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What changed in Cosmos Health Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Cosmos Health Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+222 added−206 removedSource: 10-K (2024-08-05) vs 10-K (2023-04-12)

Top changes in Cosmos Health Inc.'s 2023 10-K

222 paragraphs added · 206 removed · 129 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

44 edited+20 added−36 removed48 unchanged
Biggest changeTotal revenues from the product categories of our total consolidated revenues during the year ended December 31, 2022 are as follow; Product Categories Percentage of total Revenue Medicines 74.66% OTC Medicines 6.59% Vitamins, Minerals and Dietary Products 9.66% Heath Care Products 2.54% Medical Devices 6.14% Baby Products 0.28% Others 0.13% Total 100% Our proprietary nutraceutical line “Sky Premium Life” which has over 82 SKUs, is classified into two different main Categories, Products per Benefit and Products per Nutrient as follows: Products per Benefit Products per Nutrient General Wellbeing Amino Acids Immunity Botanicals, Herbs & Extracts Heart Vitamins & Minerals Bones & Joints Specialized Formulas & Complexes Men’s Health Omegas & Fatty Acids Women’s Health Specialized Nutrients Beauty Digestion Brain Vision Energy Sports Mood/Stress/Sleep Antioxidant Activity Services The principal activity of our services is the distribution of a full range of branded pharmaceutical products, over-the-counter products, cosmetics, nursery, and nutraceutical products to pharmacies across Greece.
Biggest changeTotal revenues from the product categories of our total consolidated revenues during the year ended December 31, 2023 are as follows: Product Categories Percentage of total Revenue Medicines 80.42 % OTC Medicines 7.52 % Vitamins, Minerals and Dietary Products 5.87 % Heath Care Products 2.63 % Medical Devices 2.86 % Baby Products 0.30 % Others 0.41 % Total 100 % Below is an analysis per category of our inventory as of December 31, 2023: Product Categories Balance as of December 31, 2023($) Percentage of total Inventory Pharmaceuticals 3,417,039 66.42 % Parapharmaceuticals 1,030,878 20.04 % Manufacturing products 160,436 3.12 % Raw materials 275,919 5.36 % Dairy products 21,017 0.41 % Veterinary medicine 13,872 0.27 % Other 225,098 4.38 % Less provisions (355,205 ) Total 4,789,054 100 % Our proprietary nutraceutical line “Sky Premium Life” which has over 105 SKUs, is classified into two different main Categories, Products per Benefit and Products per Nutrient as follows: Products per Benefit Products per Nutrient General Wellbeing Amino Acids Immunity Botanicals, Herbs & Extracts Heart Vitamins & Minerals Bones & Joints Specialized Formulas & Complexes Men’s Health Omegas & Fatty Acids Women’s Health Specialized Nutrients Beauty Digestion Brain Vision Energy Sports Mood/Stress/Sleep Antioxidant Activity 6 Table of Contents Services The principal activity of our services is the distribution of a full range of branded pharmaceutical products, over-the-counter products, cosmetics, nursery, and nutraceutical products to pharmacies across Greece.
Corporate Strategy Our main strategy initiative is focused on continuing our progress in becoming a global pharmaceutical wholesale and import/export company through the development of a lean and efficient operating model, as well as, to expand our portfolio of our own branded nutraceutical products, grow our customer base and achieve our growth stabilization in this new market and gain an adequate size in the global nutraceuticals market.
Corporate Strategy Our main strategy initiative is focused on continuing our progress in becoming a global pharmaceutical wholesale and import/export company through the development of a lean, efficient and vertically integrated operating model, as well as, to expand our portfolio of our own branded nutraceutical and pharmaceutical products, grow our customer base and achieve our growth stabilization in this new market and gain an adequate size in the global nutraceuticals market.
The warehouse operating system has improved the distribution services productivity and operating leverage. 10 Table of Contents Government Regulations Government authorities in the EU and in other countries extensively regulate, among other things, the research, development, testing, approval, manufacturing, labeling, post-approval monitoring and reporting, packaging, advertising and promotion, storage, distribution, marketing and export and import of pharmaceutical products.
The warehouse operating system has improved the distribution services productivity and operating leverage. 9 Table of Contents Government Regulations Government authorities in the EU and in other countries extensively regulate, among other things, the research, development, testing, approval, manufacturing, labeling, post-approval monitoring and reporting, packaging, advertising and promotion, storage, distribution, marketing and export and import of pharmaceutical products.
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.
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.
The transaction closed on May 22, 2018 after the due diligence period, following which the Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in Common Shares of the Company if it fails to meet certain performance milestones.
The above transaction closed on May 22, 2018 after the due diligence period, following which the Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in common shares of the Company if it failed to meet certain performance milestones.
On September 22, 2022, Cosmos Health Inc. 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. International Cannabis Corp.
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. International Cannabis Corp.
The Distribution and Equity Acquisition Agreement was to remain in effect indefinitely unless Marathon fails to provide Market Competitive (as defined therein) product pricing and Marathon has not become profitable within five (5) years of the agreement.
The Distribution and Equity Acquisition Agreement was to remain in effect indefinitely unless Marathon fails to provide Market Competitive (as defined) product pricing and Marathon has not become profitable within five years of the agreement.
We are constantly evaluating the demand of food supplements in the markets that we currently distribute pharmaceutical products to. This research and analysis determines which food and nutritional supplements we choose to develop as well as their formulations.
We are constantly evaluating the demand of food supplements in the markets that we currently distribute pharmaceutical products to. This research and analysis determines which pharmaceutical and nutraceutical products we choose to develop as well as their formulations.
The means of competition vary across product categories and business groups, demonstrating that the value of our trading products is a critical factor for success in all of our principal businesses. 9 Table of Contents Our competitors include other trading companies, and smaller companies with generic drug and consumer healthcare products.
The means of competition vary across product categories and business groups, demonstrating that the value of our trading products is a critical factor for success in all of our principal businesses. 8 Table of Contents Our competitors include other pharmaceutical companies, and smaller companies with generic drug and consumer healthcare products.
We post links on our website to the following filings as soon as reasonably practicable after they are electronically filed or furnished to the SEC: annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendment to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
We post links on our website to the following filings as soon as reasonably practicable after they are electronically filed or furnished to the SEC: annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14D, and any amendment to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
Our plan for our own branded nutraceuticals is to enlarge our portfolio up to 150 SKUs. We also use our subsidiaries as distribution centers for SPL in order to penetrate UK and EU markets. However, the leading activity of Decahedron is the trading of branded and generic pharmaceutical products and medicines across the UK and European Union member states.
Our plan for our own branded nutraceuticals is to enlarge our portfolio up to 150 SKUs. We also use our subsidiaries as distribution centers for SPL in order to penetrate UK and EU markets. However, the leading activity of Decahedron is the trading of branded and generic pharmaceutical products and medicines across the UK.
Implementing this disciplined, focused strategy has allowed us to significantly expand our business, and we believe we are well-positioned to grow revenue and increase operating income through the execution of the following key elements of our business: · Branded Pharmaceuticals : Branded pharmaceutical products are the primary product category that we import and export.
Implementing this disciplined, focused strategy has allowed us to significantly expand our business, and we believe we are well-positioned to grow revenue and increase operating income through the execution of the following key elements of our business: · Branded Pharmaceuticals : Branded pharmaceutical products are the primary product category that we produce and distribute.
We constantly evaluate product availability, pricing, demand trends, and patent expirations to maximize our performance. As the patents for branded products near expiration, the generic equivalents enter the market place and the demand for those branded products start to decrease.
We constantly evaluate product availability, pricing, demand trends, and patent expirations to maximize our performance. As the patents for branded products near expiration, the generic equivalents enter the marketplace and the demand for those branded products start to decrease.
We monitor these cycles closely and always look to find value in pricing fluctuations caused by the patent expirations as the generic equivalents enter the market. · Generic Pharmaceuticals : Generic pharmaceutical products are the secondary product category that we import and export. We apply the same discipline to generics that we do to the branded.
We monitor these cycles closely and always look to find value in pricing fluctuations caused by the patent expirations as the generic equivalents enter the market. · Generic Pharmaceuticals : Generic pharmaceutical products are the secondary product category that we produce and distribute. We apply the same discipline to generics that we do to the branded.
Failure to comply with these regulations could result in, among other things, warning letters, civil penalties, delays in approving or refusal to approve a pharmaceutical product. Our business is mainly the trading of branded and generic pharmaceutical products and medicines within the EU member states.
Failure to comply with these regulations could result in, among other things, warning letters, civil penalties, delays in approving or refusal to approve a pharmaceutical product. A main part of our business relates to the trading of branded and generic pharmaceutical products and medicines within the EU member states.
We intentionally build a workforce of people with viewpoints and backgrounds as diverse as the customers we serve around Europe. As a responsibility to our team and in an evolving effort, we provide employees with meaningful careers and development opportunities to grow and succeed. We employed 102 individuals as of December 31, 2022.
We intentionally build a workforce of people with viewpoints and backgrounds as diverse as the customers we serve around Europe. As a responsibility to our team and in an evolving effort, we engage employees with meaningful careers and development opportunities to grow and succeed. We employed 158 individuals as of December 31, 2023.
Understanding the historical and market specific characteristics of generic product demand provides insight that we use to give guidance to our vendors that source our generic drug exports. 5 Table of Contents · Health Products & Food Supplements : The wholesale distribution of food supplements offer greater margins than pharmaceutical product distribution.
Understanding the historical and market specific characteristics of generic product demand provides insight that we use to give guidance to our vendors that source our generic drug exports. 4 Table of Contents · Nutraceuticals & Food Supplements : The wholesale distribution of nutraceuticals and food supplements market offer most of the times greater margins than pharmaceutical products.
