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 June 30, 2015

 

OR

 

o 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) 674.4529

 

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 o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, 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 o

 

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

 

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller Reporting Company	x

 

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

 

As of August 14, 2015 there were 125,630,532 shares issued and 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.			10
Item 3.	Quantitative and Qualitative Disclosure about Market Risk.			14
Item 4.	Controls and Procedures.			14
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.			15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.			15
Item 3.	Defaults Upon Senior Securities.			15
Item 4.	Mine Safety Disclosures.			15
Item 5.	Other Information.			15
Item 6.	Exhibits.			16
SIGNATURES				17

 

2

 

PART I – FINANCIAL INFORMATION

 

Item 1 – Financial Statements

 

COSMOS HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

		June 30, 2015				December 31, 2014
ASSETS
CURRENT ASSETS
Cash and equivalents		$	188,055			$	446,604
Prepaid expenses			32,500				32,500
Deposit on pending acquisition			6,146,298				6,733,870
TOTAL CURRENT ASSETS			6,366,853				7,212,974
Other assets			10,847				9,601
Fixed assets, net			45,635				11,993
TOTAL ASSETS		$	6,423,335			$	7,234,568
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses		$	105,569			$	159,453
Salaries payable			-				6,000
Notes payable, related party			536,115				504,115
Taxes payable			970,863				1,091,377
TOTAL CURRENT LIABILITIES			1,612,547				1,760,945
SHAREHOLDERS' EQUITY
Preferred stock, par value $0.001, authorized 100 million shares, none issued and outstanding at June 30, 2015 and December 31, 2014, respectively			-				-
Common stock, par value $0.001, authorized 300 million, 125,630,532 and 125,585,532 issued and outstanding at June 30, 2015 and December 31, 2014, respectively			125,631				125,586
Additional paid-in capital			(229,388	)			(257,693
Accumulated other comprehensive loss			(1,130,877	)			(680,965	)
Retained earnings			6,045,422				6,286,695
TOTAL SHAREHOLDERS' EQUITY			4,810,788				5,473,623
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	6,423,335			$	7,234,568

 

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

 

3

 

COSMOS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND

COMPREHENSIVE INCOME (LOSS)

(unaudited)

 

		SIX MONTHS ENDED JUNE 30,								THREE MONTHS ENDED JUNE 30,
		2015				2014				2015				2014
Revenues
Revenues		$	-			$	2,015,223			$	-			$	1,234,167
Expenses
General and administrative expenses			194,085				241,434				109,802				168,261
Net operating income (loss)			(194,085	)			1,773,789				(109,802	)			1,065,906
Other income and (expense)
Interest income			1,059				-				242				(2,469	)
Interest expense – related party			(4,636	)			(4,910	)			(1,474	)			-
Interest expense			(43,611	)			-				(21,586	)			-
Total other income and (expense)			(47,188	)			(4,910	)			(22,818	)			(2,469	)
Income (loss) before income taxes			(241,273	)			1,768,879				(132,620	)			1,063,437
Income tax expense			-				226,380				-				135,154
Net income (loss)			(241,273	)			1,542,499				(132,620	)			928,283
Other comprehensive income (loss)
Unrealized foreign currency income (loss)			(449,912	)			(67,814	)			111,536				(11,590	)
NET COMPREHENSIVE INCOME (LOSS)		$	(691,185	)		$	1,474,685			$	(21,084	)		$	916,693
Net income (loss) per share – basic		$	(0.00	)		$	0.01			$	(0.00	)		$	0.01
Net income (loss) per share – dilutive		$	(0.00	)		$	0.01			$	(0.00	)		$	0.01
Weighted average number of shares outstanding – basic			125,601,282				125,585,532				125,601,282				125,585,532
Weighted average number of shares outstanding – dilutive			125,808,721				125,804,894				125,808,721				125,804,113

 

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

 

4

 

COSMOS HOLDINGS INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(unaudited)

 

