Filing summary
Issuer and period: The supplied filing is for Prime Estates & Developments, Inc., a development-stage company—not Cosmos Health Inc. It is a Form 10-Q for the quarter ended April 30, 2013, covering the first nine months of the fiscal year. The filing was signed May 13, 2013.
Business context and financial results
The company was pursuing commercial real estate acquisitions and related projects, including forest exploitation and carbon-credit rights in Brazil. It had no reported revenue and had not completed a property acquisition generating operating income.
| Metric | Nine months ended April 30, 2013 | Comparable 2012 period |
|---|---|---|
| Revenue | None reported | None reported |
| General and administrative expense | $294,785 | $267,404 |
| Related-party interest expense | $5,918 | $3,459 |
| Net loss | $300,703 | $270,863 |
| Basic and diluted loss per share | $0.01 | $0.01 |
| Cash used in operating activities | $73,631 | $54,126 |
For the three months ended April 30, 2013, net loss was $58,043 versus $54,564 in 2012; general and administrative expense was $56,023 versus $52,825. The filing attributes the year-to-date expense increase primarily to higher director compensation, partly offset by lower legal, consulting and promotional costs. Quarterly expense growth was attributed mainly to travel related to Greenbase negotiations.
Financial position, liquidity and capital
- At April 30, 2013, cash was $6,143, total assets were $6,143, and current liabilities were $300,700. The resulting working-capital deficit was approximately $294,557; shareholders’ deficit was also $294,557.
- Current liabilities included $175,000 of salaries payable and a $125,000 related-party note payable. The filing separately describes accumulated GreenEra contract costs of $125,000, unpaid in cash; verify how these disclosures relate to the reported liabilities.
- Cash increased by $6,103 during the nine months. Financing provided $79,734, including $100,000 from a common-stock sale, partially offset by net related-party note repayments. No investing cash flows were reported.
- The company issued 400,000 shares for $100,000 cash, 180,000 shares for director services valued at $70,200, and 16,250 shares related to a prior $6,500 subscription. Shares outstanding at April 30 were 25,305,532.
- No meaningful margin comparison is available because the company reported no revenue.
Material developments, outlook and risks
- On April 22, 2013, the company agreed to acquire all Greenbase Ltd. shares in exchange for 100,000,000 Prime Estates common shares. Due diligence was ongoing, with closing expected within 90 days; the transaction was not reported as completed. If issued, the consideration would be substantially larger than the company’s then-outstanding share count.
- The company said it needed at least $150,000 over the next 12 months in addition to funds to remain public; elsewhere it estimated $220,000 in next-12-month operating expenses and an approximately $17,000 monthly burn rate. It reported only $6,143 of cash and no committed external financing. Management expected current cash to last only until the end of June 2013 without additional funds.
- Management planned to seek equity and debt financing and stated that officers and directors intended, but were not obligated, to provide loans if funds were available. The company warned it might be unable to continue operations or execute its acquisition plans if it could not raise capital.
- The GreenEra arrangement involves rights to approximately 60,000 hectares of Brazilian forestland, with stated monthly payments of $5,000 over approximately 34 years and potential project costs capped at $1.2 million. The filing says $125,000 had accrued and remained unpaid; the agreement also includes a certification/sale condition that could void the underlying contract.
- The company disclosed substantial doubt about its ability to continue as a going concern. It also reported that disclosure controls and procedures were not effective as of period-end. No legal proceedings were reported.
Important facts for investors to verify
- Confirm the intended issuer: the supplied filing identifies Prime Estates & Developments, Inc., not Cosmos Health Inc.
- Confirm whether the Greenbase share exchange closed, whether the 100 million shares were issued, and the resulting ownership and dilution.
- Assess near-term funding, related-party support and the company’s ability to meet payroll, public-company costs and GreenEra obligations.
- Reconcile the $125,000 related-party note payable with the separately disclosed $125,000 accrued GreenEra contract cost.
- Review the ineffective disclosure controls, going-concern uncertainty, and the status and conditions of the GreenEra project.