Products & Services Products The current principal activity of the Company is the creation, development and trading of its own proprietary branded nutraceutical product lines “Sky Premium Life ® ” (“SPL”) and Mediterranation ® . The Company’s portfolio currently includes 82 product codes including vitamins, minerals and other herbal extracts used for health prevention and care needs.
Nutraceuticals The current principal activity of the Company is the manufacturing, development and trading of its own proprietary branded nutraceutical product lines “Sky Premium Life ® ” (“SPL”) and Mediterranation ® . The Company’s portfolio currently includes 105 product codes including vitamins, minerals and other herbal extracts used for health prevention and care needs.
Our global workforce is comprised of the following ethnicities: 99.0 percent Caucasian and 1.0 percent Asian. Of those employees, 38.0 percent are female. Available Information Our internet address is http://www.cosmoshold.com.
Our global workforce is comprised of the following ethnicities: 99% Caucasian and 1% Asian. Of those employees, 38% are female. Available Information Our internet address is https://www.cosmoshealthinc.com/.
We believe that the entire aforementioned product life cycle would take approximately six weeks to two months, from the demand list to the payment for the shipment. 7 Table of Contents Distribution and Marketing The majority of our products are represented directly and indirectly through a dedicated sales force team.
We believe that the entire aforementioned product life cycle would take approximately six weeks to two months, from the demand list to the payment for the shipment. Distribution and Marketing The majority of our products are represented directly and indirectly through a dedicated sales force team. Our sales force targets mainly wholesale distributors and other healthcare providers.
In order to be able to operate our business, we need to comply with EU regulations, as well as EU member states regulations that govern various operations of our business. The government regulation that applies to our business is the granting to our companies, SkyPharm and Decahedron, of the Authorization for Wholesale Distribution of Medicinal Products for human use.
In order to be able to operate our business, we need to comply with EU regulations, as well as EU member states regulations that govern various operations of our business. The Greek government regulation that applies to our business requires the granting to our operating subsidiaries of the Authorization for Wholesale Distribution of Medicinal Products for human use.
We target products with limited competition for reasons such as trading complexity or the market size, which make our pharmaceutical products a key growth driver of our portfolio and complementary to other product offerings.
We are formulating a broader and more diversified pharmaceutical product portfolio and a greater selection of targets for potential development. We target products with limited competition for reasons such as trading complexity or the market size, which make our pharmaceutical products a key growth driver of our portfolio and complementary to other product offerings.
The Company also conducts its business within the global nutraceuticals market with our own brand which we consider to be highly qualitative and competitive. Nutraceuticals are defined as products that contain at least one dietary ingredient within them and can be consumed orally.
The Company also conducts its business within the global nutraceuticals market with our own brand which we consider to be highly qualitative and competitive. Nutraceuticals are defined as products that contain at least one dietary ingredient within them and can be consumed orally. Some of the purposes of nutraceuticals are used for immune system defense, energy, stress, bones and joints.
The pharmaceutical industry is highly competitive and is subject to comprehensive government regulations. Many factors may significantly affect the Company’s sales of its products, including, but not limited to, efficacy, safety, price and cost-effectiveness, marketing effectiveness, product labeling, quality control and quality assurance.
Many factors may significantly affect the Company’s sales of its products, including, but not limited to, efficacy, safety, price and cost-effectiveness, marketing effectiveness, product labeling, quality control and quality assurance.
We also buy from pharmacies and other wholesale pharmaceutical companies and resell these products to other EU countries or in the UK. We purchase excess inventories at a discount from wholesalers and export pharmaceutical product codes to EU member states capturing contract price differentials in the process. The Company only purchases stock with purchase orders at hand, limiting inventory risk.
We purchase excess inventories at a discount from wholesalers and export pharmaceutical product codes to EU member states capturing contract price differentials in the process. The Company only purchases stock with purchase orders at hand, limiting inventory risk.
As part of the certification process by the International Organization for Standardization, we need to be compliant with the General Data Protection Regulation (“GDPR”) adopted by the European Union in May 2018. GDPR applies to the processing of personal data of persons in the EU by a controller or processor.
As part of the certification process by the International Organization for Standardization, we need to be compliant with the General Data Protection Regulation (“GDPR”) adopted by the European Union in May 2018.
The license is valid for a period of five years and pursuant to the EU directive of (2013/C343/01). Also, Cosmofarm was granted with GDP certificate on November 11, 2019. Our subsidiaries are ISO 9001 certified for a management system for the trade and distribution of pharmaceuticals.
The license is valid for a period of five years and pursuant to the EU directive of (2013/C343/01). Also, Cosmofarm was granted with GDP certificate on November 11, 2019.
Our geographical market sales distribution of our total consolidated revenues during the years ended December 31, 2022 and 2021 are as follows: 2022 2021 Greece 98.94 % 98.80 % Germany 0.00 % 0.02 % UK 0.80 % 0.82 % Italy 0.00 % 0.03 % Denmark 0.00 % 0.10 % Croatia 0.08 % 0.03 % Cyprus 0.18 % 0.20 % Total 100.00 % 100.00 % We currently sell the products to wholesalers through our own sales force.
Our geographical market sales distribution of our total consolidated revenues during the years ended December 31, 2023 and 2022 are as follows: 2023 2022 Greece 94.67 % 98.94 % UK 4.53 % 0.80 % Croatia 0.05 % 0.08 % Bulgaria 0.39 % 0.00 % Cayman Islands 0.02 % 0.00 % Cyprus 0.34 % 0.18 % Total 100.00 % 100.00 % We currently sell the products to wholesalers through our own sales force.
All of our foreign operations are subject to risks inherent in conducting business abroad, including price and currency exchange controls, fluctuations in the relative values of currencies, political and economic instability and restrictive governmental actions.
Geographic Markets All of our revenues are generated from operations in the European Union and UK, or otherwise earned outside of the U.S. All of our foreign operations are subject to risks inherent in conducting business abroad, including price and currency exchange controls, fluctuations in the relative values of currencies, political and economic instability and restrictive governmental actions.
Customers Through our subsidiaries, we primarily sell pharmaceutical products directly to pharmacies and a limited number of large wholesale drug distributors who, in turn, supply-sell the products to other wholesalers, hospitals, pharmacies, and governmental agencies across the European Union member state.
In the future, we will continue to reevaluate our decision and may purchase product liability insurance to cover some of or all of our product liability risk. 7 Table of Contents Customers Through our subsidiaries, we primarily sell pharmaceutical products directly to pharmacies and a limited number of large wholesale drug distributors who, in turn, supply-sell the products to other wholesalers, hospitals, pharmacies, and governmental agencies across the European Union member state.
Our sales force targets mainly wholesale distributors and other healthcare providers. We sell our products principally through independent wholesale distributors, but we also sell directly to other healthcare providers such as; clinics, government agencies, independent retail and specialty pharmacies and independent specialty distributors.
We sell our products principally through independent wholesale distributors, but we also sell directly to other healthcare providers such as; clinics, government agencies, independent retail and specialty pharmacies and independent specialty distributors. Customer service representatives are centralized in order to respond to customer needs in a timely and effective manner.
Some of the purposes of nutraceuticals are used for immune system defense, energy, stress, bones and joints, The global nutraceutical market has shown rise for demand and growth within the last several years. The global market is driven by the rising popularity of sports-based performance enhancement supplements and the focus on preventive healthcare measures.
The global nutraceutical market has shown rise for demand and growth within the last several years. The global market is driven by the rising popularity of sports-based performance enhancement supplements and the focus on preventive healthcare measures. The COVID-19 pandemic has also driven the global market to a high demand for immunity boosting nutraceutical products.
There can be no assurance that these agreements will not be breached, that we will have adequate remedies for any breach, that others will not independently develop equivalent proprietary information or that other third parties will not otherwise gain access to our trade secrets and other intellectual property Product Insurance We have insurance in place for our warehouses and the products in stock against any damage or theft, but we do not insure our products after the sale, since we are working under an Ex-works policy, and thus our clients are responsible for the transportation and the insurance of the products against any damage.
There can be no assurance that these agreements will not be breached, that we will have adequate remedies for any breach, that others will not independently develop equivalent proprietary information or that other third parties will not otherwise gain access to our trade secrets and other intellectual property.
Our own brand of products carries significantly higher margins than simply serving as a wholesaler for other brands. · Research & Development : We are committed to strategic R&D across each business unit with a particular focus for nutraceutical products with inherently lower risk profiles and clearly defined regulatory pathways.
Owning a brand with an extensive portfolio of products provides the Company with significant opportunities to penetrate into global sale channels. · Research & Development : We are committed to strategic R&D across each business unit with a particular focus for pharmaceutical and nutraceutical products with inherently lower risk profiles and clearly defined regulatory pathways.
Our strategy involves building a multinational network or wholesalers, distributors, and pharmacies and simultaneously continuing to expand the portfolio of products that we distribute to that network. We are committed to driving organic growth at attractive margins by improving execution, optimizing cash flow and leveraging our strong market position, while maintaining a streamlined cost structure throughout each of our businesses.
We are committed to driving organic growth at attractive margins by improving execution, optimizing cash flow and leveraging our strong market position, while maintaining a streamlined cost structure throughout each of our businesses. We continue to further align our organization to our customers’ needs in a more seamless and unified way, while supporting corporate strategy and accelerating growth.
Customer service representatives are centralized in order to respond to customer needs in a timely and effective manner. We seek to motivate and provide incentives to our sales force team by offering high quality products and providing them with product support, training seminars, sales convention and financial incentives.
We seek to motivate and provide incentives to our sales force team by offering high quality products and providing them with product support, training seminars, sales convention and financial incentives. Our products in Europe and in the UK are shipped directly from our warehouse facilities and in foreign markets we have contracted third-parties to distribute our products.
Research and Development Expenditures The Company entered into a Research & Development agreement with Doc Pharma S.A. on May 17, 2021.
