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NOTES PAYABLE | 6 Months Ended
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Jun. 30, 2024
NOTES PAYABLE |
NOTES PAYABLE | NOTE 11 – NOTES PAYABLE A summary of the Company’s third-party debt as of and for the six months ended June 30, 2024, and the year ended December 31, 2023 is presented below:
June 30, 2024 |  | Trade Facility |  |  | Third Party |  |  | COVID Loans |  |  | Total |
Beginning balance, December 31, 2023 |  | $ | 1,908,195 |  |  | $ | 2,511,148 |  |  | $ | 186,884 |  |  | $ | 4,606,227 |
Proceeds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payments |  |  | (240,998 | ) |  |  | (293,229 | ) |  |  | (7,145 | ) |  |  | (541,372 | )
Conversion of debt |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Recapitalized upon debt modification |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Accretion of debt and debt discount |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Foreign currency translation |  |  | (60,548 | ) |  |  | (62,972 | ) |  |  | (9,129 | ) |  |  | (132,649 | )
Ending balance, June 30, 2024 |  |  | 1,606,649 |  |  |  | 2,154,947 |  |  |  | 170,610 |  |  |  | 3,932,206 |
Notes payable - long-term |  |  | (1,124,655 | ) |  |  | (1,125,866 | ) |  |  | (140,909 | ) |  |  | (2,391,430 | )
Notes payable - short-term |  | $ | 481,994 |  |  | $ | 1,029,081 |  |  | $ | 29,701 |  |  | $ | 1,540,776 |
December 31, 2023 |  | Trade Facility |  |  | Third Party |  |  | COVID Loans |  |  | Total |
Beginning balance, December 31, 2022 |  | $ | 3,305,532 |  |  | $ | 1,505,078 |  |  | $ | 207,377 |  |  | $ | 5,017,987 |
Proceeds |  |  | - |  |  |  | 1,082,231 |  |  |  | - |  |  |  | 1,082,231 |
Payments |  |  | (1,155,310 | ) |  |  | (415,557 | ) |  |  | (27,027 | ) |  |  | (1,597,894 | )
Oher additions |  |  | - |  |  |  | 317,880 |  |  |  | - |  |  |  | 317,880 |
Debt forgiveness |  |  | (306,637 | ) |  |  | - |  |  |  | - |  |  |  | (306,637 | )
Foreign currency translation |  |  | (64,610 | ) |  |  | 21,516 |  |  |  | 6,534 |  |  |  | 92,660 |
Ending balance, December 31, 2023 |  |  | 1,908,195 |  |  |  | 2,511,148 |  |  |  | 186,884 |  |  |  | 4,606,227 |
Notes payable – long-term |  |  | (1,327,440 | ) |  |  | (1,549,768 | ) |  |  | (159,344 | ) |  |  | (3,036,552 | )
Notes payable - short-term |  | $ | 580,755 |  |  | $ | 961,380 |  |  | $ | 27,540 |  |  | $ | 1,569,675 |
Our outstanding debt as of June 30, 2024 is repayable as follows:
|  | June 30, 2024 |
2025 |  | $ | 1,540,776 |
2026 |  |  | 1,657,806 |
2027 |  |  | 376,470 |
2028 |  |  | 267,722 |
2029 and thereafter |  |  | 89,432 |
Total debt |  |  | 3,932,206 |
Less: notes payable - current portion |  |  | (1,540,776 | )
Notes payable - long term portion |  | $ | 2,391,430 |
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 (3.90% as of December 31, 2023), and 6% plus one-month LIBOR (fully paid as of December 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 (3.87% as of December 31, 2023). The principal was scheduled to be repaid in a total of five quarterly installments beginning October 31, 2021 of €50,000 ($54,600) each with a final repayment of €1,800,000 ($1,965,600) 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 entered into an agreement 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 $200,000 during the year ended December 31, 2022 concerning the above capitalized fees. On December 22, 2022, SkyPharm signed an agreement for the extension of the payments and an increase in interest rate due under the EURO Loan that was extended to be repaid with a balloon payment now due on October 31, 2025. This extension was agreed upon in writing on December 22, 2022, with a retroactive modification date to October 31, 2022 (the original maturity date). As of December 31, 2023 the Company had an outstanding principal balance of €1,725,000 ($1,908,195), of which $1,327,440 is classified as ''Notes payable - long term portion" on the consolidated balance sheets. As of December 31, 2023, the Company had accrued $161,274 in interest expense related to these agreements. The Company repaid €225,000 ($240,998) of the EURO Loan during the six months ended June 30, 2024. As of June 30, 2024, the Company had an outstanding principal balance of €1,500,000 ($1,606,650), of which $1,124,655 is classified as ''Notes payable - long term portion" on the consolidated balance sheets. For the three and six months ended June 30, 2024, the Company had accrued $$80,805 and $38,393 in interest expense related to these agreements. June 23, 2020 Debt Agreement On June 23, 2020, the Company’s subsidiary, Cosmofarm, entered into an agreement with the National Bank of Greece S.A. (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 received 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 (3.78% as of June 30, 2024). The outstanding balance was €147,059 ($157,515) and €205,882 ($227,747) as of June 30, 2024 and December 31, 2023, respectively, of which $0 and $97,606 was classified as "Notes payable - long-term portion" respectively, on the accompanying condensed consolidated balance sheets. During the six months ended June 30, 2024, the Company repaid €58,824 ($63,006) of the principal balance. June 24, 2020 Debt Agreement On June 24, 2020, the Company’s subsidiary, Decahedron, 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, 2023, the principal balance was £40,858 ($52,066). As of June 30, 2024, the principal balance was £38,329 ($48,437). 