美国
证券交易委员会
华盛顿特区20549
表格
根据1934年证券交易所法第13条或第15（d）条交付的季度报告 |
截至2024年6月30日季度结束
根据证券交易法第13或15(d)条的过渡报告 |
过渡期从__________到__________。
委员会文件号码：
（依凭章程所载的完整登记名称） |
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(公司成立所在地或其他行政区划) 公司或机构) |
| （州或其他管辖区 的 识别号码) |
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(总部办公地址) |
| (邮递区号) |
登记人的电话号码：(
根据交易所法第12(b)条注册的证券：
每种类别的名称 |
| 每个注册交易所的名称 |
The |
根据交易所法第12(g)条登记的证券：
每种类别的名称 |
| 每个注册交易所的名称 |
检查发行人是否 (1) 在过去12个月内（或在报告要求的较短期间内）根据证券交易法第13条或第15(d)条提交了所有所需的报告，并且 (2) 在过去90天内一直受到这些提交要求的约束。
请在选框内打勾，确认注册人是否在过去12个月内（或注册人需要提交此类文件更短的期限内）根据Regulation S-t第405条规定提交了必须提交的所有互动数据文件。
勾选此格以指示登记人是否为大型高速进行申报的申报人、高速进行申报的申报人、非高速进行申报的申报人、较小型报告公司或新兴成长公司。请参阅《交易所法令》第120亿2条中有关“大型高速进行申报人”、“高速进行申报人”、“较小型报告公司”和“新兴成长公司”的定义。
大型加速归档人 | ☐ | 加速归档人 | ☐ |
☐ | 小型报告公司 | ||
(请勿检查是否为较小的报告公司) | 新兴成长型企业 | ||
如果一家新兴成长型公司，如选择不利用交易法第13(a)条款所提供的遵守任何新修订的财务会计准则的延长过渡期，则请用勾号注明。☐
在核准的名册是否属于壳公司（如股市法规第1202条所定义之意义）方面，请用勾选符号表示。是
仅适用于公司发行人：
请指示每一类公司普通股的流通股份数，以最近可行的日期为准：
目录
第I部分 | ||||
项目1。 | 简化合并基本报表（未经审核）。 | 3 | ||
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| 2 |
| 内容表 |
阿童木健康公司。 | ||||||||
简明综合资产负债表 | ||||||||
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| 九月三十日， 2024 |
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| 12月31日, 2023 |
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| （未经核实） |
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资产 | ||||||||
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流动资产： |
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现金及现金等价物 |
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应收帐款，净额 |
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应收款项 - 关联方 |
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可市场证券 |
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存货 |
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应收贷款 |
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应收贷款 - 关联方 |
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预付费用及其他流动资产 |
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预付费用及其他流动资产 - 关联方 |
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总流动资产 |
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不动产及设备，净额 |
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商誉和无形资产，净值 |
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应收贷款 - 长期部分 |
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应收贷款 - 相关方 - 长期 |
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经营租赁权使用资产 |
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融资租赁使用权资产 |
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建物收购预付款 |
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其他资产 |
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总资产 |
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负债、次级权益及股东权益 | ||||||||
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流动负债： |
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应付帐款及应计费用 |
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应付账款及应计费用 - 关联方 |
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应计利息 |
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信贷额度 |
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应付款项 |
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应付票据 - 相关方 |
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应付贷款 - 相关方 |
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营运租赁负债，流动部分 |
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财务租赁负债，当期部分 |
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其他流动负债 |
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流动负债总额 |
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以股份结算的债务义务 |
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应付票据 - 长期部分 |
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租赁负债净额，除去当期部分 |
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融资租约负债，扣除当期部分 |
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其他负债 |
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负债合计 |
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承诺及或有负债（见附注14） |
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股东权益: |
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0.01 |
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资本公积额额外增资 |
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认股权收款 |
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按成本核算的库藏股 |
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累积亏损 |
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累积其他全面损失 |
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股东权益总额 |
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负债总额及股东权益 |
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附注是这些未经审计的简明综合财务报表的一个组成部分。
| 3 |
| 内容表 |
阿童木健康公司。 | ||||||||||||||||
未经审核之综合损益及综合亏损简明合并财务报表 | ||||||||||||||||
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| 截至三个月 九月三十日， |
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| 九个月结束 九月三十日， |
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| 2023 |
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营业收入 |
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营业成本 |
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毛利润 |
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营业费用 |
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一般及行政费用 |
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薪资与工资 |
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销售和市场推广费用 |
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折旧和摊销费用 |
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营业费用总额 |
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营运损失 |
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其他收入（支出） |
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其他收入（费用），净额 |
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利息支出 |
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利息收入 |
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股权投资溢利 |
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偿还债务所得的收益 |
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衍生负债公允价值变化 |
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价格优惠收益 |
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外币交易，净额 |
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总其他收入（费用），净额 |
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所得税前亏损额 |
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所得税费用 |
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净亏损 |
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发行认股权的被视为股利 |
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降低认股权的被视为股利 |
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认股权交换/修改的被视为股利 |
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归属于普通股股东的净亏损 |
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其他综合损益 |
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外币翻译调整, 净额 |
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总综合损失 |
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每股基本净损失 |
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每股稀释净损失 |
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流通在外加权平均数量的股份 |
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基本 |
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摊薄 |
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附带的说明是这些未经审计的简明合并基本报表的一个不可或缺的部分。
| 4 |
| 目录 |
阿童木健康公司 | ||||||||||||||||||||||||||||||||||||||||||||
未经审计的合并股东权益和夹层权益变动表 | ||||||||||||||||||||||||||||||||||||||||||||
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| 优先股 |
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| 普通股 |
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| 库存股 |
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| 累计 其他 |
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| 股份数 |
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| 价值 |
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| 价值 |
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| 实收资本 |
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| 订阅 应收款 |
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| 股份数 |
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| 价值 |
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| 累计 赤字 |
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| 综合的 Loss |
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| 股东的 股权 |
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2023年1月1日余额 |
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外币翻译调整，净值 |
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出售普通股所得 |
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发行股份以代替现金 |
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净损失 |
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截至2023年3月31日的余额 |
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外币翻译调整，净值 |
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为购买客户基础而发行的股份 |
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发行股票用于购买Cana |
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基于股票的补偿 |
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净损失 |
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|
| ( | ) |
|
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| ( | ) | ||||||
截至2023年6月30日的余额 |
|
| - |
|
| $ |
|
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| ( | ) |
|
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| ( | ) |
|
| ( | ) |
|
| ( | ) |
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| ||||||
外币转换调整，净额 |
|
| - |
|
|
|
|
|
| - |
|
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|
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|
|
| - |
|
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|
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| ( | ) |
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| ( | ) | ||||||
出售普通股的收益，扣除$442,870的融资费用后 |
|
| - |
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| ( | ) |
|
| - |
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| ||||||||
回购库存股票 |
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| - |
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| - |
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| ( | ) |
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| ( | ) | |||||
基于股票的补偿 |
|
| - |
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|
| - |
|
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|
|
|
|
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| - |
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| ||||||||
被视为红利 |
|
| - |
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|
| - |
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|
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|
|
| - |
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| ( | ) |
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| |||||||
净损失 |
|
| - |
|
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| - |
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|
|
|
|
| - |
|
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|
| ( | ) |
|
|
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| ( | ) | ||||||
截至2023年9月30日的余额 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
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| ( | ) |
|
| ( | ) |
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| ( | ) |
|
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| ||||||
| 5 |