		Common Stock, Par Value $0.001								Additional Paid In				Other Comprehensive				Retained				Total Shareholders'
		Shares				Amount				Capital				Income (loss)				Earnings				Equity
Balances, December 31, 2014			125,585,532			$	125,586			$	(257,693	)		$	(680,965	)		$	6,286,695			$	5,473,623
Shares issued for consulting services			45,000				45				28,305												28,350
Foreign currency translation effect															(449,912	)							(449,912	)
Net loss																			(241,273	)			(241,273	)
Balances, June 30, 2015			125,630,532			$	125,631			$	(229,388	)		$	(1,130,877	)		$	6,045,422			$	4,810,788

 

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

 

5

 

COSMOS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

		SIX MONTHS ENDED JUNE 30,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	(241,273	)		$	1,542,499
Adjustments to reconcile net income (loss) with cash used in operations:
Imputed interest			-				4,910
Depreciation expense			178				-
Stock-based compensation			28,350				-
Change in operating assets and liabilities:
Accounts receivable			-				(1,228,050	)
Prepaid expenses			-				(32,263	)
Other assets			(1,246	)			-
Accounts payable and accrued liabilities			(59,884	)			(468,057	)
Taxes payable			18,298				225,985
Deferred revenue			-				(671	)
Net cash (used in) provided by operating activities			(255,577	)			44,353
CASH FLOWS FROM INVESTNG ACTIVITIES
Purchase of fixed assets			(33,820	)			-
Net cash used in financing activities			(33,820	)			-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party loan			70,000				-
Payment of related party loan			(3,000	)			-
Net cash provided / (used in) financing activities			67,000				-
Foreign currency translation effect			(36,152	)			(67,814	)
NET DECREASE IN CASH			(258,549	)			(23,461	)
Cash at beginning of period			446,604				864,489
Cash at end of period		$	188,055			$	841,028
SUPPLEMENTAL DISCLOSURES
Cash paid for interest		$	-			$	-
Cash paid for income taxes			-				-

 

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

 

6

 

COSMOS HOLDINGS INC.

Notes to Unaudited Consolidated Financial Statements

June 30, 2015

 

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 June 30, 2015 and unaudited consolidated statements of operations for the six and the three months ended June 30, 2015 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 six and the three month period ended June 30, 2015, are not necessarily indicative of the results that may be expected for the year ending December 31, 2015, 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, 2014 and 2013, included in the Company’s Annual Report on Form 10-K. The accompanying unaudited consolidated balance sheet as of December 31, 2014 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 – INCOME TAXES

 

At June 30, 2015, 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. At June 30, 2014, the Company’s effective tax rate differed from the US federal statutory tax rate primarily due to earnings taxed at the lower income tax rate in Cyprus.

 

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 June 30, 2015 the Company has a maintained a valuation allowance against all net deferred tax assets in each jurisdiction in which it is subject to income tax.

 

As of June 30, 2015 the Company has no uncertain tax positions recorded in any jurisdiction where it is subject to income tax. The Company has recorded $43,611 of interest and penalties as interest expense for the six month period ended June 30, 2015 in accordance with this policy.

 

7

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

On March 27, 2015, the Company entered into a Loan Agreement with Dimitrios Goulielmos, the Chief Executive Officer and a Director of the Company, pursuant to which the Company borrowed $70,000 from Mr. Goulielmos. The loan will bear an interest rate of 2% per annum and is due and payable in full on December 15, 2015. The Company has accrued interest expense of $361 as of June 30, 2015.

 

On December 29, 2014, the Company entered into a Loan Agreement with Dimitrios Goulielmos, the Chief Executive Officer and a director of the Company, pursuant to which the Company borrowed $100,000 from Mr. Goulielmos. The Loan bears interest at the rate of 2% per annum and was due and payable in full on June 30, 2015. The maturity date has been extended to December 31, 2015. The Company has accrued interest expense of $1,003 as of June 30, 2015.

 

On December 29, 2014, the Company borrowed $3,000 from Dimitrios Goulielmos, the Chief Executive Officer and a director of the Company. The loan was non-interest bearing and was repaid in full in January 2015.