GDPR applies to the processing of personal data of persons in the EU by a controller or processor. 10 Table of Contents Research and Development The Company entered into a Research & Development agreement with Doc Pharma S.A. on May 17, 2021.
We have a diverse customer base that includes wholesalers and retail healthcare providers. We make a significant amount of our sales to a relatively small number of pharmaceutical wholesalers. These customers represent an essential part of the distribution chain of our products. Pharmaceutical wholesalers have undergone, and are continuing to undergo, significant consolidation in a worldwide basis.
These customers represent an essential part of the distribution chain of our products. Pharmaceutical wholesalers have undergone, and are continuing to undergo, significant consolidation on a worldwide basis. This consolidation resulted in these groups gaining additional purchasing leverage and consequently increasing the product pricing pressures facing our business.
EU countries have put into force new legal frameworks and mandates that boost the parallel trade market in order to deflate healthcare pricing across the region. 6 Table of Contents Product Categories Our product portfolio includes medicines, OTC medicines, nutraceutical products, health care products, medical devices, baby products and others.
EU countries have put into force new legal frameworks and mandates that boost the parallel trade market in order to deflate healthcare pricing across the region. 5 Table of Contents Branded Pharmaceuticals & Generics During the course of 2023, the Company committed to its strategic acquisition plan and proceeded to the acquisition of pharmaceutical products, specifically five branded pharmaceuticals and ten generic licenses.
The Company does not have the ability to exercise significant influence over KBB. 12 Table of Contents Employees & Human Capital As of December 31, 2022, we had 102 full-time employees in total, of which 16 engaged in sales department, 4 in procurement department, 2 in marketing department, 21 in warehouse services, 20 in logistics/transportation works, 3 in quality assurance, 8 in finance & accounting department, 4 in management, 3 in cleaning, 5 in administration, 10 in call center, 4 in B2B e-shop and 2 in IT department.
Due to termination of the Distribution and Equity Acquisition Agreement, the Company recorded a gain on extinguishment of debt of $1,554,590 due to the write-off of the share settled debt obligation, for the 12-month period ended December 31, 2023. 12 Table of Contents Employees & Human Capital As of December 31, 2023, we had 123 full-time employees in total, of which 15 engaged in sales department, four in procurement department, four in marketing department, 25 in warehouse services, 22 in logistics/transportation works, eight in quality assurance, nine in finance & accounting department, nine in management, five in cleaning, five in administration, 12 in call center, one in B2B e-shop and four in IT department.
We hold trademark registrations in Europe. We rely on confidentiality agreements with our employees, consultants and other parties to protect, among other things, trade secrets and other proprietary technology.
The patent filing describes the repurposing of an existing drug to act on the Mucosa-associated lymphoid tissue lymphoma translocation protein 1 (MALT1), a key target in various diseases. We rely on confidentiality agreements with our employees, consultants and other parties to protect, among other things, trade secrets and other proprietary technology.
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”.
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. 11 Table of Contents Distribution & Trade Agreements 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”.
We maintain our high-quality standards by carefully selecting and qualifying our suppliers as well as actively ensuring that our suppliers meet our standard of quality control on an ongoing basis. 4 Table of Contents Business Environment The Company conducts its business within the pharmaceutical and the healthcare industry and is active in branded pharmaceuticals, generics and nutraceutical product markets.
Item 1. Business Company Overview Business Environment The Company conducts its business within the pharmaceutical and the healthcare industry and is active in branded pharmaceuticals, generics and nutraceutical product markets. The pharmaceutical industry is highly competitive and is subject to comprehensive government regulations.
Total revenues from the customers that accounted for 10% or more of our total consolidated revenues during the years ended December 31, 2022 and 2021 are as follows: 2022 2021 Medihelm SA 9.28 % 15.33 % 8 Table of Contents No other customer generated over 10% of our total revenue.
No customer accounted for 10% or more of our total consolidated revenues during the years ended December 31, 2023 and 2022. We have a diverse customer base that includes wholesalers and retail healthcare providers. We make a significant amount of our sales to a relatively small number of pharmaceutical wholesalers.
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Item 1. Business Company Overview Cosmos Health Inc. together with its subsidiaries (hereinafter referred to collectively as “us”, “we”, or the “Company”) is an international healthcare group with a proprietary line of nutraceuticals and distributor of branded and generic pharmaceuticals, nutraceuticals, over-the-counter (“OTC”) medications and medical devices through an extensive, established EU and UK distribution network.
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Our strategy involves the enhancement of our manufacturing capacities and building a multinational network or wholesalers, distributors, and pharmacies and simultaneously continuing to expand the portfolio of products that we distribute to that network.
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The Company identifies, acquires, develops and commercializes products that improve patients’ lives and outcomes. We have developed a global distribution platform which is currently expanding throughout Europe, Asia and North America.
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Accordingly, the Company commenced the manufacturing, development and trading of its own branded pharmaceutical and generics products apart from its own branded nutraceuticals. This is in parallel with the production of Cana’s proprietary antimicrobial products. Product Categories Our product portfolio includes medicines, OTC medicines, nutraceutical products, health care products, medical devices, baby products and others.
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Currently, the Company has offices and distribution centers through its the parent and its wholly owned subsidiaries: (i) Cosmos Health Inc., the parent company headquartered in Chicago, USA; (ii) SkyPharm S.A., headquartered in Thessaloniki, Greece; (iii) Decahedron Ltd., headquartered in Harlow, United Kingdom; and (iv) Cosmofarm S.A., headquartered in Athens, Greece.
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We hold trademark registrations in Europe. During 2023, we added a variety of trademarks through our new subsidiary Cana (acquired on June 30, 2023), such as multiple antimicrobial products (C-SEPT) and cosmetics (EXELIA & C-DERM). The Company also submitted a patent application with the European Patent Office (EPO) for its CCX0722 obesity and weight management product on December 1, 2023.
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The Company’s cross-border pharmaceutical business serves wholesale pharmaceutical distributors and independent retail pharmacies across the EU through a network of two strategic distribution centers, one in Greece and one in the UK, as well as an additional warehousing facility.
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Additionally, on June 18, 2024, the Company entered into an agreement to acquire all remaining rights arising from the patent filed with the World Intellectual Property Organization (WIPO) under reference code PCT/EP2023/071865. This follows the agreement announced on December 7, 2023, where the Company had acquired 60% of the rights.
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The Company focuses on leveraging its growing purchasing scale and supplier relationships to secure discounts and provide pharmaceuticals at reduced prices and on continuing to drive organic growth at attractive margins for its cross-border pharmaceutical wholesale business.
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Product Insurance We have insurance in place for our warehouses and the products in stock against any damage or theft, but we do not insure our products after the sale, since we are working under an Ex-works policy, and thus our clients are responsible for the transportation and the insurance of the products against any damage.
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The Company operates in the business of full-line pharmaceutical wholesale distribution and serves approximately 1,500 independent retail pharmacies and 40 pharmaceutical wholesalers in Greece region by providing brand-name and generic pharmaceuticals, over-the-counter medicines, vitamins and nutraceuticals. We invest in technology to enhance safety, distribution and warehousing efficiency and reliability.
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On July 22, 2015, the National Medicines Agency in Greece 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.
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Specifically, the Company operates a fully automated warehouse system with three robotic systems, two ROWA™ types and one A-frame type, that ensure near-zero error selection rate, accelerate order fulfillment, and yield higher cost-efficiency in our distribution center. The Company regularly evaluates and undertakes strategic initiatives to expand its distribution reach, improve its profit margins, and strengthen its competitive position.
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Subsequently, on June 15, 2020, SkyPharm 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.
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Taking into consideration the growing demand of various vitamins and nutraceuticals, the Company entered the market with its own brand of nutraceuticals: Sky Premium Life ® (SPL). Our current business has provided us with access to wholesalers both from the sourcing and the sales division of our wholesale business.
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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).
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We sell our products to vendors that supply us with pharmaceutical products as well as to our clients to whom we currently sell pharmaceutical products. We serve this demand by offering quality products to our existing network of wholesalers and pharmacies. Pharmacies are still the key channels for distribution and sales of nutraceuticals in the European market.
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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.
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The development and manufacturing of our own line is assigned to a related party which operates according to our specifications and GMP protocols.
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The National Medicines Agency imposed a fine of €15,000 ($16,225) on SkyPharm for the above case, which was included in “General and administrative” expense on the accompany statement of operations and comprehensive loss for the 12-month period ended December 31, 2023.
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We make use of analytics and customer feedback from our EU-wide network of wholesale pharmaceutical distributors and independent retail pharmacies to identify and evaluate which nutraceutical product codes of the brand Sky Premium Life ® to be developed, commercialized and added to our portfolio.
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Our subsidiary, Cana SA, is a holder of Good Manufacturing Practices license (GMP), which means that it is certified for fulfilling the minimum standards that a medicines manufacturer must meet in the production processes. Our subsidiaries are ISO 9001 certified for a management system for the trade and distribution of pharmaceuticals.
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We intend to continue to brin g Sky Premium Life ® products to market primarily through our existing network of over 160 pharmaceutical wholesale clients and vendors and approximately 100 independent retail pharmacies within the EU market. Moreover, we have penetrated several markets through digital sale channels.
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Under this agreement, Doc Pharma is responsible for the research, development, design, registration, copy rights and licenses of 250 nutritional supplements for the final products called Sky Premium Life®. More specifically, Doc Pharma is responsible for the product development and the Company has added 105 of such products codes in its portfolio as of December 31, 2023.
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There is growing demand for vitamins and nutraceuticals and we are committed to developing quality products and creating enhanced customer value. We regularly evaluate acquisition targets that would allow us to expand our distribution reach and/or vertically integrate into the supply chain of pharmaceutical products that we currently distribute.
Added
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 December 31, 2023. Thus, no relevant R&D expense had been charged to the Company’s Consolidated Statements of Operations and Comprehensive Loss.
