Cosmos Holdings Inc. — Q1 2015 Form 10-Q
Reporting period: Three months ended March 31, 2015. The filing identifies the registrant as Cosmos Holdings Inc. (not Cosmos Health Inc.). Financial statements are unaudited. The company was pursuing acquisitions and developing pharmaceutical-related operations while its active subsidiary, Amplerissimo, provided consulting and related services.
Key financial results
| Metric | Q1 2015 | Q1 2014 / comparison |
|---|---|---|
| Revenue | $0 | $781,056 |
| Operating expenses | $84,283 | $73,173 |
| Net income (loss) | $(108,653) | $614,216 |
| Foreign currency translation loss in other comprehensive income | $(561,448) | $(56,224) |
| Net comprehensive income (loss) | $(670,101) | $557,992 |
| Net cash used in operating activities | $(174,518) | Net cash provided: $176,524 |
| Cash at period end | $284,915 | $984,789 at March 31, 2014 |
With no revenue in Q1 2015, profit margins are not meaningful. Operating expenses rose about 15% year over year, which management attributed mainly to public-company costs and acquisition-related activity. Basic and diluted loss per share were each reported as $(0.00), rounded.
Financial position and liquidity
- At March 31, 2015, total assets were $6.36 million, including a $6.01 million deposit on the pending B2IN acquisition; cash was $284,915.
- Current liabilities were $1.56 million, including $528,053 of related-party notes payable and $948,468 of taxes payable. Total shareholders’ equity was $4.80 million. The filing reports working capital of $4,768,391.
- Q1 investing cash outflow was $12,521, primarily for fixed and intangible assets. Financing provided $67,000 net, reflecting a $70,000 related-party loan and repayment of $3,000.
- There were no reported cash payments for interest or income taxes during the quarter. The company recorded $22,025 of interest expense, which the tax note describes as interest and penalties.
Material changes, outlook, and risks
- Revenue fell from $781,056 to zero because Amplerissimo had no new engagements. The company moved from a $614,216 net profit to a $108,653 net loss.
- The $561,448 foreign currency translation loss substantially increased the comprehensive loss. The filing identifies foreign-currency translation as a key accounting exposure.
- Amplerissimo had paid €5.54 million (reported as $6,010,955) toward the €7 million B2IN/Unilog pharmaceutical-logistics acquisition. Closing was subject to conditions outside the company’s control and was not assured; if it did not close by June 30, 2015, the agreement provided for return of the deposit. Management said it intended to raise the remaining purchase funding from new investors and warned it might not obtain the necessary capital.
- SkyPharm was seeking Greek pharmaceutical-wholesaler licensing and had not raised the capital needed to begin operations. Management said licensing was in its final approval stage, but noted no assurance of funding, launch, or successful development.
- A January 2015 letter of intent contemplated acquiring a 70% stake in a Chicago mobile-technology company. The filing described an initial commitment to source and invest more than $15 million, but the transaction had not closed; the filing provides no clear committed funding source or detailed closing terms.
- For the next 12 months, management planned to evaluate new services, geographic expansion, and acquisition opportunities, with estimated evaluation spending of approximately $15,000, $15,000, and $30,000, respectively. These plans were not binding commitments.
- Management said it expected to use available cash, operating cash flow, debt or equity financing, or potentially management loans. Management was not obligated to provide funds. It warned that failure to meet funding needs could jeopardize OTC quotation and SEC reporting status.
- The filing reported no legal proceedings or off-balance-sheet arrangements. Management concluded disclosure controls were effective as of March 31, 2015; no material first-quarter change in internal control over financial reporting was reported.
Important facts for investors to verify
- Whether the B2IN/Unilog acquisition closed by June 30, 2015, whether the deposit was refunded if it did not, and how the remaining purchase price was funded.
- Whether the mobile-technology LOI became a definitive agreement, and the status and source of the stated investment funding exceeding $15 million.
- SkyPharm’s licensing, financing, and commencement of operations, alongside the company’s ability to generate revenue after reporting none in Q1.
- The composition, payment terms, and status of the $948,468 tax payable and $528,053 related-party notes, including the related-party loan maturities disclosed in the notes.
- Cash runway and financing needs, given $284,915 of quarter-end cash and $174,518 of operating cash use during the quarter.
- The effect of foreign-currency movements on equity and comprehensive results, and the exact nature of the $22,025 interest and penalties expense.