 

On November 21, 2014, SkyPharm entered into a Loan Agreement with Dimitrios Goulielmos, the Chief Executive Officer and a director of the Company, pursuant to which the Borrower borrowed €330,000 ($366,115) from Mr. Goulielmos. The Loan will bear an interest rate of 2% per annum and will be due and was payable in full on May 11, 2015. The maturity date has been extended to November 11, 2015. The Company has accrued interest expense of $4,006 as of June 30, 2015.

 

At December 31, 2013, our former Chief Executive Officer and Director, Mr. Panagiotis Drakopoulos, was owed $110,000 in unpaid salaries. At December 31, 2014, $96,500 unpaid salaries were forgiven and the amount was therefore written off. As of June 30, 2015 the company paid Mr. Drakopoulos the remaining open amount.

 

We believe that all related party transactions were on terms at least as favorable as we would have secured in arm’s-length transactions with third parties. 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 4 – LEASES

 

The Company conducts its operations from an office located in Chicago, Illinois for which we paid rent of approximately $307 per month through November 2013. In December 2013 we moved our office to another location in Chicago Illinois. Beginning in February 2014, we paid rent of approximately $710 per month for our office through December 31, 2014. Effective January 1, 2015, the monthly rent expense is $730. Rent expense for the six and three month periods ended June 30, 2015 was $5,150 and $2,244 and $5,801 and $2,895 for the six and three month periods ended June 30, 2014, respectively.

 

The offices of Amplerissimo are located in Cyprus for which we paid approximately $110 per month under a one year lease which expired in July 2013 and was renewed through July 2015. Rent expense for the six and three month periods ended June 30, 2015 was $660 and $330, respectively and $660 and $330 for the six and three month periods ended June 30, 2014, respectively.

 

The offices of SkyPharm are located in Greece for which we paid approximately €4,325 ($5,405) per month under a six year lease commencing September 2014. Rent expense for the six and three month periods ended June 30, 2015 was €25,950 ($28,696) and €12,975 ($14,640), respectively and $0 and $0 for the six and three month periods ended June 30, 2014, respectively.

 

8

 

NOTE 5 – EARNINGS PER SHARE

 

Basic net income (loss) per share is computed by dividing net income (loss) attributable to the Company, decreased with respect to net income or increased with respect to net loss by dividends declared on preferred stock by using the weighted-average number of common shares outstanding. The dilutive effect of incremental common shares potentially issuable under outstanding options, warrants and restricted shares is included in diluted earnings per share utilizing the treasury stock method. The computations of basic and diluted per share data were as follows:

 

		SIX MONTHS ENDED								THREE MONTHS ENDED
		June 30, 2015				June 30, 2014				June 30, 2015				June 30, 2014
Net income (loss)		$	(241,273	)		$	1,542,499			$	(132,620	)		$	928,283
Weighted average common shares outstanding - basic			125,601,282				125,585,532				125,601,282				125,585,532
Option awards			207,439				219,362				207,439				218,581
Weighted average common shares outstanding - dilutive			125,808,721				125,804,894				125,808,721				125,804,113
Net income (loss) per share - basic and diluted		$	(0.00	)		$	0.01			$	(0.00	)		$	0.01

 

NOTE 6 – DEPOSIT ON PENDING ACQUISITION

 

On August 19, 2014, Amplerissimo Ltd., a company incorporated in Cyprus and a subsidiary of the Company (“Amplerissimo”) entered into a Share Purchase Agreement (the "Purchase Agreement") with B2IN S.A., a corporation organized under the laws of Greece ("B2IN"), Unilog Logistics S.A., a corporation organized under the laws of Greece and a wholly owned subsidiary of B2IN ("Unilog"), and Wilot Limited, a corporation organized under the laws of Cyprus ("Seller"). Unilog operates a pharmaceutical logistics business in Greece. Subject to the terms, conditions, and provisions of the Purchase Agreement, at the closing (the "Closing") of the transactions contemplated by the Purchase Agreement, Amplerissimo will acquire from Seller all of the outstanding capital stock of B2IN for a purchase price of seven million euros (€ 7,000,000) or approximately $7,766,000. As of June 30, 2015, €5,540,000 ($6,146,298) of this purchase price was paid to the Seller by Amplerissimo and is classified as a deposit on pending acquisition on the June 30, 2015 balance sheet. Upon the occurrence of the Closing, Unilog will be an indirect, wholly owned subsidiary of Amplerissimo. The Closing is subject to conditions outside the control of Amplerissimo. Under the agreement for extension entered into as of 18^th day of August 2015 if the Closing does not occur by March 30, 2016 for any reason, Amplerissimo is entitled to have the deposit returned to it by Seller.

