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v3.23.1

DEBT | 3 Months Ended
--- | ---
Mar. 31, 2023
DEBT |
DEBT | NOTE 12 – DEBT A roll forward of the Company’s third-party debt for the three months ended March 31, 2023 is presented below:
March 31, 2023 |  | Trade Facility |  |  | Third Party |  |  | COVID Loans |  |  | Total |
Beginning balance 12/31/22 |  | $ | 3,305,532 |  |  | $ | 1,505,078 |  |  | $ | 207,377 |  |  | $ | 5,017,987 |
Payments |  |  | (1,153,365 | ) |  |  | (86,561 | ) |  |  | (5,096 | ) |  |  | (1,245,022 | )
Debt forgiveness |  |  | (306,637 | ) |  |  | - |  |  |  | - |  |  |  | (306,637 | )
Foreign currency translation |  |  | 29,890 |  |  |  | 11,409 |  |  |  | 1,879 |  |  |  | 43,178 |
Ending balance 3/31/23 |  |  | 1,875,420 |  |  |  | 1,429,926 |  |  |  | 204,160 |  |  |  | 3,509,506 |
Notes payable - long-term |  |  | (1,549,260 | ) |  |  | (1,002,288 | ) |  |  | (176,000 | ) |  |  | (2,727,548 | )
Notes payable - short-term |  | $ | 326,160 |  |  | $ | 427,638 |  |  | $ | 28,160 |  |  | $ | 781,958 |
Our outstanding debt as of March 31, 2023, is repayable as follows:
|  | March 31, 2023 |
2023 |  | $ | 802,622 |
2024 |  |  | 806,824 |
2025 |  |  | 1,613,928 |
2026 |  |  | 174,947 |
2027 and thereafter |  |  | 111,185 |
Total debt |  |  | 3,509,506 |
Less: notes payable–- current portion |  |  | (781,958 | )
Notes payable–- long term portion |  | $ | 2,727,548 |
Loan Facility Agreement On August 4, 2021, the Company entered into an exchange agreement for the existing loan facility agreement with Synthesis Peer-to-Peer Income Fund, whereby the Company agreed to the following:
| • | Issue on August 4, 2021, 12,852 shares of common stock to settle $1,606,500 (€1,350,000) of debt. The Company recorded a gain on settlement of $292,383 upon the issuance of the 12,852 shares; and
| • | Agreed to issue no more than 9,520 shares of common stock upon approval of the listing of the Company’s common stock on Nasdaq to settle $1,190,000 (€1,000,000) of debt. The Company issued these shares on February 28, 2022. Upon issuance of the 9,520 shares of common stock, the Company recorded a gain on extinguishment of debt in the amount of $216,580 determined using the fair value of the Company’s common stock at the commitment date of $102.25 per share.
The Company incurred non-cash interest expense of $6,642 during the period ended December 31, 2022 concerning the debt extinguishment. The principal debt balance was paid in full during the year ended December 31, 2022. As of March 31, 2023 and December 31, 2022, the outstanding principal balance on the debt was $0, and had accrued interest expense of $18,527 and $12,853, respectively. Trade Facility Agreements On May 12, 2017, SkyPharm entered into a Trade Finance Facility Agreement (the “TFF”) with Synthesis Structured Commodity Trade Finance Limited (the “Lender”) as amended on November 16, 2017, and May 16, 2018. On October 17, 2018, the Company entered into a further amended agreement with Synthesis whereby the current balance on the TFF as of October 1, 2018, which was €4,866,910 ($5,629,555) and related accrued interest of €453,094 ($524,094) would be split into two principal balances of Euro €2,000,000 ($2,316,000), (the "EURO Loan") and USD $4,000,000, the "USD Loan". Interest on both the EURO Loan and USD Loan commenced on October 1, 2018, at 6% per annum plus one-month Euribor (2.49% as of March 31, 2023), and 6% plus one-month LIBOR (4.77% as of date of March 31, 2023), respectively. On December 30, 2020, the Company transferred the EURO Loan to a new third-party lender. The terms remained the same except interest accrues at 5.5% per annum plus one-month Euribor (2.49% as of March 31, 2023). The principal was scheduled to be repaid in a total of five quarterly installments beginning October 31, 2021 of €50,000 ($54,360) each with a final repayment of €1,800,000 ($1,956,960) Euro payable on October 31, 2022. On March 3, 2022, the Company entered into a modification agreement to extend the maturity date to January 10, 2023 and payments under the USD Loan. During June 2022, the Company agreed with the Lender to postpone the repayment of an installment of $500,000 due on June 30, 2022 (based on the modification agreement signed on March 3, 2022) until January 2023. During September 2022, the Company agreed with the Lender to postpone the repayment of the outstanding balance on the USD Loan of $3,950,000, plus unpaid accrued interest until January 2023. The Company capitalized fees paid upon modification of €200,000 ($221,060) that are being amortized over the life of the loan. The Company incurred non-cash interest expense of $23,820 during the three-month period ended March 31, 2022 concerning the above capitalized fees. During the year ended December 31, 2022, the Company repaid €175,000 ($187,215) of the EURO Loan and $2,593,363 of the USD Loan