10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2019

OR

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

For the transition period from ___________ to ___________

Commission file number: 000-54436

COSMOS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Nevada	27-0611758
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
141 West Jackson Blvd, Suite 4236 Chicago, Illinois	60604
(Address of principal executive offices)	(Zip Code)

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

N/A

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

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

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

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)		Emerging growth company	¨

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

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

As of May 20, 2019, there were 13,305,015 shares issued and 13,087,478 shares outstanding of the registrant’s common stock.

COSMOS HOLDINGS INC.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited).	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	36
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	42
Item 4.	Controls and Procedures.	42
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	43
Item 3.	Defaults Upon Senior Securities.	43
Item 4.	Mine Safety Disclosures.	43
Item 5.	Other Information.	43
Item 6.	Exhibits.	44
SIGNATURES		45

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

COSMOS HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

 

	March 31, 2019			December 31, 2018
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	309,656		$	864,343
Accounts receivable, net		5,569,831			4,753,291
Accounts receivable - related party		459,207			189,760
Other investments		208,487			217,361
Inventory		2,750,559			3,202,767
Equity investment		2,790,000			2,500,000
Prepaid expenses and other current assets		1,332,618			1,662,579
Prepaid expenses and other current assets - related party		4,988,828			4,957,061
Operating lease right-of-use asset		579,935			-
Financing lease right-of-use asset		134,011			-
TOTAL CURRENT ASSETS		19,123,132			18,347,162
Property and equipment, net		1,676,313			1,425,632
Goodwill and intangible assets, net		289,893			296,767
Deferred tax assets		513			913
Other assets		615,928			624,479
TOTAL ASSETS	$	21,705,779		$	20,694,953
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	6,282,735		$	5,933,464
Accounts payable and accrued expenses - related party		128,672			139,556
Customer advances		1,118,066			1,067,200
Convertible notes payable, net of unamortized discount of $0 and $276,841, respectively		-			135,800
Notes payable		9,757,837			9,803,733
Notes payable - related party		1,743,708			1,793,437
Lines of credit		2,127,633			1,514,583
Loans payable - related party		1,706,212			1,775,251
Operating lease liability, current portion		178,180			-
Financing lease liability, current portion		33,723			-
Other current liabilities		69,786			111,212
TOTAL CURRENT LIABILITIES		23,146,552			22,274,236
Share settled debt obligation		1,554,590			1,554,590
Operating lease liability, net of current portion		377,870			-
Financing lease liability, net of current portion		5,819			-
Other liabilities		165,483			183,577
TOTAL LIABILITIES		25,250,314			24,012,403
Commitments and Contingencies (see Note 13)		-			-
STOCKHOLDERS' DEFICIT:
Preferred stock, $0.001 par value; 100,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively		-			-
Common stock, $0.001 par value; 300,000,000 shares authorized; 13,305,015 and 13,878,757 shares issued and 13,087,478 and 13,685,067 outstanding as of March 31, 2019 and December 31, 2018, respectively		13,305			13,879
Additional paid-in capital		13,134,556			13,133,982
Treasury Stock, 217,537 and 193,690 shares as of March 31, 2019 and December 31, 2018, respectively		(297,035	)		(225,494	)
Accumulated deficit		(16,489,818	)		(16,272,645	)
Accumulated other comprehensive income		94,457			32,828
TOTAL STOCKHOLDERS' DEFICIT		(3,544,535	)		(3,317,450	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	21,705,779		$	20,694,953

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

3

COSMOS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	Three Months Ended March 31,
	2019			2018
REVENUE	$	9,683,341		$	11,965,429
COST OF REVENUE		9,057,179			11,355,433
GROSS PROFIT		626,162			609,996
OPERATING EXPENSES
General and administrative expenses		743,531			751,748
Depreciation and amortization expense		56,373			7,796
TOTAL OPERATING EXPENSES		799,904			759,544
LOSS FROM OPERATIONS		(173,742	)		(149,548	)
OTHER EXPENSE, NET
Other income (expense), net		2,357			(2,778	)
Interest expense - related party		(66	)		(66	)
Interest expense		(259,712	)		(286,578	)
Non-cash interest expense		(229,713	)		(1,284,012	)
Forgiveness of debt		-			49,623
Gain on change in fair value of equity investments		663,711			-
Loss on sale of equity investments		(57,586	)		-
Loss on extinguishment of debt		-			(1,464,698	)
Foreign currency transaction gain (loss), net		(160,640	)		82,283
TOTAL OTHER EXPENSE, NET		(41,649	)		(2,906,226	)
LOSS BEFORE INCOME TAXES		(215,391	)		(3,055,774	)
INCOME TAX EXPENSE		(1,782	)		(28	)
NET LOSS		(217,173	)		(3,055,802	)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net		61,629			(135,054	)
TOTAL COMPREHENSIVE LOSS	$	(155,544	)	$	(3,190,856	)
BASIC NET LOSS PER SHARE	$	(0.02	)	$	(0.24	)
DILUTED NET LOSS PER SHARE	$	(0.02	)	$	(0.24	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		13,384,574			12,825,393
Diluted		13,384,574			12,825,393

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

4

Cosmos Holdings, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

(Unaudited)

 

																						Accumulated
																						Other
	Preferred Stock				Common Stock						Additional		Treasury Stock									Comprehensive			Total
	No. of Shares		Value		No. of Shares			Value			Paid-in Capital		No. of Shares			Value			Accumulated Deficit			Income (Loss)			Stockholders' Deficit
Balance at January 1, 2018		-	$	-		12,825,393		$	12,825		$	5,652,429		(138,689	)	$	(95,882	)	$	(7,211,987	)	$	(1,385,229	)	$	(3,027,844	)
Foreign currency translation adjustment, net		-		-		-			-			-		-			-			-			(135,054	)		(135,054	)
Stock-based compensation		-		-		-			-			59,672		-			-			-			-			59,672
Modification of debt		-		-		-			-			1,739,289		-			-			-			-			1,739,289
Net loss		-		-		-			-			-		-			-			(3,055,802	)		-			(3,055,802	)
Balance at March 31, 2018		-	$	-		12,825,393		$	12,825		$	7,451,390		(138,689	)	$	(95,882	)	$	(10,267,789	)	$	(1,520,283	)	$	(4,419,739	)
Balance at January 1, 2019		-		-		13,878,757		$	13,879			13,133,982		(193,690	)	$	(225,494	)	$	(16,272,645	)	$	32,828		$	(3,317,450	)
Foreign currency translation adjustment, net		-		-		-			-			-		-			-			-			61,629			61,629
Cancellation of pre-delivery shares issued in connection with convertible debentures		-		-		(573,742	)		(574	)		574		-			-			-			-			-
Purchase of treasury stock from third party		-		-		-			-			-		(23,847	)		(71,541	)		-			-			(71,541	)
Net loss		-		-		-			-			-		-			-			(217,173	)		-			(217,173	)
Balance at March 31, 2019		-	$	-		13,305,015		$	13,305		$	13,134,556		(217,537	)	$	(297,035	)	$	(16,489,818	)	$	94,457		$	(3,544,535	)

 

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

5

COSMOS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

	Three Months Ended March 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(217,173	)	$	(3,055,802	)
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities:
Depreciation and amortization expense		56,373			7,796
Amortization of debt discounts		229,713			1,284,012
Loss on extinguishment of debt		-			1,464,698
Gain on forgiveness of debt		-			(49,623	)
Stock-based compensation		-			59,671
Gain on change in fair value of equity investments		(663,711	)		-
Loss on sale of equity investments		57,586			-
Amortization of right-of-use assets		69,632			-
Changes in Assets and Liabilities:
Accounts receivable, net		(816,540	)		(979,384	)
Accounts receivable - related party		(269,447	)		(366,911	)
Inventory		452,208			1,021,518
Prepaid expenses and other current assets		290,663			(554,435	)
Prepaid expenses and other current assets - related party		(31,767	)		(1,114,682	)
Other assets		8,551			(180,290	)
Accounts payable and accrued expenses		349,271			117,597
Accounts payable and accrued expenses - related party		(10,884	)		394,707
Customer advances		50,866			-
Other current liabilities		(41,426	)		-
Lease liabilities		(27,417	)		-
Taxes payable		-			84,283
Other liabilities		29,569			-
NET CASH USED IN OPERATING ACTIVITIES		(483,933	)		(1,866,845	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets		(462,545	)		(12,307	)
Proceeds from sale of investment shares		333,014			-
NET CASH USED IN INVESTING ACTIVITIES		(129,531	)		(12,307	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of convertible note payable		(365,513	)		(775,285	)
Payment of related party note payable		(14,035	)		(13,552	)
Proceeds from note payable		-			2,273,040
Payment of related party loan		(38,175	)		(142,248	)
Proceeds from related party loan		-			1,034,270
Payment of lines of credit		(1,875,720	)		-
Proceeds from lines of credit		2,518,913			-
Payments of finance lease liability		(8,121	)		-
Purchase of treasury stock		(71,541	)		-
NET CASH PROVIDED BY FINANCING ACTIVITIES		145,808			2,376,225
Effect of exchange rate changes on cash		(87,031	)		48,121
NET CHANGE IN CASH		(554,687	)		545,194
CASH AT BEGINNING OF YEAR		864,343			782,853
CASH AT END OF YEAR	$	309,656		$	1,328,047
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest	$	119,770		$	246,194
Income tax	$	-		$	-
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Cancellation of pre-delivery shares issued for conversion of convertible notes payable	$	574		$	-

 

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

6

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

NOTE 1 – BASIS OF PRESENTATION

The terms “COSM,” “we,” “the Company,” and “us” as used in this report refer to Cosmos Holdings, Inc. The accompanying unaudited consolidated balance sheet as of March 31, 2019 and unaudited consolidated statements of operations for the three months ended March 31, 2019 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management of COSM, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2019, are not necessarily indicative of the results that may be expected for the year ending December 31, 2019, or any other period. These unaudited consolidated financial statements and notes should be read in conjunction with the financial statements for each of the two years ended December 31, 2018 and 2017, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (“Form 10-K”). The accompanying consolidated balance sheet as of December 31, 2018 has been derived from the audited financial statements filed in our Form 10-K and is included for comparison purposes in the accompanying balance sheet. Certain prior year amounts have been reclassified to conform to current year presentation.

NOTE 2 – ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN

Overview

Cosmos Holdings, Inc. (“us,” “we,” or the “Company”) is an international pharmaceutical wholesaler. The Company imports, exports and distributes brand-name and generic pharmaceuticals, over-the-counter (“OTC”) medicines, a variety of vitamins, and dietary supplements. Through March 31, 2019, we operated our business through three wholly owned subsidiaries: (i) SkyPharm S.A. (“SkyPharm”), headquartered in Thessaloniki, Greece; (ii) Decahedron Ltd. (“Decahedron”), headquartered in Harlow, United Kingdom (“UK”); and (iii) Cosmofarm Ltd. (“Cosmofarm”), headquartered in Athens, Greece. Our business is primarily comprised of cross-border sales of brand-name pharmaceutical products in the European Union (“EU”). Our cross-border pharmaceutical wholesale business serves wholesale pharmaceutical distributors and independent retail pharmacies across the EU through a network of three strategic distribution centers, as well as an additional warehousing facility. Pharmaceutical manufacturers generally implement variable pricing strategies within the EU market. Identifying and evaluating price spreads between EU member states enables us to source brand-name pharmaceuticals from countries where ex-factory prices are comparatively low and export to countries where the same products are priced higher. We remain focused on leveraging our growing purchasing scale and supplier relationships to secure discounts and provide pharmaceuticals at reduced prices and continuing to drive organic growth at attractive margins for our cross-border pharmaceutical wholesale business.

We regularly evaluate and undertake strategic initiatives to expand our distribution reach, improve our profit margins, and strengthen our competitive position. In 2018, we entered the vitamins and dietary supplements segment and in the fourth quarter of 2018 we posted the first sales of our own brand of nutraceuticals; SkyPremium Life. Through the December 2018 acquisition of Cosmofarm, we entered the full-line pharmaceutical wholesale distribution segment. Cosmofarm now serves approximately 370 independent retail pharmacies and 15 pharmaceutical wholesales in the greater Athens region by providing a reliable supply of brand-name and generic pharmaceuticals, OTC medicines, vitamins, and dietary supplements. We invest in technology to enhance safety, distribution and warehousing efficiency and reliability. For example, Cosmofarm operates two fully automated ROWA robotic warehouse systems that ensure 0% error selection rate, accelerate order fulfillment, and yield higher cost-efficiency in our Athens distribution center. In the future, we intend to expand into the cosmetic/beauty industry.

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 to develop to add to our SkyPremium Life portfolio. We intend to continue to bring SkyPremium Life products to market primarily through our existing network of over 160 pharmaceutical wholesale clients and vendors and approximately 370 independent retail pharmacies in the EU. There is growing demand for vitamins and food supplements, as well as cosmetic/beauty products, and we are committed to developing quality products and creating enhanced customer value.

7

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

We are also closely monitoring the legal framework for prescription and non-prescription derivates of cannabis products as it develops in Europe. As the legal framework and processes are developed and implemented in each respective EU country, we will utilize our existing network to distribute both prescription and non-prescription derivates of cannabis products to our current customer base. We currently intend to only distribute prescription and non-prescription derivates of cannabis products to approved EU countries and not in the US.

We regularly evaluate acquisition targets that would allow us to expand our distribution reach and/or vertically integrate into the supply chain of the products that we currently distribute. 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. 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.

We believe the EU pharmaceutical import/export market will continue to grow. 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. In order to minimize business risks, we diversify our sources of supply. 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.

On July 22, 2015, the Hellenic Ministry of Health and more specifically the National Organization for Medicines granted SkyPharm a license for the wholesale of pharmaceutical products for human use. The license is valid for a period of five years and pursuant to the EU directive of (2013/C343/01).

Decahedron received its Wholesale Distribution Authorization for human use on November 7, 2013, from the UK Medicines and Healthcare Products Regulatory Agency (MHRA) in accordance with Regulation 18 of the Human Medicines Regulations 2012 (SI 2012/1916) and it is subject to the provision of those Regulations and the Medicines Act 1971. This license will continue to remain in force from the date of issue by the Licensing Authority unless cancelled, suspended, revoked or varied as to the period of its validity or relinquished by the authorization holder.

On February 2, 2019, the Hellenic Ministry of Health and the National Organization for Medicines extended the validity of Cosmofarm’s license for the wholesale of pharmaceutical products for human use for a period of five years and pursuant to the EU directive of (2013/C 343/01).

Corporate History and Structure

Cosmos Holdings, Inc. was incorporated in the State of Nevada under the name Prime Estates and Developments, Inc. on July 21, 2009. On November 14, 2013, we changed our name to Cosmos Holdings, Inc.

On September 27, 2013, the Company, closed a reverse take-over transaction by which it acquired a private company whose principal activities are the trading of products, providing representation, and provision of consulting services to various sectors. Pursuant to a Share Exchange Agreement between the Registrant and Amplerissimo Ltd., a company incorporated in Cyprus (“Amplerissimo”), the Company acquired 100% of Amplerissimo’s issued and outstanding common stock. As a result of the reverse take-over transaction, Amplerissimo became a wholly owned subsidiary of the Company.

8

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

On August 1, 2014, the Company, through its Cypriot subsidiary Amplerissimo, formed SkyPharm S.A., a Greek corporation (“SkyPharm”), a subsidiary that focuses on the trading, sourcing and distribution of pharmaceutical products. 

In February 2017, the Company completed the acquisition of Decahedron Ltd., a UK corporation (“Decahedron”) consummating the transactions contemplated by the Stock Purchase Agreement, dated November 17, 2016 as amended (the “Decahedron SPA”). Pursuant to the terms of the Decahedron SPA, the shareholders of Decahedron received an aggregate of 170,000 shares of common stock of the Company (the “Stock Consideration”), which were delivered following the closing in exchange for all of the ordinary shares of Decahedron for the stock consideration. Decahedron is a fully licensed wholesaler of pharmaceutical products and its primary activity is the distribution, import and export of pharmaceuticals. In accordance with the terms of the SPA, the principal and majority shareholder of Decahedron, Nicholas Lazarou, remained as a director and officer of Decahedron.

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

On September 29, 2018, Amplerissimo transferred its remaining 22% investment in SkyPharm to the Company. The Company now holds 100% of the capital of SkyPharm and SkyPharm remains a 100% wholly owned subsidiary of the Company. On September 30, 2018, the Company entered into a Share Purchase Agreement “SPA” with an unaffiliated third party and sold 100% of the issued capital of its subsidiary, Amplerissimo.

On December 19, 2018, the Company completed the purchase of all of the capital stock of Cosmofarm Ltd., a pharmaceutical wholesaler based in Athens, Greece. The principal of the selling shareholder is Panagiotis Kozaris, who remained with Cosmofarm as a director and chief operating officer once it became a wholly owned subsidiary of the Company. Grigorios Siokas, the Company’s CEO, became the new CEO of Cosmofarm. Mr. Kozaris had no prior relationship to the Company other than as an independent shareholder. The purchase price payable is €200,000 evidenced by a promissory note.

Going Concern

The Company’s consolidated financial statements are prepared in conformity with U.S. GAAP which contemplates the continuation of the Company as a going concern. For the three months ended March 31, 2019, the Company had revenue of $9,683,341, a net loss of $217,173 and net cash used in operations of $483,933. Additionally as of March 31, 2019, the Company had an accumulated deficit of $16,489,818, a working capital deficit of $4,023,420 and stockholders’ deficit of $3,544,535. It is management’s opinion that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of this filing.

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

The Company has not yet established an adequate ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.

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

9

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

Summary of Significant Accounting Policies

Basis of Financial Statement Presentation

The accompanying consolidated financial statements have been prepared in accordance with principles generally accepted in the United States of America.

Principles of Consolidation

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

Use of Estimates

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

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of March 31, 2019 and December 31, 2018, there were no cash equivalents.

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

Account Receivable

Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts against gross accounts receivable reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. As of March 31, 2019 and December 31, 2018, the Company's allowance for doubtful accounts was $529,299 and $540,048, respectively.

Tax Receivables

The Company pays Value Added Tax (“VAT”) or similar taxes (“input VAT”), income taxes, and other taxes within the normal course of its business in most of the countries in which it operates related to the procurement of merchandise and/or services it acquires and/or on sales and taxable income. The Company also collects VAT or similar taxes on behalf of the government (“output VAT”) for merchandise and/or services it sells. If the output VAT exceeds the input VAT, this creates a VAT payable to the government. If the input VAT exceeds the output VAT, this creates a VAT receivable from the government. The VAT tax return is filed on a monthly basis offsetting the payables against the receivables. In observance of EU regulations for intra-EU cross-border sales, our subsidiaries in Greece, SkyPharm and Cosmofarm, do not charge VAT for sales to wholesale drug distributors registered in other European Union member states. The net VAT receivable is recorded in prepaid expense and other current assets on the balance sheet.

10

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

Inventory

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

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

Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation. Depreciation is provided on a straight-line basis over the useful lives (except for leasehold improvements which are depreciated over the lesser of the lease term or the useful life) of the assets as follows:

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

Depreciation expense was $49,499 and $5,667 for the three months ended March 31, 2019 and 2018, respectively.

Impairment of Long-Lived Assets

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

Goodwill and Intangibles

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

11

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

Prior to the acquisition of Decahedron, the Company had no recorded goodwill value. As a result of the acquisition of Decahedron, the Company tested and expensed 100% of the goodwill allocated to the acquisition costs, an amount equal to $1,949,884 for the year ended December 31, 2017.

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

Intangible assets with definite useful lives are recorded on the basis of cost and are amortized on a straight-line basis over their estimated useful lives. The Company uses a useful life of 5 years for an import/export license. The Company evaluates the remaining useful life of intangible assets annually to determine whether events and circumstances warrant a revision to the remaining amortization period. If the estimate of the intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over that revised remaining useful life. At March 31, 2019, no revision to the remaining amortization period of the intangible assets was made.

Amortization expense was $6,874 and $2,129 for the three months ended March 31, 2019 and 2018, respectively.

Equity Method Investment

For those investments in common stock or in-substance common stock in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, the investment is accounted for under the equity method. The Company records its share in the earnings of the investee and is included in “Equity earnings of affiliate” in the consolidated statement of operations. The Company assesses its investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable and recognizes an impairment loss to adjust the investment to its then current fair value.

Investments in Equity Securities

Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2016-01, and accordingly, investments in equity securities are accounted for at fair value with changes in fair value recognized in income from operations. Equity securities are classified as short-term or long-term based on the nature of the securities and their availability to meet current operating requirements. Equity securities that are readily available for use in current operations are reported as a component of current assets in the accompanying consolidated balance sheets. Equity securities that are not considered available for use in current operations would be reported as a component of long-term assets in the accompanying consolidated balance sheets. For equity securities with no readily determinable fair value, the Company elects a measurement alternative to fair value. Under this alternative, the Company measures the investments at cost, less any impairment, and adjusted for changes resulting from observable price changes in transactions for identical or similar investments of the investee. The election to use the measurement alternative is made for each eligible investment.

At March 31, 2019, investments consisted of 40,000 shares which traded at a closing price of $5.03 per share, or value of $201,206 of Diversa S.A. and 16,666 shares which traded at a closing price of $0.17 per share or value of $2,900 of National Bank of Greece. Additionally, the Company has $4,381 in equity securities of Pancreta bank, which are not publicly traded and recorded at cost. See Note 4 for additional investments in equity securities.

12

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

Fair Value Measurement

The Company applied FASB ASC 820-Fair Value Measurements and Disclosures, (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results but did expand certain disclosures.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The following table presents assets that are measured and recognized at fair value as of March 31, 2019, on a recurring basis:

	March 31, 2019						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	2,790,000		-		-	$	2,790,000
Marketable securities – Divsersa S.A.		201,206		-		-		201,206
Marketable securities – National Bank of Greece		2,900		-		-		2,900
	$	2,994,106					$	2,994,106

In addition, FASB ASC 825-10-25 Fair Value Option, (“ASC 825-10-25”), was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.

Customer Advances

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

Revenue Recognition

The Company adopted the modified retrospective adoption in accordance with ASC 606, Revenue from Contracts with Customers, on January 1, 2018. The new guidance introduces a five-step model for recognizing revenue by applying the following steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the performance obligations are satisfied by transferring the promised goods to the customer. Once these steps are met, revenue is recognized upon delivery of the product. Adoption of ASC 606 has not changed the timing and nature of the Company’s revenue recognition and there has been no material effect on the Company’s financial statements.

13

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Stock Compensation (“ASC 718”) and Staff Accounting Bulletin No. 107 (“SAB 107”) issued by the SEC in March 2005 regarding its interpretation of ASC 718. ASC 718 requires the fair value of all stock-based employee compensation awarded to employees to be recorded as an expense over the related requisite service period. The Company values any employee or non-employee stock-based compensation at fair value using the Black-Scholes Option Pricing Model.

The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC 505-50, Equity-Based Payments to Non-Employees.

Foreign Currency Translations and Transactions

Assets and liabilities of all foreign operations are translated at year-end rates of exchange, and the statements of operations are translated at the average rates of exchange for the year. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders’ equity until the entity is sold or substantially liquidated.

Gains or losses from foreign currency transactions (transactions denominated in a currency other than the entity’s local currency) are included in net earnings.

Income Taxes

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

The Company is liable for income taxes in Greece and the United Kingdom of England. The corporate income tax rate is 29% in Greece (tax losses are carried forward for five years effective January 1, 2013) and 20% in United Kingdom of England. Losses may also be subject to limitation under certain rules regarding change of ownership.

We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized. Our review includes evaluating both positive (e.g., sources of taxable income) and negative (e.g., recent historical losses) evidence that could impact the realizability of our deferred tax assets. At March 31, 2019 the Company has maintained a valuation allowance against all net deferred tax assets in each jurisdiction in which it is subject to income tax.

The Company periodically reviews the uncertainties and judgments related to the application of complex income tax regulations to determine income tax liabilities in several jurisdictions. The Company uses a “more likely than not” criterion for recognizing the income tax benefit of uncertain tax positions and establishing measurement criteria for income tax benefits. The Company has evaluated the impact of these positions and due to the fact that the fiscal years 2013 - 2014 are unaudited by the Greek tax authorities, a potential tax liability has been identified, which may arise from a prospective tax audit from tax authorities, based on the tax settlement note of years 2007 - 2009. The amount of the liability as of March 31, 2019 and December 31, 2018, was $142,608 and $145,504, respectively, and has been recorded as a long-term liability within the balance sheet.

14

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

Retirement and Termination Benefits

Under Greek labor law, employees are entitled to lump-sum compensation in the event of termination or retirement. The amount depends on the employee’s work experience and renumeration as of the day of termination or retirement. If an employee remains with the company until full-benefit retirement, the employee is entitled to a lump-sum equal to 40% of the compensation to be received if the employee were to be dismissed on the same day. The Company periodically reviews the uncertainties and judgements related to the application of the relevant labor law regulations to determine retirement and termination benefits obligations of its Greek subsidiaries. The Company has evaluated the impact of these regulations and has identified a potential retirement and termination benefits liability. The amount of the liability as of March 31, 2019, was $22,876, and has been recorded as a long-term liability within the balance sheet.

Basic and Diluted Net Loss per Common Share

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

	Three Months Ended March 31,
	2019		2018
Weighted average number of common shares outstanding - Basic		13,384,574		12,825,393
Potentially dilutive common stock equivalents		-		-
Weighted average number of common and equivalent shares outstanding - Diluted		13,384,574		12,825,393

Common stock equivalents are included in the diluted income per share calculation only when option exercise prices are lower than the average market price of the common shares for the period presented.

Recent Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the measurement of goodwill by eliminating Step 2 from the current goodwill impairment test in the event that there is evidence of an impairment based on qualitative or quantitative assessments. ASU 2017-04 does not change how the goodwill impairment is identified, and the Company will continue to perform a qualitative assessment annually to determine whether the two-step impairment test is required. Until the adoption, current accounting standards require the impairment loss to be recognized under Step 2 of the impairment test. This requires the Company to calculate the implied fair value of goodwill by assigning fair value to the reporting unit’s assets and liabilities as if the reporting unit has been acquired in a business combination, then subsequently subtracting the implied goodwill from the carrying amount of the goodwill. The new standard would require the Company to determine the fair value of the reporting unit and subtract the carrying value from the fair value of the reporting unit to determine if there is an impairment. ASU 2017-04 is effective for the Company for fiscal years after December 15, 2019, and early adoption is permitted. ASU 2017-04 is required to be adopted prospectively, and the adoption is effective for annual goodwill impairment tests performed in the year of adoption. The adoption of ASU No. 2017-04 did not have a material effect on the Company’s consolidated financial position or the Company’s consolidated results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability. Lessor accounting under the standard is substantially unchanged. Additional qualitative and quantitative disclosures are also required. The Company adopted the standard effective January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The Company adopted the following practical expedients and elected the following accounting policies related to this standard update:

· The option to not reassess prior conclusions related to the identification, classification and accounting for initial direct costs for leases that commenced prior to January 1, 2019.

· Short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less; and

· The option to not separate lease and non-lease components for certain equipment lease asset categories such as freight car, vehicles and work equipment.

· The package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases.

15

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

Adoption of this standard resulted in the recognition of operating lease right-of-use assets and corresponding lease liabilities of $622,765 and $538,467, respectively, on the consolidated balance sheet as of January 1, 2019. The Company’s accounting for finance leases remained substantially unchanged. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 12.

NOTE 3 – ACQUISITION OF COSMOFARM, LTD.

On December 19, 2018, the Company completed the acquisition pursuant to the Cosmofarm SPA acquiring 100% of the outstanding shares of Cosmofarm, a pharmaceutical wholesaler based in Athens, Greece. Cosmofarm is a fully licensed wholesaler of pharmaceutical products and its primary activity is the sourcing, procuring, and distributing branded and generic medicines, over-the-counter (OTC) pharmaceuticals, food supplements, and medical devices. At closing, the Company acquired 100% of Cosmofarm’s outstanding shares and in exchange for a non-interest-bearing promissory note, due in one-year, in the amount of €200,000 (the “Acquisition”).

The Company recognized cash of $307,590 acquired in acquisition. The Company recognized the remaining Cosmofarm assets acquired and liabilities assumed based upon the fair value of such assets and liabilities measured as of the date of acquisition. The aggregate purchase price for Cosmofarm has been allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the acquired net assets represent non-capitalizable intangible assets, such Cosmofarm’s tradename and customer base. The remainder of the excess has been allocated to goodwill.

The allocation of the purchase price of Cosmofarm as of December 19, 2018, is as follows:

	Allocation
Current assets	$	6,882,286
Intangible assets		213,790
Other assets		1,519,345
Total assets acquired		8,615,421
Liabilities assumed:
Accounts payable and other current liabilities		5,111,489
Advances from customers		1,192,600
Line of credit		1,900,388
Other liabilities		232,729
Total liabilities assumed		8,437,206
Net assets acquired		178,215
Consideration:
Promissory note		227,912
Goodwill	$	49,697

The components of the acquired intangible assets were as follows:

	Amount		Useful Life (Years)
Trademark	$	36,997		5
Customer base		176,793		10
	$	213,790		-

16

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

NOTE 4 – INVESTMENTS

Distribution and Equity Agreement

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

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

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

Share Exchange Agreements

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

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

17

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

The Company determined the fair value of both exchanges based on an actively quoted stock price of ICC received in exchange for the Marathon shares. The Company continues to fair value its investment in ICC with changes recognized in earnings each period and recorded an unrealized gain on exchange of investment during the three months ended March 31, 2019 of $680,600.