| 目录 |
|
| 优先股 |
|
| 普通股 |
|
| 附加 |
|
|
|
| 库存股 |
|
|
|
| 其他 |
|
| 总计 |
| ||||||||||||||||||||||
|
| 股份数 |
|
| 价值 |
|
| 股份数 |
|
| 价值 |
|
| 实收资本 |
|
| 订阅 应收款项 |
|
| 股份数 |
|
| 价值 |
|
| 累计 赤字 |
|
| 综合的 Loss |
|
| 股东的 股权 |
| |||||||||||
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|
|
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| |||||||||||
2024年1月1日的余额 |
|
| - |
|
| $ | - |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
|
|
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
| |||||
外币翻译调整，净额 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
普通股销售所得，扣除融资费用$19,467后净额 |
|
| - |
|
|
|
|
|
|
|
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|
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|
|
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|
|
|
|
| - |
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|
|
|
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|
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| |||||||||
以股份代替现金 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
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|
|
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|
|
|
|
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| ||||||||
根据Warrants交易所协议发行的股份 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
基于股票的补偿 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
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| ||||||||
净损失 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||||||
截至2024年3月31日的余额 |
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
|
|
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ |
| ||||||
外币换算调整，净额 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||||
以股份代替现金 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
基于股票的补偿 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
净损失 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||||||
截至2024年6月30日的余额 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
| ||||||
外币翻译调整，净额 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
股票以现金替代发行 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
基于股票的补偿 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Warrants行使所得，扣除融资费用372,109美元 |
|
| - |
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
|
| - |
|
|
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|
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|
|
| |||||||||
Warrants诱导的视为股息 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||||||
净损失 |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||||||
截至2024年9月30日的余额 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
| ||||||
附带的说明是这些未经审计的简明合并基本报表的一个不可或缺的部分。
| 6 |
| 目录 |
阿童木健康公司 | ||||||||
未审计的简明合并现金流量表 | ||||||||
|
|
|
|
|
| |||
|
| 截至九个月 九月三十日 |
| |||||
|
| 2024 |
|
| 2023 |
| ||
|
|
|
|
|
|
| ||
来自营业活动的现金流： |
|
|
|
|
|
| ||
净亏损 |
| $ | ( | ) |
| $ | ( | ) |
调整以调和净亏损与经营活动中使用的净现金: |
|
|
|
|
|
|
|
|
折旧和摊销费用 |
|
|
|
|
|
| ||
使用权资产的摊销 |
|
|
|
|
|
| ||
坏账费用 |
|
| ( | ) |
|
|
| |
特殊税费准备 |
|
|
|
|
|
| ||
发行股份以代替现金 |
|
| - |
|
|
|
| |
租赁费用 |
|
|
|
|
|
| ||
融资租赁利息 |
|
|
|
|
|
| ||
基于股票的补偿 |
|
|
|
|
|
| ||
递延所得税 |
|
|
|
|
| ( | ) | |
债务解除的收益 |
|
|
|
|
| ( | ) | |
廉价购置收益 |
|
|
|
|
| ( | ) | |
衍生负债公允价值变动 |
|
|
|
|
| ( | ) | |
股权投资公允价值净变动收益 |
|
| ( | ) |
|
| ( | ) |
其他收入 |
|
|
|
|
| ( | ) | |
资产和负债的变动: |
|
|
|
|
|
|
|
|
应收账款 |
|
|
|
|
| ( | ) | |
应收账款 - 关联方 |
|
| ( | ) |
|
| ( | ) |
库存 |
|
| ( | ) |
|
| ( | ) |
预付费用和其他资产 |
|
| ( | ) |
|
| ( | ) |
预付费用和其他流动资产 - 关联方 |
|
| ( | ) |
|
| ( | ) |
贷款应收款 - 关联方 |
|
|
|
|
| - |
| |
应付账款和预提费用 |
|
| ( | ) |
|
|
| |
应付账款和应计费用 - 关联方 |
|
|
|
|
| ( | ) | |
应计利息 |
|
|
|
|
| ( | ) | |
租赁负债 |
|
| ( | ) |
|
| ( | ) |
应付税款 |
|
|
|
|
|
| ||
其他流动负债 |
|
|
|
|
| ( | ) | |
其他负债 |
|
| ( | ) |
|
| ( | ) |
经营活动中使用的净现金 |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
投资活动的现金流量： |
|
|
|
|
|
|
|
|
贷款应收款的收入 |
|
|
|
|
|
| ||
收购Cana支付的现金 |
|
|
|
|
| ( | ) | |
应收贷款 - 关联方 |
|
|
|
|
| ( | ) | |
无形资产的出售 |
|
|
|
|
|
| ||
建筑物收购的预付款 |
|
|
|
|
| ( | ) | |
无形资产的购买 |
|
|
|
|
| ( | ) | |
购买房地产和设备 |
|
| ( | ) |
|
| ( | ) |
投资活动产生的净现金（使用） |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
融资活动的现金流量： |
|
|
|
|
|
|
|
|
可转换票据应付的支付 |
|
|
|
|
| ( | ) | |
应付票据的支付 |
|
| ( | ) |
|
| ( | ) |
应付票据的收入 |
|
|
|
|
|
| ||
支付相关方贷款 |
|
| ( | ) |
|
|
| |
相关方贷款的收入 |
|
|
|
|
|
| ||
支付信用额度 |
|
| ( | ) |
|
| ( | ) |
信用额度的收入 |
|
|
|
|
|
| ||
发行A系列优先股的收入 |
|
|
|
|
|
| ||
发行普通股的收益 |
|
|
|
|
|
| ||
行使Warrants的收入 |
|
|
|
|
|
| ||
融资租赁负债的付款 |
|
| ( | ) |
|
| ( | ) |
购回股票的付款 |
|
|
|
|
| ( | ) | |
融资费用的付款 |
|
| ( | ) |
|
| ( | ) |
融资活动提供的现金净额 |
|
|
|
|
|
| ||
|
|
|
|
|
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|
|
|
汇率变化对现金的影响 |
|
| ( | ) |
|
|
| |
|
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|
|
|
现金净变动 |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
年初现金余额 |
|
|
|
|
|
| ||
年末现金余额 |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
现金流信息补充披露 |
|
|
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|
|
|
|
|
|
|
|
|
|
年度内支付的现金： |
|
|
|
|
|
|
|
|
利息 |
| $ |
|
| $ |
| ||
所得税 |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
非现金投资和融资活动的补充披露 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
为了收购客户基础而发行的普通股 |
| $ | - |
|
| $ |
| |
为了收购Cana而发行的普通股 |
| $ | - |
|
| $ |
| |
Cloudscreen收购的完成 |
| $ |
|
| $ |
| ||
在Warrants交易所视为股息 |
| $ |
|
| $ |
| ||
向员工发行的普通股 |
| $ |
|
| $ |
| ||
向顾问发行的普通股 |
| $ |
|
| $ |
| ||
附带的说明是这些未经审计的简明合并基本报表的一个不可或缺的部分。
| 7 |
| 目录 |
阿童木健康公司。
简明联合财务报表附注(未经审计)
2024年9月30日
注释 1 - 呈现基础
本报告中使用的术语“阿童木”、“我们”、“公司”、“集团”和“我们”指代阿童木健康公司。随附的截至2024年9月30日的未经审核的简明合并资产负债表以及截至2024年9月30日的三个月和九个月未经审核的简明合并运营和全面损失报表已根据公认会计原则为临时财务信息编制，并遵循10-Q表格的说明和S-X条例第8条。因此，它们不包括美国公认会计原则对完整财务报表所要求的所有信息和脚注。在阿童木管理层看来，已包含所有认为合理的调整（包括正常的经常性应计项目），以实现公平的呈现。截止2024年9月30日的三个月和九个月的运营结果不一定代表预计的2024年12月31日结束的年度结果或任何其他期间的结果。这些未经审核的简明合并财务报表和注释应与截至2023年12月31日的财务报表一起阅读，该财务报表已包含在公司2023年度10-k表格年度报告中（“10-K表格”）。截至2023年12月31日的随附简明合并资产负债表已从我们在10-k表格中提交的经过审计的财务报表中取得，随附在资产负债表中以供比较。
持续经营
公司的未经审计的简明合并基本报表符合美国一般公认会计原则（"U.S. GAAP"），这些原则假定公司将持续经营。截止2024年9月30日的九个月内，公司营业收入为40202238美元，净亏损为$
公司的收入无法支撑其运营，并且存在关于公司在到期时履行其义务能力的担忧。公司面临的风险与较小商业公司类似，包括对关键个人和产品的依赖、开发商业市场固有的困难、需要获得额外资金、来自大公司的竞争以及其他药品和医疗保健公司。
管理层评估了上述条件，这些条件对公司作为持续经营能力的能力提出了实质性的怀疑，以判断其是否能够在本次提交之日起的接下来的十二个月内履行义务。管理层考虑了其获得未来资本的能力、在必要时削减开支、扩展产品线以及收购新产品的能力。
管理层的计划包括将名牌产品扩展到市场，扩大当前的产品组合，以及评估收购目标以扩大分销。此外，该公司打算垂直整合供应链分销网络。在本报告发布之前的这段时间内，公司已经签署了多份SPL产品在欧洲和亚洲的分销协议，并通过其子公司Cana Laboratories Holdings（塞浦路斯）有限公司签署了各种合同制造协议。最后，该公司计划进一步进入资本市场，以便通过股票发行筹集更多资金。更具体地说，在发布截至2024年9月30日的九个月的合并财务报表之前，公司已经出售了
考虑到上述情况，管理层认为关于公司持续经营能力存在重大疑虑。合并基本报表中不包括任何调整，以反映这种不确定性所导致的资产的可收回性和分类，或可能影响的负债的金额和分类的未来效果。
| 8 |
| 目录 |
阿童木健康公司。
简明联合财务报表附注(未经审计)
2024年9月30日
注意 2 – 组织和业务性质
阿童木健康公司及其子公司（纳斯达克：COSM）（"我们"，"我们"，"集团"或"公司"）是一家位于希腊塞萨洛尼基的国际医疗保健集团。该集团通过自有的“Sky Premium Life”和“Mediterranation”系列产品从事营养保健品板块的业务。公司还在药品板块经营，提供多种品牌仿制药和场外交易药物。此外，集团通过在希腊和英国的子公司参与医疗保健分销业务，服务零售药店和批发分销商。公司战略上专注于新型专利营养保健品（知识产权）和专业根提取物的研发，以及专有复杂仿制药和创新的场外交易产品的研发。公司已开发出一个全球分销平台，目前正在欧洲、亚洲和北美扩展业务。公司在希腊塞萨洛尼基和雅典以及英国哈洛设有办事处和分销中心。
公司于2009年7月21日在内华达州注册，名称为Prime Estates and Developments, Inc.。2013年11月14日，我们将公司名称更改为阿童木控股公司，并在2022年11月29日更改为阿童木健康公司。通过收购Amplerissimo Ltd，于2013年9月27日，公司将其主要活动更改为产品交易、提供代表以及向各个行业提供咨询服务。2014年8月1日，公司成立了SkyPharm S.A.，一家希腊公司（“SkyPharm”），是一个曾专注于营养保健品及药品交易、采购和出口的子公司。2017年2月，公司收购了Decahedron Ltd.，一家英国公司（“Decahedron”），这是一家完全持牌的第二代批发商，专门从事EEA内通用药品和场外交易药品的进出口，同时也是英国Sky Premium Life营养保健品的分销商。2018年12月19日，公司收购了Cosmofarm，这是一家专注于通过广泛的药房网络分销和出口药品的药品批发商。2023年4月3日，公司完成了对ZipDoctor Inc.（“ZipDoctor”）的收购，一家远程医疗公司，为消费者提供基于订阅的远程医疗平台。2023年6月30日，公司收购了Cana Laboratories Holdings（塞浦路斯）有限公司（“Cana”），该公司全资拥有一家运营子公司，药品实验室Cana S.A.（“Cana SA”），这是一家希腊制药公司，生产、销售、分销和市场推广由领先的全球药品和医疗保健公司研究开发的原品牌产品。
收购会计
Cloudscreen
在2024年1月23日，公司完成了对Cloudscreen的收购，该平台是一个先进的人工智能（AI）驱动平台。该收购是根据2023年10月11日宣布的购买协议进行的。Cloudscreen是一个多模态平台，专注于药物重定位，这是一个发现现有药物用于治疗不同疾病的新靶蛋白或适应症的过程。总购买价格为$
ZipDoctor
在2023年4月3日，公司完成了对ZipDoctor Inc.（“ZipDoctor”），一家远程医疗公司的收购，总金额为$
| 9 |
| 目录 |
阿童木健康公司。
简明联合财务报表附注(未经审计)
2024年9月30日
比卡斯
2023年6月15日，阿童木健康公司与希腊公司Ioannis Bikas O.E.（“Bikas”）签署了一份转让与假设协议（“协议”）。Bikas拥有希腊的药品分销网络，并同意将其分销网络和客户基础出售给公司。网络的购买价格为100,000欧元（$
建筑物收购
在2023年4月24日，公司以现金总额购买了一栋建筑，金额为$
2023年1月6日，公司同意从第三方供应商购买位于加拿大蒙特利尔的土地和建筑。总购买价为$
卡那
2023年6月30日，公司收购了Cana Laboratories Holdings (Cyprus) Limited（"Cana"），该公司全资拥有一家运营子公司，药品实验室Cana S.A.（"Cana SA"），总价为800,000欧元（$
考虑事项 |
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现金 |
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发行普通股的公允价值 |
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转移总对价的公允价值 |
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确认可识别资产的金额 |
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金融资产 |
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库存 |
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不动产、厂房和设备 |
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可识别的无形资产 |
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金融负债 |
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可识别的净资产总额 |
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购买收益 |
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截至2024年9月30日的9个月期间的营业收入 |
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截至2024年9月30日的9个月期间的亏损 |
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| 10 |
| 目录 |
阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
在前一年度期间，Cana几乎没有运营，因为它面临财务困难并寻找投资者。
财务报表呈现的基础
附带的未经审计的简明合并基本报表是根据美国公认会计原则编制的。
合并原则
我们的合并财务报表包括我们的账目和我们全资子公司的账目，包括SkyPharm S.A.、Decahedron Ltd.、Cosmofarm S.A.、Cana Laboratories Holdings (Cyprus) Limited和ZipDoctor Inc. 本集团的基本报表是根据美国一般公认会计原则（"US GAAP"）编制的。合并财务报表反映了公司控制下的所有实体的合并，这些控制是通过能够指导对这些实体经济绩效产生重大影响的活动来确定的。所有重要的内部交易余额和交易均已被消除。
外币的交易和翻译
公司的希腊子公司（CANA Laboratories、Cosmofarm S.A. 和 SkyPharm SA）的功能货币为欧元 (€)，而英国子公司（Decahedron Ltd）的功能货币为 GBP (£)。ZipDoctor Inc. 是一家美国公司。因此，子公司的财务报表（ZipDoctor Inc. 除外）已从当地货币转换为美元，使用（i）年末汇率用于资产负债表账户，以及（ii）报告期内的平均汇率用于所有损益表账户。外币转换产生的收益和损失作为股东权益和夹层权益的合并变动财务报表的一个独立组成部分进行报告。
估计的使用
根据美国通用会计准则编制合并基本报表时，管理层需要做出估计和假设，这些估计和假设会影响在基本报表日期报告的资产和负债的金额，以及或有资产和负债的披露，以及报告期间的收入和费用的报告金额。实际结果可能与这些估计存在差异。
乌克兰战争的影响
2022年2月24日，俄罗斯军队对乌克兰发动了重大的军事行动。该地区持续存在冲突和干扰，预计这种情况将在可预见的未来持续下去。我们与乌克兰或俄罗斯没有进行任何商业交易，因此，公司并不知晓在本季度报告（Form 10-Q）发布之日是否存在任何需要更新其估计或判断或修订资产或负债账面价值的具体事件或情况。这些政治问题和冲突如果在我们开展业务的区域升级，可能会对我们的经营结果和财务状况产生重大不利影响。此外，在我们开展业务的外国市场中，政府的变动和不利行动可能会对我们的经营结果和财务状况产生重大不利影响。
| 11 |
| 目录 |
阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
信用损失
2016年6月，FASB发布了ASU 2016-13，金融工具—信用损失（主题326）：金融工具的信用损失计量，该标准修订了金融资产预期信用损失的计量和确认要求。此外，ASU 2019-10和ASU 2019-11修订为实施ASU 2016-13提供了额外的明确指导。ASU 2016-13自2023年1月1日起对公司生效，允许提前采用。公司于2023年1月1日采用了该标准，该标准对公司的合并基本报表及相关披露没有重大影响。公司主要通过销售给客户和提供的贷款面临信用损失风险。公司评估每位客户/借款人的还款能力，并通过进行信用审查来估计信用损失，该审查包括考虑既定的信用评级，或在没有信用评级时，基于客户的支付历史进行的内部信用评估。公司通过积极审查客户余额来监控信用风险。公司的应收账款预期损失方法是考虑多种因素后制定的，包括但不限于历史收款经验、当前客户信用评级、当前客户财务状况、当前和未来的经济及市场状况，以及账款的年龄。更具体地说，公司对余额长期未结的多个客户进行个别评估，为他们应用不同的信用损失百分比，然后对未包括在个别分析中的其他客户进行汇总，依据其评级（根据上述因素决定）将其分组，并对每组应用特定的信用损失百分比。公司已选择遵循简化的ECL方法。与信用损失相关的费用包括在“管理及行政费用”中，并在确定未收款项为可疑的期间记录。账户余额在被认为无法收回时，将冲减准备金。
现金及现金等价物
为了现金流量表的目的，公司将所有购买时原始到期日在三个月或更短时间内的高度流动投资视为现金等价物。
公司在美国以美元、在希腊以欧元、美元和英镑（英国镑）以及在保加利亚以欧元维持银行账户。 公司还在英国设有以欧元和英镑（英国镑）计价的银行账户。
应收账款，净额
应收账款按其净可变现价值列示。针对应收账款、预付费用及其他流动资产和其他资产的坏账准备，反映了根据历史经验、已知问题账户的具体准备金以及其他当前可用信息，对应收款组合中固有的潜在损失的最佳估计。截至2024年9月30日和2023年12月31日，公司的坏账准备为$
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截至2024年1月1日的余额 |
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外汇调整 |