such that as of December 31, 2022, the Company had principal balances of €1,775,000 ($1,898,895) and $1,406,637 under the agreements, respectively. As of March 31, 2022, the Company had accrued $81,813 in interest expense related to these agreements. On December 21, 2022 the USD Loan was assigned to GIB Fund Solutions ICAV (the “Fund”). On January 31, 2023, the Company paid $1,100,000 to the Fund under a full and final settlement agreement for the USD Loan, recording a gain on extinguishment of debt of $306,637 relating to the waiver of the unpaid balance. Additionally, the Company repaid €50,000 ($54,360) of the EURO Loan during the 3-month period ended March 31, 2023. As of March 31, 2023 the Company had an outstanding principal balance of €1,725,000 ($1,875,420), of which $1,549,260 is classified as notes payable-long term on the condensed consolidated balance sheets. As of March 31, 2023, the Company had accrued $14,380 in interest expense related to these agreements. On December 22, 2022, Skypharm SA signed an agreement for the extension of the payments and an increase in interest rate due under the EURO loan, that was extended to be repaid with a balloon payment now due on October 31, 2025. This extension was agreed upon in writing on December 22, 2022 with a retroactive modification date to October 31, 2022 (the original maturity date). Third Party Debt On November 16, 2015, the Company entered into a Loan Agreement with Panagiotis Drakopoulos, the Company’s former Director and former Chief Executive Officer, pursuant to which the Company borrowed €40,000 ($42,832) as a note payable from Mr. Drakopoulos. The note bore an interest rate of 6% per annum and was due and payable in full on November 15, 2016. As of December 31, 2022, the Company had an outstanding principal balance of €8,000 ($8,558) and accrued interest of €6,797 ($7,271). During the three months ended March 31, 2023, the Company paid the outstanding balance of €8,000. Therefore, as of March 31, 2023, the balance due is $0. Mr Drakopoulos is not considered a related party since he is no longer employed by the Company and currently holds no equity position in the Company. May 18, 2020, July 3, 2020, and August 4, 2020 Senior Promissory Notes Modification of May 18, 2020, July 3, 2020, and August 4, 2020 Senior Promissory Notes On February 23, 2022, the Company entered into modification agreements to extend the due dates of the May 18 Note, July 3 Note, and August 4 Note to June 30, 2023 of $9,000,000, in the aggregate. The Company paid restructuring fees totaling $506,087 upon modification. The Company determined the modification should be recorded as debt extinguishment in accordance with ASC 470 because the present value of the remaining cash flows under the terms of the new debt instrument is at least 10% different from the present value of the remaining cash flows under the terms of the original instrument. The Company recorded the new debt at fair value in the amount of $7,706,369 and a gain upon extinguishment in the amount of $787,544. During the year ended December 31, 2022, the Company repaid the aggregate principal balance of $7,000,000 and the aggregate accrued interest related to these notes in full. During the three months ended March 31, 2022 the Company recorded non-cash interest expense in the amount of $89,275 for the amortization of debt issuance costs. June 23, 2020 Debt Agreement On June 23, 2020, the Company’s subsidiary, Cosmofarm, entered into an agreement with the “National Bank of Greece SA” (the “Bank”) to borrow a maximum of €500,000 ($611,500). The note has a maturity date of sixty (60) months from the date of the first disbursement, which includes a grace period of nine months. The total amount of the initial proceeds was paid in 3 equal monthly installments. The note is interest bearing from the date of receipt and is payable every three (3) months at an interest rate of 3.06% plus 3-month Euribor (2.78% as of March 31, 2023). The outstanding balance was €294,118 ($319,765) and €323,529 ($346,112) on March 31, 2023 and December 31, 2022, respectively of which $191,859 and $220,253, is classified as Notes payable - long-term portion respectively, on the accompanying condensed consolidated balance sheets. During the three months ended March 31, 2023, the Company repaid €29,412 ($31,976) of the principal balance. November 19, 2020 Debt Agreement On November 19, 2020, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($611,500). The note matures on November 18, 2025 and bears an annual interest rate, based on a 360-day year, of 3.3% plus .6% plus 6-month Euribor when Euribor is positive. The principal is to be repaid in 18 quarterly installments of €27,778 ($30,210). During the year ended December 31, 2022, the Company repaid €111,111 ($118,867) of the principal and as of December 31, 2022, the Company had accrued interest