During the three months ended March 31, 2019, the Company sold 1,000,000 shares for proceeds of $333,014 and recorded a loss on the sale of investment shares of $57,586. The value of the investment as of March 31, 2019 and December 31, 2018 was $2,790,000 and $2,500,000, respectively.

Since no value was attributed to the 33 1/3% equity ownership interest in Marathon received as consideration for the distribution services, the Company would receive variable consideration in future for its services under the Distribution and Equity Acquisition Agreement, if certain milestones are achieved. Refer to Note 9 for the accounting associated with the cash of CAD $2 million received upfront. Variable consideration to be received in the future upon achieving the gross sales milestones described above, is constrained as the Company estimates that it is probable that a significant reversal of revenue could occur. In assessing the constraint, the Company considered its limited experience with the Products, new geographic markets and similar transactions, which affect the Company’s ability to estimate the likelihood of a probable revenue reversal. Therefore, no revenue has been recognized for the period ended March 31, 2019. The Company will continue to reassess variable consideration at each reporting period and update the transaction price when it becomes probable that a significant revenue reversal would not occur.

NOTE 5– PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consists of the following:

	March 31, 2019			December 31, 2018
Leasehold improvements	$	429,585		$	369,437
Equipment under capital lease		-			709,356
Vehicles		115,065			117,402
Furniture, fixtures and equipment		1,350,563			458,442
Computers and software		54,744			55,169
		1,949,957			1,709,806
Less: Accumulated depreciation		(273,644	)		(284,174	)
Total	$	1,676,313		$	1,425,632

NOTE 6– INTANGIBLE ASSETS

Intangible assets consist of the following at:

	March 31, 2019			December 31, 2018
License	$	50,000		$	50,000
Trade Name / Mark		36,997			36,997
Customer Base		176,793			176,793
		263,790			263,790
Less: Accumulated Amortization		(23,594	)		(16,720	)
Total	$	240,196		$	247,070

18

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

NOTE 7 – INCOME TAXES

The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company had no U.S. taxable income for the three months ended March 31, 2019 and 2018.

The Company's Greece subsidiaries are governed by the income tax laws of Greece. The corporate tax rate in Greece is 29% on income reported in the statutory financial statements after appropriate tax adjustments.

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

On December 22, 2017, the President of the United States signed into law Public Law No. 115-97, commonly referred to as the Tax Reform Act, following its passage by the United States Congress. The Tax Act made significant changes to U.S. federal income tax laws, including reduction of the corporate tax rate from 34.0% to 21.0%, limitation of the deduction for net operating losses to 80.0% of current year taxable income and elimination of net operating loss carrybacks, one-time taxation of offshore earning at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions.

On December 22, 2017, Staff Accounting Bulletin No. 118, “SAB 118”, was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. Additional work is necessary for a more detailed analysis of the deferred tax assets and liabilities and our historical foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense within the measurement period.

At March 31, 2019 and 2018, the Company’s effective tax rate differs from the US federal statutory tax rate primarily due to a valuation allowance recorded against net deferred tax assets in all jurisdictions in which the Company operates.

We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized. Our review includes evaluating both positive (e.g., sources of taxable income) and negative (e.g., recent historical losses) evidence that could impact the realizability of our deferred tax assets. At March 31, 2019, the Company has maintained a valuation allowance against all net deferred tax assets in each jurisdiction in which it is subject to income tax.

As of March 31, 2019 and December 31, 2018, the Company has $142,608 and $145,504, respectively, recorded in any jurisdiction where it is subject to income tax.

NOTE 8 – CAPITAL STRUCTURE

Preferred Stock

The Company is authorized to issue 100 million shares of preferred stock, which have a liquidation preference over the common stock and are non-voting. As of March 31, 2019, no preferred shares have been issued.

Common Stock

The Company is authorized to issue 300 million shares of common stock and had issued 10,000,000 in connection with the merger and had 2,558,553 shares issued prior to the merger with Amplerissimo.

19

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

On September 27, 2013, the Company completed the acquisition of Amplerissimo through the issuance of 10,000,000 shares of common stock to Dimitrios Goulielmos, the sole shareholder of Amplerissimo, the Company then had 12,558,553 shares of Common Stock issued and outstanding.

On February 10, 2017, the Company and Decahedron consummated the acquisition of Decahedron SPA. Pursuant to the terms of the Decahedron SPA, the shareholders of Decahedron received an aggregate of 170,000 shares of common stock of the Company, which were delivered at closing in exchange for all of the Ordinary Shares of Decahedron for the Stock Consideration.

On January 7, 2019 and February 5, 2019, 465,325 and 108,417 shares of common stock were cancelled, these shares were the remaining pre-delivery shares related to the convertible notes in Note 10.

On February 5, 2019, the Company entered into a Stock Purchase Agreement (the “SPA”). The SPA provides for the Company’s purchase of 193,408 shares of the Company’s common stock at $3.00 per share or an aggregate of $580,224. Payment is scheduled over a five-month period, subject to acceleration if the Company effects an eligible equity offering. As of March 31, 2019, the Company had made $49,998 in payments, but as of the date of filing the 16,666 shares had not yet been transferred back to the Company. Upon transfer of the shares, the shares will be cancelled.

On February 18, 2019, the Company entered into a Stock Purchase Agreement (the “SPA”). The SPA provides for the Company’s purchase of 83,341 shares of the Company’s common stock at $3.00 per share or an aggregate of $250,023. Payment is scheduled over a five-month period, subject to acceleration if the Company effects an eligible equity offering. As of March 31, 2019, the Company had made $21,543 in payments but as of the date of filing the 7,181 shares had not yet been transferred back to the Company. Upon transfer of the shares, the shares will be cancelled.

Purchase of Treasury Shares

On June 18, 2018, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of €60,000 ($69,612) the Company repurchased 15,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 18, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until November 2018. During the year ended December 31, 2018, the Company paid consideration of €60,000 ($69,178). The Company recorded a loss of $434 for the change in foreign currency related to this transaction.

On November 30, 2018, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of $60,000, the Company repurchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on November 30, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until August 2019. During the year ended December 31, 2018, the Company paid consideration of $11,317 and had a related party payable of $48,683.

Potentially Dilutive Securities

As of March 31, 2019, and December 31, 2018, the Company had 13,305,015 and 13,878,772 shares of common stock issued, respectively, and 13,087,478 and 13,685,082 shares of common stock outstanding, respectively.

No options, warrants or other potentially dilutive securities other than those disclosed above have been issued as of March 31, 2019.

20

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

NOTE 9 – RELATED PARTY TRANSACTIONS

On the date of our inception, we issued 20 million shares of our common stock to our three officers and directors which were recorded at no value (offsetting increases and decreases in common stock and additional paid-in capital).

DOC Pharma S.A.

As of March 31, 2019, the Company has a prepaid balance of €1,772,154 ($1,989,775) and an accounts payable balance of €48,678 ($54,656) resulting in a net prepaid balance of €1,723,476 ($1,935,119) to Doc Pharma S.A. (“Doc Pharma”), related to purchases of inventory. Additionally, the Company has a receivable balance of €207,245 ($232,694). As of March 31, 2018, the Company had a prepaid balance of €1,373,975 ($1,692,737) and an accounts payable balance of €122,928 ($151,447), resulting in a net prepaid balance of €1,251,047 ($1,541,290) to Doc Pharma, related to purchases of inventory. During the three months ended March 31, 2019 and 2018, the Company purchased a total of €507,389 ($576,089) and €1,257,618 ($1,545,486) of products from Doc Pharma, respectively. During the three months ended March 31, 2019 and 2018, the Company had revenue of €158,828 ($180,333) and €12,090 (14,857) from Doc Pharma, respectively.

On November 1, 2015, the Company entered into a €12,000 ($13,202) Loan Agreement with DOC Pharma S.A., pursuant to which DOC Pharma, paid existing bills of the Company in the amount of €12,000 ($13,202), excluding the Vendor Bills. The loan bears an interest rate of 2% per annum and was due and payable in full on October 31, 2016. As of March 31, 2019, the Company has an outstanding principal balance under this note of €12,000 ($13,474) and accrued interest expense of $902.

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

Medihelm S.A

As of March 31, 2019, the Company has a prepaid balance of €2,671,048 ($2,999,053) and an accounts payable balance of £41,745 ($52,434), resulting in a net prepaid balance of $2,946,619 to Medihelm related to purchases of inventory. Additionally, the Company has a receivable balance of €201,739 ($226,513). As of March 31, 2018, the Company had a prepaid balance of €1,865,555 ($2,298,364) and an accounts payable balance of £539,607 ($756,907), resulting in a net prepaid balance of $1,541,457 related to purchases of inventory. Additionally, the Company had a receivable balance of €436,934 ($538,303). During the three months ended March 31, 2019 and 2018, the Company purchased €951,406 ($1,080,226) and $4,089,539 of products from Medihelm, respectively. During the three months ended March 31, 2019 and 2018, the Company had revenue of €60,038 (68,167) and €386,111 ($474,492) from Medihelm, respectively.

Medihelm S.A. is considered a related party to the Company due to the fact that the managing director of Medihelm is the mother of Nicholaos Lazarou, the managing director of the Company’s UK subsidiary, Decahedron.

Grigorios Siokas

As of December 31, 2018, the Company had an outstanding principal balance of $3,496,199, consisting of €2,853,700 ($3,269,199) and $227,000, in loans payable to Grigorios Siokas. During the three months ended March 31, 2019, the Company repaid €34,000 ($38,175) of these loans. These loans are non-interest bearing and have no maturity dates. As of March 31, 2019, the Company has an outstanding principal balance under these loans of $3,392,959, consisting of €2,819,700 ($3,165,959) and $227,000, in loans payable to Grigorios Siokas.

On December 20, 2018, the €1,500,000 ($1,718,400) note payable, originally borrowed pursuant to a Loan Agreement with a third party lender, dated March 16, 2018, was transferred to Grigorios Siokas. The note bears an interest rate of 4.7% per annum and has a maturity date of March 18, 2019. As of March 31 2019, the Company has an outstanding principal balance of €1,500,000 ($1,684,200) and accrued interest of €73,015 ($81,981). The principal balance of €1,500,000 under this loan is incorporated in the €2,819,700 of loans payable as of March 31, 2019.

Grigorios Siokas is the Company’s CEO and principal shareholder and is hence considered a related party to the Company.

21

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

Dimitrios Goulielmos

As of December 31, 2018, the Company had a principal balance due to Dimitrios Goulielmos, director and former CEO, of €53,500 ($61,290) related to a loan agreement dated November 21, 2014 and amended on November 4, 2015. The loan is non-interest bearing. During the three months ended March 31, 2019, the Company repaid €12,500 ($14,035) and a principal balance of €41,000 ($46,035) remains as of March 31, 2019.

Nicholaos Lazarou

In connection with the Decahedron SPA, on February 9, 2017, Decahedron, Medihelm S.A. and Nicholaos Lazarou, managing director of Decahedon, entered into a liability transfer agreement whereby the loan provided from Decahedron to Nicholaos Lazarou prior to the acquisition would be cancelled in exchange for Nicholaos Lazarou’s personal assumption of £172,310 ($233,118) owed to Medihelm S.A., a related party creditor of Decahedron.

On November 30, 2018, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of $60,000 the Company repurchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on November 30, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until August 2019. As of December 31, 2018, the Company had an amount due to related party of $48,683. During the three months ended March 31, 2019, the Company paid consideration of $28,372 and has an amount due to related party of $20,311 recorded as accounts payable related party as of March 31, 2019.

Except as set forth above, we have not entered into any material transactions with any director, executive officer, and promoter, beneficial owner of five percent or more of our common stock, or family members of such persons.

NOTE 10 – LINES OF CREDIT

The line of credit with National Bank of Greece is being renewed annually with a current interest rate of 6.00%. The maximum borrowing allowed was $1,347,360 at March 31, 2019. The outstanding balance was $1,032,557 at March 31, 2019.

The line of credit with Alpha Bank of Greece is renewed annually with a current interest rate of 6.00%. The maximum borrowing allowed was $673,680 at March 31, 2019. The outstanding balance was $660,568 at March 31, 2019.

The line of credit with Eurobank of Greece is being renewed annually with a current interest rate of 8.55%. The maximum borrowing allowed was $561,400 at March 31, 2019. The outstanding balance was $434,508 at March 31, 2019.

Interest expense for the three months ended March 31, 2019 was $45,174.

Under the above agreements, the Company is required to maintain certain financial ratios and covenants. These lines of credit were assumed in the Company’s acquisition of Cosmofarm. During the three months ended March 31, 2019, the Company was in compliance with these ratios and covenants.

NOTE 11 – CONVERTIBLE DEBT

November 15, 2017 Securities Purchase Agreement

On November 15, 2017, the Company entered into a Securities Purchase Agreement with institutional investors (the “Buyers”), pursuant to which the Company issued on November 16, 2017 for a purchase price of $3,000,000, $3,350,000 in aggregate principal amount of Senior Convertible Notes (the “Existing Notes”) to the Buyers, convertible into approximately 670,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at $5.00 per share and five-year warrants (the “Warrants”) to purchase an aggregate of 536,000 shares of Common Stock exercisable at $7.50 per share. The Notes contained an original issue discount of $350,000. Of the $3,000,000 purchase price, $240,000 went directly to financing costs (see below) and $74,000 went directly to legal fees such that the Company received net proceeds of $2,686,000.

22

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

On February 20, 2018, the Company entered into two separate Amendment and Exchange Agreements (“Exchange Agreements”) with the Buyers for new senior convertible notes (“New Notes”) in exchange for existing notes. Each New Note is identical in all material respects to the Existing Note, except that (i) the New Note was not convertible into shares of the Company’s common stock (the “Common Stock”) until April 20, 2018; (ii) all future cash installment payments under such New Note will be made at a redemption price equal to 112% of the applicable installment amount; (iii) the Company’s existing obligation to initially deliver pre-delivery shares of its common stock to the holder of such New Note was deferred until April 20, 2018; and (iv) at any time on or before June 20, 2018, the Company had the right, at its option, to redeem all, or any part, of the amounts then outstanding under such New Note in cash at a redemption price equal to 125% of such amounts then outstanding under such New Note. The Company will repay the principal amount of the Notes in equal monthly installments beginning on January 1, 2018 and repeating on the first business day of each calendar month thereafter until the fourteenth (14th) month anniversary date of issue. On September 26, 2018, the Company entered into a second amendment which extended the maturity dates of the notes to February 1, 2019. On April 24, 2018, 670,001 pre-delivery shares were issued. On January 7, 2019 and February 5, 2019, 465,625 and 108,417 pre-delivery shares, respectively, were cancelled upon full payment of both notes. Eighty-five (85%) percent of any cash proceeds received by the holders of the Notes from the sale of pre-delivery shares issued as collateral shall be applied against the particular installment amount then due. The Notes are senior in right of payment to all existing and future indebtedness except Permitted Indebtedness which includes $12 million of senior secured indebtedness of the Company and its subsidiaries under the above described Synthesis loan agreements, plus a defined amount of purchase money indebtedness in connection with bona fide acquisitions. The Company evaluated the debt modification in accordance with ASC 470-50 and concluded that the debt qualified for debt extinguishment as the 10% cash flow test was met. As a result, the Existing Notes were written off and the New Notes were recorded at fair value as of February 20, 2018. The Company wrote off the remaining principal balance of $2,871,429 of the Existing Notes along with the remaining $2,596,838 of debt discounts related to the Existing Notes of which $1,140,711 was a reduction to additional paid-in-capital representing the intrinsic value of the existing beneficial conversion feature. The Company recorded the New Notes in the amount of $3,216,000 and a total debt discount of $3,216,000 in relation to the intrinsic value of the new beneficial conversion feature of $2,880,000 and an original issue discount of $336,000. This resulted in a net loss on extinguishment of debt in the amount of $1,464,698 and additional net equity related to the beneficial conversion feature of $1,739,289.

The Notes were not convertible until April 18, 2018 pursuant to the February 20, 2018 amendment. Beginning April 20, 2018, the Holder may convert the Notes into shares of Common Stock at the rate of $5.00 per share. In the event of an issuance of Common Stock for a consideration less than the Conversion Price (other than Excluded Securities, as defined) the Conversion Price shall be reduced to the price of the dilutive issuance, (the “Conversion Price”). Upon an Event of Default (as defined), the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the Volume-Weighted Average Price (as defined, the “VWAP”). The Company valued the beneficial conversion feature of the Existing Notes at intrinsic value and recorded $1,140,711 to debt discount, of which $405,743 was amortized through February 19, 2018. On February 20, 2018, the remaining debt discount was written off and the Company recorded a new debt discount as discussed above.

The Warrants have a five-year term and are exercisable into 536,000 shares of Common Stock beginning May 16, 2018, which was six months after the issue date. The Warrants are exercisable at $7.50 per share subject to full ratchet anti-dilution protection (see above). As of March 31, 2019, there were no anti-dilution trigger events. The Warrants will be exercisable on a cashless basis if a registration statement is not effective covering the resale of the underlying Warrant Shares. The Company calculated the warrants at relative fair value of $1,545,288, which was recognized as a discount to the Existing Notes of which $347,418 was amortized as interest expense through February 19, 2018. On February 20, 2018, the remaining balance was reversed due to the Exchange Agreement as discussed above.

23

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

Conversion of the Notes were and exercise of the Warrants are subject to a blocker provision which prevents any holder from converting or exercising, as applicable, the Notes or the Warrants, into shares of Common Stock if its beneficial ownership of the Common Stock would exceed 4.99% (subject to adjustment not to exceed 9.99%) of the Company’s issued and outstanding Common Stock (each, a “Blocker”).

The Company filed, within thirty (30) days of the Closing, a registration statement covering one hundred fifty (150%) percent of the maximum number of shares, underlying the Notes and Warrants pursuant to a registration rights agreement with the Buyers (the “Registration Rights Agreement”). The Post-Effective Amendment to the registration statement (No. 333-222061) was declared effective on May 14, 2018.

As a condition to the closing of the Financing, each Buyer, severally, was required to execute a leak-out agreement (each, a “Leak-Out Agreement”) restricting such Buyer’s sale of shares of Common Stock underlying the Notes and Warrants on any Trading Day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s Common Stock. If after the closing of the Financing there is no Event of Default under the Notes, the VWAP of the Company’s Common Stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share; provided that the portion of the Notes subject to redemption on each Installment Date shall thereafter double.

On November 15, 2017, in connection with the $3,350,000 Securities Purchase Agreement, Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for the transaction equal to eight (8%) percent of the total gross proceeds of the offering, or $240,000 and the issuance of five-year warrants to purchase eight (8%) percent of the shares of common stock issued or issuable in this offering (excluding shares of common stock issuable upon exercise of any warrants issued to investors), or 53,600 shares; and, will receive eight (8%) percent of any cash proceeds received from the exercise of any warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The warrants are exercisable six months after the issue date or May 16, 2018 and were valued at a fair value of $386,003 which was fully expensed during the year ended December 31, 2017. The $240,000 cash commission was recorded as debt discount and was amortized over the term of the Notes.

During the three months ended, the Company repaid the remaining principal balance in the amount of $103,611, such that the remaining outstanding principal balance of the Notes as of March 31, 2019 is zero.

As a result of the final payment of the Notes, the remaining debt discount of $45,614 was amortized during the three months ended March 31, 2019.

September 4, 2018 Securities Purchase Agreement

On September 4, 2018, the Company entered into a Securities Purchase Agreement with two institutional investors (the “Buyers”) pursuant to which the Company issued for a purchase price of $2,000,000, $2,233,333 in aggregate principal amount of Senior Convertible Notes (the “September 2018 Notes”) to the Buyers, convertible into 372,223 shares of the Company’s common stock, par value $.001 per share at $6.00 per share (with the exception of the conversion related to the Third Exchange Agreement described below), and warrants to purchase an aggregate of 357,334 shares of Common Stock exercisable at $7.50 per share (the “Warrants”). The Notes contained an original issue discount of $233,332. Of the $2,000,000 purchase price, $140,000 went directly to financing costs (see below) and $15,000 went directly to legal fees such that the Company received net proceeds of $1,845,000.

The September 2018 Notes provided that the Company will repay the principal amount of Notes in equal monthly installments including a 5% installment fee, which is recorded as interest expense, beginning on November 1, 2018 and repeating on the first business day of each calendar month thereafter until May 1, 2019. During the three months ended March 31, 2019, the Company has recorded $13,097 in installment fees.

24

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

The Notes were convertible at any time by the Holder into shares of Common Stock at the rate of $6.00 per share (with the exception of the conversion pursuant to the Third Exchange Agreement described below), subject to full ratchet anti-dilution adjustment (the “Conversion Price”). According to the original terms of the agreement, the Company was to pre-deliver up to 372,222 shares of common stock to the Buyers. Eighty-five percent (85%) of any cash proceeds received by the Buyers from the sale of the Pre-Delivery Shares would then be applied against the particular installment amount due on such Installment Date under the Note. The Company had three months to deliver the Pre-Delivery shares, however the debt was repaid prior to the opportunity to deliver those shares. The Registration Statement (No. 333-227813) covering 150% of the number of shares underlying the Notes and warrants was declared effective on November 1, 2018. Upon an Event of Default (regardless of whether such event has been cured), the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”). The Company valued the beneficial conversion feature of the Existing Notes at intrinsic value and recorded $934,922 to debt discount, which will be amortized over the life of the Notes.

The Warrants are exercisable into 357,334 shares of Common Stock equal to eighty (80%) percent of the number of shares of common stock the Buyers would receive if the Notes were fully converted (at an assumed price of $5.00 per share) upon the date of issuance of the Notes. The Warrants are exercisable at $7.50 per share for a five-year term commencing March 4, 2019 subject to full ratchet anti-dilution protection. The Warrants will be exercisable on a cashless basis if a registration statement is not effective covering the resale of the underlying Warrant Shares. The Company calculated the warrants at relative fair value of $910,078, which was recognized as a discount to the Notes and is being amortized as interest expense over the remaining term of the Notes.

Conversion of the Notes were and exercise of the Warrants are each subject to a blocker provision which prevents any holder from converting or exercising, as applicable, the Notes or the Warrants, into shares of common stock if its beneficial ownership of the common stock would exceed 9.99% of the Company’s issued and outstanding common stock (a “Blocker”).

As a condition to the closing of the Financing, each Buyer executed a leak-out agreement which replaced the leak-out agreements entered into in November 2017 (each, a “Leak-Out Agreement”) restricting such Buyer’s sale of shares of common stock underlying the Notes and Warrants on any trading day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s Common Stock. If after the closing of the Financing the VWAP of the Company’s common stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share; provided that the portion of the Notes subject to redemption on each Installment Date shall thereafter double.

Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for this transaction equal to seven (7%) percent of the total gross proceeds of the offering, or $140,000, and the issuance of five-year warrants to purchase seven (7%) percent of the shares of common stock issued or issuable in this offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors), or 26,056 shares; and will receive seven (7%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The warrants are exercisable six months after the issue date or March 4, 2019, at $6.00 per share and were valued at a fair value of $157,969 which was fully expensed during the year ended December 31, 2018. The $140,000 cash commission was recorded as debt discount and was be amortized over the term of the Notes.

During the year ended December 31, 2018, there were principal conversions in the amount of $1,333,333 at a conversion price of $3.478 pursuant to the Third Exchange Agreement and the Company repaid principal of $638,095, such that the remaining outstanding principal balance of the Notes as of December 31, 2018 was $261,903.

During the three months ended, the Company repaid the remaining principal balance in the amount of $261,902, such that the remaining outstanding principal balance of the Notes as of March 31, 2019 is zero.

The Company recorded a total of $2,233,332 of debt discounts related to the above Notes during the year ended December 31, 2018. The debt discounts were amortized over the term of the debt. Amortization of the debt discounts for the year ended December 31, 2018 was $2,049,232. As a result of the final payment of the Notes, the remaining debt discount of $184,100 was amortized during the three months ended March 31, 2019.

25

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

NOTE 12 – DEBT

On November 16, 2015, the Company entered into a Loan Agreement with Panagiotis Drakopoulos, former Director and former Chief Executive Officer, pursuant to which the Company borrowed €40,000 ($42,832) as a note payable from Mr. Drakopoulos. The note bears an interest rate of 6% per annum and was due and payable in full on November 15, 2016. As of December 31, 2018, the Company had an outstanding principal balance of €13,000 ($14,893) and accrued interest of €3,088 ($3,538). As of March 31, 2019, the Company had an outstanding principal balance of €13,000 ($14,596) and accrued interest of €3,430 ($3,851).

Loan Facility Agreement

On August 4, 2016, the Company’s wholly owned subsidiary SkyPharm entered into a Loan Facility Agreement, guaranteed by Grigorios Siokas, with Synthesis Peer-To Peer-Income Fund (the “Loan Facility” the “Lender”). The Loan Facility initially provided SkyPharm with a credit facility of up to $1,292,769 (€1,225,141). Any advance under the Loan Facility accrues interest at a rate of 10% per annum and requires quarterly interest payments commencing on September 30, 2016. The amounts owed under the Loan Facility were repayable upon the earlier of (i) three months following the demand of the Lender; or (ii) August 31, 2018. No prepayment is permitted pursuant to the terms of the Loan Facility. The Synthesis Facility Agreement as amended is secured by a personal guaranty of Grigorios Siokas, which is secured by a pledge of 1,000,000 shares of common stock of the Company owned by Mr. Siokas.

On September 13, 2016, Sky Pharm entered into a First Deed of Amendment with the Loan Facility increasing the maximum loan amount to $1,533,020 as a result of the Lender having advanced $240,251 (€227,629) to SkyPharm.

On March 23, 2017, SkyPharm entered into an Amended and Restated Loan Facility Agreement (the “A&R Loan Facility”), with the Loan Facility which increased the loan amount to an aggregate total of $2,664,960 (€2,216,736) as a result of the lender having advanced $174,000 (€164,898) in September 2016, $100,000 (€94,769) in October 2016, $250,000 (€236,922) in November 2016, $452,471 (€428,800) in December 2016, $155,516 (€129,360) in January 2017, $382,327 (€318,023) in July 2017 and $70,000 (€58,227) in December 2017. The A&R Loan Facility amends and restates certain provisions of the Loan Facility Agreement, dated as of August 4, 2016, by and among the same parties. Advances under the A&R Loan Facility continue to accrue interest at a rate of 10% per annum from the applicable date of each drawdown and require quarterly interest payments. The A&R Facility now permits prepayments at any time. The amounts owed under the A&R Loan Facility shall be repayable upon the earlier of (i) seventy-five days following the demand of the Lender; or (ii) August 31, 2018. The A&R Loan Facility is secured by a personal guaranty of Grigorios Siokas, which is secured by a pledge of 1,000,000 shares of common stock of the Company owned by Mr. Siokas (the “Pledged Shares”). The A&R Loan Facility was also amended to provide additional affirmative and negative covenants of Sky Pharm and the Guarantor during the term of loans remain outstanding, including, but not limited to, the consent of the Lender in connection with (i) the Company or any of its subsidiaries incurring any additional indebtedness; or (ii) in the event of any increase in the Company’s issued and outstanding shares of Common Stock, the Pledged Shares shall be increased to an amount equal to a minimum of ten percent (10%) of the issued and outstanding shares of the Company.

On April 18, 2018, the Company entered into an amendment with the Lender that was effective as of January 1, 2018, pursuant to which the maturity dates for all advances was extended to December 31, 2021. Additionally, the interest rate was amended such that the interest rate for all advances is 4% plus the 3-Month Libor rate. The Loan Facility also forgave €35,060 ($40,000) in fees related to the July 6, 2017 advance. As a result, the Company reduced the unamortized portion of debt discount that related to those fees and recorded a gain on debt settlement of €19,763 ($23,354).

26

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

As of December 31, 2018, the outstanding balance under this note was $3,078,442 (€2,687,187) and accrued interest expense of $414,830 (€362,107) has been recorded. As of March 31, 2019, the outstanding balance under this note was $3,078,442 (€2,741,755) and accrued interest expense of $473,172 (€421,421) has been recorded.

