 | ||||||||||||||||||
Common stock shares issuable upon listing on nasdaq | shares | 238,000 | |||||||||||||||||||
Settlement of debt, shares issuable upon listing on nasdaq | $ 1,190,000 | |||||||||||||||||||
Settlement of debt | 1,606,500 | |||||||||||||||||||
Gain from extinguishment of debt | $ 6,642 | $ 216,580 | ||||||||||||||||||
Discount rate | 11.66% | |||||||||||||||||||
Principal amount of existing loan | $ 1,000,000 | |||||||||||||||||||
Fair value of price per share | $ / shares | $ 3.11 | |||||||||||||||||||
Upon issuance of common stock | shares | 238,000 | 238,000 | ||||||||||||||||||
Share issued price per share | $ / shares | $ 3.85 | |||||||||||||||||||
Synthesis Facility Agreement [Member] | TFF [Member] | ||||||||||||||||||||
Debt outstanding amount | $ 5,629,555 | |||||||||||||||||||
Accrued expenses | $ 524,094 | |||||||||||||||||||
Synthesis Facility Agreement [Member] | TFF [Member] | Principal balance 2 [Member] | ||||||||||||||||||||
Debt instrument maturity date | Aug. 31, 2021 | |||||||||||||||||||
Note payable for the promissory note | 2,450,000 | |||||||||||||||||||
Stated interest rate | 6% | |||||||||||||||||||
Debt instrument, extended maturity, month and year | January 10, 2023 | January 2023 | January 2023 | |||||||||||||||||
Debt split, balance | $ 4,000,000 | 4,000,000 | ||||||||||||||||||
Synthesis Facility Agreement [Member] | TFF [Member] | Principal Balance One [Member] | ||||||||||||||||||||
Debt instrument, transferred amount | $ 2,000,000 | |||||||||||||||||||
Debt instrument, accrue interest rate | 5.50% | |||||||||||||||||||
Debt instruments periodic payment | $ 50,000 | |||||||||||||||||||
Debt intrument split, principal balance | $ 2,000,000 | |||||||||||||||||||
Loan Agreement [Member] | Panagiotis Drakopoulos [Member] | ||||||||||||||||||||
Debt outstanding amount | 7,826 | $ 7,826 | 9,054 | |||||||||||||||||
Accrued expenses | 7,151 | $ 3,100 | ||||||||||||||||||
Short term debt borrowing capacity | $ 42,832 | |||||||||||||||||||
July 30, 2021 Debt Agreement [Member] | ||||||||||||||||||||
Debt outstanding amount | 438,510 | 438,510 | ||||||||||||||||||
Accured interest | 6,503 | 6,503 | ||||||||||||||||||
Notes payable long term | 334,545 | 334,545 | ||||||||||||||||||
Loan Facility [Member] | ||||||||||||||||||||
Debt outstanding amount | $ 28,711 | 28,711 | 1,299,784 | $ 2,000,000 | ||||||||||||||||
Accrued interest expense | $ 17,146 | $ 4,414 | ||||||||||||||||||
Restricted shares | shares | 1,000,000 | 1,000,000 | ||||||||||||||||||
Distribution And Equity Acquisition Agreement [Member] | Marathon Global Inc. [Member] | ||||||||||||||||||||
Cash received upon gross sales | $ 2,750,000 | |||||||||||||||||||
Upfront cash received | $ 2,000,000 | |||||||||||||||||||
Equity interest acquired description | a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services | a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services | ||||||||||||||||||
Distribution And Equity Acquisition Agreement [Member] | Marathon Global Inc. [Member] | Sales One [Member] | ||||||||||||||||||||
Cash received upon gross sales | $ 2,750,000 | |||||||||||||||||||
Distribution And Equity Acquisition Agreement [Member] | Marathon Global Inc. [Member] | Gross Sales [Member] | ||||||||||||||||||||
Cash received upon gross sales | 2,750,000 | |||||||||||||||||||
Gross sales | $ 13,000,000 |
LEASES (Details)
LEASES (Details) - Operating Lease [Member] | Sep. 30, 2022 USD ($) |
Remainder of 2022 | $ 48,395 |
2023 | 193,582 |
2024 | 193,582 |
2025 | 127,009 |
2026 | 93,721 |
Thereafter | 257,538 |
Total undiscounted operating lease payments | 913,827 |