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截至2024年9月30日的余额 |
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税收应收款
公司在其经营所在的大多数国家/地区的正常业务过程中支付增值税（“增值税”）或类似税（“进项增值税”）、所得税和其他税款，这些税款与其收购的商品和/或服务采购和/或销售和应纳税所得额有关。公司还代表政府为其销售的商品和/或服务征收增值税或类似税（“出口增值税”）。如果产出增值税超过进项增值税，则会产生应付给政府的增值税。如果进项增值税超过产出增值税，则会产生应向政府征收的增值税。增值税纳税申报表按月提交，抵消应付账款与应收账款。根据欧盟内部跨境销售法规，我们在希腊的子公司SkyPharm和Cosmofarm不对向在其他欧盟成员国注册的药品批发分销商的销售收取增值税。截至2024年9月30日和2023年12月31日，该公司的增值税应收净额为美元
| 12 |
| 目录 |
阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
存货
库存按照成本或净可变现价值中较低者进行列示，采用加权平均法。库存主要由成品和封装材料组成，即包装好的药品及其销售所用的外包装和容器。通过100%的盘点来维护定期库存系统。库存定期更换，以保持手头的最佳库存，确保可以立即发货。
公司根据实物状况、到期日期和当前市场情况，以及预测的需求，将存货减记至可变现净值。公司的存货不易过时。公司的许多存货项目在预先约定的产品要求（包括但不限于实物状况和到期日期）未满足时，可以退回给我们的供应商。在估算我们存货的销售价格时，未应用重大判断。
净资产及设备
物业和设备按成本列示，减去累计折旧。折旧是根据资产的使用寿命以直线法计算的（租赁改良除外，后者按租期与使用寿命中较短者折旧），具体如下：
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折旧费用为$
物业和设备增加
当与资产相关的未来经济利益可能流入实体，并且资产的成本可以可靠地测量时，物业和设备的新增项目被确认为资产。新增项目最初按成本计量，包括与使资产达到其预定使用状态和位置直接相关的所有费用。这可能包括购置价格、运费、安装费用以及任何直接相关的专业费用。如果其成本超过某个阈值，则会资本化。该阈值是基于重要性考虑来确定的。低于阈值的费用通常在发生时作为费用支出。在初始确认后，新增项目按成本减去累计折旧和任何累计减值损失进行计量。折旧是根据资产的预计使用寿命系统性计算的。每当事件或情况的变化表明账面金额可能无法收回时，它们就会进行减值测试。如果账面金额超过可收回金额，则会确认减值损失，并相应地调整资产的账面金额。与收购、施工或生产合格资产（包括物业和设备新增项目）直接相关的借款费用，作为这些资产成本的一部分进行资本化。
| 13 |
| 目录 |
阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
商誉和无形资产，净值
公司定期审查不需摊销的无形资产的账面价值，包括商誉，以判断是否可能存在减值。商誉和某些无形资产每年进行评估，或在发生某些触发事件时，根据公允价值计量技术判断减值。这些事件可能包括商业环境的重大变化、法律因素、经营业绩的下降、竞争、销售或处置重要业务部分或其他因素。首先，在步骤0中，我们判断报告单位的公允价值是否低于账面价值的可能性大于50%。接下来，如果步骤0未通过，则使用两步流程确定商誉减值。商誉减值测试的第一步是通过将报告单位的公允价值与其账面价值（包括商誉）进行比较来识别潜在的减值。公司使用第三级输入和折现现金流方法来估计报告单位的公允价值。折现现金流分析需要进行各种判断假设，包括未来现金流、增长率和折现率的假设。关于未来现金流和增长率的假设基于公司的预算和长期计划。折现率假设基于对各报告单位固有风险的评估。如果报告单位的公允价值超过其账面价值，则认为该报告单位的商誉未减值，减值测试的第二步不必要。如果报告单位的账面价值超过其公允价值，则执行商誉减值测试的第二步，以测量减值损失（如有）。商誉减值测试的第二步比较报告单位的商誉的隐含公允价值与该商誉的账面价值。如果报告单位的商誉的账面价值超过该商誉的隐含公允价值，则确认减值损失，金额等于该差额。商誉的隐含公允价值的确定方式与在业务合并中确认的商誉金额相同。也就是说，报告单位的公允价值被分配给该单位的所有资产和负债（包括任何未确认的无形资产），就像报告单位是在业务合并中被获取的，报告单位的公允价值是获得报告单位所支付的购买价格。
在2018年12月19日，由于收购了Cosmofarm，公司记录了$
具有明确使用寿命的无形资产根据成本记录，并在其预计使用寿命内采用直线法摊销。公司对进出口许可证的使用寿命为5年，对在注释4中列为“许可证”的药品和营养保健产品许可证的使用寿命为10年。注释4中列为“软件”的平台和客户群也使用10年的使用寿命。公司每年评估无形资产的剩余使用寿命，以判断事件和情况是否需要修订剩余的摊销期限。如果无形资产剩余使用寿命的估计值发生变化，剩余的账面价值将前瞻性地摊销至修订后的剩余使用寿命。截止至2024年9月30日和2023年12月31日，无形资产的剩余摊销期限没有发生修订。
摊销费用为$
长期资产的减值
根据ASC 360-10，长期资产，财产和设备以及无形资产在出现事件或情况变化表明资产的账面价值可能无法回收时，需进行减值评估。长期资产的回收能力通过比较资产的账面价值与预期产生的未折现未来现金流的估算值来衡量。如果资产的账面价值超过其估计的未折现未来现金流，则确认减值费用，金额为资产账面价值超过资产公平价值的部分。公平价值通常是通过资产预期的未来折现现金流或市场价值（如易于确定）来决定。
| 14 |
| 目录 |
阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
权益法投资
对于公司能够对被投资单位的运营和财务政策施加重大影响的普通股或实质普通股投资，该投资按权益法进行核算。公司记录其在被投资单位收益中的份额，并在合并利润表中列示为“联营公司权益收益”。当事件或情况变化表明投资的账面价值可能无法收回时，公司会评估其投资是否存在其他非暂时性减值，并会确认减值损失以将投资调整为当时的公允价值。
股票证券投资
对股权证券的投资按公允价值计量，公允价值的变动计入净利润（亏损）。股权证券根据证券的性质和满足当前运营需求的可用性分类为短期或长期。可以在当前运营中便于出售的股权证券作为当前资产的组成部分在附带的合并资产负债表中报告。不被视为在当前运营中可用的股权证券将在附带的合并资产负债表中作为长期资产的组成部分报告。对于没有可立即确定公允价值的股权证券，公司选择一种替代公允价值的计量方法。在这种替代方案下，公司按照成本减去任何减值的金额进行投资计量，并根据观察到的价格变动调整，以反映被投资单位在相同或类似投资中的交易价格变动。使用替代计量的选择是针对每个合格投资进行的。
截至2024年9月30日，投资包括
公允价值计量
公司在定期以公允价值计量的资产和负债上应用 ASC 820《公允价值计量和披露》（“ASC 820”）。ASC 820 为公允价值建立了一个通用的定义，以适用于现有的普遍接受的会计原则，这些原则要求使用公允价值计量，并建立了一个公允价值计量的框架，扩展了关于这些公允价值计量的披露。
ASC 820将公允价值定义为在计量日，市场参与者之间有序交易所能获得的资产售价或需支付的负债转移金额。此外，ASC 820要求使用最大化可观察输入并最小化不可观察输入的估值技术。以下是这些输入的优先级：
第一级：在活跃市场中，对于相同资产或负债的可观察到的输入，如报价（未经调整）。
第二级：可观察的输入，除了报价价格外，还包括在活跃市场中的类似资产或负债的报价价格，以及在非活跃市场中相同或类似资产或负债的报价价格，这些输入可以是直接或者间接的。
第三级：几乎没有市场数据的不可观察输入，因此是根据我们开发的估算和假设制定的，这些估算和假设反映了市场参与者可能使用的输入。
此外，ASC 825-10-25，即公允价值选项（“ASC 825-10-25”），扩大了在财务报告中使用公允价值计量的机会，并允许实体选择将许多金融工具和其他某些项目按公允价值计量。公司没有选择任何符合条件的金融工具的公允价值选项。
| 15 |
| 目录 |
阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
截至2024年9月30日和2023年12月31日，我们的财务报告中还包括以下金融工具：现金、应收账款、存货、预付款项、应收贷款、应付账款、应付票据和信用额度。除了固定利率的应收贷款外，其余金融工具的账面价值由于其短期特性，接近公允价值。
客户预付款
公司在客户获得公司的药品之前，会从某些客户处收到预付款。公司将这些收到的款项记录为流动负债，直到满足所有营业收入确认的标准，包括将产品的控制权转移给客户，此时，公司将减少客户预付款余额并记入公司的营业收入。
收入确认
根据ASC主题606，来自客户合同的营业收入（“ASC 606”），公司采用五步模型来确认营业收入，步骤如下：
| 1) | 合同的识别：公司在与客户达成一个创建可执行权利和义务的协议时识别合同。 |
| 2) | 履行义务的识别：公司在每个合同中识别出独特的履行义务，这些义务代表向客户转让货物或服务的承诺。 |
| 3) | 交易价格的确定：公司确定交易价格，这代表它期望在转让承诺的货物或服务给客户时有权获得的对价金额，不包括代表第三方收取的任何金额。 |
| 4) | 交易价格的分配：公司根据每个独特履行义务的单独售价将交易价格分配给每个履行义务。如果单独售价不可观察，公司会使用适当的方法进行估算。 |
| 5) | 营业收入的确认：当公司通过向客户转让承诺的货物或服务来满足履行义务时，营业收入被确认。这通常发生在某一时刻或随着时间推移，这取决于履行义务的性质。 |
自有品牌营养品和药品的批发营业收入和销售
公司与客户签署了合同或合作伙伴协议（通常在制药行业的批发板块），规定了可强制执行的权利和义务。公司负责将货物转移到客户的指定地点，这代表了其唯一的履行义务。因此，交易价格（大多数产品的价格是预先确定的）完全分配给这一履行义务。营业收入在一个时点上确认，即在相应的销售发票开具时。公司评估了截至2023年12月31日和2024年9月30日开具但尚未送达客户指定地点的项目影响，并认为没有实质性影响。
制药制造业
公司与客户签订了有效合同，规定了可执行的权利和义务。公司负责根据客户分配的特定产品进行制造和包装，这代表了公司分配的交易价格的履行义务。客户负责向公司提供原材料。营业收入是在一段时间内确认的，即在各自产品的生产和包装期间。截至2024年9月30日，没有产品或产品批次的生产或包装阶段正在进行。
| 16 |
| 目录 |
阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
Medihelm SA
从2023年1月1日起，根据与公司自有营养品系列的独家分销商Medihelm达成的协议，公司认为交易价格是可变的，并记录交易价格的估计，但须遵守可变对价的限制。公司通过评估独家分销商的巨额逾期应收账款来确定与独家分销商交易价格的变化，公司在每个报告期内都会重新评估这些应收账款。通过该评估，公司应用了ASC 606-10-32-5下的 “预期价值” 模型，并在每个报告期结束时对客户应得的收入应用了特定的限制。在应用 “预期价值” 模型之后，公司推迟了美元的款项
股票基础的薪酬
公司根据ASC 718《股票补偿》（“ASC 718”）和《员工会计公报第107号》（“SAb 107”）记录股票基础补偿，涉及对ASC 718的解释。ASC 718要求将所有授予员工的股票基础补偿的公允价值记录为费用，并在相关必要服务期内摊销。公司使用布莱克-舒尔斯期权定价模型按公允价值对任何员工或非员工的股票基础补偿进行评估。
公司根据ASU 2018-07的计量和确认标准，"补偿-股票补偿-对非员工股票支付会计的改进"，对非员工股票奖励进行会计处理。
所得税
根据收入税会计标准ASC 740，公司采用资产和负债法计算所得税。在这种方法下，确认递延税资产和负债，以反映因现有资产和负债的财务报表账面价值与其各自税基之间的差异以及净营业亏损结转所产生的未来税收后果。递延税资产和负债的计量采用预期适用于将在这些临时差异预期被收回或结算的年份的已颁布税率。税率变化对递延税资产和负债的影响在包括颁布日期的期间内确认为收入。
公司在希腊和英国需要缴纳所得税，企业所得税率为
我们定期审查递延税资产，以评估其潜在实现情况，并为这些资产的部分建立估值准备金，以减少其账面价值，如果我们认为递延税资产实现的可能性不大于50%。我们的审查包括评估可能影响递延税资产可实现性的正面（例如，应税收入来源）和负面（例如，近期历史损失）证据。截至2024年9月30日，我们认为我们的英国和希腊递延税资产不会实现，因此，我们在截至2023年12月31日的财年中未记录全面估值方法的逆转。
租赁
公司根据ASC 842对租赁进行会计处理。对于所有租赁，公司在资产负债表上确认使用权资产（ROU资产）和租赁负债。ROU资产代表公司在租赁期间使用基础资产的权利，而租赁负债代表因租赁产生的支付租金的义务，均以未来租赁支付的现值计量。租赁支付在租赁期间按直线法计入运营费用。租赁负债的利息和ROU资产的摊销在利润表中分别确认。公司在谈判和确保租赁过程中发生的初始直接费用被资本化，并在租赁期间按照直线法摊销。运营租赁和融资租赁的资产和负债在开始日期基于未来租赁支付的现值确认，使用公司的担保增量借款利率或隐含利率（如易于确定时）。开空租赁，初始期限为12个月或更短，不记录在资产负债表上。公司的运营租赁不提供可容易确定的隐含利率。因此，我们使用基于我们增量借款利率的折现率，该利率是在租赁开始日根据长期债务的平均利率确定的。
| 17 |
| 目录 |
阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
养老和终止福利
根据希腊劳动法，雇员有权在解雇或退休时获得一次性补偿。该金额取决于员工在解雇或退休之日的工作经验和薪酬。如果员工在公司工作直到全额退休，则该员工有权一次性获得相当于该员工在同一天被解雇时所得薪酬的40％的一次性付款。公司定期审查与适用相关劳动法规相关的不确定性和判断，以确定其希腊子公司的退休金和解雇补助金义务。公司已经评估了这些法规的影响，并确定了潜在的退休金和解雇补助金负债。截至2024年9月30日和2023年12月31日，负债金额为美元
普通股每股基本和摊薄净亏损
每股基本收入是通过将分配给普通股股东的收入除以期间内流通的普通股加权平均数量来计算的。每股摊薄收入是通过将分配给普通股股东的收入除以期间内流通的普通股加权平均数，并在稀释时使用期权和购买普通股的Warrants的潜在股份，采用财政股票法进行计算的。根据ASC 260，收益每股，以下表格将基本流通股与摊薄流通股进行调节。
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| 九月三十日 2024 |
|
| 九月三十日 2023 |
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基本每股流通在外的加权平均股份数 |
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潜在稀释普通股等价物 |
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| - |
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| - |
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稀释后的普通股和等价物的加权平均流通在外股份数 |
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下表总结了因其效果具有抗稀释性的潜在普通股，这些股票被排除在外：
|
| 9月30日 2024 |
|
| 9月30日 2023 |
| ||
认购权证 |
|
|
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总计 |
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仅当期权行使价格低于所示期间的普通股平均市场价格时，普通股等价物才会被纳入稀释每股收益的计算中。
| 18 |
| 目录 |
阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
在2022年3月，FASB发布了ASU 2022-02，困境债务重组和历史披露。该ASU取消了对已采用ASU 2016-13（金融工具信用损失计量）的债权人困境债务重组的会计指导，该ASU于2020年1月1日生效。ASU 2016-13的采用对公司的合并基本报表没有重大影响。ASU 2022-02还增强了债权人在借款人面临财务困难时对某些贷款再融资和重组的披露要求。此外，该ASU修订了对历史披露的指导，要求实体按起源年份披露融资应收款和租赁净投资的当前期间总减值。该ASU适用于2022年12月15日之后开始的年度期间，包括这些财政年度内的中期期间。ASU的采用将以前瞻性方式应用。也允许提前采用，包括在中期期间的采用。该ASU于2023年1月1日被采用，导致保留盈余没有累计影响调整。
近期会计公告
在2024年3月，财务会计准则委员会（"FASB"）发布了会计准则更新（"ASU"）2024-01，补偿—股票补偿（主题718）：利润权益和类似奖励的范围适用。本指导旨在通过添加一个示例来改进通用会计原则（GAAP），以演示实体应如何应用第718-10-15-3段的范围指导，以判断利润权益和类似奖励（"利润权益奖励"）是否应根据主题718，补偿—股票补偿进行会计处理。本更新中的修订自2024年12月15日后开始的年度期间和这些年度期间内的中期期间生效。本更新中的修订应适用于（1）追溯适用于财务报表中呈现的所有 prior periods，或（2）前瞻性适用于在实体首次应用该修订日期之后授予或修改的利润权益和类似奖励。公司目前正在评估该指导，以判断其对合并基本报表披露可能产生的影响。
在2024年3月，财务会计准则委员会（"FASB"）发布了会计准则更新（"ASU"）2024-02，编纂改进——修订以删除对概念声明的引用。此指导旨在删除对各种FASB概念声明的引用。委员会在其议程上有一个常设项目，以处理来自利益相关者关于会计标准编纂和其他对公认会计原则（GAAP）的增量改进的建议。这项工作促进了对技术更正的编纂更新，如一致性修正、对指导的澄清、术语或指导结构的简化以及其他小幅改进。 resulting amendments 被称为编纂改进。本次更新中的修订并不打算给大多数实体带来重大会计变化。公司目前正在评估此指导，以判断其对合并基本报表披露的影响。
在2023年12月，金融会计标准委员会（“FASB”）发布了会计标准更新（“ASU”）2023-09，所得税（主题740）：改善所得税披露。该指引旨在提高所得税披露的透明度和决策使用性。ASU 2023-09中的修订主要通过对美国和外国管辖区的税率调节和已支付所得税的披露进行更改，以应对投资者对增强所得税信息的请求。ASU 2023-09自2024年12月15日后开始的财年起生效，采用前瞻性原则，也可以选择追溯适用。允许提前采用。公司目前正在评估该指引，以判断它可能对公司合并基本报表披露产生的影响。
在2023年11月，FASB发布了ASU 2023-07，段落报告：可报告段落披露的改进。该指导方针主要通过要求披露定期提供给首席运营决策Maker的重要段落费用，而扩大公共实体的段落披露，并在每个报告的段落利润或损失的度量中包括该费用，其他段落项目的金额及其组成描述，以及可报告段落的利润或损失和资产的临时披露。该指导方针适用于2023年12月15日之后开始的财政年度，以及2024年12月15日之后开始的财政年度的临时期间，并允许早期采用。修订内容要求对实体的基本报表中呈现的所有先前期间进行追溯应用。公司目前正在评估该指导方针，以判断其可能对其合并基本报表相关披露的影响。
管理层认为，任何最近发布但尚未生效的会计准则，若当前采纳，均不会对公司的合并基本报表产生重大影响。
注释 3 – 权益法投资
分配与股权协议
2018年3月19日，公司与Marathon Global Inc.（“Marathon”），一家在加拿大安大略省注册的公司，签署了分销和股权收购协议。Marathon成立的目的是成为全球大麻、大麻二酚（CBD）及/或任何大麻提取产品、提取物、附属产品和衍生品（统称为“产品”）的供应商。公司最初被指定为这些产品在欧洲的独家分销商，并在其他地方根据法律允许的情况下作为非独家分销商。公司目前无意在美国根据本协议分销任何产品或以其他方式参与美国的大麻业务。公司打算等待美国政府对大麻监管的进一步澄清，然后再决定是否进入国内市场。
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上述交易在尽职调查期结束后的2018年5月22日完成，此后公司收到了： (a)
分配和股权收购协议将无限期生效，除非马拉松未能提供市场竞争力（如定义）产品定价，并且马拉松在协议签署后未能实现盈利。
CosmoFarmacy LP
在2019年9月，公司与一家不相关的第三方签署协议，成立CosmoFarmacy L.P.，以提供战略管理咨询服务以及药品的零售业和场外交易给药房。CosmoFarmacy的设立期限为30年，至2049年5月31日。该不相关第三方是有限合伙企业的普通合伙人（“GP”），负责与CosmoFarmacy相关的管理和决策。初始股本设定为EUR
注释 4 – 物业和设备，净值
截至2024年9月30日和2023年12月31日，财产和设备，净值包括以下内容：
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减：累计折旧和摊销 |
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总计 |
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阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
注释5 - 无形资产
截至2024年9月30日和2023年12月31日，商誉和无形资产净额包括以下内容：
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| 9月30日 2024 |
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许可 |
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交易名称 / 标志 |
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减：累计摊销 |
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交易名称 / 商标 |
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截至2024年9月30日，预计在接下来的五个财政年度中，属于摊销的无形资产的总摊销费用如下：
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2025 |
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2026 |
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注释 6 – 应收贷款
2021 年 10 月 30 日，公司与 Medihelm SA 签订了一项为期十年的贷款协议，以纪念 4,284,521 欧元（美元）
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| 目录 |
阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
注释7 - 所得税
公司在美国注册成立，受美国联邦税务的管辖。由于公司在截至2024年9月30日和2023年9月30日的九个月内没有美国应税收入，因此未计提所得税准备。
公司的希腊子公司受希腊所得税法的管辖。希腊的企业税率为
公司的英国子公司受英国所得税法的管辖。英国的企业税率为
截至2024年和2023年9月30日，公司有效的税率与美国联邦法定税率的差异主要是由于在美国和英国对净递延税资产记录了估值拨备。
我们定期审查递延税项资产，以评估其潜在的实现可能性，并为这些资产的部分建立估值备抵，以减少账面价值，如果我们认为递延税项资产不太可能实现。我们的审查包括评估可能影响递延税项资产可实现性的正面（例如，应税收入来源）和负面（例如，最近的历史损失）证据。截止到2024年9月30日和2023年12月31日，公司在美国、希腊和英国的所有净递延税项资产上保持了估值备抵。
截至2024年9月30日和2023年9月30日的三个月内，公司在其纳税管辖区录得税收利益，金额为$
注意 8 - 资本结构
优先股
公司获准发行
A类优先股的主要权利与偏好
自2021年10月4日起，公司修订并重述了其公司章程（“修订和重述的章程”），并向内华达州提交了其A系列优先股（“A系列优先股”）的设计证书（“COD”）。 修订和重述的章程授权公司的董事会有权通过决议不时授权发行优先股的一类或多类系列。 2022年2月23日，公司提交了COD的第1号更正。 2022年7月28日，公司向内华达州提交了COD的修正案，允许持有人在转换A系列优先股时放弃对实际拥有权限制的适用。