The Company recorded a total of €155,060 ($191,034) in debt discounts related to this note in prior years. The debt discounts are being amortized over the term of the debt. As a result of the April 18, 2018 amendment, the Company reduced the unamortized debt discount by €20,237 ($20,237). The debt discount was fully amortized in the prior year

Bridge Loans

On March 16, 2017 and March 20, 2017, SkyPharm entered into loan agreements with the Synthesis Peer-To Peer-Income Fund (the “Bridge Loans”). The Bridge Loans provided to SkyPharm loans of €41,590 ($50,000) and €100,000 ($120,220), respectively, during the year ended December 31, 2017. The Bridge Loans accrue interest at a rate of 10% per annum and were repayable on April 16, 2017 and April 20, 2017, respectively, together with all other amounts then accrued and unpaid. On April 16, 2017, the maturity dates were amended for no additional consideration or change in terms and conditions. The maturity dates of both loans were amended, and they matured on May 16, 2017 and May 20, 2017, respectively. Pursuant to the April 18, 2018 agreement and effective January 1, 2018, the Company reached an agreement with Synthesis Peer-To-Peer Income Fund such that the March 20, 2017 loan would have a fixed USD payoff amount of $106,542. As a result of this agreement the Company recorded a gain on settlement of debt of €16,667 ($19,695) related to the reduction of the USD payoff amount and an additional gain on settlement of debt of €3,950 ($4,668) related to interest that had accrued on the original amount of the loan. The Company has accrued interest expense of an aggregate total of €14,715 ($16,857) for both loans and the outstanding balances of these loans was €43,645 ($50,000) and €93,001 ($106,542), respectively, as of December 31, 2018. The Company has accrued interest expense of an aggregate total of €17,887 ($20,083) for both loans and the outstanding balances of these loans was €44,532 ($50,000) and €94,889 ($106,542), respectively, as of March 31, 2019.

On May 5, 2017, SkyPharm entered into a loan agreement with Synthesis Peer-To-Peer Income Fund for €31,388 ($34,745). The loan accrues interest at a rate of 10% per annum and matured on September 30, 2017. The Company has accrued interest expense of €3,410 ($3,906) and the outstanding balance on this loan was €30,329 ($34,745) as of December 31, 2018. The Company has accrued interest expense of €4,065 ($4,565) and the outstanding balance on this loan was €30,945 ($34,745) as of March 31, 2019.

On April 18, 2018, the Company entered into an amendment pursuant to which the maturity dates for all of the above Bridge Loan advances were extended to December 31, 2021 for no additional consideration. Additionally, the interest rate was amended such that, effective January 1, 2018, the interest rate for all advances is 4% plus the 3-Month Libor rate.

Trade Facility Agreements

On April 10, 2017, Decahedron entered into a Trade Finance Facility Agreement (the “Decahedron Facility”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”). The Decahedron Facility provides the following material terms:

· The Lender will provide Decahedron a facility of up to €2,750,000 ($3,087,700) secured against Decahedron’s receivables from the sale of branded and generic pharmaceutical sales.

· The total facility will be calculated as 95% of the agreed upon value of Decahedron’s receivables.

· The term of the Decahedron Facility will be for 12 months.

· The obligations of Decahedron are guaranteed by the Company pursuant to a Cross Guarantee and Indemnity Agreement.

· The Lender has the right to make payments directly to Decahedron’s suppliers.

· The following fees should be paid in connection with the Decahedron Facility:

o 2% of the maximum principal amount as an origination fee.

o A one percent (1%) monthly fee.

27

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

The current draw on the Decahedron Facility is $0.

On May 12, 2017, SkyPharm entered into a Trade Finance Facility Agreement (the “SkyPharm Facility”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”). The SkyPharm Facility provides the following material terms:

· The Lender will provide SkyPharm a facility of up to €2,000,000 ($2,245,600) secured against SkyPharm’s receivables from the sale of branded and generic pharmaceutical sales. In the event that accounts receivable becomes uncollectible, the Company will be obligated to pay back the notes in full.

· The total facility will be calculated as 95% of the agreed upon value of Decahedron’s receivables.

· The term of the SkyPharm Facility will be for 12 months.

· The obligations of SkyPharm are guaranteed by the Company pursuant to a Cross Guarantee and Indemnity Agreement.

· The Lender has the right to make payments directly to SkyPharm’s suppliers.

· The following fees should be paid in connection with the SkyPharm Facility:

o 2% of the maximum principal amount as an origination fee.

o A one percent (1%) monthly fee.

The Company obtained consents from Synthesis Peer-to-Peer Income Fund in connection with obtaining the Lender.

On November 16, 2017, SkyPharm signed an amended agreement with Synthesis Structured Commodity Trade Finance Limited that increased the maximum aggregate facility limit from €2,000,000 ($2,291,200) to €6,000,000 ($6,873,600). All other terms of the original agreement remain the same. The Company also obtained consents from Synthesis Peer-to-Peer Income Fund in connection with obtaining the November 2017 convertible debt financing.

On May 12, 2018, the Company borrowed an additional €270,000 ($247,117) in funds.

On May 16, 2018, SkyPharm S.A., as Commodity Buyer, entered into a Supplemental Deed of Amendment (the “Deed”) relating to a Trade Finance Facility dated May 12, 2017, as amended, with Synthesis Structured Commodity Trade Finance Limited (“Synthesis”), as Loan Receivables Originator. Under the Trade Finance Facility (the “TFF”) first entered into on May 12, 2017, as amended, there was a principal balance of €5,866,910 ($5,369,678) outstanding as of March 31, 2018. SkyPharm made a payment of €1,000,000 ($1,123,600) of interest and principal on May 31, 2018 under the terms and conditions of the Deed. Additionally, the maturity date for the facility has been amended such that, the full principal amount is to be repaid no later than May 31, 2021, subject to a repayment schedule to be agreed upon by SkyPharm and Synthesis Structure Commodity Trade Finance Limited. Synthesis Structure Commodity Trade Finance Limited may extend this final repayment date at its sole discretion.

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COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

The TFF was amended to provide, among other things:

· A listing of approved purchasers;

· To permit SkyPharm to request Synthesis to make payments under the TFF directly to SkyPharm so that SkyPharm can discharge its obligations to a commodity seller directly;

· To prohibit SkyPharm from entering into a commodity contract which grants more than seventy-five (75) days delay between the payment for products and receipt of the purchase price and placed other limitations on terms of commodity contracts;

· If Grigorios Siokas, CEO of Cosmos Holdings Inc. (“Cosmos”), ceases to own or control at least fifty-one (51%) percent of the shares of Cosmos, or SkyPharm ceases to be a wholly-owned subsidiary of Cosmos, either event shall constitute an Event of Default (as defined);

· The maximum aggregate amount of the TFF is €15,000,000, although there is no commitment for any future loans under the TFF;

· The interest rate on the TFF for: (i) all lending in U.S. dollars is the one-month LIBOR plus six (6%) percent margin; and (ii) for all lending in Euro, the one-month Euribor Rate plus six (6%) percent per annum, commencing June 1, 2018.

· Synthesis is permitted to terminate the TFF at any time and demand repayment of all outstanding principal and interest in full within six (6) months from the date of notification.

The Deed is conditioned upon, among other things, execution and perfection of a Bulgarian Amended Pledge (“BAP”) having priority over the Bulgarian Pledge Accounts with Unicredit Bulbank AD; and the Approved Purchasers are to make all payments to SkyPharm directly to the BAP.

On May 16, 2018, SkyPharm and Synthesis also entered into an Account Merge Agreement (the “Pledge”) as a requirement under the above-described Deed. Under the Pledge, Synthesis is to receive a first ranking securities interest in SkyPharm’s outstanding receivables under the Bulgarian bank account.

On October 17, 2018, the Company entered into a further amended agreement with Synthesis whereby the current balance on the TFF as of October 1, 2018, which was €4,866,910 ($5,629,555) and related accrued interest of €453,094 ($524,094) would be split into two principal balances of Euro €2,000,000 and USD $4,000,000. Interest on the new balances commenced on October 1, 2018 at 6% per annum plus one-month Euribor, when it is positive, on the Euro balance and 6% per annum plus one month Libor on the USD balance. The Company will replay the principal amounts of each balance beginning no later than August 31, 2018 in quarterly installments of €125,000 and US $150,000. The loan matures on August 31, 2021. The Company evaluated the amended agreement under ASC 470-50 and concluded that it did not meet the 10% cash flow test and recorded debt modification expense of $138,110.

As of December 31, 2018, the Company had principal balances of €2,000,000 ($2,291,200) and $4,000,000 under the TFF and the Company had accrued $0 and $19,834, respectively in interest expense related to this agreement. As of March 31, 2019, the Company had a principal balance of €2,000,000 ($2,245,600) and $4,000,000 under the TFF and the Company had accrued $0 and $17,988, respectively in interest expense related to this agreement.

The Company recorded a total debt discount of €117,338 ($137,063) in origination fees associated with these loans, which was amortized over the original terms of the agreements. Amortization of debt discount for year ended December 31, 2017 was €61,295 ($69,269). As of December 31, 2018, the debt discount had been fully amortized.

Distribution and Equity Agreement

As discussed in Note 4 above, the Company entered into a Distribution and Equity Acquisition Agreement with Marathon. The Company was appointed the exclusive distributor of the Products initially throughout Europe and on a non-exclusive basis wherever else lawfully permitted.

29

COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

As consideration for its services, Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in Common Shares of the Company if it fails to meet certain performance milestones. The Company is entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000.

As discussed in Note 4, the Company attributed no value to the shares received in Marathon pursuant to (a) above. In relation to the CAD $2 million cash received noted in (b) above, the Company accounted for its obligation to issue a variable number of the Company’s Common Shares as Share-settled debt obligation in accordance with ASC 480 measured at fair value or the settlement amount of $1,554,590 (CAD $2 million). If settlement were to occur on March 31, 2019, the Company would be required to issue 446,311 Common Shares to settle its debt obligation. The Company could be obligated to potentially issue an unlimited number of common shares to settle its Share-settled debt obligation. If such events were to occur, the Company would be required to increase its authorized share capital and since increasing the authorized share capital is within the control of the Company, as our CEO controls greater than 50% of the outstanding common stock of the Company, the original classification of equity-classified financial instruments issued by the Company were not affected.

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

NOTE 13 – LEASES

The Company has various lease agreements with terms up to 10 years, comprising of leases of office space. Some leases include options to purchase, terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.

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

The Company’s operating leases do not provide an implicit rate that can readily be determined. Therefore, we use a discount rate based on our incremental borrowing rate, which is determined using the interest rate of our long-term debt as of January 1, 2019.

The Company’s weighted-average remaining lease term relating to its operating leases is 6.05 years, with a weighted-average discount rate of 6.74%.

The Company incurred lease expense for its operating leases of $52,508 which was included in “General and administrative expenses,” for the quarter ended March 31, 2019.

The Company had operating cash flows used in operating leases of $37,096 for the quarter ended March 31, 2019. Right-of-use assets obtained in exchange for new operating lease liabilities $622,765 for the quarter ended March 31, 2019.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of March 31, 2019.

Maturity of Lease Liability
2019	$	172,893
2020		158,383
2021		73,858
2022		44,912
2023		44,912
Thereafter		179,648
Total undiscounted finance lease payments	$	674,607
Less: Imputed interest		118,558
Present value of finance lease liabilities	$	556,049

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COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

The Company’s weighted-average remaining lease term relating to its finance leases is 1.17 years, with a weighted-average discount rate of 6.00%.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s finance leases as of March 31, 2019.

Maturity of Lease Liability
2019	$	26,384
2020		14,658
2021		-
2022		-
2023		-
Thereafter		-
Total undiscounted finance lease payments	$	41,041
Less: Imputed interest		1,499
Present value of finance lease liabilities	$	39,543

The Company had operating cash flows used in finances leases of $601 for the quarter ended March 31, 2019. The Company had financing cash flows used in finances leases of $7,232 for the quarter ended March 31, 2019.

The Company incurred interest expense on its finance leases of $601 which was included in “Interest expense,” for the quarter ended March 31, 2019. The Company incurred amortization expense on its finance leases of $26,802 which was included in “Depreciation and amortization expense,” for the quarter ended March 31, 2019.

NOTE 14 – COMMITMENTS AND CONTINGENCIES

Legal Matters

From time to time, the Company may be involved in litigation relating to claims arising out of the Company’s operations in the normal course of business. As of March 31, 2019, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations.

Intellectual Property Sale Agreement

On October 1, 2016, the Company entered into an Intellectual Property Sale Agreement with Anastasios Tsekas and Olga Parthenea Georgatsou (the “IPSA”) for the purchase of certain intellectual property rights relating to proprietary pharmaceutical formulas and any related technical information arising or related thereto (the “Intellectual Property”). The IPSA provides that the sellers shall be entitled to an aggregate of 200,000 shares of common stock of the Company, none of which have been issued to date, and issuable as follows in equal parts to each seller:

· 50,000 shares upon the successful conclusion of Preclinical Trials.

· 50,000 shares upon the conclusion of Phase I testing.

· 50,000 shares upon the conclusion of Phase II testing.

· 50,000 shares upon the conclusion of Phase III testing.

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COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

The Company has agreed to pay Anastasios Tsekas €1,500 per month until the first issuance of the shares referenced above. The Company has also agreed that in the event the Company disposes of the Intellectual Property prior to the periods referenced above, the sellers shall be entitled to the issuance of all the shares referenced above. The Company is in the process of locating a suitable lab to conduct the Preclincal trial phase, which has not yet begun as of the date of filing.

Placement Agreement

On August 8, 2017, the Company entered into an agreement with a third-party placement agent (the “Agent”) who will serve as the Company’s exclusive placement agent or sole book running manager with respect to any offerings of equity or equity-linked securities as well as any debt offering with the two organizations named in the agreement (the “Offering”) for a period of 120 days. In the event that an Offering is agreed upon by the Agent and the Company, the Company shall provide payment as follows: (1) a cash commission of 6% of the total gross proceeds for two named investors (2) a cash commission of 4% of total gross proceeds from five named investors and (3) excluding the five named investors in “(2)” a cash commission equal to 8% of the total gross proceeds from the Offering and the issuance to the Agent or its designees of warrants covering 8% of the shares of common stock issued or issuable by the Company in the Offering. Additionally, the Agent will receive a cash fee of 8% payable within 5 business days, but only in the event of, the receipt by the Company of any cash proceeds from the exercise of any warrants with an expiration equal to or less than 24 months sold in the Offering. In connection with the Company’s November 16, 2017 Note offering, the Agent received a cash commission of $240,000, equal to eight (8%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase eight (8%) percent of the shares of Common Stock issued or issuable in the offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors, or 53,600 shares); however, will receive eight (8%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The Warrants are exercisable six (6) months after the date of issuance, or as of May 16, 2018.

In connection with the Company’s September 4, 2018 Note offering, the Agent received a cash commission for this transaction of $140,000, equal to seven (7%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase seven (7%) percent of the shares of Common Stock issued or issuable in this offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors, or 26,056 shares); however, will receive seven (7%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The Warrants are exercisable six (6) months after the date of issuance, or March 4, 2019.

Advisory Agreement

On April 18, 2018, SkyPharm S.A. entered into a ten-year Advisory Agreement with Synthesis Management Limited (the “Advisor”). The Advisor was retained to assist SkyPharm to secure corporate finance capital. The Advisor shall be paid €104,000 per year during the ten-year term.

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COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

NOTE 15 – STOCK OPTIONS AND WARRANTS

As of March 31, 2019, there were 74,000 options outstanding and 74,000 options exercisable with expiration dates commencing October 2020 and continuing through January 2022.

A summary of the Company’s option activity during the three months ended March 31, 2019 is presented below:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Options	Shares		Price		Term		Value
Balance Outstanding, December 31, 2018		74,000	$	1.32		2.47	$	198,000
Granted		-		-		-		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance Outstanding, March 31, 2019		74,000	$	2.22		1.32	$	161,000
Exercisable, March 31, 2019		74,000	$	2.22		1.32	$	161,000

As of March 31, 2019, there were 1,164,673 warrants outstanding and 1,164,673 warrants exercisable with expiration dates from May 2023 through March 2024.

A summary of the Company’s warrant activity during the three months ended March 31, 2019 is presented below:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Warrants	Shares		Price		Term		Value
Balance Outstanding, December 31, 2018		1,164,673	$	6.41		5.01	$	-
Granted		-		-		-		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired				-		-		-
Balance Outstanding, March 31, 2019		1,164,673	$	6.41		4.77	$	-
Exercisable, March 31, 2019		1,164,673	$	6.41		4.77	$	-

NOTE 16 – DISAGGREGATION OF REVENUE

ASC 606-10-50-5 requires that entities disclose disaggregated revenue information in categories (such as type of good or service, geography, market, type of contract, etc). ASC 606-10-55-89 explains that the extent to which an entity’s revenue is disaggregated depends on the facts and circumstances that pertain to the entity’s contracts with customers and that some entities may need to use more than one type of category to meet the objective for disaggregating revenue.

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COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

The Company disaggregates revenue by country to depict the nature and economic characteristics affecting revenue. The following table presents our revenue disaggregated by country for the three months ended:

Country	March 31, 2019		March 31, 2018
Croatia	$	5,395	$	-
Denmark		57,657		96,518
France		42,061		72,351
Germany		2,076,814		4,410,792
Greece		5,456,573		759,999
Hungary		49,912		318,974
Indonesia		-		6,707
Ireland		132,417		568,669
Italy		73,437		156,612
Jordan		20,432		33,637
Netherlands		337,683		1,537,743
Poland		138,270		364,730
Turkey		24,695		-
UK		1,267,995		3,638,697
Total	$	9,683,341	$	11,965,429

NOTE 17 – SUBSEQUENT EVENTS

Senior Promissory Notes executed on April 1 and 3, 2019

On April 1 and 3, 2019, Cosmos Holdings Inc. (the “Company”) executed Senior Promissory Notes (the “Notes”) each in the principal amount of $250,000 payable to an unaffiliated third-party lender. The Notes bear interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The Notes mature on April 1 and 3, 2020 unless prepaid or in default. The Company may prepay the Notes within the first six (6) months by payment of unpaid interest for the first six (6) months interest and after six (6) months, with a (2%) percent ($5,000) premium.

The Notes are subject to acceleration in an Event of Default (as defined in the Notes). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the Notes. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection.

Senior Promissory Note executed on April 9, 2019

On April 9, 2019, Cosmos Holdings Inc. (the “Company”) executed a Senior Promissory Note (the “Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $500,000. The Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The Note matures on April 9, 2020 unless prepaid or in default. The Company may prepay the Note within the first six (6) months by payment of unpaid interest for the first six (6) months and after six (6) months, with a two (2%) percent ($5,000) premium.

The Note is subject to acceleration in an Event of Default (as defined in the Note). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection.

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COSMOS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statement

March 31, 2019

Securities Purchase Agreement executed on May 15, 2019

On May 15, 2019, Cosmos Holdings, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “SPA”) with an institutional investor (the “Buyer”). Upon the closing of this financing (the “Financing”) on May 17, 2019, the Company issued for a purchase price of $1,500,000 in principal amount a Senior Convertible Note (the “Note”) to the Buyer. The Buyer was the same fund which purchased an aggregate of approximately $4,475,000 principal amount of convertible notes in September 2018 and November 2017, all of which have been repaid.

The Note provides that the Company will repay the principal amount of Note on the ten (10) month anniversary date of the date of issue. Interest at the rate of nineteen (19%) percent per annum shall be payable on the first day of each calendar month.

The Note is convertible at any time by the Holder into 250,000 shares of common stock, par value $.001 per share (the “Common Stock”) at the rate of $6.00 per share, subject to adjustment (the “Conversion Price”). Upon an Event of Default (regardless of whether such event has been cured), the Buyer may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”).

The Note is senior in right of payment to all other existing and future indebtedness of the Company except Permitted Senior Indebtedness (as defined in the Note), including $12 million of senior secured indebtedness of the Company and its subsidiaries under an existing senior loan agreement, plus defined amounts of purchase money indebtedness in connection with bona fide acquisitions.

The Note includes customary Events of Default and provides that the Buyer may require the Company to redeem (regardless of whether the Event of Default has been cured) all or a portion of the Note at a redemption premium of one hundred twenty-five (125%) percent, multiplied by the greater of the conversion rate and the then current market price. The Buyer may also require redemption of the Note upon a Change of Control (as defined) at a premium of one hundred twenty-five (125%) percent. The Company has the right to redeem the Note at any time, in whole or in part, in cash at a price equal to 120% of the then outstanding conversion amount.

Conversion of the Note is subject to a blocker provision which prevents any holder from converting the Note into shares of Common Stock if its beneficial ownership of the Common Stock would exceed 9.99% of the Company’s issued and outstanding Common Stock (a “Blocker”).

Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for this transaction equal to six (6%) percent of the total gross proceeds of the offering.

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

Forward-Looking Statements

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

We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.

Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview

On September 27, 2013, the Company closed a reverse take-over transaction pursuant to which it acquired a private company whose principal activities are the trading of products, providing representation, and provision of consulting services to various industries. Pursuant to a Share Exchange Agreement between the Company and Amplerissimo Ltd. ("Amplerissimo"), a company incorporated in Cyprus, we acquired 100% of Amplerissimo's issued and outstanding common stock. On November 14, 2013, we changed our name to Cosmos Holdings Inc. and changed our focus and business strategy to the healthcare and pharmaceutical industry.

The Company, through its subsidiaries, is operating within the pharmaceutical industry and in order to compete successfully the healthcare industry, must demonstrate that its products offer medical benefits as well as cost advantages. Currently, most of the products that the Company is trading, compete with other products already on the market in the same therapeutic category, and are subject to potential competition from new products that competitors may introduce in the future.

The pharmaceutical industry is highly competitive and subject to comprehensive government regulations. Many factors may significantly affect the Company’s sales of its products, including, but not limited to, efficacy, safety, price and cost-effectiveness, marketing effectiveness, product labeling, quality control and quality assurance as well as our research and development of new products.

We are currently focusing our existing operations on expanding the business of our subsidiaries. Our operating model and the execution of our corporate strategy are designed to enable the Company to achieve sustainable growth and create shareholder value.

On July 22, 2015 the Hellenic Ministry of Health and more specifically the National Organization for Medicines granted the license for the wholesale of pharmaceutical products for human use to SkyPharm. The license is valid for a period of five years and pursuant to the EU directive of (2013/C 343/01) the Company is subject to fulfill the Guidelines of the Good Distribution Practices of medical products for human use. The Company has already incorporated the methodologies, procedures, processes and resources in order to be in accordance with the guidelines of the Good Distribution Practices. In 2016, the Company leased and equipped additional office space for our subsidiary SkyPharm in Thessaloniki, Greece in order to facilitate its growing business activity. The warehouse was already equipped with the proper shelves, working tables, medicine, cold fridge and barcode machines in compliance with all regulations.

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On May 20, 2016, the Company entered into a Non-Binding Memorandum of Understanding with Doc.Pharma S.A. to purchase the company for a combination of cash and stock to be agreed upon. Doc Pharma S.A is considered a related party to the Company due to the fact that the CEO of Doc Pharma is the wife of Grigorios Siokas, the Company’s CEO and principal shareholder, who also served as a principal of Doc Pharma SA in the past. Doc Pharma is a pharmaceutical manufacturer with production facilities in Athens, Greece, certified under Good Manufacturer Practices (GMP). The company owns numerous licenses of generic medicines and uses its own network of pharmaceutical sales representatives to communicate its products with doctors. The company also trades prototype medicines, food supplements and cosmetics. Closing of the transaction is subject to execution of definitive exchange agreements, a full audit of Doc Pharma, satisfactory completion of due diligence of Doc Pharma, tax and legal consideration and other customary closing conditions. The Memorandum of Understanding expired on December 31, 2016, and has not been formally renewed or extended, however is being pursued.

On November 17, 2016, Cosmos Holdings Inc. entered into a Stock Purchase Agreement (the “Decahedron SPA”) with Decahedron Ltd. (“Decahedron”) and the shareholders of Decahedron. The Company consummated this transaction on February 10, 2017. The terms of the Decahedron SPA provided that the Company would acquire all of the issued and outstanding shares of Decahedron. In exchange for the shares of Decahedron, the Company will issue to the Decahedron shareholders an aggregate amount of 170,000 shares of the Company’s common stock. The Decahedron SPA provided that following the closing of the transaction, the principal and majority shareholder of Decahedron, Nicholas Lazarou would be retained as a Director and COO of Decahedron with a salary of 10,000 GBP per month (approximately US $12,270).

As of October 3, 2017, the Company, entered into a Research & Development agreement with Doc Pharma S.A., a pharmaceutical manufacturer with production facilities in Athens, Greece, certified under Good Manufacturer Practices (GMP). The agreement outlines the development and contract manufacturing of Cosmos Holdings’ complete line of nutraceutical products. Under the agreement, Doc Pharma S.A. will provide its services to research, develop formulation, complete product registration, design product packaging, and provide market-ready products. Sales of food supplements by the Company commenced in the third quarter of 2018. Sales of the Company’s own line of nutraceuticals, SkyPremium Life, commenced in the fourth quarter of 2018.

On November 15, 2017, the Company entered into a Securities Purchase Agreement (the “SPA”) with certain institutional investors (the “Buyers”) with which it had no prior relationship, pursuant to which the Company issued for a purchase price of $3,000,000, $3,350,000 in aggregate principal amount of Senior Convertible Notes (the “Notes”) to the Buyers, convertible into 670,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) at $5.00 per share and warrants to purchase an aggregate of 536,000 shares of Common Stock exercisable (the “Warrants”) at $7.50 per share.

On August 25, 2017, we received shareholder and board approval for a reverse stock split of our common stock on the basis of issuing one (1) share of common stock in exchange for each ten (10) shares of common stock issued and outstanding. On November 21, 2017, the reverse stock split was made affective by FINRA. On November 21, 2017, the Company effected a one-for-ten (1:10) reverse stock split whereby the Company decreased, by a ratio of one-for-ten (1:10) the number of issued and outstanding shares of Common Stock. Proportional adjustments for the reverse stock split were made to the Company’s outstanding stock options, and warrants including all share and per-share data, for all amounts and periods presented in the consolidated financial statements. All share and per share data in this report gave retroactive effect to the reverse stock split unless otherwise noted.

On September 4, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) and completed the financing with two institutional investors who had previously purchased $3,350,000 principal amount of senior convertible notes in November 2017 (the “November Notes”) as amended in February 2018 and September 2018. The Company issued, for a $2,000,000 purchase price, $2,233,333 in aggregate principal amount of Senior Convertible Notes (the “Notes”) convertible into 372,223 shares of Common Stock at $6.00 per share and five-year Warrants to purchase an aggregate of 357,334 shares of common stock exercisable at $7.50 per share. The Company received net proceeds of $1,845,000 after deduction of offering costs.

37

On September 30, 2018, the Company entered into a Share Purchase Agreement (“SPA”) with Abbydale Management Limited, an unaffiliated third party incorporated in Belize. The Company sold one hundred (100%) percent of the issued share capital of its subsidiary, Amplerissimo Ltd., a limited liability company organized under the laws of Cypress, to the purchaser for a purchase price of €5,000. Amplerissimo had previously transferred one hundred (100%) percent of the capital stock of Sky Pharm SA to the Company. The information technology business of Amplerissimo is not a priority of the Company and the Company decided to not pursue such business.

On December 19, 2018, the Company completed the purchase of all of the capital stock of Cosmofarm Ltd., a pharmaceutical wholesaler based in Athens, Greece. The principal of the selling shareholder is Panagiotis Kozaris, who remained with Cosmofarm as a director and chief operating officer once it became a wholly-owned subsidiary of the Company. Grigorios Siokas, the Company’s CEO, became the new CEO of Cosmofarm. Mr. Kozaris had no prior relationship to the Company other than as an independent shareholder. The purchase price payable is €200,000 evidenced by a promissory note. Closing of the acquisition was subject to satisfactory completion of due diligence, delivery of audited and interim financial statements of Cosmofarm subject to being audited by PCAOB auditors, no material adverse change in the business or financial condition of Cosmofarm, all necessary consents and approvals to complete the acquisition have been obtained and other customary closing conditions.

For the three months ended March 31, 2019, the Company has recorded total revenues of $9,683,341 and cost of revenue of $9,057,179 and has incurred operating expenses of approximately $799,904, in connection with these operations.

Results of Operations

Three Months Ended March 31, 2019 versus March 31, 2018

For the three months ended March 31, 2019, the Company had a net loss of $217,173 on revenue of $9,683,341, versus a net loss of $3,055,802 on revenue of $11,965,429 for the three months ended March 31, 2018.

Cost of Revenue

For the three months ended March 31, 2019, we had direct costs of revenue of $9,057,179 associated to cost of goods sold versus $11,355,433 from the three months ended March 31, 2018.

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.

Gross Profit

Gross profit for the three months ended March 31, 2019 was $626,162 compared with the $609,996 for the three months ended March 31, 2018.

Operating Expenses

For the three months ended March 31, 2019, we had general and administrative costs of $743,531 and depreciation and amortization expense of $56,373 for a net operating loss of $173,742. For the three months ended March 31, 2018, we had general and administrative costs of $751,748, depreciation and amortization expense of $7,796 for a net operating loss of $149,548.

38

Other Income (Expense)

During the three months ended March 31, 2019, other income (expense) is primarily comprised of $259,712 interest expense related to notes payable, $229,713 of non-cash interest expense related to the amortization of debt discount, a gain on exchange of investment of $606,125 related to the Marathon/ICC (f/k/a KBB) transaction and a foreign currency loss of $160,640. During the three months ended March 31, 2018, other income (expense) is primarily comprised of $$286,578 interest expense related to notes payable, $1,284,012 of non-cash interest expense related to the amortization of debt discount and $1,464,698 loss on extinguishment of debt related to the Exchange Agreement..

Unrealized Foreign Currency losses

Additionally, we had an unrealized foreign currency gain of $61,629 for the three months ended March 31, 2019, such that our net comprehensive loss for the period was $155,544 versus the unrealized foreign currency loss of $135,054 for the three months ended March 31, 2018, such that our net comprehensive loss for the period was $3,190,856.