of $8,069 related to this note and a principal balance of €333,333 ($356,600), of which $237,733 is classified as Notes payable – long term portion on the accompanying condensed consolidated balance sheet. During the three months ended March 31, 2023, the Company repaid €27,778 ($30,200) of the principal and as of March 31, 2023, the Company has accrued interest of €2,516 ($2,735) related to this note and a principal balance of €305,556 ($332,200), of which $211,400 is classified as Notes payable – long term portion on the accompanying condensed consolidated balance sheet. July 30, 2021 Debt Agreement On July 30, 2021, the Company entered into an agreement with a third-party lender in the principal amount of €500,000 ($578,850). The note matures on August 5, 2026 and bears an annual interest rate that applies to 60% of the principal of the note that is based on a 365-day year, of 5.84% plus 3-month Euribor when Euribor is positive. Pursuant to the terms of the agreement, there is a nine-month grace period for principal repayment during which interest is accrued. The principal is to be repaid in 18 quarterly installments of €27,778 commencing three months from the end of the grace period. During the year ended December 31, 2022, the Company repaid €77,985 ($83,428) of the principal balance. As of December 31, 2022, the Company had accrued interest of €2,509 ($2,728) and a principal balance of €422,016 ($451,472), of which $336,788 is classified as notes payable – long term portion on the accompanying condensed consolidated balance sheet. During the three months ended March 31, 2023, the Company repaid €26,451 ($28,758) of the principal. As of March 31, 2023, the Company has accrued interest of €4,136 ($4,947) and principal of €395,564 ($430,057), of which $312,520 is classified as Notes payable – long term portion on the accompanying condensed consolidated balance sheet. June 9, 2022 Debt Agreement On June 9, 2022 the Company entered into an agreement with a third-party lender in the principal amount of €320,000 ($335,008), the “Note”. The Note matures on June 16, 2027 and bears an annual interest rate of 3.89% plus an additional rate of 0.60%, plus the 3-month Euribor (2.78% as of March 31, 2023). Pursuant to the agreement, there is a twelve-month grace period for principal repayment during which interest is accrued. The principal is to be repaid in 17 equal quarterly installments of €18,824 commencing on June 30, 2023. As of March 31, 2023 and December 31, 2022 the Company has accrued interest of €3,532 ($3,840) and €7,707 ($8,379), respectively, and an outstanding balance of €320,000 ($347,904), of which $286,509 and $281,924, respectively, is classified as Notes payable – long term portion on the accompanying condensed consolidated balance sheets. August 29, 2022 Promissory Note On August 29, 2022, the Company entered into a promissory note for the principal amount of $166,667. The Company received $150,000 in cash and recorded $16,667 as an original issue discount upon issuance. The promissory note matures on the earlier of (a) December 27, 2022, or (b) the date the Company completes a debt or equity financing of at least $1,000,000. The debt carried an annual interest rate of 12% which was due upon maturity. As of December 31, 2022, the Company had repaid the principal balance in full and had a balance of $5,041 in accrued interest related to this note. The Company repaid the outstanding interest during the 3-month period ended March 31, 2023 and thus the balance of both principal and interest as of March 31, 2023 is $0. COVID-19 Loans On May 12, 2020, the Company’s subsidiary, SkyPharm, was granted and on May 22, 2020 received a €300,000 ($366,900) loan from the Greek government. The loan will be repaid in 40 equal monthly installments beginning on July 29, 2022. As a condition to the loan, the Company was required to retain the same number of employees until October 31, 2020. As of December 31, 2022, the principal balance was $150,441. During the three months ended March 31, 2023, the Company repaid €4,688 ($5,096) of the principal balance. The outstanding balance as of March 31, 2023 is €135,938 ($147,791). On June 24, 2020, the Company received a loan £50,000 ($68,310) from the United Kingdom government. The loan has a ten-year maturity and bears interest at a rate of 2.5% per annum beginning 12-months after the initial disbursement, which was on July 10, 2020. The Company may prepay this loan without penalty at any time. As of December 31, 2022, the principal balance was £47,144 ($56,936). As of March 31, 2023, the principal balance was £45,573 ($56,369). None of the above loans were made by any related parties.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI https://asc.fasb.org/topic&trid=2208564 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
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