Removed
We believe that the demand for reasonably priced medicines, delivered on time and in the highest quality is set to increase in the years to come, as the population’s life expectancy increases.
Added
On June 26, 2022, the Company signed a research and development (“R&D”) agreement with a third party, through which the Company assigned to the third party the development of new products and services in the field of health, focusing on the human intestinal microbiome. The project includes two phases.
Removed
With our product portfolio of patented and non-patented medicines, we contribute to the optimization of efficient medicinal care, and thereby lowering cost for health insurance funds, companies, and patients. We also believe that the demand for non-prescription wellness products such as food and dietary supplements will continue to increase as individuals are increasingly supplementing their nutritional intake.
Added
Phase 1 has a 20-month duration and its cost amounts to EUR 758,000 ($838,450) and phase 2, has a 22-month duration and a cost of EUR 820,000 ($907,084). The amount will be due and payable upon completion of the corresponding phases.
Removed
We believe the EU pharmaceutical import/export market will continue to grow in conjunction with the demand for nutritional products. We continue to encounter competition in the market as we grow. The competition comes in the form of level of service, reliability, and product quality. On the procurement side we continue to expand our vendor base.
Added
The Company records the corresponding R&D expense based on the project’s progress, which is invoiced by the third party in the relevant period. For the 12-month period ended December 31, 2023, the Company has incurred $164,859 of such costs included in “General and administrative expenses” in the Company’s Consolidated Statements of Operations and Comprehensive Loss.
Removed
In order to minimize business risks, we diversify our sources of supply.
Added
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.
Removed
The COVID-19 pandemic has also driven the global market to a high demand for immunity boosting nutraceutical products.
Added
Since Marathon was a newly formed entity with no assets and no activity, the Company attributed no value to the 5 million shares in Marathon which was received as consideration for the distribution services.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeMoreover, the significant rise in the interest rates during 2022 may also adversely affect our business since most of our loan facilities carry floating interest rates and this may cause increased financing outflows. 14 Table of Contents Inflation Reduction Act of 2022 The Inflation Reduction Act of 2022, or IRA, includes several provisions that may impact our business to varying degrees, including provisions that reduce the out-of-pocket spending cap for Medicare Part D beneficiaries from $7,050 to $2,000 starting in 2025, thereby effectively eliminating the coverage gap; impose new manufacturer financial liability on certain drugs under Medicare Part D, allow the U.S. government to negotiate Medicare Part B and Part D price caps for certain high-cost drugs and biologics without generic or biosimilar competition; require companies to pay rebates to Medicare for certain drug prices that increase faster than inflation; and delay until January 1, 2032 the implementation of the HHS rebate rule that would have limited the fees that pharmacy benefit managers can charge.
Biggest changeInflation Reduction Act of 2022 The Inflation Reduction Act of 2022, or IRA, includes several provisions that may impact our business to varying degrees, including provisions that reduce the out-of-pocket spending cap for Medicare Part D beneficiaries from $7,050 to $2,000 starting in 2025, thereby effectively eliminating the coverage gap; impose new manufacturer financial liability on certain drugs under Medicare Part D, allow the U.S. government to negotiate Medicare Part B and Part D price caps for certain high-cost drugs and biologics without generic or biosimilar competition; require companies to pay rebates to Medicare for certain drug prices that increase faster than inflation; and delay until January 1, 2032 the implementation of the U.S.
Moreover, cyber-attacks against the Ukrainian government and other countries in the region have been reported in connection with the recent conflicts between Russia and Ukraine. To the extent such attacks have collateral effects on global critical infrastructure or financial institutions or us, such developments could adversely affect our business, operating results and financial condition.
Moreover, cyber-attacks against the Ukrainian government and other countries in the region have been reported in connection with the recent conflicts between Russia and Ukraine. To the extent such attacks have collateral effects on global critical infrastructure, financial institutions or us, such developments could adversely affect our business, operating results and financial condition.
We may need to adjust our operating procedures in response to these interpretational changes, and such changes could have a material adverse effect on our results of operations and financial condition. Changes in consumers behavior Consumer behavior in recent years shows an increasing trend in the Health-Medicines sector, especially during the period of health crisis.
We may need to adjust our operating procedures in response to these interpretational changes, and such changes could have a material adverse effect on our results of operations and financial condition. Changes in consumer behavior Consumer behavior in recent years shows an increasing trend in the Health-Medicines sector, especially during the period of health crisis.
Consumers have turned to basic necessities and digital channels and e-commerce while physical networks are underperforming. 13 Table of Contents Management of further developments In recent years, the Company has been increasing its turnover, while expanding its range of products and its own branded nutraceutical products, has acquired the latest technology drug storage systems to ensure quality and accuracy (zero error rates) in their distribution.
Consumers have turned to basic necessities and digital channels and e-commerce while physical networks are underperforming. 14 Table of Contents Management of further developments In recent years, the Company has been increasing its turnover, while expanding its range of products and its own branded nutraceutical products, has acquired the latest technology drug storage systems to ensure quality and accuracy (zero error rates) in their distribution.
Currency exchange rate fluctuations could adversely affect our results of operation and financial condition In 2022, we recognized 100% percent of our net sales in markets outside the United States, the majority of which were recognized in each market’s respective local currency. We purchase inventory from companies in foreign markets, some of them in U.S. dollars.
Currency exchange rate fluctuations could adversely affect our results of operation and financial condition In 2023, we recognized 100% percent of our net sales in markets outside the United States, the majority of which were recognized in each market’s respective local currency. We purchase inventory from companies in foreign markets, some of them in U.S. dollars.
No material capital expenditures to meet such provisions are anticipated. Such regulatory provisions did not have a material effect upon our results of operations or competitive position during the year ended December 31, 2022.
No material capital expenditures to meet such provisions are anticipated. Such regulatory provisions did not have a material effect upon our results of operations or competitive position during the year ended December 31, 2023.
Taxation and transfer pricing could adversely affect our results of operations and financial condition We are subject to foreign tax and intercompany pricing laws, including those relating to the flow of funds between our U.S. parent company and our foreign subsidiaries.
Our products, business practices and manufacturing activities are subject to extensive government regulations and could be subject to additional laws and regulations. 13 Table of Contents Taxation and transfer pricing could adversely affect our results of operations and financial condition We are subject to foreign tax and intercompany pricing laws, including those relating to the flow of funds between our U.S. parent company and our foreign subsidiaries.
At this time, it is difficult to assess the likelihood of such threat and any potential impact at this time. Inflation and rising interest rates In 2022, EU annual inflation reached the highest level ever measured at 9.2%. Compared with 2021, when the annual value was 2.9%, it more than tripled.
At this time, it is difficult to assess the likelihood of such threat and any potential impact at this time. 15 Table of Contents Inflation and rising interest rates In 2023, EU annual inflation was at 3.4%, significantly lower, compared with 2022, when the annual inflation reached the highest level ever measured at 9.33%.
The high inflation has adversely affected our business due to the higher costs of purchasing raw materials, the higher transportation costs and the significantly increased operating costs.
The annual average change in the harmonized index of consumer prices (HICP) in the EU during the period 2013-2023 was 0.9%. The high inflation has adversely affected our business due to the higher costs of purchasing raw materials, the higher transportation costs and the significantly increased operating costs.
Further, under the IRA, orphan drugs are exempted from the Medicare drug price negotiation program, but only if they have one rare disease designation and for which the only approved indication is for that disease or condition. If a product receives multiple rare disease designations or has multiple approved indications, it may not qualify for the orphan drug exemption.
Department of Health and Human Services (HHS) rebate rule that would have limited the fees that pharmacy benefit managers can charge. Further, under the IRA, orphan drugs are exempted from the Medicare drug price negotiation program, but only if they have one rare disease designation and for which the only approved indication is for that disease or condition.
Removed
Our products, business practices and manufacturing activities are subject to extensive government regulations and could be subject to additional laws and regulations.
Added
Moreover, the significant rise in the interest rates during 2023 may also adversely affect our business since all of our loan facilities carry floating interest rates and this may cause increased financing outflows.
Removed
The annual average change in the harmonized index of consumer prices (HICP) in the EU during the period 2013-2022 was 2.1%. Annual inflation also increased in these three economies: the United States hit 8.7% (just below the EU), Japan’s inflation reached 2.5%, while China was the lowest of the four with 2.0%.
Added
If a product receives multiple rare disease designations or has multiple approved indications, it may not qualify for the orphan drug exemption. Although we do not have current sales in the United States, the effects of the IRA on any future business of ours and the healthcare industry in general is not yet known. Item 1B.
Removed
The effects of the IRA on our business and the healthcare industry in general is not yet known. Item 1B. Unresolved Staff Comments Not applicable.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe monthly rate is currently $817.50 per month. · The Greece office of SkyPharm is located at 5, Agiou Georgiou Street, 57001, Pylaia, Thessaloniki, Greece.
Biggest changeThe monthly rate is currently $831.13 per month. · Our Greece office and that of SkyPharm is located at 5 Agiou Georgiou Street, 55438, Pilea, Thessaloniki, Greece. The Company has signed a new lease for a three-year period which commenced on April 20, 2022 at the rate of €8,506 ($9,201) per month for this office.
Item 2. Properties The Company rents four corporate offices: · U.S. Office corporate office is located at 141 W. Jackson Blvd, Suite 4236, Chicago, Illinois 60604. The first rent lease commenced in 2015 and has been amended several times throughout the years. The last amendment to that lease was on May 27th, 2022 through May 31, 2023.
Item 2. Properties The Company rents four corporate offices: · U.S. corporate office is located at 141 W. Jackson Blvd, Suite 4236, Chicago, Illinois 60604. The first rent lease commenced in 2015 and has been amended several times throughout the years. The last amendment to that lease was on March 20th, 2023 through July 31, 2025.