 

NOTE 7 – COMMON STOCK ISSUANCE

 

On April 28, 2015, the Company issued 45,000 shares of common stock to Hellenic American Securities for consulting services and has recorded consulting expense of $28,350 for the quarter ended June 30, 2015 based on the average share price on the date of issuance. The terms of the consulting agreement call for payments of $1,000 per month plus 180,000 shares on an annual basis which will be issued quarterly.

 

NOTE 8 – SUBSEQUENT EVENTS

 

On August 17, 2015, the Company entered into a Loan Agreement with Dimitrios Goulielmos, the Chief Executive Officer and a Director of the Company, pursuant to which the Company borrowed $50,000 from the Lender (the “August 2015 Loan”). The August 2015 Loan will bear an interest rate of 2% per annum, with a balloon payment of principal and interest and will mature on December 16, 2016.

 

On August 18, 2015, Amplerissimo Ltd. entered into an extension agreement (the “Extension Agreement”) with Wilot Limited pursuant to which parties agreed to extend the closing date for the Share Purchase Agreement, dated as of August 19, 2014 to March 30, 2016. In connection therewith, in the event the Share Purchase Agreement does not close or is terminated by Amplerissimo Ltd., the deposit shall be refunded to Amplerissimo Ltd.

 

9

 

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 Securities and Exchange Commission (“SEC”).

 

Overview

 

Cosmos Holdings Inc. (“us”, “we”, or the “Company”) was incorporated in the State of Nevada on July 21, 2009 under the name Prime Estates and Developments, Inc. for the purpose of acquiring and operating commercial real estate and real estate related assets. On November 14, 2013, we changed our name to Cosmos Holdings Inc.

 

We are currently focusing our existing operations on expanding the businesses of our new subsidiaries, Amplerissimo and SkyPharm S.A, a wholly owned subsidiary of Amplerissimo (“SkyPharm”). The Company has transitioned into a holding company and as a result the Company is currently actively pursuing and investing potential acquisition targets in various industries, including, but not limited to, pharmaceutical industry and related pharmaceutical logistics companies, cargo shipping industry, green and high tech technologies, the food industry, and the insurance industry. We have held preliminary discussions with several potential acquisition candidates and have entered into two binding agreements to acquire two such targets. The first is to acquire the 100% of the issued and outstanding shares of the B2IN S.A., a corporation organized under the laws of Greece (“B2IN”). B2IN is the parent company of the Greek entity Unilog S.A, which provides pharmaceutical logistic services. The second potential acquisition is for a 70% equity ownership interest of Terranova Inc., a Delaware corporation (“Terranova”), based in Chicago. Neither of the aforementioned transactions to acquire the targets have closed yet and no assurances can be given that either acquisition will be completed. As described below, various contingencies exist that must be satisfied prior to the expiration of the binding agreements.

 

Amplerissimo

 

Amplerissimo’s principal activities are the trading of products, providing representation, and provision of consulting services to various sectors. In the interim, we plan on continuing to offer the same products and services through Amplerissimo which include: data mining, statistical data analysis, research and analysis, negotiating services, credit risk analysis, credit management, conducting case studies, introduction services, e-commerce consulting, marketing management consulting, expansion strategies consulting, information systems consulting, and business management software consulting. We also intend to add additional services to the ones that we currently offer, including systems integration, accredited partnership services, and installation and resale of third parties systems and software. We intend to accomplish this by new cooperative agreements or acquisition of other existing companies. However, at this time we have no binding agreement, commitment or obligation for any such ventures.