Liquidity and Capital Resources

At March 31, 2019, the Company had a working capital deficit of $4,023,420 and a working capital deficit of $3,927,074 as of December 31, 2018, respectively.

At March 31, 2019, the Company had cash of $309,656 versus $864,343 as of December 31, 2018. For the three months ended March 31, 2019, net cash used in operating activities was $483,933 versus $1,866,845 net cash used in operating activities for the three months ended March 31, 2018. The Company has devoted substantially all of its cash resources to expand through organic business growth and, where appropriate, through the execution of selective company and license acquisitions, and has incurred significant general and administrative expenses in order to enable the financing and growth of its business and operations.

During the three months ended March 31, 2019, there was $129,531 net cash used in investing activities versus $12,307 net cash used in investing activities during the three months ended March 31, 2018. This was primarily due to the increased purchase of fixed assets by Cosmofarm, offset by sales of investment shares.

During the three months ended March 31, 2019, there was $145,808 of net cash provided by financing activities versus $2,376,225 provided by financing activities during the three months ended March 31, 2018.

We anticipate using cash in our bank account as of March 31, 2019, cash generated from the operations of the Company and its operating subsidiary and from debt or equity financing, or from a loan from management, to the extent that funds are available to do so to conduct our business in the upcoming year. Management is not obligated to provide these or any other funds. If we fail to meet these requirements, we may lose the qualification for quotation and our securities would no longer trade on the over the counter markets. Further, as a consequence we would fail to satisfy our reporting obligations with the Securities and Exchange Commission (“SEC”), and investors would then own stock in a company that does not provide the disclosure available in quarterly and annual reports filed with the SEC and investors may have increased difficulty in selling their stock as we will be non-reporting.

Revenue Recognition

The Company adopted Topic 606 Revenue from Contracts with Customers on January 1, 2018. As a result, it has changed its accounting policy for revenue recognition as detailed below.

Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer. These criteria are assumed to have been met upon delivery of the products requested by the customer to the customers carrier. Hence, adoption of the ASC 606, has not changed the timing and nature of the Company’s revenue recognition.

39

Plan of Operation in the Next Twelve Months

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

We are planning to develop and expand our business through organic growth and at the same level through the acquisition of carefully targeted companies that are operating in the pharmaceutical industry and would add value to our Company and its shareholders. Our organic growth will be driven by entering into new markets and areas where we can sell and distribute a more profitable series of pharmaceutical products, OTC medicines, and nutraceuticals. We are committed to capitalizing on sales growth opportunities by expanding our customer pipeline across the European market, as well as entering markets outside the European Union.

Our main objective is expanding the business operations of our subsidiaries by concentrating our efforts on becoming an international manufacturing, trading and distribution pharmaceutical company. We view our business development activity as an enabler of our strategies, and we seek to generate earnings growth and enhance shareholder value by pursuing a disciplined, strategic and financial approach to evaluating business development opportunities. Under these principles we assess our businesses and assets as part of our regular, ongoing portfolio review process and continue to consider trading development activities for our businesses.

The Company, in the following twelve months, intends to substantially grow its business operations within the dietary supplements market and the generic pharmaceutical products market. These industries are highly competitive and may significantly affect the Company’s sales of these products, including, but not limited to, price and cost-effectiveness, marketing effectiveness, product labeling, quality control and quality assurance.

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

In addition to expanding our product portfolio, we also plan to evaluate offering our products and services to different geographical markets. We are currently focused on our customers throughout the European Union. We plan on expanding our geographical reach to new areas outside of the European Union market, although we currently have no binding agreements, commitments or contracts in any of these geographical markets. Some of the methods we intend to use to accomplish this are: promoting our brand and marketing our products and services through the Internet to new geographic areas, creating strategic relationships with companies in the different geographical regions, and possibly acquiring companies that operate in new geographical regions. We anticipate that we will spend approximately $70,000 evaluating the different methods and regions to which we plan to expand. This cost is made up of primarily legal fees, consulting fees, accounting and auditing fees as well as related development expenses. We assess the foreseeable development of the Company as being positive.

We expect to continue growing through expansion into adjacent products, product categories and channels, as well as through entry into new geographic markets. We evaluate potential acquisition targets based on whether they have the capacity to deliver a return on invested capital.

As to potential acquisitions we are targeting companies that are operating primarily in the pharmaceutical sector and within the European Union boarders. SEC filing requirements are such that we will have to file audited financial statements of all our operations, including any acquired business. So, we plan that our first step in any potential acquisition process we undertake is to ascertain whether we can obtain audited financials of a company if we were to acquire them. We anticipate that we will spend approximately $500,000 to locate, conduct due diligence, and evaluate possible acquisitions. As noted above, as of the date of this report, we do not have any binding agreements, commitments, or understandings with any potential acquisition candidates.

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

40

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

We still see the risks for the future development in a difficult and competitive environment, increasing purchase prices and the stagnating selling price level. On the background of our financial stability we however see ourselves as being well-equipped for managing the future risks. Risks that could endanger the survival of the Company are currently not able to be identified.

We will evaluate and, where appropriate, execute on opportunities to expand our businesses through the acquisition of products and companies in areas that will serve patients and customers and that we believe will offer above average growth characteristics and attractive margins. In particular, we are looking to continue to enhance our product lines by acquiring or licensing rights to additional products and regularly evaluate selective acquisition and license opportunities. In addition, we remain committed to strategic R&D across each business unit with a particular focus on assets with inherently lower risk profiles and clearly defined governmental regulatory pathways.

Off Balance Sheet Arrangements

As of March 31, 2019, there were no off balance sheet arrangements.

Critical Accounting Policies

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

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

Revenue is measured based on consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer. These criteria are assumed to have been met upon delivery of the products requested by the customer to the customers carrier. Hence, adoption of the ASC 606, has not changed the timing and nature of the Company’s revenue recognition.

Foreign Currency. The Company requires translation of the Amplerissimo financial statements from euros to dollars since the reverse take-over on September 27, 2013. Assets and liabilities of all foreign operations are translated at year-end rates of exchange, and the statements of operations are translated at the average rates of exchange for the year. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders’ equity until the entity is sold or substantially liquidated. Gains or losses from foreign currency transactions (transactions denominated in a currency other than the entity’s local currency) are included in net (loss) earnings.

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

The Company is liable for income taxes in Greece and the United Kingdom of England. The corporate income tax rate is 29% in Greece (tax losses are carried forward for five years effective January 1, 2013) and 20% in United Kingdom of England. Losses may also be subject to limitation under certain rules regarding change of ownership

41

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

We recognize the impact of an uncertain tax position in our financial statements if, in management’s judgment, the position is not more-likely-then-not sustainable upon audit based on the position’s technical merits. This involves the identification of potential uncertain tax positions, the evaluation of applicable tax laws and an assessment of whether a liability for an uncertain tax position is necessary. We operate and are subject to audit in multiple taxing jurisdictions.

We record interest and penalties related to income taxes as a component of interest and other expense, respectively.

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 “Accounting for Income Taxes” as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in this financial statement because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

The Company has net operating loss carry-forwards in our parent, Cosmos Holdings, Inc. which are applicable to future taxable income in the United States (if any). Additionally, the Company has income tax liabilities in the Republic of Cyprus. The income tax assets and liabilities are not able to be netted. We therefore reserve the income tax assets applicable to the United States, but recognize the income tax liabilities in the Republic of Cyprus.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

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

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

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

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Principal Executive Officer/Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and the Principal Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective.

Changes in Internal Controls Over Financial Reporting

During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

42

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

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

None. Previously reported on Form 8-K.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

43

Item 6. Exhibits.

(a) Exhibits.

Exhibit No.	Document Description
31.1	Certification of CEO/CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of CEO/CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**

_____________

*

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

**

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

44

SIGNATURES

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

	Cosmos Holdings Inc.
Date: May 20, 2019	By:	/s/ Grigorios Siokas
		Grigorios Siokas
		Chief Executive Officer
		(Principal Executive Officer,
		Acting Principal Financial Officer and
		Acting Principal Accounting Officer)

45

EXHIBIT INDEX

Exhibit No.	Document Description
31.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*.
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**
Exhibit 101	Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.**

___________

*

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

**

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

46

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Grigorios Siokas, certify that:

1.	I have reviewed this report on Form 10-Q of Cosmos Holdings Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	Cosmos Holdings Inc.
Date: May 20, 2019	By:	/s/ Grigorios Siokas
		Grigorios Siokas
		Principal Executive Officer,
		Acting Principal Financial Officer
		and Acting Principal Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned hereby certifies that the Quarterly Report on Form 10-Q for the period ended March 31, 2019 of Cosmos Holdings Inc. (the "Company") fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	Cosmos Holdings Inc.
Date: May 20, 2019	By:	/s/ Grigorios Siokas
		Grigorios Siokas
		Principal Executive Officer,
		Acting Principal Financial Officer
		and Acting Principal Accounting Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Cosmos Holdings Inc. and will be retained by Cosmos Holdings Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 20, 2019
Document And Entity Information
Entity Registrant Name	Cosmos Holdings Inc.
Entity Central Index Key	0001474167
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		13,087,478
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Ex Transition Period	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2019	Dec. 31, 2018
CURRENT ASSETS:
Cash and cash equivalents	$ 309,656	$ 864,343
Accounts receivable, net	5,569,831	4,753,291
Accounts receivable - related party	459,207	189,760
Other investments	208,487	217,361
Inventory	2,750,559	3,202,767
Equity investment	2,790,000	2,500,000
Prepaid expenses and other current assets	1,332,618	1,662,579
Prepaid expenses and other current assets - related party	4,988,828	4,957,061
Operating lease right-of-use asset	579,935
Financing lease right-of-use asset	134,011
TOTAL CURRENT ASSETS	19,123,132	18,347,162
Property and equipment, net	1,676,313	1,425,632
Goodwill and intangible assets, net	289,893	296,767
Deferred tax assets	513	913
Other assets	615,928	624,479
TOTAL ASSETS	21,705,779	20,694,953
CURRENT LIABILITIES:
Accounts payable and accrued expenses	6,282,735	5,933,464
Accounts payable and accrued expenses - related party	128,672	139,556
Customer advances	1,118,066	1,067,200
Convertible notes payable, net of unamortized discount of $0 and $276,841, respectively		135,800
Notes payable	9,757,837	9,803,733
Notes payable - related party	1,743,708	1,793,437
Lines of credit	2,127,633	1,514,583
Loans payable - related party	1,706,212	1,775,251
Operating lease liability, current portion	178,180
Financing lease liability, current portion	33,723
Other current liabilities	69,786	111,212
TOTAL CURRENT LIABILITIES	23,146,552	22,274,236
Share settled debt obligation	1,554,590	1,554,590
Operating lease liability, net of current portion	377,870
Financing lease liability, net of current portion	5,819
Other liabilities	165,483	183,577
TOTAL LIABILITIES	25,250,314	24,012,403
Commitments and Contingencies (see Note 13)
STOCKHOLDERS' DEFICIT:
Preferred stock, $0.001 par value; 100,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively
Common stock, $0.001 par value; 300,000,000 shares authorized; 13,305,015 and 13,878,757 shares issued and 13,087,478 and 13,685,067 outstanding as of March 31, 2019 and December 31, 2018, respectively	13,305	13,879
Additional paid-in capital	13,134,556	13,133,982
Treasury Stock, 217,537 and 193,690 shares as of March 31, 2019 and December 31, 2018, respectively	(297,035)	(225,494)
Accumulated deficit	(16,489,818)	(16,272,645)
Accumulated other comprehensive income	94,457	32,828
TOTAL STOCKHOLDERS' (DEFICIT)	(3,544,535)	(3,317,450)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 21,705,779	$ 20,694,953

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
CURRENT LIABILITIES:
Convertible notes payeble, net of unamortized discount	$ 0	$ 276,841
STOCKHOLDERS' DEFICIT:
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares, outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	13,305,015	13,878,757
Common stock, shares, outstanding	13,087,478	13,685,067
Treasury Stock	217,537	193,690

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Condensed Consolidated Statements Of Operations And Comprehensive Loss
REVENUE	$ 9,683,341	$ 11,965,429
COST OF REVENUE	9,057,179	11,355,433
GROSS PROFIT	626,162	609,996
OPERATING EXPENSES
General and administrative expenses	743,531	751,748
Depreciation and amortization expense	56,373	7,796
TOTAL OPERATING EXPENSES	799,904	759,544
LOSS FROM OPERATIONS	(173,742)	(149,548)
OTHER EXPENSE, NET
Other income (expense), net	2,357	(2,778)
Interest expense - related party	(66)	(66)
Interest expense	(259,712)	(286,578)
Non-cash interest expense	(229,713)	(1,284,012)
Forgiveness of debt		49,623
Gain on change in fair value of equity investments	663,711
Loss on sale of equity investments	(57,586)
Loss on extinguishment of debt		(1,464,698)
Foreign currency transaction gain (loss), net	(160,640)	82,283
TOTAL OTHER EXPENSE, NET	(41,649)	(2,906,226)
LOSS BEFORE INCOME TAXES	(215,391)	(3,055,774)
INCOME TAX EXPENSE	(1,782)	(28)
NET LOSS	(217,173)	(3,055,802)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment, net	61,629	(135,054)
TOTAL COMPREHENSIVE LOSS	$ (155,544)	$ (3,190,856)
BASIC NET LOSS PER SHARE	$ (0.02)	$ (0.24)
DILUTED NET LOSS PER SHARE	$ (0.02)	$ (0.24)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic	13,384,574	12,825,393
Diluted	13,384,574	12,825,393

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - USD ($)	Preferred Stock	Common Stock	Additional Paid-In Capital	Treasury Stock	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Total
Beginning Balance, Shares at Dec. 31, 2017		12,825,393		(138,689)
Beginning Balance, Amount at Dec. 31, 2017		$ 12,825	$ 5,652,429	$ (95,882)	$ (7,211,987)	$ (1,385,229)	$ (3,027,844)
Foreign currency translation adjustment, net						(135,054)	(135,054)
Stock-based compensation			59,672				59,672
Modification of debt			1,739,289				1,739,289
Cancellation of pre-delivery shares issued in connection with convertible debentures, Shares
Cancellation of pre-delivery shares issued in connection with convertible debentures, Amount
Net income					(3,055,802)		(3,055,802)
Ending Balance, Shares at Mar. 31, 2018		12,825,393		(138,689)
Ending Balance, Amount at Mar. 31, 2018		$ 12,825	7,451,390	$ (95,882)	(10,267,789)	(1,520,283)	(4,419,739)
Beginning Balance, Shares at Dec. 31, 2018		13,878,757		(193,690)
Beginning Balance, Amount at Dec. 31, 2018		$ 13,879	13,133,982	$ (225,494)	(16,272,645)	32,828	(3,317,450)
Foreign currency translation adjustment, net						61,629	61,629
Cancellation of pre-delivery shares issued in connection with convertible debentures, Shares		(573,742)
Cancellation of pre-delivery shares issued in connection with convertible debentures, Amount		$ (574)	574
Purchase of treasury stock from third party, Shares				(23,847)
Purchase of treasury stock from third party, Amount				$ (71,541)			(71,541)
Net income					(217,173)		(217,173)
Ending Balance, Shares at Mar. 31, 2019		13,305,015		(217,537)
Ending Balance, Amount at Mar. 31, 2019		$ 13,305	$ 13,134,556	$ (297,035)	$ (16,489,818)	$ 94,457	$ (3,544,535)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (217,173)	$ (3,055,802)
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities:
Depreciation and amortization expense	56,373	7,796
Amortization of debt discounts	229,713	1,284,012
Loss on extinguishment of debt		1,464,698
Gain on forgiveness of debt		(49,623)
Stock-based compensation		59,671
Gain on change in fair value of equity investments	(663,711)
Loss on sale of equity investments	57,586
Amortization of right-of-use assets	69,632
Changes in Assets and Liabilities:
Accounts receivable, net	(816,540)	(979,384)
Accounts receivable - related party	(269,447)	(366,911)
Inventory	452,208	1,021,518
Prepaid expenses and other current assets	290,663	(554,435)
Prepaid expenses and other current assets - related party	(31,767)	(1,114,682)
Other assets	8,551	(180,290)
Accounts payable and accrued expenses	349,271	117,597
Accounts payable and accrued expenses - related party	(10,884)	394,707
Customer advances	50,866
Other current liabilities	(41,426)
Lease liabilities	(27,417)
Taxes payable		84,283
Other liabilities	29,569
NET CASH USED IN OPERATING ACTIVITIES	(483,933)	(1,866,845)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets	(462,545)	(12,307)
Proceeds from sale of investment shares	333,014
NET CASH USED IN INVESTING ACTIVITIES	(129,531)	(12,307)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of convertible note payable	(365,513)	(775,285)
Payment of related party note payable	(14,035)	(13,552)
Proceeds from note payable		2,273,040
Payment of related party loan	(38,175)	(142,248)
Proceeds from related party loan		1,034,270
Payment of lines of credit	(1,875,720)
Proceeds from lines of credit	2,518,913
Payments of finance lease liability	(8,121)
Purchase of treasury stock	(71,541)
NET CASH PROVIDED BY FINANCING ACTIVITIES	145,808	2,376,225
Effect of exchange rate changes on cash	(87,031)	48,121
NET CHANGE IN CASH	(554,687)	545,194
CASH AT BEGINNING OF YEAR	864,343	782,853
CASH AT END OF YEAR	309,656	1,328,047
Supplemental Disclosure of Cash Flow Information
Cash paid during the period: Interest	119,770	246,194
Cash paid during the period: Income Tax
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Cancellation of pre-delivery shares issued for conversion of convertible notes payable	$ 574

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BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 1 - BASIS OF PRESENTATION

The terms “COSM,” “we,” “the Company,” and “us” as used in this report refer to Cosmos Holdings, Inc. The accompanying unaudited consolidated balance sheet as of March 31, 2019 and unaudited consolidated statements of operations for the three months ended March 31, 2019 have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management of COSM, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2019, are not necessarily indicative of the results that may be expected for the year ending December 31, 2019, or any other period. These unaudited consolidated financial statements and notes should be read in conjunction with the financial statements for each of the two years ended December 31, 2018 and 2017, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (“Form 10-K”). The accompanying consolidated balance sheet as of December 31, 2018 has been derived from the audited financial statements filed in our Form 10-K and is included for comparison purposes in the accompanying balance sheet. Certain prior year amounts have been reclassified to conform to current year presentation.

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ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 2 - ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN

Overview

Cosmos Holdings, Inc. (“us,” “we,” or the “Company”) is an international pharmaceutical wholesaler. The Company imports, exports and distributes brand-name and generic pharmaceuticals, over-the-counter (“OTC”) medicines, a variety of vitamins, and dietary supplements. Through March 31, 2019, we operated our business through three wholly owned subsidiaries: (i) SkyPharm S.A. (“SkyPharm”), headquartered in Thessaloniki, Greece; (ii) Decahedron Ltd. (“Decahedron”), headquartered in Harlow, United Kingdom (“UK”); and (iii) Cosmofarm Ltd. (“Cosmofarm”), headquartered in Athens, Greece. Our business is primarily comprised of cross-border sales of brand-name pharmaceutical products in the European Union (“EU”). Our cross-border pharmaceutical wholesale business serves wholesale pharmaceutical distributors and independent retail pharmacies across the EU through a network of three strategic distribution centers, as well as an additional warehousing facility. Pharmaceutical manufacturers generally implement variable pricing strategies within the EU market. Identifying and evaluating price spreads between EU member states enables us to source brand-name pharmaceuticals from countries where ex-factory prices are comparatively low and export to countries where the same products are priced higher. We remain focused on leveraging our growing purchasing scale and supplier relationships to secure discounts and provide pharmaceuticals at reduced prices and continuing to drive organic growth at attractive margins for our cross-border pharmaceutical wholesale business.

We regularly evaluate and undertake strategic initiatives to expand our distribution reach, improve our profit margins, and strengthen our competitive position. In 2018, we entered the vitamins and dietary supplements segment and in the fourth quarter of 2018 we posted the first sales of our own brand of nutraceuticals; SkyPremium Life. Through the December 2018 acquisition of Cosmofarm, we entered the full-line pharmaceutical wholesale distribution segment. Cosmofarm now serves approximately 370 independent retail pharmacies and 15 pharmaceutical wholesales in the greater Athens region by providing a reliable supply of brand-name and generic pharmaceuticals, OTC medicines, vitamins, and dietary supplements. We invest in technology to enhance safety, distribution and warehousing efficiency and reliability. For example, Cosmofarm operates two fully automated ROWA robotic warehouse systems that ensure 0% error selection rate, accelerate order fulfillment, and yield higher cost-efficiency in our Athens distribution center. In the future, we intend to expand into the cosmetic/beauty industry.

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 to develop to add to our SkyPremium Life portfolio. We intend to continue to bring SkyPremium Life products to market primarily through our existing network of over 160 pharmaceutical wholesale clients and vendors and approximately 370 independent retail pharmacies in the EU. There is growing demand for vitamins and food supplements, as well as cosmetic/beauty products, and we are committed to developing quality products and creating enhanced customer value.

We are also closely monitoring the legal framework for prescription and non-prescription derivates of cannabis products as it develops in Europe. As the legal framework and processes are developed and implemented in each respective EU country, we will utilize our existing network to distribute both prescription and non-prescription derivates of cannabis products to our current customer base. We currently intend to only distribute prescription and non-prescription derivates of cannabis products to approved EU countries and not in the US.

We regularly evaluate acquisition targets that would allow us to expand our distribution reach and/or vertically integrate into the supply chain of the products that we currently distribute. 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. 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.

We believe the EU pharmaceutical import/export market will continue to grow. 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. In order to minimize business risks, we diversify our sources of supply. 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.

On July 22, 2015, the Hellenic Ministry of Health and more specifically the National Organization for Medicines granted SkyPharm a license for the wholesale of pharmaceutical products for human use. The license is valid for a period of five years and pursuant to the EU directive of (2013/C343/01).

Decahedron received its Wholesale Distribution Authorization for human use on November 7, 2013, from the UK Medicines and Healthcare Products Regulatory Agency (MHRA) in accordance with Regulation 18 of the Human Medicines Regulations 2012 (SI 2012/1916) and it is subject to the provision of those Regulations and the Medicines Act 1971. This license will continue to remain in force from the date of issue by the Licensing Authority unless cancelled, suspended, revoked or varied as to the period of its validity or relinquished by the authorization holder.

On February 2, 2019, the Hellenic Ministry of Health and the National Organization for Medicines extended the validity of Cosmofarm’s license for the wholesale of pharmaceutical products for human use for a period of five years and pursuant to the EU directive of (2013/C 343/01).

Corporate History and Structure

Cosmos Holdings, Inc. was incorporated in the State of Nevada under the name Prime Estates and Developments, Inc. on July 21, 2009. On November 14, 2013, we changed our name to Cosmos Holdings, Inc.

On September 27, 2013, the Company, closed a reverse take-over transaction by which it acquired a private company whose principal activities are the trading of products, providing representation, and provision of consulting services to various sectors. Pursuant to a Share Exchange Agreement between the Registrant and Amplerissimo Ltd., a company incorporated in Cyprus (“Amplerissimo”), the Company acquired 100% of Amplerissimo’s issued and outstanding common stock. As a result of the reverse take-over transaction, Amplerissimo became a wholly owned subsidiary of the Company.

On August 1, 2014, the Company, through its Cypriot subsidiary Amplerissimo, formed SkyPharm S.A., a Greek corporation (“SkyPharm”), a subsidiary that focuses on the trading, sourcing and distribution of pharmaceutical products. 

In February 2017, the Company completed the acquisition of Decahedron Ltd., a UK corporation (“Decahedron”) consummating the transactions contemplated by the Stock Purchase Agreement, dated November 17, 2016 as amended (the “Decahedron SPA”). Pursuant to the terms of the Decahedron SPA, the shareholders of Decahedron received an aggregate of 170,000 shares of common stock of the Company (the “Stock Consideration”), which were delivered following the closing in exchange for all of the ordinary shares of Decahedron for the stock consideration. Decahedron is a fully licensed wholesaler of pharmaceutical products and its primary activity is the distribution, import and export of pharmaceuticals. In accordance with the terms of the SPA, the principal and majority shareholder of Decahedron, Nicholas Lazarou, remained as a director and officer of Decahedron.

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

On September 29, 2018, Amplerissimo transferred its remaining 22% investment in SkyPharm to the Company. The Company now holds 100% of the capital of SkyPharm and SkyPharm remains a 100% wholly owned subsidiary of the Company. On September 30, 2018, the Company entered into a Share Purchase Agreement “SPA” with an unaffiliated third party and sold 100% of the issued capital of its subsidiary, Amplerissimo.

On December 19, 2018, the Company completed the purchase of all of the capital stock of Cosmofarm Ltd., a pharmaceutical wholesaler based in Athens, Greece. The principal of the selling shareholder is Panagiotis Kozaris, who remained with Cosmofarm as a director and chief operating officer once it became a wholly owned subsidiary of the Company. Grigorios Siokas, the Company’s CEO, became the new CEO of Cosmofarm. Mr. Kozaris had no prior relationship to the Company other than as an independent shareholder. The purchase price payable is €200,000 evidenced by a promissory note.

Going Concern

The Company’s consolidated financial statements are prepared in conformity with U.S. GAAP which contemplates the continuation of the Company as a going concern. For the three months ended March 31, 2019, the Company had revenue of $9,683,341, a net loss of $217,173 and net cash used in operations of $483,933. Additionally as of March 31, 2019, the Company had an accumulated deficit of $16,489,818, a working capital deficit of $4,023,420 and stockholders’ deficit of $3,544,535. It is management’s opinion that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of this filing.

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

The Company has not yet established an adequate ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.

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

Summary of Significant Accounting Policies

Basis of Financial Statement Presentation

The accompanying consolidated financial statements have been prepared in accordance with principles generally accepted in the United States of America.

Principles of Consolidation

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

Use of Estimates

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

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of March 31, 2019 and December 31, 2018, there were no cash equivalents.

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

Account Receivable

Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts against gross accounts receivable reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. As of March 31, 2019 and December 31, 2018, the Company's allowance for doubtful accounts was $529,299 and $540,048, respectively.

Tax Receivables

The Company pays Value Added Tax (“VAT”) or similar taxes (“input VAT”), income taxes, and other taxes within the normal course of its business in most of the countries in which it operates related to the procurement of merchandise and/or services it acquires and/or on sales and taxable income. The Company also collects VAT or similar taxes on behalf of the government (“output VAT”) for merchandise and/or services it sells. If the output VAT exceeds the input VAT, this creates a VAT payable to the government. If the input VAT exceeds the output VAT, this creates a VAT receivable from the government. The VAT tax return is filed on a monthly basis offsetting the payables against the receivables. In observance of EU regulations for intra-EU cross-border sales, our subsidiaries in Greece, SkyPharm and Cosmofarm, do not charge VAT for sales to wholesale drug distributors registered in other European Union member states. The net VAT receivable is recorded in prepaid expense and other current assets on the balance sheet.

Inventory

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

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

Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation. Depreciation is provided on a straight-line basis over the useful lives (except for leasehold improvements which are depreciated over the lesser of the lease term or the useful life) of the assets as follows:

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

Depreciation expense was $49,499 and $5,667 for the three months ended March 31, 2019 and 2018, respectively.

Impairment of Long-Lived Assets

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

Goodwill and Intangibles

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

Prior to the acquisition of Decahedron, the Company had no recorded goodwill value. As a result of the acquisition of Decahedron, the Company tested and expensed 100% of the goodwill allocated to the acquisition costs, an amount equal to $1,949,884 for the year ended December 31, 2017.

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

Intangible assets with definite useful lives are recorded on the basis of cost and are amortized on a straight-line basis over their estimated useful lives. The Company uses a useful life of 5 years for an import/export license. The Company evaluates the remaining useful life of intangible assets annually to determine whether events and circumstances warrant a revision to the remaining amortization period. If the estimate of the intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over that revised remaining useful life. At March 31, 2019, no revision to the remaining amortization period of the intangible assets was made.

Amortization expense was $6,874 and $2,129 for the three months ended March 31, 2019 and 2018, respectively.

Equity Method Investment

For those investments in common stock or in-substance common stock in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, the investment is accounted for under the equity method. The Company records its share in the earnings of the investee and is included in “Equity earnings of affiliate” in the consolidated statement of operations. The Company assesses its investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable and recognizes an impairment loss to adjust the investment to its then current fair value.

Investments in Equity Securities

Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2016-01, and accordingly, investments in equity securities are accounted for at fair value with changes in fair value recognized in income from operations. Equity securities are classified as short-term or long-term based on the nature of the securities and their availability to meet current operating requirements. Equity securities that are readily available for use in current operations are reported as a component of current assets in the accompanying consolidated balance sheets. Equity securities that are not considered available for use in current operations would be reported as a component of long-term assets in the accompanying consolidated balance sheets. For equity securities with no readily determinable fair value, the Company elects a measurement alternative to fair value. Under this alternative, the Company measures the investments at cost, less any impairment, and adjusted for changes resulting from observable price changes in transactions for identical or similar investments of the investee. The election to use the measurement alternative is made for each eligible investment.