The commencement of the lease was on September 25, 2020 at the rate of ₤3,500 ($4,817) per month. · The offices of Cosmofarm are located at Gonata Stylianou 15, Peristeri, Attiki, Greece 12133. The Company has a ten-year lease which commenced on July 18, 2018, at the rate of €4,000 ($4,214) per month.
The commencement of the lease was on September 25, 2020 at the rate of ₤3,500 ($4,817) per month. · The offices of Cosmofarm are located at Gonata Stylianou 15, Peristeri, Attiki, Greece 12133. The Company purchased the building for a total sum of $1,054,872 in cash, on April 24, 2023.
The Company has renewed the lease for a three-year period which commenced on September 1, 2020 at the rate of €8,506 ($8,960) per month. · The offices of Decahedron are located at Unit 14 Spice Green Centre, Flex Meadow, Harlow, CM19 5TR, Essex, U.K.
SkyPharm also rents offices located in Ifestou 33Α, Koropi 194 00, Athens, Greece (agreement signed on January 1, 2023, and has a 10-year duration) at a rate of €3,300 ($3,569) per month. · The offices of Decahedron are located at Unit 14 Spice Green Centre, Flex Meadow, Harlow, CM19 5TR, Essex, U.K.
Removed
The Company rents additional square footage at Gonata Stylianou 22 street. The Company has a seven-year lease which commenced on October 1, 2022, at a rate of €400 ($421) per month. Each of the above facilities is adequate for the Company’s current needs.
Added
Each of the above facilities is adequate for the Company’s current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us. Item 4. Mine Safety Disclosures None 15 Table of Contents PART II
Biggest changeItem 3. Legal Proceedings We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
Added
On April 17, 2024, we received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) stating that, because the Company had not yet filed its Annual Report on Form 10-K for the period ended December 31, 2023 (the “Form 10-K”), the Company was no longer in compliance with Nasdaq Listing Rule 5250(c)(1).
Added
The Nasdaq letter had no immediate effect on the listing of the Company’s shares. The Nasdaq notification letter stated that the Company had 60 calendar days to submit to Nasdaq a plan to regain compliance with the Nasdaq Listing Rules.
Added
If a compliance plan is accepted, Nasdaq may grant up to 180 days from the prescribed due date to regain compliance.
Added
On May 21, 2024, we received an additional delinquency letter from Nasdaq notifying the Company that it continued to be out of compliance with Nasdaq’s continued listing requirements set forth in Nasdaq Listing Rule 5250(c)(1) due to the Company’s failure to timely file its Form 10-Q for the period ended March 31, 2024, as well as remaining delinquent in filing its Annual Report on Form 10-K for the period ended December 31, 2023.
Added
The additional delinquency letter had no immediate effect on the listing of the Company’s shares on Nasdaq. On May 31, 2024, the Company provided its compliance plan to Nasdaq in relation to the filing of its Form 10-K and Form 10-Q for the period ended March 31, 2024.
Added
On June 20, 2024, Nasdaq accepted the plan and initially granted the Company a period ending July 29, 2024 to file the delinquent reports. On July 30, 2024, Nasdaq further extended the filing deadline through October 14, 2024.
Added
On July 19, 2024, Cosmos Health received a notification letter from Nasdaq, informing the Company that it has regained compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).
Added
To regain compliance with the Minimum Bid Price Requirement, the closing bid of the Company’s shares of common stock needed to be at least $1.00 per share for a minimum of ten consecutive business days.
Added
The notification letter confirmed that the Company achieved a closing bid price of $1.00 or greater per common share for ten consecutive business days from July 5, 2024 to July 18, 2024, thereby regaining compliance with the Minimum Bid Price Requirement. Accordingly, Nasdaq has determined that this matter is now closed.
Added
This cured the delinquency notified by Nasdaq on March 20, 2024 that the Company’s common stock had failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive business days as required by the Nasdaq Listing Rules. Item 4. Mine Safety Disclosures None. 17 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe intend to retain future earnings, if any, to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Our future payment of dividends will depend on our earnings, capital requirements, expansion plans, financial condition and other relevant factors that our board of directors may deem relevant.
Biggest changeDividends We have not paid any cash dividends to date and do not anticipate or contemplate paying dividends in the foreseeable future. We intend to retain future earnings, if any, to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account. 16 Table of Contents In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account. 18 Table of Contents In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
The Plan is designed to enable the flexibility to grant equity awards to the Company’s officers, employees, non-employee directors and consultants and to ensure that it can continue to grant equity awards to eligible recipients at levels determined to be appropriate by the Board and/or the Compensation Committee.
The 2022 Plan is designed to enable the flexibility to grant equity awards to the Company’s officers, employees, non-employee directors and consultants and to ensure that it can continue to grant equity awards to eligible recipients at levels determined to be appropriate by the Board and/or the Compensation Committee.
Securities Authorized for Issuance under Equity Compensation Plans Omnibus Equity Incentive Plan On September 19, 2022 the Company held a Board of Directors meeting, whereas, the Board of Directors had elected to adopt an Omnibus Equity Incentive Plan (the “Plan”), that includes reserving 200,000 shares of common stock eligible for issuance under the Plan to be registered on a Form S-8 Registration Statement with the SEC.
Securities Authorized for Issuance under Equity Compensation Plans 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 200,000 shares of common stock eligible for issuance under the Plan to be registered on a Form S-8 Registration Statement with the SEC.
Our accumulated deficit currently limits our ability to pay dividends. Penny Stock The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.
Our future payment of dividends will depend on our earnings, capital requirements, expansion plans, financial condition and other relevant factors that our board of directors may deem relevant. Our accumulated deficit currently limits our ability to pay dividends. Penny Stock The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.
The number of record holders does not include beneficial owners of common stock whose shares are held in the names of various broker-dealers and registered clearing agencies. Dividends We have not paid any cash dividends to date and do not anticipate or contemplate paying dividends in the foreseeable future.
Holders of Our Common Stock As of August 5, 2024, we had 17,606,312 shares of our common stock issued and 17,590,814 shares outstanding, held by approximately 562 stockholders of record. The number of record holders does not include beneficial owners of common stock whose shares are held in the names of various broker-dealers and registered clearing agencies.
Our common stock became listed on the Nasdaq Capital Market on February 28, 2022 under the symbol “COSM.” Our common stock was previously quoted on the OTC QX. Holders of Our Common Stock As of December 31, 2022, we had 10,605,412 shares of our common stock issued and 10,589,915 shares outstanding, held by approximately 482 stockholders of record.
Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock became listed on the Nasdaq Capital Market on February 28, 2022 under the symbol “COSM.” Our common stock was previously quoted on the OTC QX.
Removed
Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has been quoted through various over-the-counter systems at various times since 2009.
Added
The 2022 Plan was approved by the Company’s stockholders at the Annual Meeting of Stockholders held on December 2, 2022. On April 3, 2023, the Company approved incentive stock awards for the CFO, certain officers and directors and other employees of the Company.
Removed
According to the Proxy Statement filed with the SEC on October 20, 2022 the Plan was subject to final approval by the Company’s stockholders at the Annual Meeting of Stockholders held on December 2, 2022 when the Plan was approved. Item 6. Selected Financial Data A smaller reporting company is not required to provide the information required by this Item.
Added
The awards are in the form of restricted stock and will vest in two parts: 50% on October 2, 2023 and 50% on October 2, 2024.
Added
A total of 185,000 shares were awarded and a corresponding share-based compensation expense of $323,957 was recorded for the 12 months ended December 31, 2023, based on the amortization of fair value from the date of issuance of April 3, 2023 through December 31, 2023.
Added
On August 21, 2023, the Board adopted, subject to stockholder approval, the Cosmos Health Inc. 2023 Omnibus Equity Incentive Plan (the “2023 Plan”).
Added
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.
Added
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 2,500,000 shares.
Added
The 2023 Plan was approved by the Company’s stockholders at the Annual Meeting of Stockholders held on September 18, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOperating Expenses For the year ended December 31, 2022, we had general and administrative costs of $10,183,025, salaries and wages expenses of $2,429,021 sales and marketing expenses of $630,057 and depreciation and amortization expense of $188,890 for a net operating loss of $7,474,036 For the year ended December 31, 2021, we had general and administrative costs of $9,208,701, salaries and wages of $2,472,953, sales and marketing expenses of $732,545 and depreciation and amortization expense of $449,692 for a net operating loss of $4,533,404. 19 Table of Contents Interest Expenses For the year ended December 31, 2022, we had interest expense of $2,109,061 and non-cash interest expenses of $1,619,838 related to the amortization of debt discounts arising from debt modification and extinguishment events, versus the year ending December 31, 2021, where we had interest expense of $2,823,842 and non-cash interest expenses of $757,021 related to the amortization of debt discounts arising from debt modification and extinguishment events.
Biggest changeFor the year ended December 31, 2022, we had general and administrative costs of $10,183,025, salaries and wages of $2,429,021, sales and marketing expenses of $630,057 and depreciation and amortization expense of $188,890, for a net operating loss of $7,474,036.
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, development of franchising model, alliances and acquisitions of nutraceutical companies.
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.
Losses may also be subject to limitation under certain rules regarding change of ownership. 26 Table of Contents 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.
Losses may also be subject to limitation under certain rules regarding change of ownership. 32 Table of Contents 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.
All dollar amounts in this registration statement refer to U.S. dollars unless otherwise indicated. 17 Table of Contents Overview Summary We are an international pharmaceutical company with a proprietary line of nutraceuticals and distributor of branded and generic pharmaceuticals, nutraceuticals, OTC medications and medical devices.
All dollar amounts in this registration statement refer to U.S. dollars unless otherwise indicated. 20 Table of Contents Overview Summary We are an international pharmaceutical company with a proprietary line of nutraceuticals and distributor of branded and generic pharmaceuticals, nutraceuticals, OTC medications and medical devices.