 

On August 19, 2014, Amplerissimo Ltd., a company incorporated in Cyprus and subsidiary of the Company (“Amplerissimo”) entered into a Share Purchase Agreement (the "Purchase Agreement") with Wilot Limited, a corporation organized under the laws of Cyprus ("Seller") for the acquisition of B2IN S.A., a corporation organized under the laws of Greece ("B2IN"), and its wholly owned subsidiary Unilog Logistics S.A., a corporation organized under the laws of Greece. Unilog operates a pharmaceutical logistics business in Greece. Subject to the terms, conditions, and provisions of the Purchase Agreement, at the closing (the "Closing") of the transactions contemplated by the Purchase Agreement, Amplerissimo will acquire from Seller (Wilot) all of the outstanding capital stock of B2IN for a purchase price of seven million euros (€ 7,000,000) or approximately $7,766,000. As of June 30, 2015, €5,540,000 ($6,146,298) of this purchase price was paid to the Seller by Amplerissimo and is classified as a deposit on pending acquisition on the June 30, 2015 balance sheet.

 

10

 

Upon the occurrence of the Closing, B2IN and Unilog will be indirect, wholly owned subsidiaries of Amplerissimo. The Closing is subject to conditions outside the control of Amplerissimo. Please see Note 8 Subsequent Events for further information regarding the transaction.

 

SkyPharm

 

We are seeking to enter the pharmaceutical sector if and when we have sufficient capital through new wholly-owned subsidiaries that will focus on the wholesale of pharmaceutical products. On April 30, 2014, we entered into an Exclusive Cooperation Agreement with Grigorios Siokas to assume the position of Manager of Pharmaceutical Division of the Company. On August 1, 2014, we formed SkyPharm S.A. Greek Corporation (“SkyPharm”), a wholly owned subsidiary of Amplerissimo that will focus on wholesale sales of pharmaceutical products. SkyPharm is currently in the process of obtaining the necessary licensing from National Organization for Medicines of Greece required to be a wholesaler of pharmaceutical products. SkyPharm has not raised any capital and otherwise does not have the capital resources necessary to commence this line of business. However, the Company has expended approximately $248,000 as of June 30, 2015 in connection with these proposed operations. There can be no assurance that we will ever raise the required capital necessary to effectuate our business plan; and even if we do, there is no assurance that we will ever commence or successfully develop this line of business, notwithstanding the Agreement.

 

We have already facilitated the medicines warehouse with the proper equipment, specifically with the proper shelves, working table, medicines cold fridge and barcode machines. The offices in Thessaloniki have been also equipped with the proper equipment and specifically with the office tables, chairs and the terminals for each one working station. The hardware systems and software programs that are needed for the efficient trading of pharmaceuticals is already installed. The application for licensing from the Hellenic Pharmaceutical Organization has been applied and is in the last stage of the approval. The management has already worked on the GDP (Good Distribution Practices) methodology in order to be compliant with the prerequisites set from the Hellenic Pharmaceutical Organization. 

 

Results of Operations

 

Three Month Period ended June 30, 2015 versus June 30, 2014

 

During the three month period ended June 30, 2015, the Company had a net loss of $(132,620) with no revenues, versus net profit of $928,283 on revenue of $1,234,167, for the three month period ended June 30, 2014. Net profit in the most recent three month period in 2015 turned to a loss as compared to the corresponding period last year due to the absence of the revenue.

 

Revenue

 

The Company did not have any revenue for the three month period ended June 30, 2015, versus $1,234,167 during the three month period ended June 30, 2014. During the Company’s three month period ended June 30, 2015, revenues decreased by 100% as compared to revenues in the period ended June 30, 2014. This variation resulted against the corresponding period in 2014 primarily from the absence of new engagements through our subsidiary Amplerissimo, which is our only active subsidiary.