Less: Imputed interest | (153,649) |
Present value of operating lease liabilities | $ 760,178 |
LEASES (Details 1)
LEASES (Details 1) - Finance Lease [Member] | Sep. 30, 2022 USD ($) |
Remainder of 2022 | $ 25,931 |
2023 | 95,787 |
2024 | 81,047 |
2025 | 54,516 |
2026 | 29,844 |
Thereafter | 9,359 |
Total undiscounted finance lease payments | 296,484 |
Less: Imputed interest | (31,040) |
Present value of finance lease liabilities | $ 265,444 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
LEASES | ||
Operating lease, term of agreements | The Company has various lease agreements with terms up to 10 years, comprising leases of office space | |
Operating lease expense | $ 158,407 | $ 196,115 |
Operating lease weighted-average remaining lease term | 5 years 7 months 13 days | |
Operating lease, weighted average discount rate | 6.74% | |
Finance lease, weighted average remaining lease term | 1 year 1 month 2 days | |
Finance lease, interest expense | $ 11,645 | $ 9,995 |
Finance lease, weighted average discount rate | 6.74% | |
Finance lease, amortization expense | $ 60,935 | |
Finance lease total cash used | $ 65,263 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | |
Aug. 25, 2022 | Jul. 31, 2021 | Sep. 30, 2022 | |
Description for consultant agreement entered by company | On August 25, 2022, the Company signed a 4-month agreement with a consultant for a marketing/media plan and the development of a forward-looking strategy for the Company. The Consultant’s compensation for the above services amounted to $150,000, $75,000 of which, was paid as of September 30, 2022 | ||
Description for advisory agreement | The term of the agreement is a minimum of 45 days 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% of the gross proceeds of any securities sold in the offering payable at closing of 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 offering 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 | ||
Description for compensation payable under agreement to consultants | a) a cash fee or as 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 of shares of common stock placed in each offering. c) out of the proceeds of each closing, the Company also agreed to pay the agent up to $35,000 for non-accountable expenses (up to $50,000 for a public offering) along with up to $50,000 for fees and expenses of legal counsel and other out-of-pocket expenses (increase to up 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 of at least $3 million raised by investors introduced by the agent | ||
July 1, 2021 [Member] | Advisory Agreement [Member] | |||
Consulting fee payable monthly until listing | $ 4,000 | ||
Description for consulting fees payable under agreement | 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 bonus upon NASDAQ listing and when the Company has raised an aggregate of $10,000,000. Finally, the Company has agreed that the Consultant shall receive a total of 250,000 shares of the Company’s common stock, 50,000 of such shares that have been previously issued pursuant to previous agreements and 200,000 shares to be issued when the Company commences trading on NASDAQ. As of September 30, 2022, 50,000 additional shares have been issued to the Consultant concerning the Company’s listing on Nasdaq |
STOCK OPTIONS AND WARRANTS (Det
STOCK OPTIONS AND WARRANTS (Details) - Stock Options [Member] | 9 Months Ended |
Sep. 30, 2022 USD ($) $ / shares shares | |
Number of Shares Outstanding, Beginning | shares | 37,000 |
Expired | shares | (37,000) |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 1.32 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | 0 |