At March 31, 2019, investments consisted of 40,000 shares which traded at a closing price of $5.03 per share, or value of $201,206 of Diversa S.A. and 16,666 shares which traded at a closing price of $0.17 per share or value of $2,900 of National Bank of Greece. Additionally, the Company has $4,381 in equity securities of Pancreta bank, which are not publicly traded and recorded at cost. See Note 4 for additional investments in equity securities.

Fair Value Measurement

The Company applied FASB ASC 820-Fair Value Measurements and Disclosures, (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results but did expand certain disclosures.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The following table presents assets that are measured and recognized at fair value as of March 31, 2019, on a recurring basis:

	March 31, 2019						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	2,790,000		-		-	$	2,790,000
Marketable securities – Divsersa S.A.		201,206		-		-		201,206
Marketable securities – National Bank of Greece		2,900		-		-		2,900
	$	2,994,106					$	2,994,106

In addition, FASB ASC 825-10-25 Fair Value Option, (“ASC 825-10-25”), was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.

Customer Advances

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

Revenue Recognition

The Company adopted the modified retrospective adoption in accordance with ASC 606, Revenue from Contracts with Customers, on January 1, 2018. The new guidance introduces a five-step model for recognizing revenue by applying the following steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the performance obligations are satisfied by transferring the promised goods to the customer. Once these steps are met, revenue is recognized upon delivery of the product. Adoption of ASC 606 has not changed the timing and nature of the Company’s revenue recognition and there has been no material effect on the Company’s financial statements.

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Stock Compensation (“ASC 718”) and Staff Accounting Bulletin No. 107 (“SAB 107”) issued by the SEC in March 2005 regarding its interpretation of ASC 718. ASC 718 requires the fair value of all stock-based employee compensation awarded to employees to be recorded as an expense over the related requisite service period. The Company values any employee or non-employee stock-based compensation at fair value using the Black-Scholes Option Pricing Model.

The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC 505-50, Equity-Based Payments to Non-Employees.

Foreign Currency Translations and Transactions

Assets and liabilities of all foreign operations are translated at year-end rates of exchange, and the statements of operations are translated at the average rates of exchange for the year. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders’ equity until the entity is sold or substantially liquidated.

Gains or losses from foreign currency transactions (transactions denominated in a currency other than the entity’s local currency) are included in net earnings.

Income Taxes

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

The Company is liable for income taxes in Greece and the United Kingdom of England. The corporate income tax rate is 29% in Greece (tax losses are carried forward for five years effective January 1, 2013) and 20% in United Kingdom of England. Losses may also be subject to limitation under certain rules regarding change of ownership.

We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized. Our review includes evaluating both positive (e.g., sources of taxable income) and negative (e.g., recent historical losses) evidence that could impact the realizability of our deferred tax assets. At March 31, 2019 the Company has maintained a valuation allowance against all net deferred tax assets in each jurisdiction in which it is subject to income tax.

The Company periodically reviews the uncertainties and judgments related to the application of complex income tax regulations to determine income tax liabilities in several jurisdictions. The Company uses a “more likely than not” criterion for recognizing the income tax benefit of uncertain tax positions and establishing measurement criteria for income tax benefits. The Company has evaluated the impact of these positions and due to the fact that the fiscal years 2013 - 2014 are unaudited by the Greek tax authorities, a potential tax liability has been identified, which may arise from a prospective tax audit from tax authorities, based on the tax settlement note of years 2007 - 2009. The amount of the liability as of March 31, 2019 and December 31, 2018, was $142,608 and $145,504, respectively, and has been recorded as a long-term liability within the balance sheet.

Retirement and Termination Benefits

Under Greek labor law, employees are entitled to lump-sum compensation in the event of termination or retirement. The amount depends on the employee’s work experience and renumeration as of the day of termination or retirement. If an employee remains with the company until full-benefit retirement, the employee is entitled to a lump-sum equal to 40% of the compensation to be received if the employee were to be dismissed on the same day. The Company periodically reviews the uncertainties and judgements related to the application of the relevant labor law regulations to determine retirement and termination benefits obligations of its Greek subsidiaries. The Company has evaluated the impact of these regulations and has identified a potential retirement and termination benefits liability. The amount of the liability as of March 31, 2019, was $22,876, and has been recorded as a long-term liability within the balance sheet.

Basic and Diluted Net Loss per Common Share

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

	Three Months Ended March 31,
	2019		2018
Weighted average number of common shares outstanding - Basic		13,384,574		12,825,393
Potentially dilutive common stock equivalents		-		-
Weighted average number of common and equivalent shares outstanding - Diluted		13,384,574		12,825,393

Common stock equivalents are included in the diluted income per share calculation only when option exercise prices are lower than the average market price of the common shares for the period presented.

Recent Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the measurement of goodwill by eliminating Step 2 from the current goodwill impairment test in the event that there is evidence of an impairment based on qualitative or quantitative assessments. ASU 2017-04 does not change how the goodwill impairment is identified, and the Company will continue to perform a qualitative assessment annually to determine whether the two-step impairment test is required. Until the adoption, current accounting standards require the impairment loss to be recognized under Step 2 of the impairment test. This requires the Company to calculate the implied fair value of goodwill by assigning fair value to the reporting unit’s assets and liabilities as if the reporting unit has been acquired in a business combination, then subsequently subtracting the implied goodwill from the carrying amount of the goodwill. The new standard would require the Company to determine the fair value of the reporting unit and subtract the carrying value from the fair value of the reporting unit to determine if there is an impairment. ASU 2017-04 is effective for the Company for fiscal years after December 15, 2019, and early adoption is permitted. ASU 2017-04 is required to be adopted prospectively, and the adoption is effective for annual goodwill impairment tests performed in the year of adoption. The adoption of ASU No. 2017-04 did not have a material effect on the Company’s consolidated financial position or the Company’s consolidated results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability. Lessor accounting under the standard is substantially unchanged. Additional qualitative and quantitative disclosures are also required. The Company adopted the standard effective January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The Company adopted the following practical expedients and elected the following accounting policies related to this standard update:

• The option to not reassess prior conclusions related to the identification, classification and accounting for initial direct costs for leases that commenced prior to January 1, 2019.

• Short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less; and

• The option to not separate lease and non-lease components for certain equipment lease asset categories such as freight car, vehicles and work equipment.

• The package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases.

Adoption of this standard resulted in the recognition of operating lease right-of-use assets and corresponding lease liabilities of $622,765 and $538,467, respectively, on the consolidated balance sheet as of January 1, 2019. The Company’s accounting for finance leases remained substantially unchanged. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 12.

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ACQUISITION OF COSMOFARM, LTD.

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 3 - ACQUISITION OF COSMOFARM, LTD.

On December 19, 2018, the Company completed the acquisition pursuant to the Cosmofarm SPA acquiring 100% of the outstanding shares of Cosmofarm, a pharmaceutical wholesaler based in Athens, Greece. Cosmofarm is a fully licensed wholesaler of pharmaceutical products and its primary activity is the sourcing, procuring, and distributing branded and generic medicines, over-the-counter (OTC) pharmaceuticals, food supplements, and medical devices. At closing, the Company acquired 100% of Cosmofarm’s outstanding shares and in exchange for a non-interest-bearing promissory note, due in one-year, in the amount of €200,000 (the “Acquisition”).

The Company recognized cash of $307,590 acquired in acquisition. The Company recognized the remaining Cosmofarm assets acquired and liabilities assumed based upon the fair value of such assets and liabilities measured as of the date of acquisition. The aggregate purchase price for Cosmofarm has been allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the acquired net assets represent non-capitalizable intangible assets, such Cosmofarm’s tradename and customer base. The remainder of the excess has been allocated to goodwill.

The allocation of the purchase price of Cosmofarm as of December 19, 2018, is as follows:

	Allocation
Current assets	$	6,882,286
Intangible assets		213,790
Other assets		1,519,345
Total assets acquired		8,615,421
Liabilities assumed:
Accounts payable and other current liabilities		5,111,489
Advances from customers		1,192,600
Line of credit		1,900,388
Other liabilities		232,729
Total liabilities assumed		8,437,206
Net assets acquired		178,215
Consideration:
Promissory note		227,912
Goodwill	$	49,697

The components of the acquired intangible assets were as follows:

	Amount		Useful Life (Years)
Trademark	$	36,997		5
Customer base		176,793		10
	$	213,790		-

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INVESTMENTS

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 4 - INVESTMENTS

Distribution and Equity Agreement

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

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

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

Share Exchange Agreements

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

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

The Company determined the fair value of both exchanges based on an actively quoted stock price of ICC received in exchange for the Marathon shares. The Company continues to fair value its investment in ICC with changes recognized in earnings each period and recorded an unrealized gain on exchange of investment during the three months ended March 31, 2019 of $680,600.

During the three months ended March 31, 2019, the Company sold 1,000,000 shares for proceeds of $333,014 and recorded a loss on the sale of investment shares of $57,586. The value of the investment as of March 31, 2019 and December 31, 2018 was $2,790,000 and $2,500,000, respectively.

Since no value was attributed to the 33 1/3% equity ownership interest in Marathon received as consideration for the distribution services, the Company would receive variable consideration in future for its services under the Distribution and Equity Acquisition Agreement, if certain milestones are achieved. Refer to Note 9 for the accounting associated with the cash of CAD $2 million received upfront. Variable consideration to be received in the future upon achieving the gross sales milestones described above, is constrained as the Company estimates that it is probable that a significant reversal of revenue could occur. In assessing the constraint, the Company considered its limited experience with the Products, new geographic markets and similar transactions, which affect the Company’s ability to estimate the likelihood of a probable revenue reversal. Therefore, no revenue has been recognized for the period ended March 31, 2019. The Company will continue to reassess variable consideration at each reporting period and update the transaction price when it becomes probable that a significant revenue reversal would not occur.

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PROPERTY, PLANT AND EQUIPMENT

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consists of the following:

	March 31, 2019			December 31, 2018
Leasehold improvements	$	429,585		$	369,437
Equipment under capital lease		-			709,356
Vehicles		115,065			117,402
Furniture, fixtures and equipment		1,350,563			458,442
Computers and software		54,744			55,169
		1,949,957			1,709,806
Less: Accumulated depreciation		(273,644	)		(284,174	)
Total	$	1,676,313		$	1,425,632

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INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 6 - INTANGIBLE ASSETS

Intangible assets consist of the following at:

	March 31, 2019			December 31, 2018
License	$	50,000		$	50,000
Trade Name / Mark		36,997			36,997
Customer Base		176,793			176,793
		263,790			263,790
Less: Accumulated Amortization		(23,594	)		(16,720	)
Total	$	240,196		$	247,070

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INCOME TAXES

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 7 - INCOME TAXES

The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company had no U.S. taxable income for the three months ended March 31, 2019 and 2018.

The Company's Greece subsidiaries are governed by the income tax laws of Greece. The corporate tax rate in Greece is 29% on income reported in the statutory financial statements after appropriate tax adjustments.

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

On December 22, 2017, the President of the United States signed into law Public Law No. 115-97, commonly referred to as the Tax Reform Act, following its passage by the United States Congress. The Tax Act made significant changes to U.S. federal income tax laws, including reduction of the corporate tax rate from 34.0% to 21.0%, limitation of the deduction for net operating losses to 80.0% of current year taxable income and elimination of net operating loss carrybacks, one-time taxation of offshore earning at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions.

On December 22, 2017, Staff Accounting Bulletin No. 118, “SAB 118”, was issued to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. Additional work is necessary for a more detailed analysis of the deferred tax assets and liabilities and our historical foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense within the measurement period.

At March 31, 2019 and 2018, the Company’s effective tax rate differs from the US federal statutory tax rate primarily due to a valuation allowance recorded against net deferred tax assets in all jurisdictions in which the Company operates.

We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized. Our review includes evaluating both positive (e.g., sources of taxable income) and negative (e.g., recent historical losses) evidence that could impact the realizability of our deferred tax assets. At March 31, 2019, the Company has maintained a valuation allowance against all net deferred tax assets in each jurisdiction in which it is subject to income tax.

As of March 31, 2019 and December 31, 2018, the Company has $142,608 and $145,504, respectively, recorded in any jurisdiction where it is subject to income tax.

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CAPITAL STRUCTURE

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 8 - CAPITAL STRUCTURE

Preferred Stock

The Company is authorized to issue 100 million shares of preferred stock, which have a liquidation preference over the common stock and are non-voting. As of March 31, 2019, no preferred shares have been issued.

Common Stock

The Company is authorized to issue 300 million shares of common stock and had issued 10,000,000 in connection with the merger and had 2,558,553 shares issued prior to the merger with Amplerissimo.

On September 27, 2013, the Company completed the acquisition of Amplerissimo through the issuance of 10,000,000 shares of common stock to Dimitrios Goulielmos, the sole shareholder of Amplerissimo, the Company then had 12,558,553 shares of Common Stock issued and outstanding.

On February 10, 2017, the Company and Decahedron consummated the acquisition of Decahedron SPA. Pursuant to the terms of the Decahedron SPA, the shareholders of Decahedron received an aggregate of 170,000 shares of common stock of the Company, which were delivered at closing in exchange for all of the Ordinary Shares of Decahedron for the Stock Consideration.

On January 7, 2019 and February 5, 2019, 465,325 and 108,417 shares of common stock were cancelled, these shares were the remaining pre-delivery shares related to the convertible notes in Note 10.

On February 5, 2019, the Company entered into a Stock Purchase Agreement (the “SPA”). The SPA provides for the Company’s purchase of 193,408 shares of the Company’s common stock at $3.00 per share or an aggregate of $580,224. Payment is scheduled over a five-month period, subject to acceleration if the Company effects an eligible equity offering. As of March 31, 2019, the Company had made $49,998 in payments, but as of the date of filing the 16,666 shares had not yet been transferred back to the Company. Upon transfer of the shares, the shares will be cancelled.

On February 18, 2019, the Company entered into a Stock Purchase Agreement (the “SPA”). The SPA provides for the Company’s purchase of 83,341 shares of the Company’s common stock at $3.00 per share or an aggregate of $250,023. Payment is scheduled over a five-month period, subject to acceleration if the Company effects an eligible equity offering. As of March 31, 2019, the Company had made $21,543 in payments but as of the date of filing the 7,181 shares had not yet been transferred back to the Company. Upon transfer of the shares, the shares will be cancelled.

Purchase of Treasury Shares

On June 18, 2018, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of €60,000 ($69,612) the Company repurchased 15,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on June 18, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until November 2018. During the year ended December 31, 2018, the Company paid consideration of €60,000 ($69,178). The Company recorded a loss of $434 for the change in foreign currency related to this transaction.

On November 30, 2018, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of $60,000, the Company repurchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on November 30, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until August 2019. During the year ended December 31, 2018, the Company paid consideration of $11,317 and had a related party payable of $48,683.

Potentially Dilutive Securities

As of March 31, 2019, and December 31, 2018, the Company had 13,305,015 and 13,878,772 shares of common stock issued, respectively, and 13,087,478 and 13,685,082 shares of common stock outstanding, respectively.

No options, warrants or other potentially dilutive securities other than those disclosed above have been issued as of March 31, 2019.

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 9 - RELATED PARTY TRANSACTIONS

On the date of our inception, we issued 20 million shares of our common stock to our three officers and directors which were recorded at no value (offsetting increases and decreases in common stock and additional paid-in capital).

DOC Pharma S.A.

As of March 31, 2019, the Company has a prepaid balance of €1,772,154 ($1,989,775) and an accounts payable balance of €48,678 ($54,656) resulting in a net prepaid balance of €1,723,476 ($1,935,119) to Doc Pharma S.A. (“Doc Pharma”), related to purchases of inventory. Additionally, the Company has a receivable balance of €207,245 ($232,694). As of March 31, 2018, the Company had a prepaid balance of €1,373,975 ($1,692,737) and an accounts payable balance of €122,928 ($151,447), resulting in a net prepaid balance of €1,251,047 ($1,541,290) to Doc Pharma, related to purchases of inventory. During the three months ended March 31, 2019 and 2018, the Company purchased a total of €507,389 ($576,089) and €1,257,618 ($1,545,486) of products from Doc Pharma, respectively. During the three months ended March 31, 2019 and 2018, the Company had revenue of €158,828 ($180,333) and €12,090 (14,857) from Doc Pharma, respectively.

On November 1, 2015, the Company entered into a €12,000 ($13,202) Loan Agreement with DOC Pharma S.A., pursuant to which DOC Pharma, paid existing bills of the Company in the amount of €12,000 ($13,202), excluding the Vendor Bills. The loan bears an interest rate of 2% per annum and was due and payable in full on October 31, 2016. As of March 31, 2019, the Company has an outstanding principal balance under this note of €12,000 ($13,474) and accrued interest expense of $902.

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

Medihelm S.A

As of March 31, 2019, the Company has a prepaid balance of €2,671,048 ($2,999,053) and an accounts payable balance of £41,745 ($52,434), resulting in a net prepaid balance of $2,946,619 to Medihelm related to purchases of inventory. Additionally, the Company has a receivable balance of €201,739 ($226,513). As of March 31, 2018, the Company had a prepaid balance of €1,865,555 ($2,298,364) and an accounts payable balance of £539,607 ($756,907), resulting in a net prepaid balance of $1,541,457 related to purchases of inventory. Additionally, the Company had a receivable balance of €436,934 ($538,303). During the three months ended March 31, 2019 and 2018, the Company purchased €951,406 ($1,080,226) and $4,089,539 of products from Medihelm, respectively. During the three months ended March 31, 2019 and 2018, the Company had revenue of €60,038 (68,167) and €386,111 ($474,492) from Medihelm, respectively.

Medihelm S.A. is considered a related party to the Company due to the fact that the managing director of Medihelm is the mother of Nicholaos Lazarou, the managing director of the Company’s UK subsidiary, Decahedron.

Grigorios Siokas

As of December 31, 2018, the Company had an outstanding principal balance of $3,496,199, consisting of €2,853,700 ($3,269,199) and $227,000, in loans payable to Grigorios Siokas. During the three months ended March 31, 2019, the Company repaid €34,000 ($38,175) of these loans. These loans are non-interest bearing and have no maturity dates. As of March 31, 2019, the Company has an outstanding principal balance under these loans of $3,392,959, consisting of €2,819,700 ($3,165,959) and $227,000, in loans payable to Grigorios Siokas.

On December 20, 2018, the €1,500,000 ($1,718,400) note payable, originally borrowed pursuant to a Loan Agreement with a third party lender, dated March 16, 2018, was transferred to Grigorios Siokas. The note bears an interest rate of 4.7% per annum and has a maturity date of March 18, 2019. As of March 31 2019, the Company has an outstanding principal balance of €1,500,000 ($1,684,200) and accrued interest of €73,015 ($81,981). The principal balance of €1,500,000 under this loan is incorporated in the €2,819,700 of loans payable as of March 31, 2019.

Grigorios Siokas is the Company’s CEO and principal shareholder and is hence considered a related party to the Company.

Dimitrios Goulielmos

As of December 31, 2018, the Company had a principal balance due to Dimitrios Goulielmos, director and former CEO, of €53,500 ($61,290) related to a loan agreement dated November 21, 2014 and amended on November 4, 2015. The loan is non-interest bearing. During the three months ended March 31, 2019, the Company repaid €12,500 ($14,035) and a principal balance of €41,000 ($46,035) remains as of March 31, 2019.

Nicholaos Lazarou

In connection with the Decahedron SPA, on February 9, 2017, Decahedron, Medihelm S.A. and Nicholaos Lazarou, managing director of Decahedon, entered into a liability transfer agreement whereby the loan provided from Decahedron to Nicholaos Lazarou prior to the acquisition would be cancelled in exchange for Nicholaos Lazarou’s personal assumption of £172,310 ($233,118) owed to Medihelm S.A., a related party creditor of Decahedron.

On November 30, 2018, the Company entered into a stock purchase agreement with an officer and director of the Company, whereby for consideration of $60,000 the Company repurchased 20,000 shares of its common stock. As per the agreement, the sale and transfer of the shares occurred on November 30, 2018, the date of signing, however the Company is entitled to pay the full consideration in tranches until August 2019. As of December 31, 2018, the Company had an amount due to related party of $48,683. During the three months ended March 31, 2019, the Company paid consideration of $28,372 and has an amount due to related party of $20,311 recorded as accounts payable related party as of March 31, 2019.

Except as set forth above, we have not entered into any material transactions with any director, executive officer, and promoter, beneficial owner of five percent or more of our common stock, or family members of such persons.

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LINES OF CREDIT

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 10 - LINES OF CREDIT

The line of credit with National Bank of Greece is being renewed annually with a current interest rate of 6.00%. The maximum borrowing allowed was $1,347,360 at March 31, 2019. The outstanding balance was $1,032,557 at March 31, 2019.

The line of credit with Alpha Bank of Greece is renewed annually with a current interest rate of 6.00%. The maximum borrowing allowed was $673,680 at March 31, 2019. The outstanding balance was $660,568 at March 31, 2019.

The line of credit with Eurobank of Greece is being renewed annually with a current interest rate of 8.55%. The maximum borrowing allowed was $561,400 at March 31, 2019. The outstanding balance was $434,508 at March 31, 2019.

Interest expense for the three months ended March 31, 2019 was $45,174.

Under the above agreements, the Company is required to maintain certain financial ratios and covenants. These lines of credit were assumed in the Company’s acquisition of Cosmofarm. During the three months ended March 31, 2019, the Company was in compliance with these ratios and covenants.

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CONVERTIBLE DEBT

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 11 - CONVERTIBLE DEBT

November 15, 2017 Securities Purchase Agreement

On November 15, 2017, the Company entered into a Securities Purchase Agreement with institutional investors (the “Buyers”), pursuant to which the Company issued on November 16, 2017 for a purchase price of $3,000,000, $3,350,000 in aggregate principal amount of Senior Convertible Notes (the “Existing Notes”) to the Buyers, convertible into approximately 670,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at $5.00 per share and five-year warrants (the “Warrants”) to purchase an aggregate of 536,000 shares of Common Stock exercisable at $7.50 per share. The Notes contained an original issue discount of $350,000. Of the $3,000,000 purchase price, $240,000 went directly to financing costs (see below) and $74,000 went directly to legal fees such that the Company received net proceeds of $2,686,000.

On February 20, 2018, the Company entered into two separate Amendment and Exchange Agreements (“Exchange Agreements”) with the Buyers for new senior convertible notes (“New Notes”) in exchange for existing notes. Each New Note is identical in all material respects to the Existing Note, except that (i) the New Note was not convertible into shares of the Company’s common stock (the “Common Stock”) until April 20, 2018; (ii) all future cash installment payments under such New Note will be made at a redemption price equal to 112% of the applicable installment amount; (iii) the Company’s existing obligation to initially deliver pre-delivery shares of its common stock to the holder of such New Note was deferred until April 20, 2018; and (iv) at any time on or before June 20, 2018, the Company had the right, at its option, to redeem all, or any part, of the amounts then outstanding under such New Note in cash at a redemption price equal to 125% of such amounts then outstanding under such New Note. The Company will repay the principal amount of the Notes in equal monthly installments beginning on January 1, 2018 and repeating on the first business day of each calendar month thereafter until the fourteenth (14th) month anniversary date of issue. On September 26, 2018, the Company entered into a second amendment which extended the maturity dates of the notes to February 1, 2019. On April 24, 2018, 670,001 pre-delivery shares were issued. On January 7, 2019 and February 5, 2019, 465,625 and 108,417 pre-delivery shares, respectively, were cancelled upon full payment of both notes. Eighty-five (85%) percent of any cash proceeds received by the holders of the Notes from the sale of pre-delivery shares issued as collateral shall be applied against the particular installment amount then due. The Notes are senior in right of payment to all existing and future indebtedness except Permitted Indebtedness which includes $12 million of senior secured indebtedness of the Company and its subsidiaries under the above described Synthesis loan agreements, plus a defined amount of purchase money indebtedness in connection with bona fide acquisitions. The Company evaluated the debt modification in accordance with ASC 470-50 and concluded that the debt qualified for debt extinguishment as the 10% cash flow test was met. As a result, the Existing Notes were written off and the New Notes were recorded at fair value as of February 20, 2018. The Company wrote off the remaining principal balance of $2,871,429 of the Existing Notes along with the remaining $2,596,838 of debt discounts related to the Existing Notes of which $1,140,711 was a reduction to additional paid-in-capital representing the intrinsic value of the existing beneficial conversion feature. The Company recorded the New Notes in the amount of $3,216,000 and a total debt discount of $3,216,000 in relation to the intrinsic value of the new beneficial conversion feature of $2,880,000 and an original issue discount of $336,000. This resulted in a net loss on extinguishment of debt in the amount of $1,464,698 and additional net equity related to the beneficial conversion feature of $1,739,289.

The Notes were not convertible until April 18, 2018 pursuant to the February 20, 2018 amendment. Beginning April 20, 2018, the Holder may convert the Notes into shares of Common Stock at the rate of $5.00 per share. In the event of an issuance of Common Stock for a consideration less than the Conversion Price (other than Excluded Securities, as defined) the Conversion Price shall be reduced to the price of the dilutive issuance, (the “Conversion Price”). Upon an Event of Default (as defined), the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the Volume-Weighted Average Price (as defined, the “VWAP”). The Company valued the beneficial conversion feature of the Existing Notes at intrinsic value and recorded $1,140,711 to debt discount, of which $405,743 was amortized through February 19, 2018. On February 20, 2018, the remaining debt discount was written off and the Company recorded a new debt discount as discussed above.

The Warrants have a five-year term and are exercisable into 536,000 shares of Common Stock beginning May 16, 2018, which was six months after the issue date. The Warrants are exercisable at $7.50 per share subject to full ratchet anti-dilution protection (see above). As of March 31, 2019, there were no anti-dilution trigger events. The Warrants will be exercisable on a cashless basis if a registration statement is not effective covering the resale of the underlying Warrant Shares. The Company calculated the warrants at relative fair value of $1,545,288, which was recognized as a discount to the Existing Notes of which $347,418 was amortized as interest expense through February 19, 2018. On February 20, 2018, the remaining balance was reversed due to the Exchange Agreement as discussed above.

Conversion of the Notes were and exercise of the Warrants are subject to a blocker provision which prevents any holder from converting or exercising, as applicable, the Notes or the Warrants, into shares of Common Stock if its beneficial ownership of the Common Stock would exceed 4.99% (subject to adjustment not to exceed 9.99%) of the Company’s issued and outstanding Common Stock (each, a “Blocker”).

The Company filed, within thirty (30) days of the Closing, a registration statement covering one hundred fifty (150%) percent of the maximum number of shares, underlying the Notes and Warrants pursuant to a registration rights agreement with the Buyers (the “Registration Rights Agreement”). The Post-Effective Amendment to the registration statement (No. 333-222061) was declared effective on May 14, 2018.

As a condition to the closing of the Financing, each Buyer, severally, was required to execute a leak-out agreement (each, a “Leak-Out Agreement”) restricting such Buyer’s sale of shares of Common Stock underlying the Notes and Warrants on any Trading Day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s Common Stock. If after the closing of the Financing there is no Event of Default under the Notes, the VWAP of the Company’s Common Stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share; provided that the portion of the Notes subject to redemption on each Installment Date shall thereafter double.

On November 15, 2017, in connection with the $3,350,000 Securities Purchase Agreement, Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for the transaction equal to eight (8%) percent of the total gross proceeds of the offering, or $240,000 and the issuance of five-year warrants to purchase eight (8%) percent of the shares of common stock issued or issuable in this offering (excluding shares of common stock issuable upon exercise of any warrants issued to investors), or 53,600 shares; and, will receive eight (8%) percent of any cash proceeds received from the exercise of any warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The warrants are exercisable six months after the issue date or May 16, 2018 and were valued at a fair value of $386,003 which was fully expensed during the year ended December 31, 2017. The $240,000 cash commission was recorded as debt discount and was amortized over the term of the Notes.

During the three months ended, the Company repaid the remaining principal balance in the amount of $103,611, such that the remaining outstanding principal balance of the Notes as of March 31, 2019 is zero.

As a result of the final payment of the Notes, the remaining debt discount of $45,614 was amortized during the three months ended March 31, 2019.

September 4, 2018 Securities Purchase Agreement

On September 4, 2018, the Company entered into a Securities Purchase Agreement with two institutional investors (the “Buyers”) pursuant to which the Company issued for a purchase price of $2,000,000, $2,233,333 in aggregate principal amount of Senior Convertible Notes (the “September 2018 Notes”) to the Buyers, convertible into 372,223 shares of the Company’s common stock, par value $.001 per share at $6.00 per share (with the exception of the conversion related to the Third Exchange Agreement described below), and warrants to purchase an aggregate of 357,334 shares of Common Stock exercisable at $7.50 per share (the “Warrants”). The Notes contained an original issue discount of $233,332. Of the $2,000,000 purchase price, $140,000 went directly to financing costs (see below) and $15,000 went directly to legal fees such that the Company received net proceeds of $1,845,000.

The September 2018 Notes provided that the Company will repay the principal amount of Notes in equal monthly installments including a 5% installment fee, which is recorded as interest expense, beginning on November 1, 2018 and repeating on the first business day of each calendar month thereafter until May 1, 2019. During the three months ended March 31, 2019, the Company has recorded $13,097 in installment fees.