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% plus 0.6% plus 6-month Euribor when Euribor is positive (3.76% as of June 30, 2024). The principal is to be repaid in 18 quarterly installments of €27,778 ($30,333). During the six months ended June 30, 2024, the Company repaid €55,556 ($59,506) of the principal. As of June 30, 2024 and December 31, 2023, the Company has accrued interest of €10,393 ($11,132) and €11,191 ($12,379) related to this note and a principal balance of €166,667 ($178,517) and €222,222 ($245,822), of which $59,506 and $122,911 is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets. 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 (3.78% as of June 30, 2024). 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 six months ended June 30, 2024, the Company repaid €54,238 ($58,094) of the principal. As of June 30, 2024 and December 31, 2023, the Company had accrued interest of €14,995 ($16,061) and €10,905 ($12,063) and principal of €262,662 ($281,338) and €316,900 ($350,555), of which $159,676 and $227,065 is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets. 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 (3.76% as of June 30, 2024). 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. During the six months ended June 30, 2024, the Company repaid €40,000 ($42,844) of the principal. As of June 30, 2024 and December 31, 2023, the Company has accrued interest of €10,774 ($11,540) and €11,043 ($12,215), respectively, and an outstanding balance of €220,000 ($235,642) and €260,000 ($287,612) of which $154,994 and $204,322, respectively, is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets. July 14, 2023 Debt Agreement On July 14, 2023 the Company entered into an agreement with a third-party lender in the principal amount of €1,000,000 ($1,123,700), the “Note”. The Note matures on July 31, 2028 and bears an annual interest rate of 2.46% plus the 3-month Euribor (3.78% as of June 30, 2024). Pursuant to the agreement, there is a nine-month grace period for interest and principal repayment. The principal is to be repaid in 18 equal quarterly installments of €55,556 commencing on May 2, 2024. During the six months ended June 30, 2024, the Company repaid €54,317 ($58,179) of the principal. As of June 30, 2024, and December 31, 2023, the Company has accrued interest of €22,522 ($24,124) and €19,820 ($21,925), respectively. As of June 30, 2024, and December 31, 2023 the Company an outstanding balance of €923,383 ($989,036) and €977,700 ($1,081,532), of which $751,690 and $897,165, respectively, is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets. 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, 2023, the principal balance was $134,818. During the six months ended June 30, 2024, the Company repaid €7,813 ($8,368) of the principal balance. The outstanding balance as of June 30, 2024 is €114,063 ($122,172) of which $100,416, is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheet. Cloudscreen Promissory Note On January 23, 2024 the Company entered into an agreement with a third-party in the principal amount of €300,000 ($324,870), the “Promissory Note”. The Promissory Note matures on March 25, 2025 and is interest free. This Note is being given in connection with the Closing of the Asset Purchase, Sale and Transfer Agreement dated as of October 9, 2023 and as amended from time to time pursuant to which the Company agreed to purchase from the third-party a drug repurposing Artificial Intelligence “AI” powered platform known as “Cloudscreen®” (refer to Note 2, section “Acquisition accounting”). The principal is to be repaid in 15 equal monthly installments of €20,000 commencing on January 25, 2024. During the six months ended June 30, 2024, the Company repaid €10,000 ($10,830) of the principal and recorded a foreign currency gain of $5,850. As of June 30, 2024, and December 31, 2023 the Company an outstanding balance of $312,900 and $317,880 of which $0 and $0, respectively, is classified as "Notes payable - long term portion" on the accompanying condensed consolidated balance sheets. Distribution and Equity Agreement As discussed in Note 3 above, the Company entered into a Distribution and Equity Acquisition Agreement with Marathon. The Company was appointed the exclusive distributor of the Products (as defined) 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 3, 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 had occurred on December 31, 2022, the Company would have been required to issue 420,471 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. On March 20, 2023, the Company’s legal counsel provided notice to Marathon Global Inc, that Cosmos terminated the Equity agreement dated on March 19, 2018 pursuant to Section 3.2 and that termination is effective thirty days from the date of the letter. None of the above loans were made by any related parties.

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