关于分红派息和在公司清算、解散或结束时的资产分配，无论是自愿还是非自愿，所有A系列优先股的股份将按以下顺序排名： (i) 优先于公司所有普通股和公司未来可能发行的任何其他股权证券， (ii) 与公司未来可能发行的任何其他股权证券平等，这些证券的条款特别规定这些股权证券与A系列优先股具有同等或优先地位（"平价证券"）， (iii) 劣于公司发行的所有其他股权证券，这些证券的条款特别规定这些股权证券优先于A系列优先股，以及 (iv) 劣于公司现有和未来的所有债务；未经多数持有者的事先书面同意。
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阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
在公司（“清算”）发生任何自愿或非自愿清算、解散或结束的情况下，A系列优先股票的持有人将首先有权从公司可供分配给其股东的资产中获得赔偿。
每位持有人不得与持有普通股的股东共同投票，共同作为一个单类，针对公司提交给股东的任何和所有事项进行投票，除非法律另有规定或在COD中另有说明。A系列优先股的持有者有权按照与普通股持有者相同的程度领取支付的分红和分配，就好像A系列优先股的持有者将这些股份转换为普通股一样。
每个持有人有权根据每股A系列优先股的票面价值，以每年
的分红派息率，接受以A系列优先股或现金形式的分红派息。
A系列股份在支付分红和在清算、解散或结束营业时分配资产方面，优先于公司所有的普通股和公司未来可能发行的其他权益证券。在A系列股份未被赎回期间，公司不得修订、变更或不利改变A系列股份所赋予的权利、偏好或权益，创建或授权创建公司任何额外的资本股票类别或系列（或任何可转换或可行使以获取公司任何类别或系列资本股票的证券），包括任何优于或与A系列股份平行的公司资本股票类别或系列，按任何不利于A系列股份持有人的方式修改、修订、撤销其公司章程或其他章程文件，增加或减少授权的A系列股份数量，任何将导致控制权变更的协议、承诺或交易，任何超出公司正常营业范围的大宗资产销售或处置，任何公司主要业务的重大变更，包括进入任何新业务领域或退出任何当前业务领域，以及绕过A系列股份的权利或优先权。任何A系列股份的持有人有权通过书面选举向公司申请转换所有或部分未赎回的A系列股份。所有可注册证券（如在注册权利协议中定义）注册再售的注册声明生效后，所有未赎回的A系列股份将自动转换为普通股，但须遵守某些有益的持股限制。
库存股
截至2024年9月30日和2023年12月31日，公司持有
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| 目录 |
阿童木健康公司
简明联合财务报表附注(未经审计)
2024年9月30日
在2023年1月24日，公司宣布其董事会已批准一项股份回购计划，授权以最高可购买$
普通股
公司获准发行
普通股的发行
截至2023年9月30日的九个月期间，公司发行了
截至2024年9月30日的九个月期间，公司通过两份招股说明书补充文件募集了额外的股权资金，这些文件是针对于2024年2月29日和3月7日向SEC提交的S-3注册声明（编号：333-267550）。更具体地说，公司出售了
截至2023年12月29日，公司已与一名投资者签订了一个认股权证交换协议（“认股权证交换”），以降低行使价格，
On September 26, 2024, the Company entered into a Warrant Inducement Letter (the “Letter”) with an investor pursuant to which the Company issued
Exercise of Warrants
During the nine months ended September 30, 2024, the Company issued
Warrant Classification
The Company determines the classification of its warrants upon issuance by identifying the instrument issued to determine if it is debt or equity classified. The Company determined its warrants meet the scope exception in ASC 815-10 and are equity classified because, (a) the warrant is indexed to the Company’s own stock, (b) require settlement in equity shares, and (c) the Company has enough authorized and unissued shares.
NOTE 9 – RELATED PARTY TRANSACTIONS
Doc Pharma S.A.
Doc Pharma S.A is considered a related party to the Company due to the fact that the CEO of Doc Pharma is the 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.
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| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2024
Prepaid expenses and other current assets – related party
As of September 30, 2024 and December 31, 2023, the Company had a prepaid balance of $
Accounts payable and accrued expenses - related party
As of September 30, 2024 and December 31, 2023, the Company had an accounts payable balance to Doc Pharma of $
Accounts receivable - related party
The Company had a receivable balance of $
Sales and Purchases
During the three months ended September 30, 2024 and 2023, the Company purchased a total of $
During the nine months ended September 30, 2024 and 2023, the Company purchased a total of $
Other Agreements
On October 10, 2020, the Company entered into a contract manufacturer outsourcing (“CMO”) agreement with Doc Pharma whereby Doc Pharma is responsible for the development and manufacturing of pharmaceutical products and nutritional supplements according to the Company’s specifications based on strict pharmaceutical standards and good manufacturing practice (“GMP”) protocols as the National Organization for Medicines requires. The Company has the exclusive ownership rights for trading and distribution of its own branded nutritional supplements named “Sky Premium Life®”. The duration of the agreement is for five years, however, either party may terminate the agreement at any time giving six-month advance notice. Doc Pharma is exclusively responsible for supplying the raw materials and packaging required to manufacture the final product. However, they are not responsible for potential delays that may arise, concerning their import. Doc Pharma is also obligated to store the raw and packaging materials. The delivery of raw and packaging materials should be purchased at least 30 and 25 days, respectively, before the delivery date of the final product. The Manufacturer solely delivers the finished product to the Company. There is a minimum order quantity (“MoQ”) of
For the three months ended September 30, 2024 and 2023, the Company has purchased €34,350 ($
For the nine months ended September 30, 2024 and 2023, the Company has purchased €161,108 ($
On May 17, 2021, Doc Pharma and the Company entered into a Research and Development (“R&D”) agreement whereby Doc Pharma will be responsible for the research, development, design, registration, copy rights and licenses of 250 nutritional supplements for the final products called Sky Premium Life®. These products will be sold in Greece and abroad.
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| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2024
Purchase of branded pharmaceuticals
On June 28, 2023, the Company approved the purchase of five proprietary and innovative branded pharmaceuticals with significant market presence and material profit contribution from Zakalia Ltd., the parent company of Doc Pharma, for €1,800,000 ($
Loans receivable - related party
The balance of prepaid expenses due Doc Pharma as of December 31, 2022, had increased to €7,103,706 ($7,599,545), which was mainly attributable to the prepayments SkyPharm S.A. made in accordance with the CMO agreement and the extensive orders and sales of the SPL products the Company expects to achieve within 2023, mainly through its Amazon channels in the UK, Singapore, Canada and other countries. However, as the benefit from a significant portion of the prepaid balance would not have been realized within a 12-month period, the Company opted to secure a portion of the outstanding prepaid balance through a loan agreement. SkyPharm S.A. (the “Lender”) entered into a loan agreement with Doc Pharma (the “Borrower”) for €4,000,000 ($
As of September 30, 2024 and December 31, 2023, the loan had a current portion of €400,000 ($
Cana Laboratories Holding Limited
Cana was considered a related party as the Company had signed a binding letter of intent and an SPA for the acquisition of Cana. The acquisition was completed on June 30, 2023 according to the SPA signed on May 31, 2023. Thus, all balances between the Company and Cana were eliminated upon consolidation as of December 31, 2023. The Secured Promissory Note discussed below was included in consideration transferred upon acquisition.
Loans receivable - Related Party - Long Term
On February 28, 2023 (Issue Date), the Company signed a Secured Promissory Note with Cana Laboratories Holdings (Cyprus) Limited (the “Holder”), whereby the Holder borrowed the sum of €4,100,000 ($
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| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2024
Panagiotis Kozaris
Panagiotis Kozaris is considered a related party due to the fact that he is a former General operational manager and current employee of Cosmofarm S.A.
Prepaid Expenses and Other Current Assets - Related Party
From time to time the Company purchases back shares that Panagiotis Kozaris owns and records them as treasury shares. The Company pays Panagiotis Kozaris in advance for the shares owned and obtains the shares upon execution of a cumulative stock-purchase agreement (“SPA”). During the three months ended September 30, 2024 and 2023, the Company paid Panagiotis Kozaris an additional sum of $
Basotho Investment Limited
Basotho Investment Limited is considered a related party once Panagiotis Kozaris (former general operational manager and current employee of Cosmofarm SA) is one of its directors.
General and administrative expenses
On November 21, 2023, the Company issued
Maria Kozari
Maria Kozari is considered a related party to the Company due to the fact that she is the daughter of Panagiotis Kozaris, a former Operational General Manager and current employee of Cosmofarm S.A.
Accounts Receivable - Related Party
During 2021, the Company, through its subsidiary, Cosmofarm SA, commenced a partnership with a pharmacy called “Pharmacy & More”, owned by Maria Kozari. The transactions with the respective pharmacy were in Cosmofarm’s normal course of business, however, a more flexible credit policy was allowed as the pharmacy was new and needed to be established in the market. During the three and nine months ended September 30, 2024 and 2023 the Company’s net sales to Pharmacy & More amounted to $
The Company plans to acquire Pharmacy & More within fiscal year 2024. Upon acquisition, the Company intends to offset the outstanding receivable balance with the corresponding purchase price and additionally plans to make Pharmacy & More the first shop-in-shop of its own branded line of nutraceutical products, Sky Premium Life® (SPL).
Other Related Parties
The Company has the following balances as of September 30, 2024: a) a balance of $
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| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2024
Additionally, the Company had the following balances as of December 31, 2023: a) a balance of $
Notes Payable – Related Party
A summary of the Company’s related party notes payable as of September 30, 2024 and December 31, 2023 is presented below:
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Foreign currency translation |
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Dimitrios Goulielmos
Dimitris Goulielmos was the Company’s former CEO and a Director of the Company.
On November 21, 2014, the Company entered into an agreement with Dimitrios Goulielmos, as amended on November 4, 2016. Pursuant to the amendment, this loan has no maturity date and is non-interest bearing. As of September 30, 2024 and December 31, 2023, the Company had a principal balance of €10,200 ($
The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the nine months ended September 30, 2024, the Company recorded a foreign currency translation loss of $
Loans Payable – Related Party
A summary of the Company’s related party loans payable as of September 30, 2024 and December 31, 2023 is presented below:
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
|
|
|
|
|
|
| ||
Beginning balance |
| $ |
|
| $ |
| ||
Proceeds |
|
|
|
|
|
| ||
Payments |
|
| ( | ) |
|
|
| |
Foreign currency translation |
|
| ( | ) |
|
|
| |
Ending balance |
| $ |
|
| $ |
| ||
| 28 |
| Table of Contents |
Grigorios Siokas
From time to time, Grigorios Siokas loans the Company funds in the form of non-interest bearing, no-term loans. As of September 30, 2024, the Company had an outstanding principal balance under these loans of $
The above balances are adjusted for the foreign currency rate as of the balance sheet date. For the nine months ended September 30, 2024, the Company recorded a gain of $
Except as set forth above, we have not entered into any material transactions with any director, executive officer, and promoter, beneficial owner of five percent or more of our common stock, or family members of such persons.
