cosm_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2022

☐	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)

Title of Each Class

Trading Symbol

Name of Each Exchange

On Which Registered

Common Stock, $.001 par value

COSM

The Nasdaq Capital Market

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 ☒ 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 ☒ 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	☒
(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 ☒

Applicable only to Corporate Issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of May 17, 2022, there were 19,106,625 shares issued and 18,719,201 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.	35

Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	43

Item 4.	Controls and Procedures.	43

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	45

Item 1A	Risk Factors	45

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	45

Item 3.	Defaults Upon Senior Securities.	45

Item 4.	Mine Safety Disclosures.	45

Item 5.	Other Information.	45

Item 6.	Exhibits.	46

SIGNATURES		47

Table of Contents

COSMOS HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2022			December 31, 2021
	(Unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	1,010,427		$	286,487
Accounts receivable, net		26,094,450			26,858,114
Accounts receivable - related party		2,844,572			2,901,300
Marketable securities		12,551			11,468
Inventory		4,007,977			3,147,276
Loans receivable		375,195			377,590
Prepaid expenses and other current assets		1,944,720			2,987,687
Prepaid expenses and other current assets - related party		4,368,794			3,263,241
Operating lease right-of-use asset		775,545			834,468
Financing lease right-of-use asset		192,822			211,099

TOTAL CURRENT ASSETS		41,627,053			40,878,730

Property and equipment, net		1,777,889			1,888,052
Goodwill and intangible assets, net		464,630			485,767
Loans receivable - long term portion		4,227,268			4,410,689
Other assets		909,581			915,250
Deferred tax assets		767,267			850,774

TOTAL ASSETS	$	49,773,688		$	49,429,262

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	11,781,189		$	12,126,626
Accounts payable and accrued expenses - related party		220,887			599,125
Accrued interest		1,033,866			1,019,889
Lines of credit		4,362,327			4,743,557
Convertible notes payable, net of unamortized discount of $191,085 and $258,938, respectively		448,915			381,062
Derivative liability - convertible note		30,664			45,665
Notes payable		6,143,075			5,462,504
Notes payable - related party		455,035			464,264
Loans payable		1,000,000			1,000,000
Loans payable - related party		1,703,881			1,293,472
Taxes payable		1,192,178			1,324,722
Operating lease liability, current portion		158,359			138,450
Financing lease liability, current portion		71,861			73,078
Other current liabilities		1,193,683			1,255,824

TOTAL CURRENT LIABILITIES		29,795,920			29,928,238

Share settled debt obligation		1,554,590			1,554,590
Lines of credit - long-term portion		185,872			366,171
Notes payable - long term portion		6,885,806			12,356,384
Operating lease liability, net of current portion		617,183			696,015
Financing lease liability, net of current portion		131,016			148,401

TOTAL LIABILITIES		39,170,387			45,049,799

Commitments and Contingencies (see Note 14)		-			-

MEZZANINE EQUITY
Preferred stock, $0.001 par value; 100,000,000 shares authorized:
Series A preferred stock, stated value $1,000 per share, 6,000,000 shares authorized; 6,000 and 0 shares issued and outstanding as of March 31, 2022 and December 31, 2021; liquidation preference of $6,000,000 and $0, respectively		5,452,300			-

STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value; 300,000,000 shares authorized; 18,611,980 and 17,544,509 shares issued and 18,224,556 and 17,157,085 outstanding as of March 31, 2022 and December 31, 2021, respectively		18,611			17,544
Additional paid-in capital		40,648,106			39,675,753
Treasury stock, 387,424 and 387,424 shares as of March 31, 2022 and December 31, 2021		(816,707	)		(816,707	)
Accumulated deficit		(34,142,159	)		(34,345,506	)
Accumulated other comprehensive loss		(556,850	)		(151,621	)

TOTAL STOCKHOLDERS' EQUITY		5,151,001			4,379,463

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY	$	49,773,688		$	49,429,262

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

Table of Contents

COSMOS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended March 31,
	2022		2021

REVENUE	$	13,071,800	$	11,619,076

COST OF GOODS SOLD		11,179,868		10,617,741

GROSS PROFIT		1,891,932		1,001,335

OPERATING EXPENSES
General and administrative expenses		868,639		1,688,712
Salaries and wages		521,471		531,556
Sales and marketing expenses		146,949		405,092
Depreciation and amortization expense		112,622		107,073
TOTAL OPERATING EXPENSES		1,649,681		2,732,433

INCOME (LOSS) FROM OPERATIO

SEC Form 10-Q filed by Cosmos Holdings Inc.