 

Operating Expenses

 

Total operating expenses for the three month period ended June 30, 2015 were $109,802, versus $168,261 during the three month period ended June 30, 2014. The approximate 34% decrease in operating expenses in the three month period in 2015, against the corresponding period in 2014, is primarily due to the costs of professional fees and other associated expenses in connection with being a public company, including related activity, as well as increased expenditures for potential company acquisitions. Consulting expenses consistently constitute the bulk of operating costs for the investment activities of the Company.

 

Unrealized Foreign Currency losses

 

Additionally, we had an unrealized foreign currency gain of $111,536 for the three months ended June 30, 2015 such that our net comprehensive loss for the period was $21,084 versus an unrealized foreign currency loss of $11,590 and comprehensive income of $916,693 during the three month period ended June 30, 2014.

 

11

 

Liquidity and Capital Resources

 

As of June 30, 2015, the Company had working capital of approximately $4,754,000 versus a working capital of approximately $1,426,000 as of June 30, 2014 and approximately $5,452,000 as of December 31, 2014. Most of this change is attributed to the growth of the business of the subsidiary Amplerissimo and in the increase of revenues that incurred as of the year ended December 31, 2014.

 

At the end of period ended June 30, 2015, the Company had net cash of $188,055 versus $841,028 as of June 30, 2014. For the six months ended June 30, 2015, net cash used in operating activities was $255,577 versus $44,353 net cash provided by operating activities for the six months ended June 30, 2014. The decrease in net cash from operating activities was primarily due to the net loss and the decrease in accounts payable and accrued expenses and taxes payable, as well as the decreased revenues from the previous year end.

 

During the six months ended June 30, 2015, there was $33,820 net cash used in investing activities versus none used in during the six months ended June 30, 2014. This was primarily due to the purchase of fixed assets by Amplerissimo.

 

During the three months ended June 30, 2015, there was $67,000 of net cash provided by financing activities versus none provided by during the six months ended June 30, 2014.

 

We anticipate using cash in our bank account as of June 30, 2015, cash generated from the operations of the Company and its subsidiaries 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 SEC reporting obligations, 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

 

We consider revenue recognizable when persuasive evidence of an arrangement exists, the price is fixed or determinable, goods or services have been delivered, and collectability is reasonably assured. These criteria are assumed to have been met if a customer orders an item, the goods or services have been shipped or delivered to the customer, and we have sufficient evidence of collectability, such a payment history with the customer. Revenue that is billed and received in advance such as recurring weekly or monthly services are initially deferred and recognized as revenue over the period the services are provided.

 

Plan of Operation in the Next Twelve Months

 

For the Company’s Amplerissimo subsidiary, we plan on continuing to offer the same products and services through Amplerissimo which include: data mining, statistical data analysis, research and analysis, negotiating services, credit risk analysis, credit management, conducting case studies, introduction services, e-commerce consulting, marketing management consulting, expansion strategies consulting, information systems consulting, and business management software consulting. We also intend to add additional services to the ones that we currently offer, including systems integration, accredited partnership services, and installation and resale of third parties systems and software. We intend to accomplish this by new cooperative agreements or acquisition of other existing companies. We anticipate that we will spend approximately $15,000 to evaluate the different methods of adding services. This cost is made of up primarily legal, planning and structuring, and accounting due diligence. We currently have no binding agreements, commitments or contracts for new cooperative agreements or acquisition of other existing companies.

 

In addition to adding services we also plan to evaluate offering our services to different geographical markets. We currently have focused our services to our customers throughout Europe. We plan on expanding our geographical reach to: United Arab Emirates, Jordan, Malta, Lebanon, Algeria, and Saudi Arabia, although we currently have no binding agreements, commitments or contracts in any of these geographical markets. Some of the methods we will use to accomplish this are: marketing our services through the internet to new geographic areas, creating strategic relationships with companies in the new geographical regions, and possibly acquiring companies that operate in different geographical regions. We anticipate that we will spend $15,000 evaluating the different methods and regions we plan on expanding too. This cost is made of up primarily legal, planning and structuring, and accounting due diligence. No assurances that the Company will be able to effectuate the expansion of services.