The Notes were convertible at any time by the Holder into shares of Common Stock at the rate of $6.00 per share (with the exception of the conversion pursuant to the Third Exchange Agreement described below), subject to full ratchet anti-dilution adjustment (the “Conversion Price”). According to the original terms of the agreement, the Company was to pre-deliver up to 372,222 shares of common stock to the Buyers. Eighty-five percent (85%) of any cash proceeds received by the Buyers from the sale of the Pre-Delivery Shares would then be applied against the particular installment amount due on such Installment Date under the Note. The Company had three months to deliver the Pre-Delivery shares, however the debt was repaid prior to the opportunity to deliver those shares. The Registration Statement (No. 333-227813) covering 150% of the number of shares underlying the Notes and warrants was declared effective on November 1, 2018. Upon an Event of Default (regardless of whether such event has been cured), the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”). The Company valued the beneficial conversion feature of the Existing Notes at intrinsic value and recorded $934,922 to debt discount, which will be amortized over the life of the Notes.

The Warrants are exercisable into 357,334 shares of Common Stock equal to eighty (80%) percent of the number of shares of common stock the Buyers would receive if the Notes were fully converted (at an assumed price of $5.00 per share) upon the date of issuance of the Notes. The Warrants are exercisable at $7.50 per share for a five-year term commencing March 4, 2019 subject to full ratchet anti-dilution protection. The Warrants will be exercisable on a cashless basis if a registration statement is not effective covering the resale of the underlying Warrant Shares. The Company calculated the warrants at relative fair value of $910,078, which was recognized as a discount to the Notes and is being amortized as interest expense over the remaining term of the Notes.

Conversion of the Notes were and exercise of the Warrants are each subject to a blocker provision which prevents any holder from converting or exercising, as applicable, the Notes or the Warrants, into shares of common stock if its beneficial ownership of the common stock would exceed 9.99% of the Company’s issued and outstanding common stock (a “Blocker”).

As a condition to the closing of the Financing, each Buyer executed a leak-out agreement which replaced the leak-out agreements entered into in November 2017 (each, a “Leak-Out Agreement”) restricting such Buyer’s sale of shares of common stock underlying the Notes and Warrants on any trading day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s Common Stock. If after the closing of the Financing the VWAP of the Company’s common stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share; provided that the portion of the Notes subject to redemption on each Installment Date shall thereafter double.

Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for this transaction equal to seven (7%) percent of the total gross proceeds of the offering, or $140,000, and the issuance of five-year warrants to purchase seven (7%) percent of the shares of common stock issued or issuable in this offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors), or 26,056 shares; and will receive seven (7%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The warrants are exercisable six months after the issue date or March 4, 2019, at $6.00 per share and were valued at a fair value of $157,969 which was fully expensed during the year ended December 31, 2018. The $140,000 cash commission was recorded as debt discount and was be amortized over the term of the Notes.

During the year ended December 31, 2018, there were principal conversions in the amount of $1,333,333 at a conversion price of $3.478 pursuant to the Third Exchange Agreement and the Company repaid principal of $638,095, such that the remaining outstanding principal balance of the Notes as of December 31, 2018 was $261,903.

During the three months ended, the Company repaid the remaining principal balance in the amount of $261,902, such that the remaining outstanding principal balance of the Notes as of March 31, 2019 is zero.

The Company recorded a total of $2,233,332 of debt discounts related to the above Notes during the year ended December 31, 2018. The debt discounts were amortized over the term of the debt. Amortization of the debt discounts for the year ended December 31, 2018 was $2,049,232. As a result of the final payment of the Notes, the remaining debt discount of $184,100 was amortized during the three months ended March 31, 2019.

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DEBT

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 12 - DEBT

On November 16, 2015, the Company entered into a Loan Agreement with Panagiotis Drakopoulos, former Director and former Chief Executive Officer, pursuant to which the Company borrowed €40,000 ($42,832) as a note payable from Mr. Drakopoulos. The note bears an interest rate of 6% per annum and was due and payable in full on November 15, 2016. As of December 31, 2018, the Company had an outstanding principal balance of €13,000 ($14,893) and accrued interest of €3,088 ($3,538). As of March 31, 2019, the Company had an outstanding principal balance of €13,000 ($14,596) and accrued interest of €3,430 ($3,851).

Loan Facility Agreement

On August 4, 2016, the Company’s wholly owned subsidiary SkyPharm entered into a Loan Facility Agreement, guaranteed by Grigorios Siokas, with Synthesis Peer-To Peer-Income Fund (the “Loan Facility” the “Lender”). The Loan Facility initially provided SkyPharm with a credit facility of up to $1,292,769 (€1,225,141). Any advance under the Loan Facility accrues interest at a rate of 10% per annum and requires quarterly interest payments commencing on September 30, 2016. The amounts owed under the Loan Facility were repayable upon the earlier of (i) three months following the demand of the Lender; or (ii) August 31, 2018. No prepayment is permitted pursuant to the terms of the Loan Facility. The Synthesis Facility Agreement as amended is secured by a personal guaranty of Grigorios Siokas, which is secured by a pledge of 1,000,000 shares of common stock of the Company owned by Mr. Siokas.

On September 13, 2016, Sky Pharm entered into a First Deed of Amendment with the Loan Facility increasing the maximum loan amount to $1,533,020 as a result of the Lender having advanced $240,251 (€227,629) to SkyPharm.

On March 23, 2017, SkyPharm entered into an Amended and Restated Loan Facility Agreement (the “A&R Loan Facility”), with the Loan Facility which increased the loan amount to an aggregate total of $2,664,960 (€2,216,736) as a result of the lender having advanced $174,000 (€164,898) in September 2016, $100,000 (€94,769) in October 2016, $250,000 (€236,922) in November 2016, $452,471 (€428,800) in December 2016, $155,516 (€129,360) in January 2017, $382,327 (€318,023) in July 2017 and $70,000 (€58,227) in December 2017. The A&R Loan Facility amends and restates certain provisions of the Loan Facility Agreement, dated as of August 4, 2016, by and among the same parties. Advances under the A&R Loan Facility continue to accrue interest at a rate of 10% per annum from the applicable date of each drawdown and require quarterly interest payments. The A&R Facility now permits prepayments at any time. The amounts owed under the A&R Loan Facility shall be repayable upon the earlier of (i) seventy-five days following the demand of the Lender; or (ii) August 31, 2018. The A&R Loan Facility is secured by a personal guaranty of Grigorios Siokas, which is secured by a pledge of 1,000,000 shares of common stock of the Company owned by Mr. Siokas (the “Pledged Shares”). The A&R Loan Facility was also amended to provide additional affirmative and negative covenants of Sky Pharm and the Guarantor during the term of loans remain outstanding, including, but not limited to, the consent of the Lender in connection with (i) the Company or any of its subsidiaries incurring any additional indebtedness; or (ii) in the event of any increase in the Company’s issued and outstanding shares of Common Stock, the Pledged Shares shall be increased to an amount equal to a minimum of ten percent (10%) of the issued and outstanding shares of the Company.

On April 18, 2018, the Company entered into an amendment with the Lender that was effective as of January 1, 2018, pursuant to which the maturity dates for all advances was extended to December 31, 2021. Additionally, the interest rate was amended such that the interest rate for all advances is 4% plus the 3-Month Libor rate. The Loan Facility also forgave €35,060 ($40,000) in fees related to the July 6, 2017 advance. As a result, the Company reduced the unamortized portion of debt discount that related to those fees and recorded a gain on debt settlement of €19,763 ($23,354).

As of December 31, 2018, the outstanding balance under this note was $3,078,442 (€2,687,187) and accrued interest expense of $414,830 (€362,107) has been recorded. As of March 31, 2019, the outstanding balance under this note was $3,078,442 (€2,741,755) and accrued interest expense of $473,172 (€421,421) has been recorded.

The Company recorded a total of €155,060 ($191,034) in debt discounts related to this note in prior years. The debt discounts are being amortized over the term of the debt. As a result of the April 18, 2018 amendment, the Company reduced the unamortized debt discount by €20,237 ($20,237). The debt discount was fully amortized in the prior year

Bridge Loans

On March 16, 2017 and March 20, 2017, SkyPharm entered into loan agreements with the Synthesis Peer-To Peer-Income Fund (the “Bridge Loans”). The Bridge Loans provided to SkyPharm loans of €41,590 ($50,000) and €100,000 ($120,220), respectively, during the year ended December 31, 2017. The Bridge Loans accrue interest at a rate of 10% per annum and were repayable on April 16, 2017 and April 20, 2017, respectively, together with all other amounts then accrued and unpaid. On April 16, 2017, the maturity dates were amended for no additional consideration or change in terms and conditions. The maturity dates of both loans were amended, and they matured on May 16, 2017 and May 20, 2017, respectively. Pursuant to the April 18, 2018 agreement and effective January 1, 2018, the Company reached an agreement with Synthesis Peer-To-Peer Income Fund such that the March 20, 2017 loan would have a fixed USD payoff amount of $106,542. As a result of this agreement the Company recorded a gain on settlement of debt of €16,667 ($19,695) related to the reduction of the USD payoff amount and an additional gain on settlement of debt of €3,950 ($4,668) related to interest that had accrued on the original amount of the loan. The Company has accrued interest expense of an aggregate total of €14,715 ($16,857) for both loans and the outstanding balances of these loans was €43,645 ($50,000) and €93,001 ($106,542), respectively, as of December 31, 2018. The Company has accrued interest expense of an aggregate total of €17,887 ($20,083) for both loans and the outstanding balances of these loans was €44,532 ($50,000) and €94,889 ($106,542), respectively, as of March 31, 2019.

On May 5, 2017, SkyPharm entered into a loan agreement with Synthesis Peer-To-Peer Income Fund for €31,388 ($34,745). The loan accrues interest at a rate of 10% per annum and matured on September 30, 2017. The Company has accrued interest expense of €3,410 ($3,906) and the outstanding balance on this loan was €30,329 ($34,745) as of December 31, 2018. The Company has accrued interest expense of €4,065 ($4,565) and the outstanding balance on this loan was €30,945 ($34,745) as of March 31, 2019.

On April 18, 2018, the Company entered into an amendment pursuant to which the maturity dates for all of the above Bridge Loan advances were extended to December 31, 2021 for no additional consideration. Additionally, the interest rate was amended such that, effective January 1, 2018, the interest rate for all advances is 4% plus the 3-Month Libor rate.

Trade Facility Agreements

On April 10, 2017, Decahedron entered into a Trade Finance Facility Agreement (the “Decahedron Facility”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”). The Decahedron Facility provides the following material terms:

· The Lender will provide Decahedron a facility of up to €2,750,000 ($3,087,700) secured against Decahedron’s receivables from the sale of branded and generic pharmaceutical sales.

· The total facility will be calculated as 95% of the agreed upon value of Decahedron’s receivables.

· The term of the Decahedron Facility will be for 12 months.

· The obligations of Decahedron are guaranteed by the Company pursuant to a Cross Guarantee and Indemnity Agreement.

· The Lender has the right to make payments directly to Decahedron’s suppliers.

· The following fees should be paid in connection with the Decahedron Facility:

o 2% of the maximum principal amount as an origination fee.

o A one percent (1%) monthly fee.

The current draw on the Decahedron Facility is $0.

On May 12, 2017, SkyPharm entered into a Trade Finance Facility Agreement (the “SkyPharm Facility”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”). The SkyPharm Facility provides the following material terms:

· The Lender will provide SkyPharm a facility of up to €2,000,000 ($2,245,600) secured against SkyPharm’s receivables from the sale of branded and generic pharmaceutical sales. In the event that accounts receivable becomes uncollectible, the Company will be obligated to pay back the notes in full.

· The total facility will be calculated as 95% of the agreed upon value of Decahedron’s receivables.

· The term of the SkyPharm Facility will be for 12 months.

· The obligations of SkyPharm are guaranteed by the Company pursuant to a Cross Guarantee and Indemnity Agreement.

· The Lender has the right to make payments directly to SkyPharm’s suppliers.

· The following fees should be paid in connection with the SkyPharm Facility:

o 2% of the maximum principal amount as an origination fee.

o A one percent (1%) monthly fee.

The Company obtained consents from Synthesis Peer-to-Peer Income Fund in connection with obtaining the Lender.

On November 16, 2017, SkyPharm signed an amended agreement with Synthesis Structured Commodity Trade Finance Limited that increased the maximum aggregate facility limit from €2,000,000 ($2,291,200) to €6,000,000 ($6,873,600). All other terms of the original agreement remain the same. The Company also obtained consents from Synthesis Peer-to-Peer Income Fund in connection with obtaining the November 2017 convertible debt financing.

On May 12, 2018, the Company borrowed an additional €270,000 ($247,117) in funds.

On May 16, 2018, SkyPharm S.A., as Commodity Buyer, entered into a Supplemental Deed of Amendment (the “Deed”) relating to a Trade Finance Facility dated May 12, 2017, as amended, with Synthesis Structured Commodity Trade Finance Limited (“Synthesis”), as Loan Receivables Originator. Under the Trade Finance Facility (the “TFF”) first entered into on May 12, 2017, as amended, there was a principal balance of €5,866,910 ($5,369,678) outstanding as of March 31, 2018. SkyPharm made a payment of €1,000,000 ($1,123,600) of interest and principal on May 31, 2018 under the terms and conditions of the Deed. Additionally, the maturity date for the facility has been amended such that, the full principal amount is to be repaid no later than May 31, 2021, subject to a repayment schedule to be agreed upon by SkyPharm and Synthesis Structure Commodity Trade Finance Limited. Synthesis Structure Commodity Trade Finance Limited may extend this final repayment date at its sole discretion.

The TFF was amended to provide, among other things:

· A listing of approved purchasers;

· To permit SkyPharm to request Synthesis to make payments under the TFF directly to SkyPharm so that SkyPharm can discharge its obligations to a commodity seller directly;

· To prohibit SkyPharm from entering into a commodity contract which grants more than seventy-five (75) days delay between the payment for products and receipt of the purchase price and placed other limitations on terms of commodity contracts;

· If Grigorios Siokas, CEO of Cosmos Holdings Inc. (“Cosmos”), ceases to own or control at least fifty-one (51%) percent of the shares of Cosmos, or SkyPharm ceases to be a wholly-owned subsidiary of Cosmos, either event shall constitute an Event of Default (as defined);

· The maximum aggregate amount of the TFF is €15,000,000, although there is no commitment for any future loans under the TFF;

· The interest rate on the TFF for: (i) all lending in U.S. dollars is the one-month LIBOR plus six (6%) percent margin; and (ii) for all lending in Euro, the one-month Euribor Rate plus six (6%) percent per annum, commencing June 1, 2018.

· Synthesis is permitted to terminate the TFF at any time and demand repayment of all outstanding principal and interest in full within six (6) months from the date of notification.

The Deed is conditioned upon, among other things, execution and perfection of a Bulgarian Amended Pledge (“BAP”) having priority over the Bulgarian Pledge Accounts with Unicredit Bulbank AD; and the Approved Purchasers are to make all payments to SkyPharm directly to the BAP.

On May 16, 2018, SkyPharm and Synthesis also entered into an Account Merge Agreement (the “Pledge”) as a requirement under the above-described Deed. Under the Pledge, Synthesis is to receive a first ranking securities interest in SkyPharm’s outstanding receivables under the Bulgarian bank account.

On October 17, 2018, the Company entered into a further amended agreement with Synthesis whereby the current balance on the TFF as of October 1, 2018, which was €4,866,910 ($5,629,555) and related accrued interest of €453,094 ($524,094) would be split into two principal balances of Euro €2,000,000 and USD $4,000,000. Interest on the new balances commenced on October 1, 2018 at 6% per annum plus one-month Euribor, when it is positive, on the Euro balance and 6% per annum plus one month Libor on the USD balance. The Company will replay the principal amounts of each balance beginning no later than August 31, 2018 in quarterly installments of €125,000 and US $150,000. The loan matures on August 31, 2021. The Company evaluated the amended agreement under ASC 470-50 and concluded that it did not meet the 10% cash flow test and recorded debt modification expense of $138,110.

As of December 31, 2018, the Company had principal balances of €2,000,000 ($2,291,200) and $4,000,000 under the TFF and the Company had accrued $0 and $19,834, respectively in interest expense related to this agreement. As of March 31, 2019, the Company had a principal balance of €2,000,000 ($2,245,600) and $4,000,000 under the TFF and the Company had accrued $0 and $17,988, respectively in interest expense related to this agreement.

The Company recorded a total debt discount of €117,338 ($137,063) in origination fees associated with these loans, which was amortized over the original terms of the agreements. Amortization of debt discount for year ended December 31, 2017 was €61,295 ($69,269). As of December 31, 2018, the debt discount had been fully amortized.

Distribution and Equity Agreement

As discussed in Note 4 above, the Company entered into a Distribution and Equity Acquisition Agreement with Marathon. The Company was appointed the exclusive distributor of the Products initially throughout Europe and on a non-exclusive basis wherever else lawfully permitted.

As consideration for its services, Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in Common Shares of the Company if it fails to meet certain performance milestones. The Company is entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000.

As discussed in Note 4, the Company attributed no value to the shares received in Marathon pursuant to (a) above. In relation to the CAD $2 million cash received noted in (b) above, the Company accounted for its obligation to issue a variable number of the Company’s Common Shares as Share-settled debt obligation in accordance with ASC 480 measured at fair value or the settlement amount of $1,554,590 (CAD $2 million). If settlement were to occur on March 31, 2019, the Company would be required to issue 446,311 Common Shares to settle its debt obligation. The Company could be obligated to potentially issue an unlimited number of common shares to settle its Share-settled debt obligation. If such events were to occur, the Company would be required to increase its authorized share capital and since increasing the authorized share capital is within the control of the Company, as our CEO controls greater than 50% of the outstanding common stock of the Company, the original classification of equity-classified financial instruments issued by the Company were not affected.

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

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LEASES

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 13 - LEASES

The Company has various lease agreements with terms up to 10 years, comprising of leases of office space. Some leases include options to purchase, terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised.

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

The Company’s operating leases do not provide an implicit rate that can readily be determined. Therefore, we use a discount rate based on our incremental borrowing rate, which is determined using the interest rate of our long-term debt as of January 1, 2019.

The Company’s weighted-average remaining lease term relating to its operating leases is 6.05 years, with a weighted-average discount rate of 6.74%.

The Company incurred lease expense for its operating leases of $52,508 which was included in “General and administrative expenses,” for the quarter ended March 31, 2019.

The Company had operating cash flows used in operating leases of $37,096 for the quarter ended March 31, 2019. Right-of-use assets obtained in exchange for new operating lease liabilities $622,765 for the quarter ended March 31, 2019.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s operating leases as of March 31, 2019.

Maturity of Lease Liability
2019	$	172,893
2020		158,383
2021		73,858
2022		44,912
2023		44,912
Thereafter		179,648
Total undiscounted finance lease payments	$	674,607
Less: Imputed interest		118,558
Present value of finance lease liabilities	$	556,049

The Company’s weighted-average remaining lease term relating to its finance leases is 1.17 years, with a weighted-average discount rate of 6.00%.

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s finance leases as of March 31, 2019.

Maturity of Lease Liability
2019	$	26,384
2020		14,658
2021		-
2022		-
2023		-
Thereafter		-
Total undiscounted finance lease payments	$	41,041
Less: Imputed interest		1,499
Present value of finance lease liabilities	$	39,543

The Company had operating cash flows used in finances leases of $601 for the quarter ended March 31, 2019. The Company had financing cash flows used in finances leases of $7,232 for the quarter ended March 31, 2019.

The Company incurred interest expense on its finance leases of $601 which was included in “Interest expense,” for the quarter ended March 31, 2019. The Company incurred amortization expense on its finance leases of $26,802 which was included in “Depreciation and amortization expense,” for the quarter ended March 31, 2019.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 14 - COMMITMENTS AND CONTINGENCIES

Legal Matters

From time to time, the Company may be involved in litigation relating to claims arising out of the Company’s operations in the normal course of business. As of March 31, 2019, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations.

Intellectual Property Sale Agreement

On October 1, 2016, the Company entered into an Intellectual Property Sale Agreement with Anastasios Tsekas and Olga Parthenea Georgatsou (the “IPSA”) for the purchase of certain intellectual property rights relating to proprietary pharmaceutical formulas and any related technical information arising or related thereto (the “Intellectual Property”). The IPSA provides that the sellers shall be entitled to an aggregate of 200,000 shares of common stock of the Company, none of which have been issued to date, and issuable as follows in equal parts to each seller:

• 50,000 shares upon the successful conclusion of Preclinical Trials.

• 50,000 shares upon the conclusion of Phase I testing.

• 50,000 shares upon the conclusion of Phase II testing.

• 50,000 shares upon the conclusion of Phase III testing.

The Company has agreed to pay Anastasios Tsekas €1,500 per month until the first issuance of the shares referenced above. The Company has also agreed that in the event the Company disposes of the Intellectual Property prior to the periods referenced above, the sellers shall be entitled to the issuance of all the shares referenced above. The Company is in the process of locating a suitable lab to conduct the Preclincal trial phase, which has not yet begun as of the date of filing.

Placement Agreement

On August 8, 2017, the Company entered into an agreement with a third-party placement agent (the “Agent”) who will serve as the Company’s exclusive placement agent or sole book running manager with respect to any offerings of equity or equity-linked securities as well as any debt offering with the two organizations named in the agreement (the “Offering”) for a period of 120 days. In the event that an Offering is agreed upon by the Agent and the Company, the Company shall provide payment as follows: (1) a cash commission of 6% of the total gross proceeds for two named investors (2) a cash commission of 4% of total gross proceeds from five named investors and (3) excluding the five named investors in “(2)” a cash commission equal to 8% of the total gross proceeds from the Offering and the issuance to the Agent or its designees of warrants covering 8% of the shares of common stock issued or issuable by the Company in the Offering. Additionally, the Agent will receive a cash fee of 8% payable within 5 business days, but only in the event of, the receipt by the Company of any cash proceeds from the exercise of any warrants with an expiration equal to or less than 24 months sold in the Offering. In connection with the Company’s November 16, 2017 Note offering, the Agent received a cash commission of $240,000, equal to eight (8%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase eight (8%) percent of the shares of Common Stock issued or issuable in the offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors, or 53,600 shares); however, will receive eight (8%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The Warrants are exercisable six (6) months after the date of issuance, or as of May 16, 2018.

In connection with the Company’s September 4, 2018 Note offering, the Agent received a cash commission for this transaction of $140,000, equal to seven (7%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase seven (7%) percent of the shares of Common Stock issued or issuable in this offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors, or 26,056 shares); however, will receive seven (7%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The Warrants are exercisable six (6) months after the date of issuance, or March 4, 2019.

Advisory Agreement

On April 18, 2018, SkyPharm S.A. entered into a ten-year Advisory Agreement with Synthesis Management Limited (the “Advisor”). The Advisor was retained to assist SkyPharm to secure corporate finance capital. The Advisor shall be paid €104,000 per year during the ten-year term.

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STOCK OPTIONS AND WARRANTS

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 15 - STOCK OPTIONS AND WARRANTS

As of March 31, 2019, there were 74,000 options outstanding and 74,000 options exercisable with expiration dates commencing October 2020 and continuing through January 2022.

A summary of the Company’s option activity during the three months ended March 31, 2019 is presented below:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Options	Shares		Price		Term		Value
Balance Outstanding, December 31, 2018		74,000	$	1.32		2.47	$	198,000
Granted		-		-		-		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance Outstanding, March 31, 2019		74,000	$	2.22		1.32	$	161,000
Exercisable, March 31, 2019		74,000	$	2.22		1.32	$	161,000

As of March 31, 2019, there were 1,164,673 warrants outstanding and 1,164,673 warrants exercisable with expiration dates from May 2023 through March 2024.

A summary of the Company’s warrant activity during the three months ended March 31, 2019 is presented below:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Warrants	Shares		Price		Term		Value
Balance Outstanding, December 31, 2018		1,164,673	$	6.41		5.01	$	-
Granted		-		-		-		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired				-		-		-
Balance Outstanding, March 31, 2019		1,164,673	$	6.41		4.77	$	-
Exercisable, March 31, 2019		1,164,673	$	6.41		4.77	$	-

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DISAGGREGATION OF REVENUE

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 16 - DISAGGREGATION OF REVENUE

ASC 606-10-50-5 requires that entities disclose disaggregated revenue information in categories (such as type of good or service, geography, market, type of contract, etc). ASC 606-10-55-89 explains that the extent to which an entity’s revenue is disaggregated depends on the facts and circumstances that pertain to the entity’s contracts with customers and that some entities may need to use more than one type of category to meet the objective for disaggregating revenue.

The Company disaggregates revenue by country to depict the nature and economic characteristics affecting revenue. The following table presents our revenue disaggregated by country for the three months ended:

Country	March 31, 2019		March 31, 2018
Croatia	$	5,395	$	-
Denmark		57,657		96,518
France		42,061		72,351
Germany		2,076,814		4,410,792
Greece		5,456,573		759,999
Hungary		49,912		318,974
Indonesia		-		6,707
Ireland		132,417		568,669
Italy		73,437		156,612
Jordan		20,432		33,637
Netherlands		337,683		1,537,743
Poland		138,270		364,730
Turkey		24,695		-
UK		1,267,995		3,638,697
Total	$	9,683,341	$	11,965,429

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 17 - SUBSEQUENT EVENTS

Senior Promissory Notes executed on April 1 and 3, 2019

On April 1 and 3, 2019, Cosmos Holdings Inc. (the “Company”) executed Senior Promissory Notes (the “Notes”) each in the principal amount of $250,000 payable to an unaffiliated third-party lender. The Notes bear interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The Notes mature on April 1 and 3, 2020 unless prepaid or in default. The Company may prepay the Notes within the first six (6) months by payment of unpaid interest for the first six (6) months interest and after six (6) months, with a (2%) percent ($5,000) premium.

The Notes are subject to acceleration in an Event of Default (as defined in the Notes). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the Notes. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection.

Senior Promissory Note executed on April 9, 2019

On April 9, 2019, Cosmos Holdings Inc. (the “Company”) executed a Senior Promissory Note (the “Note”) in the principal amount of $250,000 payable to an unaffiliated third-party lender who had previously loaned the Company $500,000. The Note bears interest at the rate of fifteen (15%) percent per annum, paid quarterly in arrears. The Note matures on April 9, 2020 unless prepaid or in default. The Company may prepay the Note within the first six (6) months by payment of unpaid interest for the first six (6) months and after six (6) months, with a two (2%) percent ($5,000) premium.

The Note is subject to acceleration in an Event of Default (as defined in the Note). Grigorios Siokas, the Company’s CEO, personally guaranteed repayment of the Note. The guaranty is unconditional and irrevocable and constitutes a guaranty of performance and of payment when due, and not just of collection.

Securities Purchase Agreement executed on May 15, 2019

On May 15, 2019, Cosmos Holdings, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “SPA”) with an institutional investor (the “Buyer”). Upon the closing of this financing (the “Financing”), on May 17, 2019 the Company issued for a purchase price of $1,500,000 in principal amount a Senior Convertible Note (the “Note”) to the Buyer. The Buyer was the same fund which purchased an aggregate of approximately $4,475,000 principal amount of convertible notes in September 2018 and November 2017, all of which have been repaid.

The Note provides that the Company will repay the principal amount of Note on the ten (10) month anniversary date of the date of issue. Interest at the rate of nineteen (19%) percent per annum shall be payable on the first day of each calendar month.

The Note is convertible at any time by the Holder into 250,000 shares of common stock, par value $.001 per share (the “Common Stock”) at the rate of $6.00 per share, subject to adjustment (the “Conversion Price”). Upon an Event of Default (regardless of whether such event has been cured), the Buyer may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”).

The Note is senior in right of payment to all other existing and future indebtedness of the Company except Permitted Senior Indebtedness (as defined in the Note), including $12 million of senior secured indebtedness of the Company and its subsidiaries under an existing senior loan agreement, plus defined amounts of purchase money indebtedness in connection with bona fide acquisitions.

The Note includes customary Events of Default and provides that the Buyer may require the Company to redeem (regardless of whether the Event of Default has been cured) all or a portion of the Note at a redemption premium of one hundred twenty-five (125%) percent, multiplied by the greater of the conversion rate and the then current market price. The Buyer may also require redemption of the Note upon a Change of Control (as defined) at a premium of one hundred twenty-five (125%) percent. The Company has the right to redeem the Note at any time, in whole or in part, in cash at a price equal to 120% of the then outstanding conversion amount.

Conversion of the Note is subject to a blocker provision which prevents any holder from converting the Note into shares of Common Stock if its beneficial ownership of the Common Stock would exceed 9.99% of the Company’s issued and outstanding Common Stock (a “Blocker”).

Roth Capital Partners, LLC (“Roth”), as the Company’s exclusive placement agent, received a cash commission for this transaction equal to six (6%) percent of the total gross proceeds of the offering.

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ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN (Policies)

3 Months Ended

Mar. 31, 2019

Organization Nature Of Business And Going Concern

Basis of Financial Statement Presentation

The accompanying consolidated financial statements have been prepared in accordance with principles generally accepted in the United States of America.

Principles of Consolidation

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

Use of Estimates

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

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of March 31, 2019 and December 31, 2018, there were no cash equivalents.