NOTE 10 – LINES OF CREDIT
A summary of the Company’s lines of credit as of September 30, 2024 and December 31, 2023, is presented below:
|
| September 30, 2024 |
|
| December 31, 2023 |
| ||
National |
| $ |
|
| $ |
| ||
Alpha |
|
|
|
|
|
| ||
Pancreta |
|
|
|
|
|
| ||
EFG |
|
|
|
|
|
| ||
Ending balance |
| $ |
|
| $ |
| ||
The maximum borrowing allowed for the 6% line of credit was $
The cumulative maximum borrowing allowed for the COSME 1 Facility and COSME 2 Facility (collectively, the "Facilities") was $
The Company maintains a line of credit with Alpha Bank of Greece ("Alpha LOC"), which is renewed annually and has a current interest rate of 6.00%. The maximum borrowing allowed was $
The Company holds a line of credit with Pancreta Bank ("Pancreta LOC"), which is renewed annually and has a current interest rate of 4.10%. The maximum borrowing allowed as of September 30, 2024 and December 31, 2023 was $
The Company maintains a line of credit with EGF ("EGF LOC"), which is renewed annually and has a current interest rate of 4.49% plus 3-month Euribor. The maximum borrowing allowed as of September 30, 2024 and December 31, 2023 was $
| 29 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2024
Under the aforementioned line of credit agreements, the Company is required to maintain certain financial ratios and covenants. As of September 30, 2024, and December 31, 2023, the Company was in compliance with these ratios and covenants.
All lines of credit are guaranteed by customer receivable checks, which are a type of factoring in which postponed customer checks are assigned by the Company to the bank, in order to be financed at an agreed upon rate.
Interest expense on the Company’s outstanding lines of credit balances for the three and nine months ended September 30, 2024 and 2023, was $
NOTE 11 – NOTES PAYABLE
A summary of the Company’s third-party debt as of and for the nine months ended September 30, 2024, and the year ended December 31, 2023 is presented below:
September 30, 2024 |
| Trade Facility |
|
| Third Party |
|
| COVID Loans |
|
| Total |
| ||||
Beginning balance, December 31, 2023 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Proceeds |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Payments |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Conversion of debt |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Recapitalized upon debt modification |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accretion of debt and debt discount |
|
|
|
|
|
|
|
|
|
|
| - |
| |||
Foreign currency translation |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Ending balance, September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Notes payable - long-term |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Notes payable - short-term |
| $ |
|
| $ |
|
| $ |
|
|
|
| ||||
December 31, 2023 |
| Trade Facility |
|
| Third Party |
|
| COVID Loans |
|
| Total |
| ||||
Beginning balance, December 31, 2022 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Proceeds |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Payments |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Oher additions |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Debt forgiveness |
|
| ( | ) |
|
|
|
|
|
|
|
| ( | ) | ||
Foreign currency translation |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Ending balance, December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Notes payable – long-term |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Notes payable - short-term |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Our outstanding debt as of September 30, 2024 is repayable as follows: | ||||
|
| September 30, 2024 |
| |
2025 |
| $ |
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
2029 and thereafter |
|
|
| |
Total debt |
|
|
| |
Less: notes payable - current portion |
|
| ( | ) |
Notes payable - long term portion |
| $ |
| |
| 30 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2024
Trade Facility Agreements
On May 12, 2017, SkyPharm entered into a Trade Finance Facility Agreement (the “TFF”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”) as amended on November 16, 2017, and May 16, 2018.
On October 17, 2018, the Company entered into a further amended agreement with Synthesis whereby the current balance on the TFF as of October 1, 2018, which was €4,866,910 ($
On December 30, 2020, the Company transferred the EURO Loan to a new third-party lender. The terms remained the same except interest accrues at
On March 3, 2022, the Company entered into a modification agreement to extend the maturity date to January 10, 2023 and payments under the USD Loan. During June 2022, the Company agreed with the Lender to postpone the repayment of an installment of $500,000 due on June 30, 2022 (based on the modification agreement signed on March 3, 2022) until January 2023. During September 2022, the Company entered into an agreement with the Lender to postpone the repayment of the outstanding balance on the USD Loan of $
On December 22, 2022, SkyPharm signed an agreement for the extension of the payments and an increase in interest rate due under the EURO Loan that was extended to be repaid with a balloon payment now due on October 31, 2025. This extension was agreed upon in writing on December 22, 2022, with a retroactive modification date to October 31, 2022 (the original maturity date).
As of December 31, 2023 the Company had an outstanding principal balance of €1,725,000 ($
The Company repaid €300,000 ($
June 23, 2020 Debt Agreement
On June 23, 2020, the Company’s subsidiary, Cosmofarm, entered into an agreement with the National Bank of Greece S.A. (the “Bank”) to borrow a maximum of €500,000 ($
| 31 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2024
June 24, 2020 Debt Agreement
On June 24, 2020, the Company’s subsidiary, Decahedron, received a loan £50,000 ($
November 19, 2020 Debt Agreement
On November 19, 2020, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($
July 30, 2021 Debt Agreement
On July 30, 2021, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($
June 9, 2022 Debt Agreement
On June 9, 2022
July 14, 2023 Debt Agreement
On July 14, 2023
July 29, 2024 Debt Agreement
On July 29, 2024 the Company entered into an agreement with a third-party lender in the principal amount of €400,000 ($432,760), the “Note”.
| 32 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2024
COVID-19 Loans
On May 12, 2020, the Company’s subsidiary, SkyPharm, was granted and on May 22, 2020 received a €300,000 ($
Cloudscreen Promissory Note
On January 23, 2024 the Company entered into an agreement with a third-party in the principal amount of €300,000 ($
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 $
As discussed in Note 3, the Company attributed no value to the shares received in Marathon pursuant to (a) above. In relation to the
| 33 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2024
On March 20, 2023, the Company’s legal counsel provided notice to Marathon Global Inc, that Cosmos terminated the Equity agreement dated on March 19, 2018 pursuant to Section 3.2 and that termination is effective thirty days from the date of the letter.
None of the above loans were made by any related parties.
NOTE 12 – LEASES
Operating Leases
The Company’s weighted-average remaining lease term relating to its operating leases is
The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of September 30, 2024:
Maturity of Operating Lease Liability |
|
|
| |
2024 |
|
|
| |
2025 |
|
|
| |
2026 |
|
|
| |
2027 and thereafter |
|
|
| |
Total undiscounted operating lease payments |
| $ |
| |
Less: Imputed interest |
|
| ( | ) |
Present value of operating lease liabilities |
| $ |
| |
The Company incurred lease expense, due to amortization of operating lease right-of-use assets, of $
Finance Leases
The Company’s weighted-average remaining lease term relating to its finance leases is
The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s finance leases as of September 30, 2024:
Maturity of Lease Liability |
|
|
| |
2024 |
|
|
| |
2025 |
|
|
| |
2026 |
|
|
| |
Total undiscounted finance lease payments |
| $ |
| |
Less: Imputed interest |
|
| ( | ) |
Present value of finance lease liabilities |
| $ |
| |
| 34 |
| Table of Contents |
The Company had financing cash flows used in finances leases of $
The Company incurred interest expense on its finance leases of $
NOTE 13 – OTHER LIABILITIES
The Company’s other liabilities include but are not limited to liabilities to local tax authorities, fines and payroll taxes, which comprise the largest portion of the balance as of September 30, 2024. The Company’s Greek subsidiaries have $
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, 2024, the following litigations were pending. None of the below is expected to have a material financial or operational impact.
On July 22, 2015, the National Medicines Agency approved the license of wholesale sale of pharmaceutical products under the name SkyPharm SA with set validity at five years and an expiration date of July 22, 2020. Subsequently, SkyPharm on June 15, 2020, legally and timely submitted the application for renewal of the wholesale license of pharmaceutical products to the National Medicines Agency. The National Medicines Agency did not respond, therefore the Company asked for an immediate decision on the renewal. Two months after the filing of the no. 3459 / 15.01.2021 letter and almost nine months after the no. 627615.06.2020 Company application for the renewal, the National Medicines Agency replied by rejecting the renewal request on March 9, 2021 (ref. 62769 / 20-25.02.2021). In addition, document No. 127351-16.12.2021 of EOF (Greek National Medicines Organization) to SkyPharm states that after an inspection of EOF at the premises of Doc Pharma, we did not have a wholesale license in violation of article 106 par. 1b and par. 1c of the ministerial decision D.YG3a / GP.32221 / 29-4-2019. The National Medicines Agency imposed a fine of €15,000 ($
There has been a payment request by the Greek court, which relates to a fine arising from Cosmofarm’s tax audit for financial year 2014. The law with no. 483/16.12.2020 was used by the court against Cosmofarm (the “defendant”). The defendant appealed against the decision using the law with no.11541/09.03.2021. This appeal was dismissed after 120 days from its submission to the court. Additionally, there had been an obligation for payment of additional tax and fines related to this matter in the amount of €91,652 ($
On January 25, 2023, a criminal case of dishonored checks against Cosmofarm’s customer Filippou, was heard at the Z’ Three-Member Misdemeanor Court of Athens, which was postponed to November 27, 2023, when the defendant was tried and found guilty.
| 35 |
| Table of Contents |
On January 26, 2023, the appeal of the Company against Eleutheria Drakopoulou and decision 1389/2021of the Single-Member Court of First Instance of Athens was heard at the Athens Court of Appeal. The appeal was partially accepted. The Court ordered the return of the fee to the appellants, dismissed the action against the third defendant, Kozaris and accepted the action as regards the first and the second defendants (Kastrantas & Cosmofarm).
On October 23, 2023, a criminal case of dishonored checks against Cosmofarm’s customer Kafantaris was heard at the Sixth Single-Member Misdemeanor Court of Athens, which was postponed to January 26, 2024, when the defendant was convicted by decision no. 1599/2024.
In October 2023, the Company’s subsidiary, Cana Laboratories was approached by an attorney on behalf of two clients which were requesting an amount of €39,211 as compensation for the value of 34.70 square meters in relation to an urban sprawl with respect to which an Act of Imputation had been issued by the department of Urban Planning. Our legal counsel’s response was that CANA was not obliged to accept the compensatory value agreed and suggested exploring out of court settlement. As of today, the clients’ Attorney at law has not come back with any suggestions.
Our subsidiary, Cana Laboratories, has two pending lawsuits against Euaggelismos Hospital for a total sum of EUR 526,436 due to unpaid bills. The court date for one of the two lawsuits is set for December 11, 2024, and for the other one has not yet been set. The opinion of our legal advisor is that the collection of the total sum by the Company is almost certain.
Our subsidiary, Cana Laboratories, has an unasserted claim against Papanikolaou Hospital for a total sum of EUR 89,300 due to unpaid bills, which will be asserted through a lawsuit. The opinion of our legal advisor is that the collection of the sum by the Company is almost certain.
A lawsuit dated April 5, 2018 against the Company’s subsidiary Cana Laboratories by a former employee before the Athens court of instance was initially heard on October 12, 2018. The former employee was seeking that the termination of her employment contract to be considered null and void and was requesting compensation for late wages and moral damages. Following numerous appeals, Judgment No. 1192/2024 was issued on September 26, 2023, which as explicitly stated by our legal counsel, requires CANA to rehire the former employee with the threat of a penalty of €200 for each day of non-compliance. As informed by our legal counsel, in order for the penalty to be effective the former employee should file a new lawsuit against CANA and request to get rehired. In case CANA denies employment, then the penalty should be in effect. As of today, we have not received neither a lawsuit nor any request of employment by the former employee.
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.
On November 21, 2023, the Company entered into certain consulting agreements with four third-party consultants for the provision of a variety of services such as digital marketing, advisory services relating to target acquisitions and M&As and other additional services as described in the respective agreements. The agreements have a duration from 10 to 18 months and the consultants will solely receive stock consideration for the services rendered. More precisely, they have been awarded a total of
On July 1, 2024 the Company entered into a consulting agreement with a third-party consultant for the provision of a variety of services such as preparation of press releases and other publications, relationship management and other additional services as described in the respective agreement. The agreement has a duration of sixteen months and the consultant will solely receive stock consideration for the services rendered. More precisely, they have been awarded a total of 240,000 shares of the Company’s common stock valued at a total of $
The corresponding consulting expense is accrued evenly over the term of the agreements. For the twelve-month period ended December 31, 2023 the Company has recorded $
| 36 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2024
Research and Development Agreements
The Company entered into a Research & Development agreement with Doc Pharma S.A. on May 17, 2021. Under this agreement, Doc Pharma is responsible for the research, development, design, registration, copy rights and licenses of 250 nutritional supplements for the final products called Sky Premium Life®. More specifically, Doc Pharma is responsible for the product development and the Company had added 105 of such products codes in its portfolio as of December 31, 2023. No additional ones were added within the nine-month period ended September 30, 2024. The licenses purchased by Doc Pharma SA are capitalized and included in “Goodwill and intangible assets, net” of the Company’s Consolidated Balance Sheets as of September 30, 2024. Thus, no relevant R&D expense had been charged to the Company’s Consolidated Statements of Operations and Comprehensive Loss.
On June 26, 2022, the Company signed a research and development (“R&D”) agreement with a third party, through which the Company assigns to the third party the development of new products and services in the field of health, focusing on the human intestinal microbiome. The project includes two phases. Phase 1 has a 20-month duration and its cost amounts to EUR 758,000 ($
NOTE 15 – STOCK OPTIONS AND WARRANTS
Omnibus Equity Incentive Plan
On September 19, 2022, the Company held a Board of Directors meeting, whereas, the Board of Directors had elected to adopt an Omnibus Equity Incentive Plan (the “2022 Plan”), that includes reserving
On April 3, 2023, the Company approved incentive stock awards for the CFO, certain officers and directors and other employees of the Company.