This guidance creates an exception to the general recognition and measurement principles of ASC 805, Business Combinations. This guidance should be applied prospectively and is effective for all public business entities for fiscal years beginning after December 15, 2022 and include interim periods.
The new guidance creates an exception to the general recognition and measurement principles of ASC 805, Business Combinations. The new guidance should be applied prospectively and is effective for all public business entities for fiscal years beginning after December 15, 2022, and include interim periods.
The 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 of England. The income tax assets and liabilities are not able to be netted.
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.
October 2021, the FASB issued accounting standards update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts.
October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts.
We intend to continue our efforts to build and expand this team as we grow our business. We have plans to increase the number of our employees by adding more sales people during the next twelve months. Off Balance Sheet Arrangements As of December 31, 2022, there were no off-balance sheet arrangements.
We intend to continue our efforts to build and expand this team as we grow our business. We have plans to increase the number of our employees by adding more sales people during the next 12 months. Off Balance Sheet Arrangements As of December 31, 2023, there were no off-balance sheet arrangements.
We anticipate using cash on hand as of December 31, 2022, cash generated from operations of the Company, and cash flows from debt and equity financing to the extent that funds are available to do so in order to conduct our business operations over the upcoming year.
We anticipate using cash on hand as of December 31, 2023 and cash flows from debt and equity financing to the extent that funds are available to do so in order to conduct our business operations over the upcoming year.
On October 17, 2018, the Company entered into a further amended agreement with Synthesis whereby the current balance on the SSCTF as of October 1, 2018, which was €4,866,910 ($5,629,555) and related accrued interest of €453,094 ($524,094) would be split into two principal balances of Euro €2,000,000 and USD $4,000,000.
On October 17, 2018, the Company entered into a further amended agreement with Synthesis whereby the current balance on the TFF as of October 1, 2018, which was €4,866,910 ($5,629,555) and related accrued interest of €453,094 ($524,094) would be split into two principal balances of Euro €2,000,000 ($2,316,000), (the “EURO Loan”) and USD $4,000,000 (the “USD Loan”).
Our future revenue growth will 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 generic drugs that will be available over the next few years as a result of the expiration of certain drug patents held by brand-name pharmaceutical manufacturers and the rate of conversion from brand products to those generic drugs, price increases and price deflation, general economic conditions in 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.
The increase is attributable to the wholesale revenue increase of our subsidiary Cosmofarm SA, following the acquisition of Bikas customer base and a slight increase in demand for the period. 22 Table of Contents Our future revenue growth will 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 generic drugs that will be available over the next few years as a result of the expiration of certain drug patents held by brand-name pharmaceutical manufacturers and the rate of conversion from brand products to those generic drugs, price increases and price deflation, general economic conditions in 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.
During the year ended December 31, 2022, the Company repaid €111,111 ($118,867) of the principal and as of December 31, 2022, the Company has accrued interest of $8,069 related to this note and a principal balance of €333,333 ($356,600), of which $237,733 is classified as Notes payable – long term portion on the consolidated balance sheet.
During the year ended December 31, 2022, the Company repaid €111,111 ($118,867) of the principal and as of December 31, 2022, the Company had accrued interest of $8,069 related to this note and a principal balance of €333,333 ($356,600), of which $237,733 is classified as “Notes payable – long term portion” on the accompanying consolidated balance sheets.
The Company is liable for income taxes in Greece and the United Kingdom of England. The corporate income tax rate in Greece is 22%, (tax losses are carried forward for five years effective January 1, 2013) (prior to 2013, losses were carried forward indefinitely) and 19% in the United Kingdom of England.
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 the United Kingdom.
We therefore reserve the income tax assets applicable to the United States, but recognize the income tax liabilities in Greece and the United Kingdom of England. Losses may also be subject to limitation under certain rules regarding change of ownership. Accounts Receivable and Allowance for Doubtful Accounts The Company follows ASC 310 to estimate the allowance for doubtful accounts.
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.
During the year ended December 31, 2022, there was $35,048,288 of net cash and cash equivalents provided by financing activities versus $7,267,777 provided by financing activities during the year ended December 31, 2021.
During the year ended December 31, 2023, there was $12,694,007 of net cash and cash equivalents provided by financing activities versus $35,048,288 provided by financing activities during the year ended December 31, 2022.
The adoption did not have a material impact on its consolidated financial statements. Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.
The Company adopted this ASU which resulted in no impact on the Company’s consolidated financial statements. Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.
Revenue sources The Company operates in the wholesale distribution of branded pharmaceutical products, OTC products, medical devices, vitamins and a variety of nutraceuticals, including its proprietary label. Import/Export of Branded pharmaceuticals We conduct wholesale import and export of branded pharmaceutical products throughout Europe by our subsidiaries.
Revenue sources The Company operates in the wholesale distribution of branded pharmaceutical products, OTC products, medical devices, vitamins and a variety of nutraceuticals, including its proprietary label. 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.
The outstanding balance as of December 31, 2022, was $100,000. On February 7, 2023, the Company fully repaid the outstanding balance and interest of the January 7, 2021, $100,000 Convertible Promissory Note. December 21, 2020 Convertible Promissory Note On December 21, 2020 the Company entered into a convertible promissory note with a third-party lender.
The outstanding balance as of December 31, 2022, was $100,000. On February 7, 2023, the Company fully repaid the outstanding balance and interest of the January 7, 2021, $100,000 Convertible Promissory Note. July 30, 2021 Debt Agreement On July 30, 2021, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($578,850).
Unrealized Foreign Currency Losses & Deemed Dividends Additionally, we had an unrealized foreign currency translation loss of $981,014 for the year ended December 31, 2022, deemed dividends on the issuance and down round of warrants, on warrants exchanges and on preferred stock of $50,114,914 such that our net comprehensive loss for the period was $64,926,299 versus unrealized foreign currency loss of $1,006,517 and deemed dividend in the amount of $7,633,033 which concerned the anti-dilution adjustment of the Company’s outstanding warrants, such that our net comprehensive loss for the period was $16,601,199 for the year ended December 31, 2021.
Unrealized Foreign Currency Losses & Deemed Dividends We had an unrealized foreign currency translation loss of $712,791 for the year ended December 31, 2023, deemed dividends on the issuance and down round of warrants, on warrants exchanges and on preferred stock of $7,241,180 such that our net comprehensive loss for the period was $25,071,043 versus unrealized foreign currency gain of $981,014, deemed dividends on the issuance and down round of warrants, on warrants exchanges and on preferred stock of $50,114,914 which concerned the anti-dilution adjustment of the Company’s outstanding warrants, such that our net comprehensive loss for the period was $64,926,299 for the year ended December 31, 2022.
The note matures on August 5, 2026 and bears an annual interest rate that applies to 60% of the principal of the note that is based on a 365-day year, of 3.50% plus 3-month Euribor when Euribor is positive. During the year ended December 31, 2022, the Company repaid €77,985 ($83,428) of the principal.
The note matures on August 5, 2026 and bears an annual interest rate that applies to 60% of the principal of the note that is based on a 365-day year, of 5.84% plus 3-month Euribor when Euribor is positive (3.96% as of December 31, 2023).
For the year ended December 31, 2022, net cash used in operating activities was $14,870,639 versus $7,097,174 net cash used in operating activities for the year ended December 31, 2021.
For the year ended December 31, 2023, net cash used in operating activities was $15,635,999 versus $14,870,639 net cash used in operating activities for the year ended December 31, 2022.
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.
Bad debt expense is included in general and administrative expenses, if any. Inventory Our merchandise inventories are made up of finished goods, manufacturing products, raw materials and other products and are valued at the lower of cost or market using the weighted-average cost method.
December 20, 2018 Note On December 20, 2018, the €1,500,000 ($1,718,400) note payable, originally borrowed by SkyPharm pursuant to a Loan Agreement with a third-party lender, dated March 16, 2018, was transferred to Grigorios Siokas. The note bears an interest rate of 4.7% per annum and had a maturity date of March 18, 2019.
December 20, 2018 Note On December 20, 2018, the €1,500,000 ($1,718,400) note payable, originally borrowed by SkyPharm pursuant to a Loan Agreement with a third-party lender, dated March 16, 2018, was transferred to Grigorios Siokas.
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 evaluated the above conditions which raise substantial doubt about the Company’s ability to continue as a going concern to determine if it can meet its obligations for the subsequent 12 months from the date of this filing.
On December 22, 2022, Skypharm SA signed an agreement for the extension of the payments and an increase in interest rate due under the Varengold loan (€2,000,000 portion of the Trade Facility), that was extended to be repaid with a balloon payment now due on October 31, 2025.
As of December 31, 2023, the Company had accrued $161,274 in interest expense related to these agreements. 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.
The decrease in the gross profit was primarily due to the slight decrease in sales of our own brand of nutraceuticals, SkyPremium Life, during the last quarter of 2022 , in order for the Company to achieve a decrease in the outstanding receivables.
The decrease in the gross profit was primarily due to the slight decrease in sales of our own brand of nutraceuticals, SkyPremium Life, during the period, in order for the Company to achieve a decrease in the outstanding receivables and the boost in our wholesale stream as explained in “Cost of Goods Sold” section above.
Results of Operations Year ended December 31, 2022 versus December 31, 2021 For the year ended December 31, 2022, the Company had a net loss of $13,830,371 on revenue of $50,347,652, versus a net loss of $7,961,649 on revenue of $56,239,667, for the year ended December 31, 2021.
Results of Operations Year ended December 31, 2023 versus December 31, 2022 For the year ended December 31, 2023, the Company had a net loss of $18,542,654 on revenue of $53,376,874, versus a net loss of $13,830,371 on revenue of $50,347,652, for the year ended December 31, 2022.
The loan has a six-year maturity and bears interest at a rate of 2.5% per annum beginning 12-months after the initial disbursement. The Company may prepay this loan without penalty at any time.