Weighted Average Exercise Price Exercisable | $ / shares | $ 0 |
Weighted Average Remaining Contractual Term Outstanding, Beginning | 3 days |
Aggregate Intrinsic Value Outstanding, Beginning | $ | $ 75,850 |
Aggregate Intrinsic Value Outstanding, Ending | $ | 0 |
Aggregate Intrinsic Value Exercisable | $ | $ 0 |
STOCK OPTIONS AND WARRANTS (D_2
STOCK OPTIONS AND WARRANTS (Details 1) - Warrants [Member] | 9 Months Ended |
Sep. 30, 2022 USD ($) $ / shares shares | |
Number of Shares Outstanding, Beginning | $ 3,698,238 |
Granted | shares | 10,652,460 |
Exercised | shares | (3,488,171) |
Number of Shares Outstanding, Ending | $ 10,862,527 |
Number of Shares Exercisable | shares | 10,862,527 |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 2.02 |
Weighted Average Exercise Price Outstanding, Granted | $ / shares | 0.63 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | 0.66 |
Weighted Average Exercise Price Exercisable | $ / shares | $ 0.66 |
Weighted Average Remaining Contractual Term Outstanding, Beginning | 2 years 10 days |
Weighted Average Remaining Contractual Term Outstanding, Ending | 4 years 10 months 2 days |
Weighted Average Remaining Contractual Term Exercisable | 4 years 10 months 2 days |
Aggregate Intrinsic Value Outstanding, Beginning | $ 4,992,621 |
Aggregate Intrinsic Value Outstanding, Ending Balance | 0 |
Aggregate Intrinsic Value Exercisable | $ 0 |
STOCK OPTIONS AND WARRANTS (D_3
STOCK OPTIONS AND WARRANTS (Details Narrative) | 9 Months Ended |
Sep. 30, 2022 shares | |
Options [Member] | |
Number of Shares Exercisable | 0 |
Number of Shares Outstanding, Beginning | 0 |
Warrants [Member] | |
Number of Shares Exercisable | 10,862,527 |
Number of Shares Outstanding, Beginning | 10,862,527 |
Expired dates description | expiration dates from May 2023 through August 2027 |
DISAGGREGATION OF REVENUE (Deta
DISAGGREGATION OF REVENUE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue | $ 12,016,098 | $ 13,595,418 | $ 38,296,402 | $ 40,061,419 |
Germany [Member] | ||||
Revenue | 0 | (102) | 0 | 13,515 |
Greece [Member] | ||||
Revenue | 11,990,599 | 13,555,718 | 38,151,898 | 39,514,083 |
Italy [Member] | ||||
Revenue | 0 | (118) | 0 | 15,613 |
Denmark [Member] | ||||
Revenue | 0 | (488) | 0 | 54,291 |
Cyprus [Member] | ||||
Revenue | 0 | 13,982 | 0 | 92,930 |
UK [Member] | ||||
Revenue | 26,209 | 23,318 | 118,467 | 355,977 |
Croatia [Member] | ||||
Revenue | $ (710) | $ 3,107 | $ 26,037 | $ 15,010 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | |||||
Nov. 07, 2022 | Oct. 18, 2022 | Oct. 28, 2022 | Oct. 21, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Common Stock, shares outstanding | 25,977,980 | 17,157,085 | ||||
Subsequent Events [Member] | ||||||
Common stock issued public offering during period | 50,000,000 | 62,500,000 | ||||
Common stock shares issued, gross proceed | $ 50,000,000 | |||||
Warrants to purchase shares of common stock, gross proceeds | $ 7,500,000 | |||||
Warrants to purchase shares of common stock, price per share | $ 0.12 | |||||
Outstanding principal paid | $ 590,800 | |||||
Unpaid interest of Convertible Promissory Note | $ 525,000 | |||||
Common Stock, shares outstanding | 84,184,905 | |||||
Common Stock, shares outstanding, held held by non-affiliates | 63,893,963 | |||||
Shares, registered for sale, represent less than the one-third held by non-affiliates | 21,297,988 | |||||
Subsequent Events [Member] | Series A Warrants [Member] | ||||||
Warrants to purchase shares of common stock | 62,500,000 | |||||
Subsequent Events [Member] | Series B Warrants [Member] | ||||||
Warrants to purchase shares of common stock | 62,500,000 |