The equivalent share-based compensation expense for the three and nine months ended September 30, 2023 was $
On August 21, 2023, the Board adopted, subject to stockholder approval, the Cosmos Health Inc. 2023 Omnibus Equity Incentive Plan (the “2023 Plan”). The 2023 Plan is designed to enable the flexibility to grant equity awards to our officers, employees, non-employee directors and consultants and to ensure that we can continue to grant equity awards to eligible recipients at levels determined to be appropriate by the Board and/or the Compensation Committee. Subject to certain adjustments (as provided in Section 4.2 of the 2023 Plan) and exception (as provided in Section 5.6(b) of the 2023 Plan), the maximum number of shares reserved for issuance under the 2023 Plan (including incentive share options) is
On September 16, 2024 the Company’s Board of Directors approved incentive stock awards for the CEO, the CFO, certain officers and directors and other key employees of the Company pursuant to the 2023 Plan adopted on August 21, 2023. The awards are in the form of restricted stock and will vest in two parts: 50% on September 16, 2025 and 50% on September 16, 2026. A total of
| 37 |
| Table of Contents |
Warrant Anti-Dilution Adjustment and Deemed Dividend
The Company’s warrants outstanding contain certain anti-dilution adjustments if the Company issues shares of its common stock at a lower price per share than the applicable exercise price of the underlying warrant. If any such dilutive issuance occurs prior to the exercise of such warrant, the exercise price will be adjusted downward to a price equal to the common stock issuance, and the number of warrants that may be purchase upon exercise is increased proportionately so that the aggregate exercise price payable under the warrant shares shall be the same as the aggregate exercise price in effect immediately prior to such adjustment.
On December 29, 2023, the Company entered into a warrant exchange agreement (the “Warrant Exchange”) with an investor to reduce the exercise price of
On September 26, 2024, the Company entered into a Warrant Inducement Letter (the “Letter”) with an investor pursuant to which the Company issued
As of September 30, 2024, there were
A summary of the Company’s warrant activity for the nine months ended September 30, 2024 and the year ending December 31, 2023 is as follows:
|
|
|
|
|
| Weighted |
|
|
| |||||||
|
|
|
| Weighted |
|
| Average |
|
|
| ||||||
|
|
|
| Average |
|
| Remaining |
|
| Aggregate |
| |||||
|
| Number of |
|
| Exercise |
|
| Contractual |
|
| Intrinsic |
| ||||
Warrants |
| Shares |
|
| Price |
|
| Term |
|
| Value |
| ||||
Balance Outstanding, January 1, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Granted |
|
|
|
|
|
|
|
|
|
|
| - |
| |||
Forfeited |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Exercised |
|
| ( | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Expired |
|
| (5,307 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Balance Outstanding, December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
Granted |
|
|
|
|
|
|
|
|
|
|
| - |
| |||
Forfeited |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
Exercised |
|
| ( | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Expired |
|
| ( | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Balance Outstanding, September 30, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
|
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
Exercisable, September 30, 2024 |
|
|
|
| $ |
|
|
|
|
| $ |
| ||||
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.
| 38 |
| Table of Contents |
COSMOS HEALTH INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2024
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:
Country |
| September 30, 2024 |
|
| September 30, 2023 |
| ||
Croatia |
| $ |
|
|
|
| ||
Cyprus |
|
|
|
|
|
| ||
Bulgaria |
|
|
|
|
|
| ||
Greece |
|
|
|
|
|
| ||
USA |
|
|
|
|
|
| ||
Ireland |
|
|
|
|
|
| ||
UK |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
The following table presents our revenue disaggregated by country for the nine months ended:
Country |
| September 30, 2024 |
|
| September 30, 2023 |
| ||
Croatia |
| $ |
|
|
|
| ||
Cyprus |
|
|
|
|
|
| ||
Bulgaria |
|
|
|
|
|
| ||
Greece |
|
|
|
|
|
| ||
USA |
|
|
|
|
|
| ||
Ireland |
|
|
|
|
|
| ||
UK |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
NOTE 17 – SUBSEQUENT EVENTS
On November 6, 2024, the Company received a non-compliance letter from Nasdaq for its failure to maintain a minimum bid price of
| 39 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Available Information
The following discussion should be read in conjunction with our interim Condensed Consolidated Financial Statements and the related notes and other financial information appearing elsewhere in this report as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Form 10-K for the year ended December 31, 2023 (“Form 10-K”) and this Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.
We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.
Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
Overview
Summary
We are an international healthcare company with a proprietary line of nutraceuticals and distributor of branded and generic pharmaceuticals, nutraceuticals, OTC medications and medical devices. The Company uses a differentiated operating model based on a lean, nimble and decentralized structure, with an emphasis on acquisitions of established companies and our ability to maintain better pharmaceutical assets than others. This operating model and the execution of our corporate strategy are designed to enable the Company to achieve sustainable growth and create added value for our shareholders. In particular, we look to enhance our pharmaceutical and over-the-counter product lines by acquiring or licensing rights to additional products and regularly evaluate selective company acquisition opportunities. The Company, through its subsidiaries, is operating within the pharmaceutical industry and in order to compete successfully in the healthcare industry, must demonstrate that its products offer medical benefits as well as cost advantages. Currently, most of the products that the Company is trading, compete with other products already in the market in the same therapeutic category, and are subject to potential competition from new products that competitors may introduce in the future.
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We continue to rapidly expand our distribution network worldwide and open new markets for our proprietary line of branded pharmaceuticals, nutraceuticals, and nutraceuticals through our distribution channels and e-commerce marketplace. We use our extensive network with direct access to Europe’s primary sales channels for pharmaceuticals and nutraceuticals, which includes over 160 pharmaceutical wholesale distributors in Europe’s largest markets, over 40,000 pharmacies in Europe and 1,500 pharmacies in Greece. We achieve stable supply of pharmaceuticals from DocPharma, a related party, which enhances our ability to scale our expansion. Additionally, following the successful completion of the acquisition of Cana on June 30, 2023, the Company expects to also utilize Cana’s facilities for the production of both pharmaceutical and nutraceutical products. We receive full priority in the production of nutraceuticals and volumes. Our full production in Greece ensures a decisive production-cost advantage while we secure additional discounts by leveraging our purchasing scale.
Our focus on investing in technology enhances yield cost savings and economies of scale the safety, distribution and warehousing efficiency and reliability, as a result of 0% error selection rate and acceleration order fulfillment.
Revenue sources
The Company operates in nutraceuticals industry, distribution of pharmaceuticals and healthcare distribution.
Branded Pharmaceuticals & Generics
We are engaged in the production, promotion, distribution and sale of licensed branded generics and OTC products throughout Europe by our subsidiaries in Greece and UK. Our capital efficient business model is based on infrastructure, efficiency and scale. We believe that there is a significant growth on opportunities through product additions and geographic expansion.
Healthcare Distribution
We conduct direct distribution and sales of pharmaceuticals, medical devices, branded generics and OTC products. Our automated and GDP licensed distribution facilities ensure all medications reach their destination daily on an efficient and secure way. Our network exceeds over 1,500 pharmacies in Greece. We have created an upgraded and high-end distribution center in Greece due to our Robotic systems and integrated automations (“ROWA” robotics).
Nutraceutical
We have created and developed our own proprietary branded nutraceutical products, named “Sky Premium Life®” which was launched in 2018 and “Mediterranation®” which was launched in 2022. Utilizing unique formulations, and specialized extraction processes which follow strict pharmaceutical standards, our proprietary lines of nutraceuticals aim for excellence. We have a full portfolio of fast-moving and specialty formulas with more than 105 product codes including vitamins, minerals and other herbal extracts. Our nutraceutical products are manufactured exclusively by Doc Pharma, a related party of the Company. Our nutraceutical products have penetrated several markets within 2022 and 2023 through digital channels such as Amazon and Tmall and through significant partnerships such as the one with Pharmalink for the distribution of our products in the United Arab Emirates (the “UAE”). We focus on nutraceutical products because we foresee it as a market with high grow opportunities due to its large market size and margin contribution as the demand for nutraceutical products is increasing globally.
Regulations and Licenses
Our subsidiary, Decahedron, was granted the license for the wholesale of medicinal products for human use in February 2021 pursuant to the regulation of 18 of The Human Medicines Regulations 2012 (SI 2012/1916). It fulfills the guidelines of the Wholesale Distribution Authorization (Human). Our subsidiary, Cosmofarm S.A., was granted the license for the wholesale of pharmaceutical products for human use on February 2019 pursuant to the EU directive of (2013/C 343/01). It fulfils the Guidelines of the Good Distribution Practices of medical products for human use. Finally, our subsidiary, Cana SA, is a holder of Good Manufacturing Practices license (GMP), which means that it is certified for fulfilling the minimum standards that a medicines manufacturer must meet in the production processes. All licenses were granted based on inspections and are valid unless current inspections occur which will revise their status.
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Risks
Supply chain disruption is a growing concern for the European pharmaceutical industry as it increasingly looks to cut costs by relying on ‘emerging markets’, where standards can be lower in terms of compliance, ethics and health and safety.
Hikes in the price of medicine and their impact on the sustainability of the healthcare systems are garnering more and more attention. European regulators are willing to play their part in safeguarding continued access to safe and effective medicines. Regulators can speed up the approval of branded pharmaceuticals and biosimilars to boost competition and drive down prices.
Cuts in healthcare spending keep occurring since the financial crises of the late of 2000s. Europe’s slow recovery has been uneven, with austerity and economic uncertainty, especially in the EU’s poorer member states, such as Greece.
Distribution and Trade Agreements
On July 1, 2021, the Company’s subsidiary SkyPharm SA, entered into an exclusive distribution agreement with a company based in Germany, the “Distributor A”, whereas SkyPharm appointed Distributor A to be the responsible Partner for the distribution, promotion, trade marketing, logistics and sale of the nutraceuticals manufactured and supplied by SkyPharm (Sky Premium Life®), in the territories of Austria and Germany. Distributor A places purchase orders with SkyPharm at the company’s address and the purchase order is necessary to initiate any shipment.
On July 7, 2021, SkyPharm SA signed a trade agreement with a company specializing in e-commerce mall advice and operation, henceforward referred as “Distributor B”. Based on the agreement, SkyPharm will sell its own branded products Sky Premium Life ® to final consumers through the e-commerce store opened by Distributor B on Tmall International MALL and Distributor B will provide platform operation services to SkyPharm. The services provided by Distributor B will include mall construction, mall operation and network promotion, along with collection, settlement, customer service, logistics and distribution.
On November 25, 2021, SkyPharm SA signed a trade agreement with a wholesaler which operates in the storage, distribution, trading and promotion of pharmaceutical products) henceforward referred as “Distributor C”. Based on the agreement Distributor C is appointed as the exclusive representative for the promotion & distribution of our proprietary nutraceutical products Sky Premium Life®, in Greece.
During July 2021, the Company’s subsidiary Decahedron Ltd, created a distribution page on Amazon UK, through which it sells, advertises and promotes our own proprietary branded nutraceutical product line “Sky Premium Life®, directly to final consumers.
On September 22, 2022, the Company entered into a distribution agreement with a third party in order to become the distributor of Monkeypox Virus Real-Time PCR Detection Kits. Cosmos will have exclusive distribution rights for Greece and Cyprus, with the opportunity to distribute the test kits across Europe on a non-exclusive basis.
On June 27, 2024 the Company signed an exclusive distribution agreement (the "Agreement") with Pharmalink for its Sky Premium Life products in the UAE. As part of the Agreement, Pharmalink will be responsible for all key functions, including sales and marketing, regulatory affairs, logistics, supply, and distribution of Sky Premium Life products in the UAE. Cosmos Health has secured its first purchase order from Pharmalink for 130,000 units and anticipates receiving orders of more than 500,000 units in the first year and in excess of 3,000,000 units over the next five years.
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Acquisitions and Co-Ventures
ZipDoctor
On September 28, 2022, the Company entered into a non-binding letter of intent (“LOI”) agreement to wholly acquire ZipDoctor Inc., a company that possesses a direct-to-consumer subscription-based telemedicine platform, that expects to provide its customers affordable, unlimited, 24/7 access to board certified physicians and licensed mental and behavioral health counselors and therapists. The current parent company of the acquiree will continue to manage all its aspects of the day-to-day operations, including product development, marketing, and operational support.
On March 17, 2023, the Company announced that it has entered into a definitive agreement to acquire ZipDoctor Inc. for a total sum of $150,000. The Sale and Purchase Agreement (“SPA”) was signed on March 17, 2023, and the transaction closed on April 3, 2023.
CANA
On May 31, 2023, the Company entered into a Stock Purchase Agreement with the owners of one hundred (100%) percent of the equity (the “Shares”) of Cana Laboratories Holdings (Cyprus) Limited (“Cana”), which wholly owned an operating subsidiary, Pharmaceutical Laboratories Cana S.A. (“Cana SA”). The purchase price for the shares for the two Sellers is €800,000 and 46,377 shares of Cosmos restricted common stock at an issuance price of $17.25 per share or $800,000. Moreover, on February 28, 2023, the Company signed a Secured Promissory Note with Cana, whereby Cana borrowed the sum of €4,100,000 ($4,457,520), included in the total cash consideration provided for the acquisition. The acquisition was successfully completed on June 30, 2023.
Cana SA is a Greek pharmaceutical company that manufactures, sells, distributes, and markets original branded products researched and developed by leading global pharmaceutical and healthcare companies. Cana stands out as it brings significant synergies and vertical integration. With a long-standing history spanning almost a century, Cana has earned the trust of industry giants like AstraZeneca, Merck, Unilever, and Procter & Gamble. Cana's Good Manufacturing Practice (GMP) license enables us to manufacture pharmaceuticals, including medicines, within the EU, which creates attractive opportunities for high-margin contract manufacturing agreements with major multinational clients.
Bikas
On June 15, 2023, Cosmos Health Inc. entered into an Assignment and Assumption Agreement (the “Agreement”) with Ioannis Bikas O.E., a Greek Company (“Bikas”). Bikas is owner of a pharmaceutical distribution network in Greece and agreed to sell the Company their distribution network and customer base. The purchase price of the network was €100,000 ($109,330) of cash, and €300,000 ($316,081) of the Company’s stock. The Company issued 99,710 shares of common stock related to the acquisition of the customer base, based on the fair value of the stock on the acquisition date. The Company accounted for the acquisition as an asset acquisition in accordance with ASC 805 and recorded $425,411 as an intangible asset related to the customer base acquired.
This acquisition positively impacted on our revenue (an increase of more than $10 million annually) and enhanced the Company's gross margins (due to economies of scale). Additionally, synergies with Cosmofarm's state-of-the-art facility, which employs robotic technologies for procurement, inventory management, and order execution, provide an elevated level of service to pharmacies, leading to increased orders. We are pleased to announce that we have now successfully integrated Bikas within the Cosmofarm platform.
Cloudscreen
On January 23, 2024, the Company completed the acquisition of Cloudscreen, a cutting-edge Artificial Intelligence (AI) powered platform. The acquisition is pursuant to the purchase agreement announced on October 11, 2023. Cloudscreen is a multimodal platform specialized in drug repurposing, a process that involves uncovering new target proteins or indications for existing drugs for use in treating different diseases. The total purchase price amounted to $637,080 and consisted of 280,000 shares of common stock with a fair value of $319,200 and an amount of $317,880 to be settled in cash during 2024 based on the Promissory Note signed on October 10, 2023. The Company accounted for the acquisition as an asset acquisition in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, (“ASC 805”) and recorded $637,080 as another asset related to the technology platform acquired. The total amount was reclassified to “Goodwill and intangible assets, net” in January 2024 with the closing of the agreement (refer to Notes 2 & 5).