The loan has a ten-year maturity and bears interest at a rate of 2.5% per annum beginning 12-months after the initial disbursement, which was on July 10, 2020. The Company may prepay this loan without penalty at any time. As of December 31, 2022, the principal balance was £47,144 ($56,936).
Revenue Revenue during the Company’s twelve-month period ended December 31, 2022, decreased by 10.48% as compared to revenues in the period ended December 31, 2021.
Revenue Revenue during the Company’s 12-month period ended December 31, 2023, increased by 6.02% as compared to revenues in the period ended December 31, 2022.
There is a significant growth on opportunities through product additions and geographic expansion. 18 Table of Contents 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.
We focus on nutraceutical products because we foresee it as a market with high growth opportunities due to its large market size and margin contribution as the demand for nutraceutical products is increasing globally. 21 Table of Contents 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.
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.
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. 31 Table of Contents Significant Equipment We do not intend to purchase any significant equipment for the next 12 months aside from a few pieces of IT equipment.
Pursuant to the agreement, there is a twelve-month grace period for principal repayment during which interest is accrued. The principal is to be repaid in 17 equal quarterly installments of €18,824 commencing on June 30, 2023.
Pursuant to the agreement, there is a nine-month grace period for interest and principal repayment. The principal is to be repaid in 18 equal quarterly installments of €55,556 commencing on May 2, 2024.
The note matures on November 18, 2025 and bears an annual interest rate, based on a 360-day year, of 3.9% plus 6-month Euribor when Euribor is positive.
The note matures on November 18, 2025 and bears an annual interest rate, based on a 360-day year, of 3% plus 0.6% plus 6-month Euribor when Euribor is positive (4% as of December 31, 2023). The principal is to be repaid in 18 quarterly installments of €27,778 ($30,333).
The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of the ASU would be applied prospectively. Early adoption is also permitted, including adoption in an interim period. This ASU is currently not expected to have a material impact on the Company’s consolidated financial statements.
The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of the ASU would be applied prospectively. Early adoption is also permitted, including adoption in an interim period. This ASU was adopted on January 1, 2023, which resulted in no cumulative-effect adjustment to retained earnings.
The Company repaid £722.97 ($773) of principal during the year ended December 31, 2022, and the balance as of December 31, 2022 was £47,144 ($56,936). 23 Table of Contents Related Party Indebtedness Grigorios Siokas From time to time, Grigorios Siokas loans the Company funds in the form of non-interest bearing, no-term loans.
During the year ended December 31, 2023, the Company repaid €18,750 ($20,741) of the principal balance. The outstanding balance is €121,875 ($134,818) as of December 31, 2023. 29 Table of Contents Related Party Indebtedness Grigorios Siokas From time to time, Grigorios Siokas loans the Company funds in the form of non-interest bearing, no-term loans.
As of December 31, 2022, the Company has accrued interest of $2,728 and a principal balance of €422,015 ($451,472), of which $336,788 is classified as Notes payable – long term portion on the consolidated balance sheet.
As of December 31, 2022, the Company had accrued interest of €2,509 ($2,728) and a principal balance of €422,016 ($451,472), of which $336,788 is classified as “Notes payable – long term portion” on the accompanying consolidated balance sheets. During the year ended December 31, 2023, the Company repaid €79,006 ($87,396) of the principal.
The Company has converted a total of $540,000 of the Note to shares of common stock and the outstanding balance as of December 31, 2022 was $0. 21 Table of Contents November 19, 2020 Debt Agreement On November 19, 2020, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($611,500).
As of December 31, 2023, the principal balance was £ 40,858 ($52,066). November 19, 2020 Debt Agreement On November 19, 2020, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($611,500).
As of December 31, 2022 the Company has accrued interest of $8,379 and an outstanding balance of €320,000 ($342,336), of which $281,924 is classified as Notes payable – long term portion on the accompanying consolidated balance sheet.
As of December 31, 2023 and 2022 the Company has accrued interest of €11,043 ($12,215) and €7,707 ($8,379), respectively, and an outstanding balance of €260,000 ($287,612), of which $204,322 and $281,924, respectively, is classified as “Notes payable – long term portion” on the accompanying consolidated balance sheets.
The outstanding balance of the Note as of December 31, 2022 was $0, since the Note was fully repaid within December 2022. 22 Table of Contents Trade Facility Agreements On May 12, 2017, SkyPharm entered into a Trade Finance Facility Agreement (the “SkyPharm Facility”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”) as amended on November 16, 2017, and May 16, 2018.
As of December 31, 2023 and 2022 the Company an outstanding balance of €977,000 ($1,081,532) and $0, of which $897,864 and $0, respectively, is classified as “Notes payable – long term portion” on the accompanying consolidated balance sheets. 28 Table of Contents Trade Facility Agreements On May 12, 2017, SkyPharm entered into a Trade Finance Facility Agreement (the “SkyPharm Facility”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”) as amended on November 16, 2017 and May 16, 2018.
Gross Profit Gross profit for the year ended December 31, 2022 was $5,956,957 compared with the $8,330,487 for the year ended December 31, 2021. Gross profit decreased by $2,373,530 or 28.49% from the prior fiscal year.
Gross Profit Gross profit for the year ended December 31, 2023 was $4,349,569 compared with the $5,956,957 for the year ended December 31, 2022. Gross profit decreased by $1,607,388 or 26.98% from the prior fiscal year.
The Company has adequate cash from operations in order to cover its operating costs and to continue as a going concern for the next 12 months. 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’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.
During the year ended December 31, 2022, there was $21,497 net cash used in investing activities versus $826,817 used in during the year ended December 31, 2021. In the year ended December 31, 2021 this was due to the purchase of fixed assets and licenses.
During the year ended December 31, 2023, there was $13,760,357 net cash used in investing activities versus $21,497 used in during the year ended December 31, 2022.
This increase in the working capital surplus is primarily attributed to the Company’s cash provided by financing activities during the year ending as of December 31, 2022. 20 Table of Contents As of December 31, 2022, the Company had net cash of $20,749,683 versus $286,487 as of December 31, 2021.
This decrease in the working capital surplus is primarily attributed to the Company’s cash used for its operating activities during the year ending as of December 31, 2023 in addition to the significant expected credit loss allowances recorded for the 12-month period ended December 31, 2023. 25 Table of Contents As of December 31, 2023, the Company had net cash of $3,833,195 versus $20,749,683 as of December 31, 2022.
As of December 31, 2022, the Company had an outstanding principal balance of €10,200 ($10,912) and €0 ($0) accrued interest. 24 Table of Contents Plan of Operation in the Next Twelve Months Specifically, our plan of operations for the next 12 months is as follows: We assess the foreseeable development of the Company as being positive.
For the years ended December 31, 2023 and 2022, the Company recorded a foreign currency translation loss of $371 and $19,568, respectively. 30 Table of Contents Plan of Operation in the Next 12 Months Specifically, our plan of operations for the next 12 months is as follows: We assess the foreseeable development of the Company as being positive.
Our nutraceutical products are manufactured exclusively by Doc Pharma, a related party of the Company. Our nutraceutical products have penetrated several markets within 2021 & 2022 through digital channels such as Amazon and Tmall.
We have a full portfolio of fast-moving and specialty formulas with more than 80 product codes including vitamins, minerals and other herbal extracts. Our nutraceutical products are manufactured exclusively by Doc Pharma. Our nutraceutical products have penetrated several markets within 2022 and 2023 through digital channels such as Amazon and Tmall.
Cost of Goods Sold For the year ended December 31, 2022, we had direct costs of goods sold of $44,390,695 associated to cost of goods sold versus $47,909,180 from the prior fiscal year ended December 31, 2021. Cost of goods sold year over year decreased by 7.34% in 2022 as compared to 2021, in accordance with the decrease in revenue.
Cost of Goods Sold For the year ended December 31, 2023, we had direct costs of goods sold of $49,027,305 versus $44,390,695 from the prior fiscal year ended December 31, 2022.
Based on the management’s evaluations, it has devised a plan in order to meet its obligations for the next twelve months. 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.
Management considered its ability to access future capital, curtail expenses if needed, expand product lines, and acquire new products. 24 Table of Contents 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.
Debt Obligations June 9, 2022 Debt Agreement On June 9, 2022 the Company entered into an agreement with a third-party lender in the principal amount of €320,000 ($335,008). The note matures on June 16, 2027 and bears an annual interest of 3.89% plus levy of 0.60% plus the 3-month Euribor (when positive).
July 14, 2023 Debt Agreement On July 14, 2023, the Company entered into an agreement with a third-party lender in the principal amount of €1,000,000 ($1,123,700), the “Note”. The Note matures on July 31, 2028 and bears an annual interest rate of 2.46% plus the 3-month Euribor (3.96% as of December 31, 2023).
During the year ended December 31, 2022, the Company repaid €9,375 ($10,029) of the principal of this loan. As of December 31, 2022, the principal balance was $150,441. On June 24, 2020, the Company received a loan £50,000 ($68,310) from the United Kingdom government.
During the year ended December 31, 2023, the Company repaid €117,647 ($130,141) of the principal balance. 26 Table of Contents June 24, 2020 Debt Agreement On June 24, 2020, the Company’s subsidiary, Decahedron, received a loan £50,000 ($68,310) from the UK government.
As of December 31, 2022, the Company fully repaid the Note and thus had an outstanding balance of €0 ($0) and accrued interest of €192,891 ($206,355). Grigorios Siokas is the Company’s CEO and principal shareholder and is hence considered a related party to the Company.
As of December 31, 2022, the Company had repaid the principal balance in full and had a balance of $5,041 in accrued interest related to this note. The Company repaid the outstanding interest during the year ended December 31, 2023 and thus the balance of both principal and interest as of December 31, 2023 is $0.
The significant increase is attributable to a preferred-stock offering that took place within February 2022 and the two common stock offerings that occurred within October and December 2022 for total net proceeds of approximately $40 million. Additionally, the substantial proceeds of approximately $11 million from the warrant exercises also contributed to this increase.