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

Account Receivable

Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts against gross accounts receivable reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. As of March 31, 2019 and December 31, 2018, the Company's allowance for doubtful accounts was $529,299 and $540,048, respectively.

Tax Receivables

The Company pays Value Added Tax (“VAT”) or similar taxes (“input VAT”), income taxes, and other taxes within the normal course of its business in most of the countries in which it operates related to the procurement of merchandise and/or services it acquires and/or on sales and taxable income. The Company also collects VAT or similar taxes on behalf of the government (“output VAT”) for merchandise and/or services it sells. If the output VAT exceeds the input VAT, this creates a VAT payable to the government. If the input VAT exceeds the output VAT, this creates a VAT receivable from the government. The VAT tax return is filed on a monthly basis offsetting the payables against the receivables. In observance of EU regulations for intra-EU cross-border sales, our subsidiaries in Greece, SkyPharm and Cosmofarm, do not charge VAT for sales to wholesale drug distributors registered in other European Union member states. The net VAT receivable is recorded in prepaid expense and other current assets on the balance sheet.

Inventory

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

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

Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation. Depreciation is provided on a straight-line basis over the useful lives (except for leasehold improvements which are depreciated over the lesser of the lease term or the useful life) of the assets as follows:

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

Depreciation expense was $49,499 and $5,667 for the three months ended March 31, 2019 and 2018, respectively.

Impairment of Long-Lived Assets

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

Goodwill and Intangibles

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

Prior to the acquisition of Decahedron, the Company had no recorded goodwill value. As a result of the acquisition of Decahedron, the Company tested and expensed 100% of the goodwill allocated to the acquisition costs, an amount equal to $1,949,884 for the year ended December 31, 2017.

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

Intangible assets with definite useful lives are recorded on the basis of cost and are amortized on a straight-line basis over their estimated useful lives. The Company uses a useful life of 5 years for an import/export license. The Company evaluates the remaining useful life of intangible assets annually to determine whether events and circumstances warrant a revision to the remaining amortization period. If the estimate of the intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over that revised remaining useful life. At March 31, 2019, no revision to the remaining amortization period of the intangible assets was made.

Amortization expense was $6,874 and $2,129 for the three months ended March 31, 2019 and 2018, respectively.

Equity Method Investment

For those investments in common stock or in-substance common stock in which the Company has the ability to exercise significant influence over the operating and financial policies of the investee, the investment is accounted for under the equity method. The Company records its share in the earnings of the investee and is included in “Equity earnings of affiliate” in the consolidated statement of operations. The Company assesses its investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable and recognizes an impairment loss to adjust the investment to its then current fair value.

Investments in Equity Securities

Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2016-01, and accordingly, investments in equity securities are accounted for at fair value with changes in fair value recognized in income from operations. Equity securities are classified as short-term or long-term based on the nature of the securities and their availability to meet current operating requirements. Equity securities that are readily available for use in current operations are reported as a component of current assets in the accompanying consolidated balance sheets. Equity securities that are not considered available for use in current operations would be reported as a component of long-term assets in the accompanying consolidated balance sheets. For equity securities with no readily determinable fair value, the Company elects a measurement alternative to fair value. Under this alternative, the Company measures the investments at cost, less any impairment, and adjusted for changes resulting from observable price changes in transactions for identical or similar investments of the investee. The election to use the measurement alternative is made for each eligible investment.

At March 31, 2019, investments consisted of 40,000 shares which traded at a closing price of $5.03 per share, or value of $201,206 of Diversa S.A. and 16,666 shares which traded at a closing price of $0.17 per share or value of $2,900 of National Bank of Greece. Additionally, the Company has $4,381 in equity securities of Pancreta bank, which are not publicly traded and recorded at cost. See Note 4 for additional investments in equity securities.

Fair Value Measurement

The Company applied FASB ASC 820-Fair Value Measurements and Disclosures, (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results but did expand certain disclosures.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

The following table presents assets that are measured and recognized at fair value as of March 31, 2019, on a recurring basis:

	March 31, 2019						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	2,790,000		-		-	$	2,790,000
Marketable securities – Divsersa S.A.		201,206		-		-		201,206
Marketable securities – National Bank of Greece		2,900		-		-		2,900
	$	2,994,106					$	2,994,106

In addition, FASB ASC 825-10-25 Fair Value Option, (“ASC 825-10-25”), was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.

Customer Advances

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

Revenue Recognition

The Company adopted the modified retrospective adoption in accordance with ASC 606, Revenue from Contracts with Customers, on January 1, 2018. The new guidance introduces a five-step model for recognizing revenue by applying the following steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the performance obligations are satisfied by transferring the promised goods to the customer. Once these steps are met, revenue is recognized upon delivery of the product. Adoption of ASC 606 has not changed the timing and nature of the Company’s revenue recognition and there has been no material effect on the Company’s financial statements.

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Stock Compensation (“ASC 718”) and Staff Accounting Bulletin No. 107 (“SAB 107”) issued by the SEC in March 2005 regarding its interpretation of ASC 718. ASC 718 requires the fair value of all stock-based employee compensation awarded to employees to be recorded as an expense over the related requisite service period. The Company values any employee or non-employee stock-based compensation at fair value using the Black-Scholes Option Pricing Model.

The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC 505-50, Equity-Based Payments to Non-Employees.

Foreign Currency Translations and Transactions

Assets and liabilities of all foreign operations are translated at year-end rates of exchange, and the statements of operations are translated at the average rates of exchange for the year. Gains or losses resulting from translating foreign currency financial statements are accumulated in a separate component of stockholders’ equity until the entity is sold or substantially liquidated.

Gains or losses from foreign currency transactions (transactions denominated in a currency other than the entity’s local currency) are included in net earnings.

Income Taxes

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

The Company is liable for income taxes in Greece and the United Kingdom of England. The corporate income tax rate is 29% in Greece (tax losses are carried forward for five years effective January 1, 2013) and 20% in United Kingdom of England. Losses may also be subject to limitation under certain rules regarding change of ownership.

We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets to reduce the carrying value if we do not consider it to be more likely than not that the deferred tax assets will be realized. Our review includes evaluating both positive (e.g., sources of taxable income) and negative (e.g., recent historical losses) evidence that could impact the realizability of our deferred tax assets. At March 31, 2019 the Company has maintained a valuation allowance against all net deferred tax assets in each jurisdiction in which it is subject to income tax.

The Company periodically reviews the uncertainties and judgments related to the application of complex income tax regulations to determine income tax liabilities in several jurisdictions. The Company uses a “more likely than not” criterion for recognizing the income tax benefit of uncertain tax positions and establishing measurement criteria for income tax benefits. The Company has evaluated the impact of these positions and due to the fact that the fiscal years 2013 - 2014 are unaudited by the Greek tax authorities, a potential tax liability has been identified, which may arise from a prospective tax audit from tax authorities, based on the tax settlement note of years 2007 - 2009. The amount of the liability as of March 31, 2019 and December 31, 2018, was $142,608 and $145,504, respectively, and has been recorded as a long-term liability within the balance sheet.

Retirement and Termination Benefits

Under Greek labor law, employees are entitled to lump-sum compensation in the event of termination or retirement. The amount depends on the employee’s work experience and renumeration as of the day of termination or retirement. If an employee remains with the company until full-benefit retirement, the employee is entitled to a lump-sum equal to 40% of the compensation to be received if the employee were to be dismissed on the same day. The Company periodically reviews the uncertainties and judgements related to the application of the relevant labor law regulations to determine retirement and termination benefits obligations of its Greek subsidiaries. The Company has evaluated the impact of these regulations and has identified a potential retirement and termination benefits liability. The amount of the liability as of March 31, 2019, was $22,876, and has been recorded as a long-term liability within the balance sheet.

Basic and Diluted Net Income (Loss) per Common Share

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

	Three Months Ended March 31,
	2019		2018
Weighted average number of common shares outstanding - Basic		13,384,574		12,825,393
Potentially dilutive common stock equivalents		-		-
Weighted average number of common and equivalent shares outstanding - Diluted		13,384,574		12,825,393

Common stock equivalents are included in the diluted income per share calculation only when option exercise prices are lower than the average market price of the common shares for the period presented.

Recent Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the measurement of goodwill by eliminating Step 2 from the current goodwill impairment test in the event that there is evidence of an impairment based on qualitative or quantitative assessments. ASU 2017-04 does not change how the goodwill impairment is identified, and the Company will continue to perform a qualitative assessment annually to determine whether the two-step impairment test is required. Until the adoption, current accounting standards require the impairment loss to be recognized under Step 2 of the impairment test. This requires the Company to calculate the implied fair value of goodwill by assigning fair value to the reporting unit’s assets and liabilities as if the reporting unit has been acquired in a business combination, then subsequently subtracting the implied goodwill from the carrying amount of the goodwill. The new standard would require the Company to determine the fair value of the reporting unit and subtract the carrying value from the fair value of the reporting unit to determine if there is an impairment. ASU 2017-04 is effective for the Company for fiscal years after December 15, 2019, and early adoption is permitted. ASU 2017-04 is required to be adopted prospectively, and the adoption is effective for annual goodwill impairment tests performed in the year of adoption. The adoption of ASU No. 2017-04 did not have a material effect on the Company’s consolidated financial position or the Company’s consolidated results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability. Lessor accounting under the standard is substantially unchanged. Additional qualitative and quantitative disclosures are also required. The Company adopted the standard effective January 1, 2019 using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The Company adopted the following practical expedients and elected the following accounting policies related to this standard update:

• The option to not reassess prior conclusions related to the identification, classification and accounting for initial direct costs for leases that commenced prior to January 1, 2019.

• Short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less; and

• The option to not separate lease and non-lease components for certain equipment lease asset categories such as freight car, vehicles and work equipment.

• The package of practical expedients applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases.

Adoption of this standard resulted in the recognition of operating lease right-of-use assets and corresponding lease liabilities of $622,765 and $538,467, respectively, on the consolidated balance sheet as of January 1, 2019. The Company’s accounting for finance leases remained substantially unchanged. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included in Note 12.

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ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN (Tables)

3 Months Ended

Mar. 31, 2019

Organization Nature Of Business And Going Concern Tables Abstract

Schedule of Calculation of Fixed Assets

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

Schedule of measured and recognized at fair value

	March 31, 2019						Total Carrying
	Level 1		Level 2		Level 3		Value
Marketable securities – ICC International Cannabis Corp.	$	2,790,000		-		-	$	2,790,000
Marketable securities – Divsersa S.A.		201,206		-		-		201,206
Marketable securities – National Bank of Greece		2,900		-		-		2,900
	$	2,994,106					$	2,994,106

Schedule of reconciles basic and diluted shares outstanding.

	Three Months Ended March 31,
	2019		2018
Weighted average number of common shares outstanding - Basic		13,384,574		12,825,393
Potentially dilutive common stock equivalents		-		-
Weighted average number of common and equivalent shares outstanding - Diluted		13,384,574		12,825,393

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ACQUISITION OF COSMOFARM, LTD (Tables)

3 Months Ended

Mar. 31, 2019

Acquisition Of Cosmofarm Ltd

Schedule of purchase price of Cosmofarm

	Allocation
Current assets	$	6,882,286
Intangible assets		213,790
Other assets		1,519,345
Total assets acquired		8,615,421
Liabilities assumed:
Accounts payable and other current liabilities		5,111,489
Advances from customers		1,192,600
Line of credit		1,900,388
Other liabilities		232,729
Total liabilities assumed		8,437,206
Net assets acquired		178,215
Consideration:
Promissory note		227,912
Goodwill	$	49,697

Schedule of acquired intangible assets

	Amount		Useful Life (Years)
Trademark	$	36,997		5
Customer base		176,793		10
	$	213,790		-

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PROPERTY, PLANT AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2019

Property Plant And Equipment

Schedule of property plant and equipment

	March 31, 2019			December 31, 2018
Leasehold improvements	$	429,585		$	369,437
Equipment under capital lease		-			709,356
Vehicles		115,065			117,402
Furniture, fixtures and equipment		1,350,563			458,442
Computers and software		54,744			55,169
		1,949,957			1,709,806
Less: Accumulated depreciation		(273,644	)		(284,174	)
Total	$	1,676,313		$	1,425,632

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INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2019

Intangible Assets

Schedule of Intangible assets

	March 31, 2019			December 31, 2018
License	$	50,000		$	50,000
Trade Name / Mark		36,997			36,997
Customer Base		176,793			176,793
		263,790			263,790
Less: Accumulated Amortization		(23,594	)		(16,720	)
Total	$	240,196		$	247,070

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LEASES (Tables)

3 Months Ended

Mar. 31, 2019

Leases

Schedule of operating leases

Maturity of Lease Liability
2019	$	172,893
2020		158,383
2021		73,858
2022		44,912
2023		44,912
Thereafter		179,648
Total undiscounted finance lease payments	$	674,607
Less: Imputed interest		118,558
Present value of finance lease liabilities	$	556,049

Schedule of finance leases

Maturity of Lease Liability
2019	$	26,384
2020		14,658
2021		-
2022		-
2023		-
Thereafter		-
Total undiscounted finance lease payments	$	41,041
Less: Imputed interest		1,499
Present value of finance lease liabilities	$	39,543

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STOCK OPTIONS AND WARRANTS (Tables)

3 Months Ended

Mar. 31, 2019

Stock Options And Warrants

Schedule of option activity during the year

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Options	Shares		Price		Term		Value
Balance Outstanding, December 31, 2018		74,000	$	1.32		2.47	$	198,000
Granted		-		-		-		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance Outstanding, March 31, 2019		74,000	$	2.22		1.32	$	161,000
Exercisable, March 31, 2019		74,000	$	2.22		1.32	$	161,000

Warrants

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
Warrants	Shares		Price		Term		Value
Balance Outstanding, December 31, 2018		1,164,673	$	6.41		5.01	$	-
Granted		-		-		-		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired				-		-		-
Balance Outstanding, March 31, 2019		1,164,673	$	6.41		4.77	$	-
Exercisable, March 31, 2019		1,164,673	$	6.41		4.77	$	-

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DISAGGREGATION OF REVENUE (Tables)

3 Months Ended

Mar. 31, 2019

Disaggregation Of Revenue

Schedule of revenue disaggregated by country

Country	March 31, 2019		March 31, 2018
Croatia	$	5,395	$	-
Denmark		57,657		96,518
France		42,061		72,351
Germany		2,076,814		4,410,792
Greece		5,456,573		759,999
Hungary		49,912		318,974
Indonesia		-		6,707
Ireland		132,417		568,669
Italy		73,437		156,612
Jordan		20,432		33,637
Netherlands		337,683		1,537,743
Poland		138,270		364,730
Turkey		24,695		-
UK		1,267,995		3,638,697
Total	$	9,683,341	$	11,965,429

XML

ORGANIZATION AND NATURE OF BUSINESS (Details)	3 Months Ended
	Mar. 31, 2019
Vehicles [Member]
Estimated Useful Life	6 years
Machinery [Member]
Estimated Useful Life	20 years
Furniture, fixtures and equipment [Member] | Minimum [Member]
Estimated Useful Life	5 years
Furniture, fixtures and equipment [Member] | Maximum [Member]
Estimated Useful Life	10 years
Leasehold improvements and technical works [Member]
Estimated Useful Life	40 years
Computers and software [Member] | Minimum [Member]
Estimated Useful Life	3 years
Computers and software [Member] | Maximum [Member]
Estimated Useful Life	5 years

XML

ORGANIZATION AND NATURE OF BUSINESS (Details 1)	Mar. 31, 2019 USD ($)
Fair value of assets and liabilities	$ 2,994,106
Level 1 [Member]
Fair value of assets and liabilities	2,994,106
Level 2 [Member]
Fair value of assets and liabilities
Level 3 [Member]
Fair value of assets and liabilities
Marketable securities - ICC International Cannabis Corp. [Member]
Fair value of assets and liabilities	2,790,000
Marketable securities - ICC International Cannabis Corp. [Member] | Level 1 [Member]
Fair value of assets and liabilities	2,790,000
Marketable securities - ICC International Cannabis Corp. [Member] | Level 2 [Member]
Fair value of assets and liabilities
Marketable securities - ICC International Cannabis Corp. [Member] | Level 3 [Member]
Fair value of assets and liabilities
Marketable securities - Divsersa S.A. [Member]
Fair value of assets and liabilities	201,206
Marketable securities - Divsersa S.A. [Member] | Level 1 [Member]
Fair value of assets and liabilities	201,206
Marketable securities - Divsersa S.A. [Member] | Level 2 [Member]
Fair value of assets and liabilities
Marketable securities - Divsersa S.A. [Member] | Level 3 [Member]
Fair value of assets and liabilities
Marketable securities - National Bank of Greece [Member]
Fair value of assets and liabilities	2,900
Marketable securities - National Bank of Greece [Member] | Level 1 [Member]
Fair value of assets and liabilities	2,900
Marketable securities - National Bank of Greece [Member] | Level 2 [Member]
Fair value of assets and liabilities
Marketable securities - National Bank of Greece [Member] | Level 3 [Member]
Fair value of assets and liabilities

XML

ORGANIZATION AND NATURE OF BUSINESS (Details 2) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Organization And Nature Of Business
Weighted average number of common shares outstanding - Basic	13,384,574	12,825,393
Potentially dilutive common stock equivalents
Weighted average number of common and equivalent shares outstanding - Diluted	13,384,574	12,825,393

XML

ORGANIZATION, NATURE OF BUSINESS AND GOING CONCERN (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended		12 Months Ended
	Nov. 21, 2017	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 19, 2018	Sep. 30, 2018	Sep. 29, 2018	Feb. 10, 2017	Sep. 27, 2013
State or country of incorporation		Nevada
Date of incorporation		Jul. 21, 2009
Reverse stock split, description	the Company effected a one-for-ten (1:10) reverse stock split whereby the Company decreased, by a ratio of one-for-ten (1:10) the number of issued and outstanding shares of Common Stock.
Revenue		$ 9,683,341	$ 11,965,429
Net loss		(217,173)	(3,055,802)
Working capital deficit		(4,023,420)
Accumulated deficit		(16,489,818)			$ (16,272,645)
TOTAL STOCKHOLDERS' (DEFICIT)		(3,544,535)	(4,419,739)	$ (3,027,844)	(3,317,450)
Allowance for doubtful accounts		529,299			540,048
Depreciation expense		49,499	5,667
Amortization of intangible assets		6,874	2,129
Impairment of goodwill				$ 1,949,884
Impairment of goodwill, percent				100.00%
Goodwill						$ 49,697
Net cash used in operations		(483,933)	$ (1,866,845)
Long-term liability		142,608			$ 145,504
Potential retirement and termination benefits liability		$ 22,876
United Kingdom of England [Member]
Income tax rate		20.00%
Greece [Member]
Income tax rate		29.00%
Import/export license [Member]
Estimated Useful Life		5 years
National Bank of Greece [Member]
Equity method investment shares acquired, shares		16,666
Equity method investment shares acquired, value		$ 2,900
Closing price		$ 0.17
Diversa S.A. [Member]
Equity method investment shares acquired, shares		40,000
Equity method investment shares acquired, value		$ 201,206
Closing price		$ 5.03
Amplerissimo Ltd [Member]
Equity ownership percentage										100.00%
Ownership interest sold							100.00%
SkyPharm [Member]
Equity ownership percentage								100.00%
Percentage of ownership interest transferred to company by Amplerissimo								22.00%
Decahedron Ltd [Member] | Stock Purchase Agreement [Member]
Common stock shares reserved									170,000

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ACQUISITION OF COSMOFARM, LTD. (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018	Dec. 19, 2018
Current assets	$ 19,123,132	$ 18,347,162
Intangible assets	289,893	296,767
Other assets	615,928	624,479
Total assets acquired	21,705,779	20,694,953
Liabilities assumed:
Advances from customers	1,118,066	1,067,200
Line of credit	2,127,633	1,514,583
Other liabilities	165,483	183,577
Total liabilities assumed	25,250,314	$ 24,012,403
Promissory note	2,919,286
Goodwill			$ 49,697
Cosmofarm [Member]
Current assets	6,882,286
Intangible assets	213,790
Other assets	1,519,345
Total assets acquired	8,615,421
Liabilities assumed:
Accounts payable and other current liabilities	5,111,489
Advances from customers	1,192,600
Line of credit	1,900,388
Other liabilities	232,729
Total liabilities assumed	8,437,206
Net assets acquired	178,215
Promissory note	227,912
Goodwill	$ 49,697

XML

ACQUISITION OF COSMOFARM, LTD. (Details 1)	3 Months Ended
	Mar. 31, 2019 USD ($)
Acquired intangible assets	$ 213,790
Trademark [Member]
Acquired intangible assets	$ 36,997
Acquired intangible assets, Useful Life (Years)	5 years
Customer base [Member]
Acquired intangible assets	$ 176,793
Acquired intangible assets, Useful Life (Years)	10 years

XML

ACQUISITION OF COSMOFARM, LTD. (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 19, 2018
Cash received from acquisition	$ 307,590
Business acquisition outstanding percentage	100.00%
Cosmofarm SPA [Member]
Business acquisition outstanding percentage		100.00%

XML

INVESTMENTS (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended
	Jul. 16, 2018	Mar. 31, 2019	Dec. 31, 2018	May 17, 2018
Equity interest acquired, percentage		100.00%
Unrealized gain on exchange of investment		$ 680,600
Cash received with accounting associated		2,000,000
Loss on sale of equity investments		57,586
Equity investment		$ 2,790,000	$ 500,000
Common stock shares sold during the period		1,000,000
Proceeds from sold of common shares		$ 333,014
Kaneh Bosm Biotechnology Inc [Member] | Share Exchange Agreement [Member]
Transfer of shares				2,500,000
Kaneh Bosm Biotechnology Inc [Member] | Share Exchange Agreement [Member] | Canadian Securities Exchange [Member]
Exchange of shares				5,000,000
ICC [Member] | Share exchange agreement [Member]
Equity method investment shares acquired	5,000,000
Description for ownership percentage	The ten million shares of ICC owned by the Company constitute approximately 7% of the 141,219,108 shares of capital stock of KBB then issued and outstanding
Marathon Global Inc [Member]
Gain on exchange of investment		$ 1,953,000
Marathon Global Inc [Member] | Share exchange agreement [Member]
Shares of Marathon transferred by company to KBB	2,500,000
Gain on exchange of investment	$ 2,092,200
Marathon Global Inc [Member] | Distribution and Equity Acquisition Agreement [Member]
Equity interest acquired, percentage		33.33%
Cash received upon repayment for purchase common stock		$ 2,000,000
Sale of stock, number of shares issued for distribution services		5,000,000
Marathon Global Inc [Member] | Distribution and Equity Acquisition Agreement [Member] | Gross Sales One [Member]
Cash received upon gross sales		$ 2,750,000
Gross sales		13,000,000
Marathon Global Inc [Member] | Distribution and Equity Acquisition Agreement [Member] | Gross Sales [Member]
Cash received upon gross sales		2,750,000
Gross sales		$ 6,500,000

XML

PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Property plant and equipment	$ 1,949,957	$ 1,709,806
Less: Accumulated depreciation	(273,644)	(284,174)
Total	1,676,313	1,425,632
Computers and software [Member]
Property plant and equipment	54,744	55,169
Equipment under capital lease [Member]
Property plant and equipment		709,356
Leasehold Improvements [Member]
Property plant and equipment	429,585	369,437
Vehicles [Member]
Property plant and equipment	115,065	117,402
Furniture, fixtures and equipment [Member]
Property plant and equipment	$ 1,350,563	$ 458,442

XML

INTANGIBLE ASSETS (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Intangible assets	$ 263,790	$ 263,790
Less: Accumulated Amortization	(23,594)	(16,720)
Total	240,196	247,070
Trade Name / Mark [Member]
Intangible assets	36,997	36,997
Customer Base [Member]
Intangible assets	176,793	176,793
License [Member]
Intangible assets	$ 50,000	$ 50,000

XML

INCOME TAXES (Details Narrative) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Income Taxes Details Narrative Abstract
Deferred tax valuation allowance	$ 142,608	$ 145,504

XML

CAPITAL STRUCTURE (Details Narrative) - USD ($)		1 Months Ended			3 Months Ended
	Feb. 05, 2019	Feb. 18, 2019	Nov. 30, 2018	Jun. 18, 2018	Mar. 31, 2019	Jan. 07, 2019	Dec. 31, 2018	Feb. 10, 2017
Common stock, shares issued					13,305,015		13,878,757
Common stock, shares outstanding					13,087,478		13,685,067
Common stock shares authorized					300,000,000		300,000,000
Preferred stock shares authorized					100,000,000		100,000,000
Common stock value					$ 13,305		$ 13,879
Convertible Notes [Member]
Common stock shares cancelled	108,417					465,325
Stock Purchase Agreement [Member]
Common stock shares purchase	193,408	83,341
Price per share	$ 3.00	$ 3.00
Common stock value	$ 580,224	$ 250,023
Common stock description	the Company had made $49,998 in payments, but as of the date of filing the 16,666 shares had not yet been transferred back to the Company. Upon transfer of the shares, the shares will be cancelled.	Payment is scheduled over a five-month period, subject to acceleration if the Company effects an eligible equity offering. As of March 31, 2019, the Company had made $21,543 in payments but as of the date of filing the 7,181 shares had not yet been transferred back to the Company. Upon transfer of the shares, the shares will be cancelled.
Stock Purchase Agreement [Member] | Director [Member]
Purchase of treasury stock, Shares			20,000	15,000
Purchase of treasury stock from officer			$ 60,000	$ 69,612
Stock Purchase Agreement [Member] | Decahedron Ltd [Member]
Common stock shares reserved								170,000
Prior to merger [Member]
Common stock, shares issued					10,000,000
Prior to merger [Member] | Amplerissimo Ltd [Member]
Common stock, shares issued					2,558,553
Tranche 3 [Member]
Purchase of treasury stock from officer					$ 11,317
Due to related party					48,683
Tranche 2 [Member]
Purchase of treasury stock from officer					69,178
Gain/Loss of change in foreign currency					$ 434

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	1 Months Ended		3 Months Ended		12 Months Ended
	Nov. 30, 2018	Jun. 18, 2018	Mar. 31, 2019	Mar. 31, 2018	Dec. 20, 2018	Dec. 31, 2018	Jul. 22, 2009
Shares issued			13,305,015			13,878,757
Debt outstanding amount			$ 2,127,633			$ 1,514,583
Repayment of related party debt			38,175	$ 142,248
Revenue			9,683,341	11,965,429
Accounts receivable balance			5,569,831			4,753,291
Officers and directors [Member]
Shares issued							20,000,000
Medihelm S.A. and Nicholaos Lazarou [Member]
Personal assumption			233,118
Dimitrios Goulielmos [Member]
Prepaid balance			46,035
Debt outstanding amount			61,290
Repayment of loans			14,035
Grigorios Siokas One [Member]
Prepaid balance			1,684,200
Accrued interest			81,981
Grigorios Siokas One [Member]
Prepaid balance			3,392,959
Repayment of loans			2,819,700
Borrowing			3,165,959			227,000
Grigorios Siokas [Member]
Prepaid balance					$ 1,718,400	3,496,199
Net prepaid balance					1,500,000
Repayment of loans			38,175
Borrowing			227,000		$ 1,718,400	$ 3,269,199
Interest rate					4.70%
Maturity date					Mar. 18, 2019
Accrued interest					$ 63,371
Medihelm [Member]
Payments to acquire businesses			1,080,226	4,089,539
Revenue			68,167	474,492
MediHelm S.A. [Member]
Prepaid balance			2,999,053	2,298,364
Net prepaid balance			2,946,619	1,541,457
Accounts payable balance			52,434	756,907
Accounts receivable balance			226,513	538,303
DOC Pharma S.A. [Member]
Prepaid balance			1,989,775
Net prepaid balance			54,656
Accounts payable balance			1,541,290
Payments to acquire businesses			576,089	1,545,486
Revenue			180,333	$ 14,857
DOC Pharma S.A. One [Member]
Prepaid balance			1,935,119
Net prepaid balance			232,694
Accounts payable balance			151,447
Stock Purchase Agreement [Member] | Director [Member]
Purchase of treasury stock from officer	$ 60,000	$ 69,612
Purchase of treasury stock, Shares	20,000	15,000
Stock Purchase Agreement [Member] | Director [Member] | November 30, 2018 [Member]
Due to related party			48,683
Consideration amount paid			28,372
Stock Purchase Agreement [Member] | Director [Member] | November 30, 2018 [Member] | Accounts Payable [Member]
Due to related party			20,311
Loan agreement [Member] | DOC Pharma S.A. [Member]
Debt outstanding amount			13,474
Accrued interest			902
Loan agreement [Member] | On November 1, 2015 [Member] | DOC Pharma S.A. [Member]
Payment of miscellaneous bills			$ 13,202
Interest rate			2.00%
Maturity date			Oct. 31, 2016

XML

LINES OF CREDIT (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Debt outstanding amount	$ 2,127,633		$ 1,514,583
Interest expense	259,712	$ 286,578
Line of Credit [Member]
Interest expense	$ 45,174
Line of Credit [Member] | National Bank of Greece [Member]
Interest rate	6.00%
Borrowing	$ 1,347,360
Debt outstanding amount	$ 1,032,557
Line of Credit [Member] | Alpha Bank of Greece [Member]
Interest rate	6.00%
Borrowing	$ 673,680
Debt outstanding amount	$ 660,568
Line of Credit [Member] | Eurobank of Greece [Member]
Interest rate	8.55%
Borrowing	$ 561,400
Debt outstanding amount	$ 434,508