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Results of Operations
Three and Nine Months Ended September 30, 2024 and 2023
Revenue and net loss
The Company had revenue of $12,411,048 and $12,823,797 (a decrease of 3.22%) for the three months ended September 30, 2024 and 2023, respectively and $40,202,238 and $37,537,003 (an increase of 7.10%) for the nine months ended September 30, 2024 and 2023, respectively. Revenue increased overall, compared to the prior periods, and the increase in the nine-month period is mainly attributed to the wholesale revenue stream which was further increased with the enhancement of the overall customer base (acquisition of Bikas and other customer bases from smaller wholesalers). The revenue decrease in the three-month period relates to CANA’s decreased revenue for the period due to a few delays in the production process and Decahedron’s decreased sales of nutraceutical products. Management evaluates that both subsidiaries will rebound and increase their revenue in the fourth quarter of 2024. The Company had a net loss of $2,182,534 on revenue of $12,411,048 versus a net loss of $3,415,077 on revenue of $12,823,797 for the three months ended September 30, 2024 and 2023, respectively and net loss of $6,639,935 on revenue of $40,202,238 versus a net loss of $4,790,597 on revenue of $37,537,003 for the nine months ended September 30, 2024 and 2023, respectively. The increase in net loss for the nine-month period ended September 30, 2024 compared to the 2023 period of $1,849,338 was due to the extraordinary 2023 items such as the gain on debt extinguishment of $1,910,770 and the bargain purchase gain of $1,633,842. The decrease in net loss for the three-month period ended September 31, 2024 compared to the three-month period ended September 31, 2023 is mainly attributable to significantly higher general and administrative costs in the 2023 period, which include material provisions relating to allowances on trade and other receivables and other tax related provisions.
Cost of Goods Sold
The Company had costs of goods sold of $11,204,186 versus $11,609,039 (a decrease of 3.49%) for the three months ended September 30, 2024 and 2023, respectively and $36,894,502 versus $34,418,334 (an increase of 7.19%) for the nine months ended September 30, 2024 and 2023, respectively. The increase in the cost of goods sold in the nine month period is a consequence of the increased sales and the equivalent decrease in the three month period is also in accordance with the decreased revenue.
Our future revenue growth is expected to continue to be affected by various factors such as industry growth trends, including drug utilization, the introduction of new innovative brand therapies, the likely increase in the number of branded pharmaceutical products that will be available over the next few years’ price increases and price deflation, general economic conditions, including the effects of the current conflict in the Ukraine, the coronavirus in the United Kingdom and the member states of European Union, competition within the industry, customer consolidation, changes in pharmaceutical manufacturer pricing and distribution policies and practices, increased downward pressure on government and other third party reimbursement rates to our customers, and changes in government rules and regulations.
Gross Profit
The Company had gross profit of $1,206,862 versus $1,214,758 (a decrease of 0.65%) for the three months ended September 30, 2024 and 2023, respectively and $3,307,736 versus $3,118,669 (an increase of 6.06%) for the nine months ended September 30, 2024 and 2023, respectively. The increase in gross profit for the nine-month period is attributable to the inclusion of CANA’s pharma manufacturing stream which attributes high gross margins, whereas it was merely included for three months in the equivalent 2023 period (acquisition was dated on June 30, 2023). The gross profit was relatively stable between the three-month period ended September 30, 2024 and 2023.
Operating Expenses
The Company had general and administrative costs of $1,782,957 and $2,573,414, salaries and wage expenses of $1,317,782 and $1,252,680, sales and marketing expenses of $41,848 and $157,435 and depreciation and amortization expense of $304,139 and $248,530 for a loss from operations of $2,239,864 and a loss from operations of $3,017,301 for the three months ended September 30, 2024 and 2023, respectively. The operating expenses decreased by 18.56% for the three-month period ended September 30, 2024, mainly derived from the decrease in general and administrative costs. They decreased by 30.72% due to the significant provisions for bad debt allowances and other tax liabilities recorded in 2023. The salaries and wages increased by 5.2% which is mainly attributable to the addition of CANA and the corresponding payroll costs, once all employees remained with the Company following its acquisition on June 30, 2023. The increase in depreciation and amortization expense for the three-month period ended September 30, 2024 of $55,609 (22.38%) is in accordance increase in intangible assets (mainly attributable to the purchase of pharmaceutical licenses in December 2023).
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For the nine months ended September 30, 2024 and 2023, the Company had general and administrative costs of $4,591,620 and $6,662,579, salaries and wage expenses of $4,030,823 and $3,279,803, sales and marketing expenses of $326,291 and $942,759 and depreciation and amortization expense of $937,000 and $478,466 for a loss from operations of $6,577,998 and a loss from operations of $8,244,938, respectively. The significant increase in salaries and wages of $751,020 (22.9%) is due to CANA’s inclusion in the group for the whole nine-month period ended September 30, 2024 whereas it was consolidated for three months in the comparative period. The 95.83% increase in depreciation and amortization expense for the nine-month period ended September 30, 2024 is attributable to increased depreciation expense charged for Cosmofarm’s and CANA’s wholly owned facilities (acquired in April and June 2023 respectively) as long as the amortization expense for the pharmaceutical licenses acquired in December 2023.
Other Income (Expense)
The Company had interest expense related to notes payable and lines of credit of $181,429 and $151,274 versus $692,547 and $529,782 for the three and nine months ended September 30, 2024 and 2023, respectively. The increase in interest expense of 19.93% and 30.72% for the three and nine months ended September 30, 2024 and 2023 respectively, contrary to the overall decrease in notes payable and lines of credit balances for the equivalent periods, is mainly attributable to the increased floating rates of the Company’s facilities in 2024 (Euribor, Libor and Euro Short Term rate).
Interest income amounted to $101,236 and $309,031 versus $110,596 and $555,281 for the three and nine months ended September 30, 2024 and 2023, respectively and the decrease is attributable to both the decreased outstanding balances of the Company’s Loans Receivable and Loans Receivable from related parties and the fact that the Company had interest income arising from treasury bills in the 2023 comparative periods.
The other income, net recorded in the 9-month period ended September 30, 2024, of $160,598 mostly relates to write-offs of liabilities of our dormant subsidiary Cana Laboratories Holdings (Cyprus) Limited (“Cana”) arising from the past which had no substance and thus written off. The corresponding other expense and other income amounts in the three-month periods ended September 30, 2024, and 2023 of $1,921 and $14,404, respectively, primarily relate to prior period income/(expenses) of the Greek subsidiaries.
Additionally, a gain on debt extinguishment relating to the write-off of a share settled debt obligation and the forgiveness of a notes payable balance for a total gain of $1,911,476 was recorded in the nine months ended September 30, 2023. Finally, the Company has recorded a bargain purchase gain of $1,633,842 for the nine months ended September 30, 2023. The bargain purchase gain recorded is solely arising from the gain recognized upon acquisition of Cana. No equivalent extraordinary items were included in the three and nine-month periods ended September 30, 2024.
Foreign currency translation adjustment, net and total comprehensive gain/loss
The Company had a foreign currency translation adjustment gain of $747,879 and a foreign currency translation adjustment loss of $27,988 versus losses of $890,645 and $470,994, attributable to the positive movement of the exchange rates during the three months ended September 30, 2024, respectively, and a net comprehensive loss of $7,629,679 and $12,862,947 versus a loss of $4,254,902 and $5,276,644 for the three and nine months ended September 30, 2024 and 2023, respectively. The increase in comprehensive loss in the three and nine months ended September 30, 2024 mostly derives from the deemed dividends of $9,793 for the inducement to exercise the warrants exercised on September 26, 2024 and $6,185,231 for the grant of new warrants (200% of the ones exercised). For more details regarding the warrant transaction and the deemed dividends recorded please refer to Note 15.
Liquidity and Capital Resources
As of September 30, 2024, the Company had working capital of $11,027,653 compared to $12,285,310 as of December 31, 2023.
The Company had cash and cash equivalents of $3,314,845 versus $3,833,195 as of September 30, 2024 and December 31, 2023, respectively. The Company had net cash used in operating activities of $3,883,215 and $16,587,726 for the nine months ended September 30, 2024 and 2023, respectively. The Company has devoted substantially all of its cash resources to expand through organic business growth and has incurred significant general and administrative expenses in order to enable the financing and growth of its business and operations. The decrease is attributable to the significant working capital outflows in 2023, when the company utilized the proceeds from 2022 equity offerings to repay its significant outstanding liabilities in addition to providing prepayments to certain suppliers.
The Company had net cash used provided by investing activities of $206,971 and net cash used in investing activities $10,399,264 during the nine months ended September 30, 2024, and 2023, respectively. For the nine months ended September 30, 2023, the net cash used in investing activities was mainly attributable to the outflow of consideration transferred through the Cana acquisition, the purchase of ZipDoctor Inc, the purchase of Bikas customer base, the purchase of a list of pharmaceutical licenses, the purchase of Cosmofarm’s warehouse facilities and the advances provided for the purchase of the facilities in Montreal, Canada from the parent company.
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The Company had net cash provided by financing activities of $3,426,621 versus $8,401,750 during the nine months ended September 30, 2024, and 2023, respectively. For the nine months ended September 30, 2024, the Company received proceeds from lines of credit of $18,831,043 and payments of lines of credit of $19,504,594, for a net decrease on the lines of credit of $673,551. The significantly higher inflows arising from financing activities in 2023 was mainly attributable to the receipt of the $4,750,107 subscription receivable, due from December’s 2022 offering. However, the Company repaid $1,494,867 of the outstanding notes payable during the nine-month period ended September 30, 2023, versus $814,267 of debt repayments within the nine-month period ended September 30, 2024 whilst having proceeds from notes payable of $434,797 versus $1,059,300 for the nine month periods ended September 30, 2024 and 2023 respectively. During the nine-month period ended September 30, 2024, the Company raised additional equity funds through two Prospectus Supplements to its Registration Statement on Form S-3 (No. 333-267550) filed with the SEC on February 29 and March 7, 2024. More specifically, the Company sold 901,488 shares of common stock for gross proceeds of $649,039. Additionally, the Company received gross proceeds from the exercise of a number of its outstanding warrants pursuant to the warrant inducement transaction occurred on September 26, 2024 of $4,240,977.
We anticipate using cash in our bank account as of September 30, 2024, cash generated from debt or equity financing, from investing activities or from management loans to the extent that funds are available to do so to conduct our business in the upcoming year. Management is not obligated to provide these or any other funds. If we fail to meet these requirements, we may lose the qualification for quotation and our securities would no longer trade on Nasdaq Capital Market. Further, as a consequence we would fail to satisfy our reporting obligations with the Securities and Exchange Commission (“SEC”), and investors would then own stock in a company that does not provide the disclosure available in quarterly and annual reports filed with the SEC and investors may have increased difficulty in selling their stock as we will be non-reporting.
Going Concern
The Company’s unaudited 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, 2024, the Company had revenue of $40,202,238, net loss of $6,639,935 and net cash used in operations of $3,883,215. Additionally, as of September 30, 2024, the Company had positive working capital of $11,027,653, an accumulated deficit of $104,479,692, and stockholders’ equity of $34,976,599. It is the management’s opinion that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of this filing.
The Company’s revenues are not able to sustain its operations, and concerns exist regarding the Company’s ability to meet its obligations as they become due. The Company is subject to a number of risks to those of smaller commercial companies, including dependence on key individuals and products, the difficulties inherent in the development of a commercial market, the need to obtain additional capital, competition from larger companies, and other pharmaceutical and health care companies.
Management evaluated the above conditions which raise substantial doubt about the Company’s ability to continue as a going concern to determine if it can meet its obligations for the subsequent twelve months from the date of this filing. Management considered its ability to access future capital, curtail expenses if needed, expand product lines, and acquire new products.
Management’s plans include expansion of brand name products to the market, expanding the current product portfolio, and evaluating acquisition targets to expand distribution. Furthermore, the Company intends to vertically integrate the supply chain distribution network. During the period up to the issuance of this report the Company has signed multiple distribution agreements for its SPL products in Europe and Asia and a variety of contract manufacturing agreements though its subsidiary, CANA. Finally, the Company plans to further access the capital markets in order to raise additional funds through equity offerings. More specifically, up to the issuance of its consolidated financial statements for the nine months ended September 30, 2024, the Company has sold 901,488 shares of common stock for net proceeds of $629,426 through two Prospectus Supplements to its Registration Statement on Form S-3 (No. 333-267550) filed with the SEC on February 29 and March 7, 2024. Management will also consider postponing the repayment of its outstanding Trade Facility ($1,588,163 balance as of September 30, 2024), intends to make substantial efforts to receive additional debt financing through its subsidiary, Cosmofarm SA, and plans to raise additional equity funds through utilizing its outstanding warrants. Following such efforts, on September 26, 2024, the Company entered into a Warrant Inducement Letter with an investor pursuant to which the Company issued 9,748,252 new warrants and reduced the exercise price of 4,874,126 warrant shares from $1.45 to $0.8701 to induce exercise and receive gross cash proceeds of $4,240,977 and on July 29, 2024 the Company’s subsidiary Cosmofarm SA entered into an agreement with a third-party lender in the principal amount of €400,000 ($432,760). The Company additionally plans to file with the U.S. SEC a registration statement on Form S-1 for an offering of up to $7.5 million by the end of November 2024. Moreover, the Company’s management is considering postponing certain repayments of suppliers and creditors. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described herein and eventually secure other sources of financing and attain profitable operations.
Considering the above, management is of the view that substantial doubt exists about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of this uncertainty.
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Plan of Operation in the Next Twelve Months
Specifically, our plan of operations for the next twelve months is as follows:
We assess the foreseeable development of the Company as being positive. Over the medium term we expect to further expand our market share. However, during the course of further organizational optimization there may be associated extraordinary additional costs.
Our plan for our own branded nutraceuticals is to enlarge our portfolio up to 150 SKUs by the end of 2023, including more basic line formulas to cover more customer needs of any age, advanced formulations, formulas based on herbs and further clinical studies with R&D for further products. Our plan for geographic expansion in distributing and market penetration in the EU, Asia, USA and Canada is based on exclusive distributors, wholesalers, e-commerce, and development of franchising model, alliances and acquisitions of nutraceutical companies.
In addition, our plan for branded pharmaceuticals is geographic expansion across the world, especially in the EU and UK, as well as in other countries with fast registration and developed markets with liberalized OTC policies for online pharmacies and supermarkets. We also intend to enhance our exclusive distribution rights with a growing basis of cooperating partners whilst purchasing generic, biosimilar drugs and OTC licenses. We also intend to enhance our product expectance by registered copyrights and trademarks in all OTC drugs. In addition, we remain committed to strategic research and development across each business unit with a particular focus on assets with inherently lower risk profiles and clearly defined governmental regulatory pathways.
