Filing and business context
The supplied filing is Prime Estates & Developments, Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2013—not a filing identified as Cosmos Health Inc. Investors should verify the issuer and filing before relying on this summary.
On September 27, 2013, Prime Estates completed a reverse takeover of Cyprus-based Amplerissimo Ltd. and shifted its focus toward Amplerissimo’s trading, representation, and consulting services, while retaining plans to pursue real estate investments. Under reverse-merger accounting, the financial statements continue Amplerissimo’s operating history, with a recapitalized share structure.
Financial results and condition
| Metric | Three months ended September 30, 2013 | Nine months ended September 30, 2013 |
|---|---|---|
| Revenue | $0 | $0 |
| Direct consulting costs | $63,011 | $552,835 |
| General and administrative expenses | $16,330 | $20,225 |
| Operating loss | $79,341 | $573,060 |
| Net loss | $79,834 | $573,553 |
| Net comprehensive loss | $97,536 | $588,014 |
- At September 30, cash was $501,217, total current liabilities were $1,404,448, and shareholders’ deficit was $903,231. The company reported negative working capital of $903,231.
- Nine-month operating cash flow was positive $497,530, principally reflecting increases in accounts payable/accrued liabilities and deferred revenue, rather than recognized revenue. Cash acquired in the reverse merger was $18,148; ending cash was $501,217.
- Current liabilities included accounts payable and accrued expenses of $572,616, unearned revenue of $500,240, salaries payable of $181,592, and a related-party note payable of $150,000. Interest expense was $493 for the nine-month period.
- The filing reports no revenue for either 2013 or the comparable 2012 periods; the 2012 net loss was $228 for both the three- and nine-month periods. No meaningful margin comparison is available because reported revenue was zero.
Changes, outlook, and risks
- Management said it had invoiced customers approximately $8.465 million through the filing date and collected approximately $500,240 through September 30. It reported additional receipts of about $907,000 by November 1 for unpaid invoices. These billings and collections were not recognized as revenue because management said it lacked sufficient documentation to meet GAAP revenue-recognition criteria; $500,240 received was recorded as deferred revenue.
- The company had two customer agreements, each with a 10-year stated term, but neither required customers to purchase services. Both were terminable by either party on six months’ notice, and management said neither customer had an outstanding service request at the time described.
- Management disclosed substantial doubt about the company’s ability to continue as a going concern, citing the nine-month loss and working-capital deficit. It planned to seek funding through common-stock sales, debt, profitable operations, or a combination; it had no committed financing and management had no obligation to provide funds.
- Management acknowledged ineffective disclosure controls, including insufficient procedures to obtain documentation needed for revenue recognition. It described new purchase-order, service-completion confirmation, and collection-history procedures, but their effectiveness had not been established.
- A legacy forest/carbon-credit agreement with GreenEra required payments of $5,000 per month for approximately 34 years and contemplated financing costs up to $1.2 million. The filing says the company had not decided whether to proceed after the acquisition; the related certification/sale condition could void the underlying arrangement if unmet by December 31, 2013. The filing also discloses a relationship between GreenEra and a company director/CFO.
Important facts to verify
- Confirm that this Prime Estates filing, rather than a Cosmos Health filing, is the intended document.
- Reconcile the share count: the filing reports 125,585,532 shares after the transaction in the equity statement and elsewhere, but the balance-sheet text gives 125,385,532; it also reports 125,585,532 shares outstanding as of December 3, 2013.
- Verify subsequent customer collections, the status and documentation supporting billed services, and whether revenue was later recognized or amounts became uncollectible.
- Assess the company’s ability to meet its liabilities and secure financing, alongside the going-concern warning and ineffective controls.
- Confirm the status and potential obligations of the GreenEra agreement and the related-party payable and salary amounts.