XML

CONVERTIBLE DEBT (Details Narrative) - USD ($)				1 Months Ended			3 Months Ended
	Dec. 13, 2018	Dec. 12, 2018	Sep. 04, 2018	Feb. 20, 2018	Feb. 19, 2018	Nov. 15, 2017	Mar. 31, 2019	Mar. 31, 2018	Feb. 05, 2019	Jan. 07, 2019	Dec. 31, 2018	Apr. 24, 2018	Dec. 31, 2017
Convertible notes payable, principal amount							$ 2,919,286
Common stock, par value							$ 0.001				$ 0.001
Debt discount							$ 3,169,672				$ 3,350,000
Fair Value of Warrants							157,969
Debt outstanding amount							2,127,633				1,514,583
Amortization of debt discount							3,124,058
Beneficial conversion feature							386,062
Loss on extinguishment of debt							(1,464,698)
Outstanding principal balance							$ 149,938
Dividend yield
Related Party Debt								$ 1,034,270
Common stock issued							1,000,000
Third Amendment and Exchange Agreements [Member]
Convertible notes payable, principal amount							$ 261,902				261,903
Third Amendment and Exchange Agreements [Member]
Convertible notes payable, principal amount											1,333,333
Repayment of principal											$ 638,095
Exercise price		$ 6.00
Warrants retired		536,000
Conversion price											$ 3.478
Warrants [Member] | Securities Purchase Agreement [Member]
Common stock shares issuable upon conversion of debt/convertible securities			357,334	536,000		536,000
Common stock, par value			$ 6.00			$ 5.00
Proceeds from issuance of warrants						$ 2,686,000
Legal fees						$ 74,000
Debt instrument maturity date			Mar. 01, 2019
Maturity period			5 years	5 years		5 years
Warrants exercise price				$ 7.50		$ 7.50
Fair Value of Warrants			$ 910,078	$ 1,545,288
Terms of Blocker Provision			The Notes or the Warrants, into shares of common stock if its beneficial ownership of the common stock would exceed 9.99% of the Company’s issued and outstanding common stock (a “Blocker”).	A blocker provision which prevents any holder from converting or exercising, as applicable, the Notes or the Warrants, into shares of Common Stock if its beneficial ownership of the Common Stock would exceed 4.99% (subject to adjustment not to exceed 9.99%) of the Company’s issued and outstanding Common Stock (each, a “Blocker”).
Conditional proceeds from sale of common stock under the agreement			$ 20,000
Debt original issue discount			$ 233,332
Amortization of interest expense				$ 347,418
Debt convertible conversion description			The Notes and Warrants on any trading day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s Common Stock. If after the closing of the Financing the VWAP of the Company’s common stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share
Exercise price			$ 7.50
Roth Capital Partners, LLC [Member] | Placement agent [Member]
Proceeds from issuance of warrants			$ 140,000
Debt instrument maturity date			Mar. 04, 2019
Maturity period			5 years
Fair Value of Warrants			$ 157,969
Terms of Blocker Provision			will receive seven (7%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months.
Amortization of debt discount							184,100
Installment fees							$ 13,097
Interest Rate							5.00%
Roth Capital Partners, LLC [Member] | Placement agent [Member] | Warrants [Member]
Common stock shares issuable upon conversion of debt/convertible securities			26,056
Warrants exercise price			$ 6.00
Debt original issue discount			$ 140,000
Leak-out Agreement [Member] | Warrants [Member] | Securities Purchase Agreement [Member]
Convertible notes payable, principal amount						$ 3,350,000		103,611
Debt discount								45,614					$ 240,000
Fair Value of Warrants								$ 386,003
Terms of agreement				As a condition to the closing of the Financing, each Buyer, severally, was required to execute a leak-out agreement (each, a “Leak-Out Agreement”) restricting such Buyer’s sale of shares of Common Stock underlying the Notes and Warrants on any Trading Day to not more than such Buyer’s pro rata allocation of the greater of (x) sales with net proceeds of an aggregate of $20,000 or (y) twenty-five (25%) percent of the daily average trading volume of the Company’s Common Stock. If after the closing of the Financing there is no Event of Default under the Notes, the VWAP of the Company’s Common Stock for three (3) trading days is less than $1.50 per share, the Company may further restrict the Buyers from selling at less than $1.50 per share; provided that the portion of the Notes subject to redemption on each Installment Date shall thereafter double.
Conditional proceeds from sale of common stock under the agreement				$ 20,000
Terms of commission to placement agent						Placement agent, received a cash commission for the transaction equal to eight (8%) percent of the total gross proceeds of the offering, or $240,000 and the issuance of five-year warrants to purchase eight (8%) percent of the shares of common stock issued or issuable in this offering (excluding shares of common stock issuable upon exercise of any warrants issued to investors), or 53,600 shares; and, will receive eight (8%) percent of any cash proceeds received from the exercise of any warrants sold in the offering with an expiration equal to or less than twenty-four (24) months.
Registration Rights Agreement [Member] | Warrants [Member] | Securities Purchase Agreement [Member]
Debt instrument maturity date				Feb. 01, 2019
Terms of agreement				The Company filed, within thirty (30) days of the Closing, a registration statement covering one hundred fifty (150%) percent of the maximum number of shares, underlying the Notes and Warrants pursuant to a registration rights agreement with the Buyers (the “Registration Rights Agreement”).
November 15, 2017 Securities Purchase Agreement [Member] | Third Amendment and Exchange Agreements [Member]
Debt instrument maturity date		Dec. 11, 2023
Warrants issued		727,683
September 4, 2018 Securities Purchase Agreement [Member] | Third Amendment and Exchange Agreements [Member]
Related Party Debt		$ 1,333,333
Conversion price		$ 3.478
Debt modification expense	$ 1,778,952
Common stock issued	383,363
Post-modification [Member] | Third Amendment and Exchange Agreements [Member]
Exercise price		$ 6
Fair value of common stock		$ 6
Expected volatility		113.62%
Dividend yield		0.00%
Risk-free rate		2.77%
Expected life		5 years
Pre-modification [Member] | Third Amendment and Exchange Agreements [Member]
Exercise price		$ 7.50
Fair value of common stock		$ 6
Expected volatility		243.69%
Dividend yield		0.00%
Risk-free rate		2.77%
Expected life		3 years 11 months 4 days
September 2018 Notes [Member] | Holder [Member] | Warrants [Member] | Securities Purchase Agreement [Member]
Common stock, par value			$ 6.00
Event of default conversion price, description			Upon an Event of Default (regardless of whether such event has been cured), the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”).
Debt instrument maturity date			Nov. 01, 2018
Customary events of default, description			The Notes at a redemption premium of one hundred twenty-five (125%) percent, multiplied by the greater of the conversion rate and the then current market price. The Buyers may also require redemption of the Notes upon a Change of Control (as defined) at a premium of one hundred twenty-five (125%) percent. The Company has the right to redeem the Notes at any time, in whole or in part, in cash at a price equal to 120% of the then outstanding conversion amount.
Debt original issue discount			$ 934,922
Per-delivery shares issued			372,222
September 2018 Notes [Member] | Institutional investors [Member] | Securities Purchase Agreement [Member]
Convertible notes payable, principal amount			$ 2,233,333
Common stock shares issuable upon conversion of debt/convertible securities			372,223
Common stock, par value			$ 0.001
Proceeds from issuance of warrants			$ 1,845,000
Legal fees			$ 15,000
Debt instrument maturity date			May 01, 2019
Purchase price charged to financing costs			$ 140,000
Purchase price of financing cost			$ 2,000,000
Exercise price			$ 7.50
Senior Convertible Notes [Member] | Securities Purchase Agreement [Member]
Common stock shares issuable upon conversion of debt/convertible securities						670,000
Common stock, par value						$ 0.001
Debt original issue discount						$ 350,000
Purchase price charged to financing costs						240,000
Purchase price of financing cost						3,000,000
Senior Convertible Notes [Member] | Exchange Agreements [Member]
Convertible notes payable, principal amount				$ 2,871,429
Common stock, par value				$ 5.00
Convertible debt, description				The Company evaluated the debt modification in accordance with ASC 470-50 and concluded that the debt qualified for debt extinguishment as the 10% cash flow test was met.
Event of default conversion price, description				Upon an Event of Default (as defined), the Buyers may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the Volume-Weighted Average Price (as defined, the “VWAP”).
Debt discount				$ 2,596,838
Customary events of default, description				The Notes include customary Events of Default and provide that the Buyers may require the Company to redeem (regardless of whether the Event of Default has been cured) all or a portion of the Notes at a redemption premium of one hundred twenty-five (125%) percent, multiplied by the greater of the conversion rate and the then current market price. The Buyers may also require redemption of the Notes upon a Change of Control (as defined) at a premium of one hundred twenty-five (125%) percent.
Existing note description				(i) the New Note was not convertible into shares of the Company’s common stock (the “Common Stock”) until April 20, 2018; (ii) all future cash installment payments under such New Note will be made at a redemption price equal to 112% of the applicable installment amount; (iii) the Company’s existing obligation to initially deliver pre-delivery shares of its common stock to the holder of such New Note was deferred until April 20, 2018; and (iv) at any time on or before June 20, 2018, the Company had the right, at its option, to redeem all, or any part, of the amounts then outstanding under such New Note in cash at a redemption price equal to 125% of such amounts then outstanding under such New Note.
Cash proceeds received by holders				85.00%
Additional paid in capital				$ 1,140,711
Aggregate indebtedness				12,000,000
Per-delivery shares issued									108,417	465,625		670,001
New Notes [Member] | Exchange Agreements [Member]
Convertible notes payable, principal amount				3,216,000
Debt discount				3,216,000	$ 1,140,711
Amortization of debt discount					$ 405,743
Debt original issue discount				336,000
Beneficial conversion feature				2,880,000
Loss on extinguishment of debt				1,464,698
Adjustments to beneficial conversion feature and issue of debt discount				$ 1,739,289
Senior Convertible Note 2 [Member] | Institutional investors [Member] | Securities Purchase Agreement [Member]
Convertible notes payable, principal amount						3,350,000
Senior Convertible Note 1 [Member] | Institutional investors [Member] | Securities Purchase Agreement [Member]
Convertible notes payable, principal amount						$ 3,000,000
Convertible Notes [Member]
Debt discount							$ 2,233,332
Amortization of debt discount							2,049,232
Beneficial conversion feature							1,333,333
Outstanding principal balance							$ 261,903
Conversion price							$ 3.478
Convertible Notes [Member] | Third Exchange Agreement [Member]
Convertible notes payable, principal amount							$ 638,095
Convertible Notes [Member] | September 2018 [Member]
Event of Default Interest rate							18.00%
Installment fees							$ 31,905
Interest Rate							5.00%

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DEBT (Details Narrative) - USD ($)							1 Months Ended					3 Months Ended	12 Months Ended
	May 12, 2018	May 12, 2017	May 05, 2017	Apr. 10, 2017	Mar. 16, 2017	Aug. 04, 2016	Oct. 17, 2018	May 31, 2018	Mar. 23, 2017	Mar. 20, 2017	Nov. 16, 2015	Mar. 31, 2019	Dec. 20, 2018	Dec. 31, 2017	Dec. 31, 2018	Mar. 31, 2018	Nov. 16, 2017	Jul. 31, 2017	Jan. 31, 2017	Dec. 31, 2016	Nov. 30, 2016	Oct. 31, 2016	Sep. 30, 2016	Sep. 13, 2016
Debt outstanding amount												$ 2,127,633			$ 1,514,583
Debt discount												3,169,672			3,350,000
Amortization of debt discount												3,124,058
TFF [Member]
Short term debt borrowing capacity												$ 15,000,000
Libor rate description												(i) all lending in U.S. dollars is the one-month LIBOR plus six (6%) percent margin; and (ii) for all lending in Euro, the one-month Euribor Rate plus six (6%) percent per annum, commencing June 1, 2018
CEO [Member]
Percentage of wholly-owned subsidiary shares												51.00%
On April 18, 2018 [Member]
Maturity date												Dec. 31, 2021
Debt outstanding amount												$ 3,078,442			3,078,442
Accrued interest												$ 473,172			14,830
Libor rate description												Additionally the interest rate was amended such that the interest rate for all advances is 4% plus the 3-Month Libor rate
Gain on debt settlement												$ 23,354
Loan Facility July 6, 2017 [Member]
Fees forgiven related to advance												40,000
Loan facility agreement [Member]
Debt discount												191,034
Unamortized debt discount												$ 20,237
Marathon [Member]
Distribution and equity acquisition agreement, description												As consideration for its services, Company received: (a) a 33 1/3% equity interest or 5 million shares in Marathon as partial consideration for the Company’s distribution services; and (b) received cash of CAD $2,000,000, subject to repayment in Common Shares of the Company if it fails to meet certain performance milestones. The Company is entitled to receive an additional CAD $2,750,000 upon the Company’s receipt of gross sales of CAD $6,500,000 and an additional CAD $2,750,000 upon receipt of gross sales of CAD $13,000,000.
Settlement amount												$ 1,554,590
Cash received												$ 2,000,000
Shares issued for settlement of debt												446,311
Panagiotis Drakopoulos [Member] | Loan Agreement [Member]
Short term debt borrowing capacity											$ 42,832
Interest rate											6.00%
Maturity date											Nov. 15, 2016
Debt outstanding amount												$ 14,596			14,893
Accrued interest												3,851			3,538
SkyPharm [Member] | MediHelm S.A. [Member]
Amortization of debt discount														$ 69,269
Origination fees												137,063
SkyPharm [Member] | Loan facility agreement [Member]
Short term debt borrowing capacity						$ 1,292,769
Interest rate						10.00%
Description for the repayment						The amounts owed under the Loan Facility were repayable upon the earlier of (i) three months following the demand of the lender; or (ii) August 31, 2018. No prepayment is permitted pursuant to the terms of the Loan Facility
SkyPharm [Member] | Amendment to loan facility agreement [Member]
Short term debt borrowing capacity																								$ 1,533,020
Debt outstanding amount																								$ 240,251
SkyPharm [Member] | Second amendment to loan facility agreement [Member]
Short term debt borrowing capacity									$ 2,664,960					70,000				$ 382,327	$ 155,516	$ 452,471	$ 250,000	$ 100,000	$ 174,000
Interest rate									10.00%
Maturity date									Aug. 04, 2016
Debt outstanding amount														3,117,287
Accrued interest														221,657
Description for the repayment									The amounts owed under the Loan Facility shall be repayable upon the earlier of (i) seventy five days following the demand of the Lender; or (ii) August 31, 2018
Common stock shares issuable upon conversion of debt/convertible securities									1,000,000
Debt discount														$ 42,149						$ 126,624
SkyPharm [Member] | Bridge Loans [Member]
Short term debt borrowing capacity			$ 34,745		$ 50,000					$ 120,220		50,000
Interest rate			10.00%		10.00%					10.00%
Maturity date			Sep. 30, 2017		Apr. 16, 2017					Apr. 20, 2017
Amended maturity date					May 16, 2017					May 20, 2017
Debt outstanding amount					$ 50,000					$ 106,542		106,542
Accrued interest					$ 14,138					16,857		20,083
Gain on debt settlement										19,695
Additional gain on settlement of debt										4,668
Loan fixed payoff amount										$ 106,542
SkyPharm [Member] | Bridge Loans [Member] | May 5 2017 [Member]
Debt outstanding amount												34,745			34,745
Accrued interest												4,565			3,906
Grigorios Siokas [Member]
Interest rate													4.70%
Accrued interest													$ 63,371
Grigorios Siokas [Member] | Synthesis facility agreement [Member] | Loan facility agreement [Member]
Common stock shares issuable upon conversion of debt/convertible securities						10,000,000
Trade Facility Agreements [Member]
Debt outstanding amount																$ 5,866,910
Payment of interest and principal								$ 1,123,600
Trade Facility Agreements [Member] | SkyPharm [Member]
Short term debt borrowing capacity		$ 2,245,600
Debt outstanding amount								$ 5,369,678
Description for the repayment		The total facility will be calculated as 95% of the agreed upon value of Decahedrons receivables.
Term of credit facility		12 months
Credit facility origination fee, percentage		2.00%
Monthly credit fee, percentage		1.00%
Proceeds from debt	$ 247,117
Trade Facility Agreements [Member] | SkyPharm [Member] | Minimum [Member]
Short term debt borrowing capacity																	$ 2,291,200
Trade Facility Agreements [Member] | SkyPharm [Member] | Maximum [Member]
Short term debt borrowing capacity																	$ 6,873,600
Trade Facility Agreements [Member] | SkyPharm [Member] | Decahedron [Member]
Short term debt borrowing capacity				$ 3,087,700
Description for the repayment				The total facility will be calculated as 95% of the agreed upon value of Decahedrons receivables
Term of credit facility				12 months
Credit facility origination fee, percentage				2.00%
Monthly credit fee, percentage				1.00%
TFF [Member] | Synthesis facility agreement [Member]
Debt outstanding amount							$ 5,629,555
Accrued interest							$ 524,094
Description for amendment to agreement under ASU 470-50							The Company evaluated the amended agreement under ASC 470-50 and concluded that it did not meet the 10% cash flow test and recorded debt modification expense of $138,110
Debt modification expense							$ 138,110
TFF [Member] | Synthesis facility agreement [Member] | Principal balance 1 [Member]
Maturity date							Aug. 31, 2021
Accrued interest												0			0
Debt split, balance							$ 2,000,000					2,245,600			2,291,200
Interest rate description							6% per annum plus one-month Euribor, when it is positive, on the Euro balance
Repayment of debt, periodic payments							$ 125,000
Frequency of periodic payments							Quarterly
TFF [Member] | Synthesis facility agreement [Member] | Principal balance 2 [Member]
Maturity date							Aug. 31, 2021
Accrued interest												17,988			19,834
Debt split, balance							$ 4,000,000					$ 4,000,000			$ 4,000,000
Interest rate description							6% per annum plus one month Libor on the USD balance
Repayment of debt, periodic payments							$ 150,000
Frequency of periodic payments							Quarterly

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LEASES (Details)	Mar. 31, 2019 USD ($)
Leases Details Abstract
2019	$ 172,893
2020	158,383
2021	73,858
2022	44,912
2023	44,912
Thereafter	179,648
Total undiscounted finance lease payments	674,607
Less: Imputed interest	118,558
Present value of finance lease liabilities	$ 556,049

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LEASES (Details 1)	Mar. 31, 2019 USD ($)
Leases Details 1Abstract
2019	$ 26,384
2020	14,658
2021
2022
2023
Thereafter
Total undiscounted finance lease payments	41,041
Less: Imputed interest	1,499
Present value of finance lease liabilities	$ 39,543

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LEASES (Details Details Narrative)	3 Months Ended
	Mar. 31, 2019 USD ($)
Leases Details Details Narrative Abstract
Operating lease, term of agreements	The Company has various lease agreements with terms up to 10 years, comprising of leases of office space. Some leases include options to purchase, terminate or extend for one or more years
Operating lease, weighted average remaining lease term	6 years 18 days
Operating lease, weighted average discount rate	6.74%
Operating lease expense	$ 52,508
Operating lease, cash flows	37,096
Operating lease liabilities	$ 622,765
Finance lease, weighted average remaining lease term	1 year 2 months 1 day
Finance lease, weighted average discount rate	6.00%
Operating lease cash flows used in finance lease	$ 601
Finance lease, interest expense	601
Finance lease, cash flows	7,232
Finance lease, amortization expense	$ 26,802

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COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)			1 Months Ended	3 Months Ended
	Sep. 04, 2018	Aug. 08, 2017	Nov. 16, 2017	Mar. 31, 2019
SkyPharm [Member] | April 18, 2018 [Member] | Advisory Agreement [Member]
Term of operating lease				10 years
Annually operating lease amount				$ 104,000
Anastasios Tsekas and Olga Parthenea Georgatsou [Member] | On October 1, 2016 [Member] | Intellectual property sale agreement [Member]
Operating lease periodic payment				$ 1,500
Common stock shares reserved				200,000
Anastasios Tsekas and Olga Parthenea Georgatsou [Member] | On October 1, 2016 [Member] | Intellectual property sale agreement [Member] | Conclusion of Preclinical Trials [Member]
Common stock shares reserved				50,000
Anastasios Tsekas and Olga Parthenea Georgatsou [Member] | On October 1, 2016 [Member] | Intellectual property sale agreement [Member] | conclusion of Phase I testing [Member]
Common stock shares reserved				50,000
Anastasios Tsekas and Olga Parthenea Georgatsou [Member] | On October 1, 2016 [Member] | Intellectual property sale agreement [Member] | Conclusion of Phase III testing [Member]
Common stock shares reserved				50,000
Anastasios Tsekas and Olga Parthenea Georgatsou [Member] | On October 1, 2016 [Member] | Intellectual property sale agreement [Member] | Conclusion of Phase II testing [Member]
Common stock shares reserved				50,000
Private Placement [Member]
Commitments and contingencies description		(1) a cash commission of 6% of the total gross proceeds for two named investors (2) a cash commission of 4% of total gross proceeds from five named investors and (3) excluding the five named investors in “(2)” a cash commission equal to 8% of the total gross proceeds from the Offering and the issuance to the Agent or its designees of warrants covering 8% of the shares of common stock issued or issuable by the Company in the Offering. Additionally, the Agent will receive a cash fee of 8% payable within 5 business days, but only in the event of, the receipt by the Company of any cash proceeds from the exercise of any warrants with an expiration equal to or less than 24 months sold in the Offering.
Cash commission description	In connection with the Company's September 4, 2018 Note offering, the Agent received a cash commission for this transaction of $140,000, equal to seven (7%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase seven (7%) percent of the shares of Common Stock issued or issuable in this offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors, or 26,056 shares); however, will receive seven (7%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The Warrants are exercisable six (6) months after the date of issuance, or March 4, 2019.		In connection with the Company's November 16, 2017 Note offering, the Agent received a cash commission of $240,000, equal to eight (8%) percent of the total gross proceeds of the offering and the issuance of five-year warrants to purchase eight (8%) percent of the shares of Common Stock issued or issuable in the offering (excluding shares of Common Stock issuable upon exercise of any Warrants issued to investors, or 53,600 shares); however, will receive eight (8%) percent of any cash proceeds received from the exercise of any Warrants sold in the offering with an expiration equal to or less than twenty-four (24) months. The Warrants are exercisable six (6) months after the date of issuance, or as of May 16, 2018.

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STOCK OPTIONS AND WARRANTS (Details) - Options [Member]	3 Months Ended
	Mar. 31, 2019 USD ($) $ / shares shares
Number of Shares
Granted | shares	74,000
Forfeited | shares
Exercised | shares
Expired | shares
Number of Shares Outstanding, Ending | shares	74,000
Number of Shares Exercisable | shares	74,000
Weighted Average Exercise Price
Weighted Average Exercise Price Outstanding, Beginning | $ / shares	$ 1.32
Granted | $ / shares
Forfeited | $ / shares
Exercised | $ / shares
Expired | $ / shares
Weighted Average Exercise Price Outstanding, Ending | $ / shares	2.22
Weighted Average Exercise Price Exercisable | $ / shares	$ 2.22
Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term Outstanding, Beginning	2 years 5 months 20 days
Weighted Average Remaining Contractual Term Outstanding, Ending	1 year 3 months 26 days
Weighted Average Remaining Contractual Term Exercisable	1 year 3 months 26 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value Outstanding, Beginning | $	$ 198,000
Granted | $
Forfeited | $
Exercised | $
Expired | $
Aggregate Intrinsic Value Outstanding, Ending | $	161,000
Aggregate Intrinsic Value Exercisable | $	$ 161,000

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STOCK OPTIONS AND WARRANTS (Details 1) - Warrants [Member]	3 Months Ended
	Mar. 31, 2019 USD ($) $ / shares shares
Number of Shares
Number of Shares Outstanding, Beginning | shares	1,164,673
Granted | shares
Forfeited | shares
Exercised | shares
Expired | shares
Number of Shares Outstanding, Ending | shares	1,164,673
Number of Shares Exercisable | shares	1,164,673
Weighted Average Exercise Price
Weighted Average Exercise Price Outstanding, Beginning | $ / shares	$ 6.41
Granted | $ / shares
Forfeited | $ / shares
Exercised | $ / shares
Expired | $ / shares
Weighted Average Exercise Price Outstanding, Ending | $ / shares	6.41
Weighted Average Exercise Price Exercisable | $ / shares	$ 6.41
Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term Outstanding, Beginning	5 years 4 days
Weighted Average Remaining Contractual Term Outstanding, Ending	4 years 9 months 7 days
Weighted Average Remaining Contractual Term Exercisable	4 years 9 months 7 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value Outstanding, Beginning | $
Granted | $
Forfeited | $
Exercised | $
Expired | $
Aggregate Intrinsic Value Outstanding, Ending | $
Aggregate Intrinsic Value Exercisable | $

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STOCK OPTIONS AND WARRANTS (Details Narrative) - shares	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Options [Member]
Number of shares outstanding	74,000
Number of shares exercisable	74,000
Class of warrants or rights, expiration dates	Commencing October 2020 and continuing through January 2022
Warrants [Member]
Number of shares outstanding	1,164,673	1,164,673
Number of shares exercisable	1,164,673
Class of warrants or rights, expiration dates	From May 2023 through March 2024

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DISAGGREGATION OF REVENUE (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue	$ 9,683,341	$ 11,965,429
Croatia [Member]
Revenue	5,395
Denmark [Member]
Revenue	57,657	96,518
France [Member]
Revenue	42,061	72,351
Germany [Member]
Revenue	2,076,814	4,410,792
Greece [Member]
Revenue	5,456,573	759,999
Hungary [Member]
Revenue	49,912	318,974
Indonesia [Member]
Revenue		6,707
Ireland [Member]
Revenue	132,417	568,669
Italy [Member]
Revenue	73,437	156,612
Jordan [Member]
Revenue	20,432	33,637
Netherlands [Member]
Revenue	337,683	1,537,743
Poland [Member]
Revenue	138,270	364,730
Turkey [Member]
Revenue	24,695
UK [Member]
Revenue	$ 1,267,995	$ 3,638,697

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended
	May 15, 2019	May 17, 2019	Mar. 31, 2019
Convertible notes payable, principal amount			$ 2,919,286
Subsequent Event [Member] | Securities purchase agreement [Member] | Institutional investor [Member]
Convertible note payable to be issued as consideration under financing		$ 1,500,000
Description for the buyer under financing	The Buyer was the same fund which purchased an aggregate of approximately $4,475,000 principal amount of convertible notes in September 2018 and November 2017
Description for the repayment of debt	The Note provides that the Company will repay the principal amount of Note on the ten (10) month anniversary date of the date of issue. Interest at the rate of nineteen (19%) percent per annum shall be payable on the first day of each calendar month
Convertible note payable terms of conversion feature	The Note is convertible at any time by the Holder into 250,000 shares of common stock, par value $.001 per share (the “Common Stock”) at the rate of $6.00 per share, subject to adjustment (the ‘Conversion Price”)
Event of default, description	Upon an Event of Default (regardless of whether such event has been cured), the Buyer may convert at an alternative conversion price equal to the lower of the then applicable Conversion Price or seventy-five (75%) percent of the then Volume-Weighted Average Price (as defined, the “VWAP”)
Senior secured indebtness, amount	$ 12,000,000
Customary event of default, description	The Note includes customary Events of Default and provides that the Buyer may require the Company to redeem (regardless of whether the Event of Default has been cured) all or a portion of the Note at a redemption premium of one hundred twenty-five (125%) percent, multiplied by the greater of the conversion rate and the then current market price. The Buyer may also require redemption of the Note upon a Change of Control (as defined) at a premium of one hundred twenty-five (125%) percent. The Company has the right to redeem the Note at any time, in whole or in part, in cash at a price equal to 120% of the then outstanding conversion amount
Description for the blocker provision	Conversion of the Note is subject to a blocker provision which prevents any holder from converting the Note into shares of Common Stock if its beneficial ownership of the Common Stock would exceed 9.99% of the Company’s issued and outstanding Common Stock (a “Blocker”)
Cash commission payble against gross proceeds to Roth, percent	6.00%
Subsequent Event [Member] | Senior Promissory Notes [Member] | On April 9, 2019 [Member]
Convertible notes payable, principal amount			$ 250,000
Interest rate			15.00%
Maturity date, description			The Note matures on April 9, 2020 unless prepaid or in default.
Description for the payment of installments			The Company may prepay the Note within the first six (6) months by payment of unpaid interest for the first six (6) months and after six (6) months, with a two (2%) percent ($5,000) premium.
Loans payable			$ 500,000
Subsequent Event [Member] | Senior Promissory Notes [Member] | On April 1 and 3, 2019 [Member]
Convertible notes payable, principal amount			$ 250,000
Interest rate			15.00%
Maturity date, description			The Notes mature on April 1 and 3, 2020 unless prepaid or in default.
Description for the payment of installments			The Company may prepay the Notes within the first six (6) months by payment of unpaid interest for the first six (6) months interest and after six (6) months, with a (2%) percent ($5,000) premium.