Our plan for our full line wholesale is to expand in the Greek territory, enlarge our customer portfolio and integrate of established sales network of pharmacies through the use of B2B and B2C e-commerce platforms and exclusive distributors. We are also aiming in increasing the exports of branded pharmaceuticals as we focus on higher profit margins categories (OTC and VMS), deliver 3PL (third-party logistics) services to pharma companies, put in force loyalty programs, provide added value services to pharmacies and emergency deliveries to VIP customers. The Company will evaluate and, where appropriate, execute on opportunities to expand its network of pharmacies and products in areas that it believes will offer above average growth characteristics and attractive margins.
The Company is growing its business through organic growth, market penetration, geographic expansion and acquisitions which would add value to its business and its shareholders. The Company is also committed to pursuing various forms of business development; this can include trading, alliances, joint ventures and dispositions. Moreover, it hopes to continue to build on its portfolio of pharmaceutical products and expand its OTC and nutraceutical product portfolio. Thus, the Company is developing a sound sales distribution network specializing in its own branded nutraceutical products.
The Company’s main objective is expanding the business operations of its subsidiaries by concentrating its efforts on becoming an international pharmaceutical Company. The Company views its business development activity as an enabler of its strategies, and it seeks to generate earnings growth and enhance shareholder value by pursuing a disciplined, strategic, and financial approach to evaluating business development opportunities. Under these principles the Company assesses businesses and assets as part of its regular, ongoing portfolio review process and continues to consider trading development activities for its businesses. The Company’s objective is the optimization of operating expenses across all entities without compromising the quality of the Company’s services and products.
Changes in the behavior and spending patterns of purchasers of pharmaceutical and healthcare products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of doctor visits, and foregoing healthcare insurance coverage, may impact the Company’s business.
The pharmaceutical sector offers a large growth potential within the European pharmaceutical market if service, price and quality are strictly directed towards the customer requirements. The Company will continue to encounter competition in the market by product, service, reliability, and a high level of quality. On the procurement side, the Company can access a wide range of supply possibilities. To minimize business risks, the Company diversifies its sources of supply all over Europe. It secures its high-quality demands through careful supplier qualification and selection, as well as active suppliers’ system management.
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Strategic Plan
Our strategic plan, which strikes a balance between growth and sustainability, emphasizes synergies, vertical integration, operational efficiencies, R&D, brand expansion, and the global growth of our distribution network and facilities.
We intend to continue to pursue active ongoing acquisitions. In fact, many of our acquisitions entail exploring opportunities, with discounted assets through business combinations or joint ventures, all to enhance our distribution network. We will expand our R&D division which is a platform and incubator to develop new patented pharmaceuticals and proprietary innovative nutraceutical products. To foster organic growth, we will enhance our business development and marketing efforts, pursue global expansion via prominent retailers, pharmacies and e-commerce platforms, and recapture lost markets such as the infant and baby care categories. In addition, we will invest in the expansion of our production capacity and global network of facilities to boost sales of our brands, engage in contract manufacturing with large multinational pharmaceutical companies, produce pharma grade ethanol for hospitals, and expand into new large markets capitalizing on our comparative advantages. Last but not least, we aim to strategically invest in key personnel, from seasoned export managers to highly skilled scientists, to ensure we have the necessary expertise at our fingertips.
Organic Growth
Proprietary Portfolio of Branded Products: A bright spot so far in 2024 is the strong demand for our branded nutraceuticals, as we aspire to transform them into global brands. Our products have received very positive feedback at leading events like Arab Health in Dubai, Infarma in Barcelona, Vitafoods in Geneva, and Pharmacy Show in Birmingham.
Sky Premium Life®: We are selling Sky Premium Life products in an increasing number of countries through pharmacies, retail chains, and online platforms. Among our prominent retailers is Holland & Barrett, with over 1,600 stores in 18 countries across the world, it is not only Europe's largest health and wellbeing retailer but also one of the world's largest, generating about $1 billion in annual revenue. Additionally, our products are available online through platforms like eBay and Amazon in the UK, Canada, the US, Germany, France, Spain, and Singapore. We are investing in our infrastructure, expanding our production capacity to accommodate increasing volumes, accelerating our efforts to broaden our distribution network, and planning to penetrate new major markets. This is boosted by strategic collaborations like the one announced with C.A. PAPAELLINAS Group, a market leader with an extensive distribution network throughout Cyprus. PAPAELLINAS will represent and distribute Sky Premium Life, not only in Holland & Barrett stores but also in pharmacies throughout Cyprus.
Mediterranation®: Building upon the success of Sky Premium Life, we also launched Mediterranation, our premium food supplements brand. Inspired by the Mediterranean way of life, renowned for its healthy food, sunny climate, and longevity, Mediterranation utilizes organic herbs and plant extracts, such as dittany of Crete, oregano, mastic, and kritamos from the Mediterranean region. All of our products are manufactured under strict pharmaceutical standards and adhere to GMP protocols.
Bio-Bebe® and C-Sept®/C-Scrub: Among Cana's many valuable assets, Cosmos Health also obtained a proprietary portfolio of pharmaceutical, dermocosmetic, antiseptic, and food supplement branded products. These include, among others: Bio-Bebe, an organic infant care and nutrition brand, which we are in the process of relaunching. This presents us with a great opportunity to enter the lucrative global baby food market that, according to Fortune Business Insights, is worth $102.90 billion per year. C-Sept, an antiseptic brand, which we are expanding with the launch of the new C-Scrub Wash 4% CHG Biocide. We are well positioned to capitalize on the global antiseptic and disinfectant market that, according to Grand View Research, is worth $29 billion per year.
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While the Company intends to pursue these milestones, there may be circumstances where for valid business reasons or due to factors beyond the control of the Company, a reallocation of efforts may be necessary or advisable.
The Company intends to spend the funds available to strengthen working capital, inventories, intangible assets, acquisitions, research and development, sales and marketing expenses. Due to the uncertain nature of the industry in which the Company operates, projects may be frequently reviewed and reassessed. Accordingly, while it is currently intended by management that the available funds will be expended as set forth above, actual expenditures may in fact differ from these amounts and allocations.
Off Balance Sheet Arrangements
As of September 30, 2024, there were no off-balance sheet arrangements.
Critical Accounting Policies
In December 2001, the SEC requested that all registrants list their most “critical accounting polices” under the Management’s Discussion and Analysis section. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Revenue Recognition: The Company adopted Topic 606 Revenue from Contracts with Customers on January 1, 2018. As a result, it has changed its accounting policy for revenue recognition as detailed in Note 2.
Foreign Currency. Assets and liabilities of all foreign operations are translated at period-end rates of exchange, and the statements of operations are translated at the average rates of exchange for the period. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders’ equity until the entity is sold or substantially liquidated. Gains or losses from foreign currency transactions (transactions denominated in a currency other than the entity’s local currency) are included in net (loss) earnings.
Income Taxes. The Company accounts for income taxes under the asset and liability method, as required by the accounting standard for income taxes, ASC 740. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, as well as net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company is liable for income taxes in Greece and the United Kingdom. The corporate income tax rate is 22% in Greece (tax losses are carried forward for five years effective January 1, 2013) and 25% in United Kingdom. Losses may also be subject to limitation under certain rules regarding change of ownership.
We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized. Our review includes evaluating both positive (e.g., sources of taxable income) and negative (e.g., recent historical losses) evidence that could impact the realizability of our deferred tax assets.
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We recognize the impact of an uncertain tax position in our financial statements if, in management’s judgment, the position is not more-likely-than-not sustainable upon audit based on the position’s technical merits. This involves the identification of potential uncertain tax positions, the evaluation of applicable tax laws and an assessment of whether a liability for an uncertain tax position is necessary. We operate and are subject to audit in multiple taxing jurisdictions.
We record interest and penalties related to income taxes as a component of interest and other expense as incurred, respectively.
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 “Accounting for Income Taxes” as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in this financial statement because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
The Company has net operating loss carry-forwards in our parent, Cosmos Health Inc., which are applicable to future taxable income in the United States (if any). Additionally, the Company has income tax liabilities in the United Kingdom. The income tax assets and liabilities are not able to be netted. We therefore reserve the income tax assets applicable to the United States but recognize the income tax liabilities in Greece and the United Kingdom. Losses may also be subject to limitation under certain rules regarding change of ownership.
Accounts Receivable and Allowance for Credit Losses
The Company follows ASC 310 to estimate the allowance for doubtful accounts. Pursuant to FASB ASC paragraph 310-10-35-9, losses from uncollectible receivables shall be accrued when both of the following conditions are met: (a) information available before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) indicates that it is probable that an asset has been impaired at the date of the financial statements, and (b) the amount of the loss can be reasonably estimated. Those conditions may be considered in relation to individual receivables or in relation to groups of similar types of receivables. If the conditions are met, accrual shall be made even though the receivables that are uncollectible may not be identifiable. The Company reviews individually each trade receivable for collectability and performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and general economic conditions that may affect a client’s ability to pay. Bad debt expense is included in general and administrative expenses, if any.
Inventory Reserves
Our merchandise inventories are made up of finished goods and are valued at the lower of cost or market using the weighted-average cost method. Average cost includes the direct purchase price, net of vendor allowances and cash discounts, of merchandise inventory. We record valuation reserves on an annual basis for merchandise damage and defective returns, merchandise items with slow-moving or obsolescence exposure and merchandise that has a carrying value that exceeds market value. These reserves are estimates of a reduction in value to reflect inventory valuation at the lower of cost or market. The reserve for merchandise returns is based upon the determination of the historical net realizable value of products sold from our returned goods inventory or returned to vendors for credit. Our reserve for merchandise returns includes amounts for returned product on-hand as well as for new merchandise on-hand that we estimate will ultimately become returned goods inventory after being sold based on historical return rates.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable. A smaller reporting company is not required to provide the information required by this Item.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and the Principal Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were ineffective due to material weaknesses stated below:
| · | The Company has a lack of proper segregation of duties. |
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| · | The Company’s internal control structure lacks multiple levels of review and oversight and does not have appropriate IT General Controls (ITGCs) for the applications used in the Financial Reporting process, caused by lack of design of relevant controls and overall IT risk management. |
We are in the process of remediating all material weaknesses present in our internal controls and we plan to have completed the remediation by December 31, 2024.
- The Company has a lack of proper segregation of duties.
We are in the process of updating the organizational chart in order to reallocate roles among personnel and emphasize sharing the responsibilities of key business processes by distributing the discrete functions of these processes to multiple people and departments.
- The Company’s internal control structure lacks multiple levels of review and oversight and does not have appropriate IT General Controls (ITGCs) for the applications used in the Financial Reporting process, caused by lack of design of relevant controls and overall IT risk management.
We are in the process of developing multiple levels of review based on job responsibilities and level of personnel. For example, management reviews whether the bank reconciliations are being prepared on a timely basis by the preparer and whether there are discrepancies between the general ledger and the bank statements. Another example is the review of management accounting information by the CFO and his authorization for material transactions and adjustments. Furthermore, we are in the process of assessing a new financial reporting application that will be used by all the companies of the Group and would be able to support, process financially relevant information, provide financially relevant reporting and house financially relevant interfaces and application controls in order for us to more efficiently establish IT General Controls to a single and more reliable application.
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Changes in Internal Controls Over Financial Reporting
There were no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
Our Audit Committee is in the process of evaluating our existing controls and procedures, while communicating with the Management on quarterly basis.
Audit Committee
We have a separately designated standing audit committee, which is appointed by the Board of Directors of Cosmos Health Inc. On April 28, 2022, Dr. Anastasios Aslidis was elected to serve on the Board of Directors and was appointed as a chair of the Audit Committee. Our three independent directors, Anastasios Aslidis, John Hoidas and Demetrios Demetriades serve on the Audit Committee. The primary function of the committee is to assist the Board of Directors in overseeing (1) the financial reporting and accounting processes of the Company, and (2) the financial statements audits of the Company. The Committee also prepares a written report to be included in the annual proxy statement of the Company pursuant to the applicable rules and regulations of the “SEC”. In furtherance of these purposes, the Committee shall maintain direct communication among the Company’s independent auditors and the Board of Directors. The independent auditors and any other registered public accounting firm engaged in preparing or issuing an audit report or performing other audit review or attest services for the Company shall report directly to the Committee and are ultimately accountable to the Committee and the Board of Directors.
In discharging its oversight role, the Committee is authorized to investigate any matter brought to its attention with full access to all books, records, facilities and personnel of the Company. The Committee shall have the sole authority to retain at the Company’s expense outside legal, accounting or other advisors to advise the Committee and to receive appropriate funding, as determined by the Committee, from the Company for the payment of the compensation of such advisors and for the payment of ordinary administrative expenses of the Committee that are necessary to carry out its duties. The Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditors to attend a meeting of the Committee or to meet with any member of, or advisors to, the Committee. The Committee may also meet with the Company’s investment bankers or financial analysts who follow the Company.
The Committee shall meet no less frequently than four times per year, with additional meetings as circumstances warrant. The Committee shall also meet periodically with management, the internal auditors, if any, and the independent auditors in separate executive sessions. The Committee shall record the minutes of all such meetings and shall submit the minutes of its meetings to, or discuss the matters deliberated at each meeting with, the Board of Directors. The Company’s chief financial or accounting officer shall function as the management liaison officer to the Committee.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no changes since the filing of the Company’s Form 10-K for the year ended December 31, 2023 and Form 10-Q for the quarter ending June 30, 2024.
Item 1A. Risk Factors
The Company is not required to provide the information called for in this item due to its status as a Smaller Reporting Company. You should refer to the other information set forth in this report, including the information set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in our consolidated financial statements and the related notes. Our business prospects, financial condition or results of operations could be adversely affected by any of these risks.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None. Previously reported on Form 8-K.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the nine months ended September 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
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Item 6. Exhibits.
(a) Exhibits.
Exhibit No. | Document Description | |
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| Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
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| Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
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101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).** | |
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101.SCH | Inline XBRL Taxonomy Extension Schema Document.** | |
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101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.** | |
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101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.** | |
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101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document.** | |
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101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.** | |
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104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).** |
_____________
* | This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings. |
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** | XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Cosmos Health Inc. | |||
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Date: November 14, 2024 | By: | /s/ Grigorios Siokas | |
Grigorios Siokas | |||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
Date: November 14, 2024 | By: | /s/ Georgios Terzis |
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Georgios Terzis |
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| Chief Financial Officer |
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| (Principal Financial Officer, And Principal Accounting Officer) |
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EXHIBIT INDEX
Exhibit No. | Document Description | |
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| Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
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| Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
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101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).** | |
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101.SCH | Inline XBRL Taxonomy Extension Schema Document.** | |
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101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.** | |
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101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.** | |
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101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document.** | |
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101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.** | |
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104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).** |
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* | This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings. |
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** | XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
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