 

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As to potential acquisitions, 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 $30,000 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.

 

On August 19, 2014, Amplerissimo entered into a Share Purchase Agreement (the “Purchase Agreement”) with Wilot Limited, a company organized under the laws of Cyprus (the “Seller”) in order to acquire B2IN, which is the parent of Unilog Logistics S.A., a corporation organized under the laws of Greece (“Unilog”). Unilog operates a pharmaceutical logistics business in Greece. Subject to the terms, conditions, and provisions of the Purchase Agreement, at the closing of the transactions, Amplerissimo will acquire from Seller all of the outstanding capital stock of B2IN for a purchase price of seven million euro (€ 7,000,000). Upon the occurrence of the Closing, Unilog will be an indirect, wholly owned subsidiary of Amplerissimo. The Closing is subject to conditions outside the control of Amplerissimo.

 

On January 12, 2015, we entered into a letter of intent (LOI) to acquire a 70 percent majority stake in a Chicago-based mobile technology company, which develops A.I. software, a proprietary algorithm and APIs that power mobile apps, including its own location-based consumer app for mobile devices. “We initially have committed to source and invest more than $15 million to accelerate growth. The Company’s executive management team will lead the company’s continued expansion following the closing of the transaction.

 

Off Balance Sheet Arrangements

 

As of June 30, 2015, there were no off balance sheet arrangements.

 

Critical Accounting Policies

 

Foreign Currency. We require 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. We provide for income taxes in accordance with ASC Topic 740 (ASC 740). Income taxes are accounted for under the asset and liability method with deferred tax assets and liabilities 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. 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 reversed or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance for the amounts of any tax benefits which, more likely than not, will not be realized.

 

Future tax benefits of net operating loss carry forwards generated in the U.S. by us represent the primary component of our deferred tax assets. Under ASC 740 “Accounting for Income Taxes”, we evaluate at every reporting period whether the benefit of such losses will more likely than not be realized. Based on our history of taxable losses in the U.S. and the potential annual limitation on future utilization if it is determined that a change in ownership as defined in IRC 382 has occurred, we have determined that it is not more likely than not that the tax benefit of such losses will be realized prior to their expiration and thus has recorded a full valuation allowance against ourr net deferred tax assets.

 

Recently Issued Accounting Pronouncements

 

In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (“ASU 2014-15”), “Presentation of Financial Statements - Going Concern.” The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our financial statements and related disclosures.

 

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Item 3. Quantitative and Qualitative Disclosure about Market Risk

 

Not applicable.

 

Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures. Our senior management is responsible for establishing and maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d – 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Evaluation of Disclosure Controls and Procedures. We have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report, with the participation of our Chief Executive Officer and Chief Financial Officer, as well as other key members of our management. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2015.

 

Internal Controls Over Financial Reporting. No change occurred in our internal control over financial reporting during the second quarter of 2015 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

None.

 

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

 

None

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

None. 

 

Item 5. Other Information.

 

None.

 

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Item 6. Exhibits.

 

(a) Exhibits.

 

Exhibit No.		Document Description
10.1		Loan Agreement, dated as of August 17, 2015, between Dimitrios Goulielmos and Cosmos Holdings Inc.
10.2		Agreement, dated as of August 18, 2015, by and between Amplerissimo Ltd. and Wilot Limited.
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

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

	Cosmos Holdings Inc.
Date: August 20, 2015	By:	/s/ Dimitrios Goulielmos
		Dimitrios Goulielmos
		Principal Executive Officer, Acting Principal Financial Officer and Acting Principal Accounting Officer and Director

 

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EXHIBIT INDEX

 

Exhibit No.		Document Description
10.1		Loan Agreement, dated as of August 17, 2015, between Dimitrios Goulielmos and Cosmos Holdings Inc.
10.2		Agreement, dated as of August 18, 2015, by and between Amplerissimo Ltd. and Wilot Limited.
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

 

 

18

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