The significant decrease is attributable to a preferred-stock offering that took place within February 2022 and the two common stock offerings that occurred within October and December 2022 for total net proceeds of approximately $40 million for the 12-month period ended December 31, 2022 whereas for the 12-month period ended December 31, 2023 we had $9,362,937 proceeds from the July 2023 offering and the receipt of the outstanding subscription receivable from December’s 2022 offering and $3,533,741 net proceeds from the exercise of warrants during December 2023.
COVID-19 Government Loans On May 12, 2020, the Company’s subsidiary, SkyPharm, was granted and on May 22, 2020 the Company received a €300,000 ($366,900) loan from the Greek government. During the year ended December 31, 2021, the Company received a waiver of 50% forgiveness of the loan and recorded $177,450 as other income.
This extension was agreed upon in writing on December 22, 2022, with a retroactive modification date to October 31, 2022 (the original maturity date). COVID-19 Government Loans On May 12, 2020, the Company’s subsidiary, SkyPharm, was granted and, on May 22, 2020, received a €300,000 ($366,900) loan from the Greek government.
Therefore, it is determined that no substantial doubt exists about the Company’s ability to continue as a going concern for a period of twelve months from the date of this filing. Liquidity and Capital Resources As of December 31, 2022, the Company had working capital of $34,296,033 versus a working capital of $9,904,925 as of December 31, 2021.
Additionally, as of December 31, 2023, the Company had positive working capital of $12,285,310, an accumulated deficit of $91,644,234, and stockholders’ equity of $36,043,028. It is management’s opinion that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of 12 months from the date of this filing.
The guidance is effective for all other entities for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effects of the adoption of ASU No. 2021-08 on its consolidated financial statements.
ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis, with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures.
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.
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.
Interest on the new balances commenced on October 1, 2018, at 6% per annum plus one-month Euribor, when it is positive, on the Euro balance and 6% per annum plus one-month Libor on the USD balance. The original loan of the USD $4,000,000 matured on August 31, 2021.
Interest on both the EURO Loan and USD Loan commenced on October 1, 2018, at 6% per annum plus one-month Euribor (3.869% as of December 31, 2023), and 6% plus one-month LIBOR (5.47% as of date of December 31, 2023), respectively. On December 30, 2020, the Company transferred the EURO Loan to a new third-party lender.
Dimitrios Goulielmos On November 21, 2014, SkyPharm entered into a Loan Agreement with Dimitrios Goulielmos, former Chief Executive Officer of the Company, pursuant to which the Company borrowed €330,000 ($401,115) from Mr. Goulielmos. The Loan bore an interest rate of 2% per annum and was due and payable in full on May 11, 2015.
Debt Obligations On November 16, 2015, the Company entered into a Loan Agreement with Panagiotis Drakopoulos, the Company’s former Director and former Chief Executive Officer, pursuant to which the Company borrowed €40,000 ($42,832) as a note payable from Mr. Drakopoulos.
The amendments in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2021, and interim periods with fiscal years beginning after December 15, 2021. Early adoption is permitted, including adoption in an interim period. The Company adopted ASU 2021-04 on January 1, 2022.
The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments are required to be applied retrospectively to all prior periods presented in an entity’s financial statements.
This extension was agreed upon in writing on December 22, 2022 with a retroactive modification date to October 31, 2022 (the original maturity date) between SkyPharm SA, (the “Borrower”) and Varengold Bank AG (the “Lender”) During December 2022, the Company repaid $2,593,363 of the $4,000,000 Note and $187,215 of the €2,000,000 Note balance such that as of December 31, 2022, the Company had principal balances of €1,775,000 ($1,898,895) and $1,406,637 under the agreements, of which $1,604,700 is classified as Notes payable-long term on the consolidated balance sheet and the Company had accrued $20,604 and $169 respectively, in interest expense related to these agreements.
During the year ended December 31, 2022, the Company repaid €175,000 ($191,100) of the EURO Loan and $2,593,363 of the USD Loan such that as of December 31, 2022, the Company had principal balances of €1,775,000 ($1,898,895) and $1,406,637 under the agreements, respectively. As of December 31, 2022, the Company had accrued $309,365 in interest expense related to these agreements.
We source licensed pharmaceuticals from wholesalers at a lower cost, primarily in Greece and the UK and sell to other European wholesalers. Our capital efficient business model is based on infrastructure, efficiency and scale. Full-line Wholesale We conduct direct distribution and sales of pharmaceuticals, medical devices, branded pharmaceuticals and OTC products. Our distribution network exceeds over 1,500 pharmacies in Greece.
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.
On March 3, 2022, the Company signed an extension to the facility agreement relating to the USD $4,000,000. Based on the updated repayment terms the facility’s final repayment date was extended to January 2023.
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 the twelve-month period ended December 31, 2022 the Company borrowed additional proceeds of $2,933,165 and €656,750 ($702,591) and repaid $3,045,000 and €1,688,800 ($1,806,678) of these loans, respectively. As of December 31, 2022, the Company had a total outstanding balance under these loans of $12,821.
During the 12-month period ended December 31, 2022, the Company had an outstanding principal balance under these loans of $12,821 in loans payable to Grigorios Siokas. As of December 31, 2023, the Company had an outstanding principal balance of $0 related to this payable.
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. 27 Table of Contents Recently Issued Accounting Pronouncements In December 2022, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2022-06, Deferral of the Sunset Date of Reference Rate Reform (Topic 848).
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. 33 Table of Contents Below is an analysis per category of our inventories as of December 31, 2023 and 2022: Product Categories December 31, 2023 December 31, 2022 Pharmaceuticals 3,417,039 2,763,350 Parapharmaceuticals 1,030,878 662,598 Manufacturing products 160,436 - Raw materials 275,919 - Dairy products 21,017 24,630 Veterinary medicine 13,872 5,638 Other 225,098 101,709 Less provisions (355,205 ) (106,057 ) Total 4,789,054 3,451,868 34 Table of Contents Recently Issued Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
Removed
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 at more than 80 product codes including vitamins, minerals and other herbal extracts. We expect to reach 150 product codes by the end of 2023.
Added
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).
Removed
We focus on nutraceutical products because we foresee it as a relatively under-penetrated market throughout Europe with potential of high growth opportunities due to its large market size and margin contribution as the demand for nutraceutical products is increasing globally. Branded pharmaceuticals We are engaged in the promotion, distribution and sale of branded pharmaceutical products throughout Europe.
Added
Cost of goods sold year over year increased by 10.45% in 2023 as compared to 2022, in accordance with the increase in revenue and the fact that a larger proportion of our revenue arose from the wholesale stream which historically has lower margins.
Removed
Through a related company, we have the distribution rights to over 70 fast-moving pharmaceutical products.
Added
Operating Expenses For the year ended December 31, 2023, we had general and administrative costs of $19,642,005, salaries and wages expenses of $4,719,768, sales and marketing expenses of $1,204,636 and depreciation and amortization expense of $614,377, for a net operating loss of $21,831,217.
Removed
The significant increase relates to the additional deemed dividend amounts that arose from the Company’s multiple offerings and warrants issuances within 2022. Going Concern The Company’s consolidated financial statements are prepared using U.S. GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.
Added
The material increase in operating costs can be attributed to a combination of factors such as the provisions for expected credit losses which amounted to $11,850,788 for the year ended December 21, 2023 compared to $5,621,938 for the year ended December 31, 2022, the significant increase in management’s salaries and bonuses and the considerable investment in sales and marketing expenses, especially for our own branded nutraceuticals, which increased by 91.19% compared to the year ended December 31, 2022. 23 Table of Contents Interest Income & Expenses For the year ended December 31, 2023, we had interest expense of $866,476, versus the year ending December 31, 2022, where we had interest expense of $2,345,410.
Removed
The Company had net loss of $13,830,371, and net cash used in operations of $14,870,639 during the year ended December 31, 2022, and positive working capital of $34,296,033 and an accumulated deficit of $66,232,813 as of December 31, 2022.
Added
The decrease of 63.06% is attributable to the significant debt repayments occurred in 2022 following our successful capital raises, which subsequently decreased the corresponding finance costs.
Removed
During the fiscal year, the Company has undergone a strategic review process to help find a definitive solution to the Company’s accumulated deficit constraints.
Added
Interest income for the year ended December 31, 2023 was $662,859 compared to $236,349 for the year ended December 31, 2022, an increase of 180.46% arising from interest income on short term time deposits (treasury bills) we had during the period and interest earned on the related party loan receivable we signed with Doc Pharma SA on December 30, 2022.
Removed
Options under consideration in the strategic review process include, but are not limited to, securing new debt, exchange debt for equity, restructuring current debt facilities from short term into long-term making the proper actions for new fund raising.
Added
Gain on extinguishment of debt We had gains on debt extinguished of $1,910,967 for the year ended December 31, 2023, which arose from a gain of $1,605,499 from the termination of the agreement with Marathon Global Inc. and the write-off of the share settled debt obligation we had as of December 31, 2022 and $305,468 arising from the debt forgiveness of the Synthesis Structured debt facility of our subsidiary SkyPharm SA.
Removed
Finally, the Company plans to access the capital markets further in order to raise additional funds through equity offerings. Additionally, as of December 31, 2022, the Company's cash reserves amounted to $20.7 million compared to $286 thousand as of December 31, 2021.
Added
Bargain purchase gain We had a bargain purchase gain of $1,440,249 arising from the acquisition of Cana on June 30, 2023, once the fair value of Cana’s net assets on the date of acquisition were more that the fair value of the consideration transferred. For more information refer to Note 1 (section: Acquisition Accounting).
Removed
During the year ended December 31, 2022, the Company raised $46.0 million from equity financings, fortifying its capital position. In addition, the Company received $10.5 million during the year from the exercise of warrants.

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