Cosmos Health Inc. - Quarter Report: 2012 April (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2012

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _____________________ to ______________

Commission File Number: 333-162597

Prime Estates & Developments, Inc.

(Name of registrant in our charter)

Telephone: 312.674.4529

N/A

(Former name, former address and former three months, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x  No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ¨      No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

As of June 4, 2012 there were 24,709,282 shares issued and outstanding of the registrant’s common stock.

PRIME ESTATES & DEVELOPMENTS, INC.

(A Development Stage Company)

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

PRIME ESTATES & DEVELOPMENTS, INC.

(A Development Stage Company)

BALANCE SHEETS

The accompanying notes are an integral part of these financial statements.

PRIME ESTATES AND DEVELOPMENTS, INC.

(A Development Stage Company)

RESULTS OF OPERATIONS

(Unaudited)

The accompanying notes are an integral part of these financial statements.

PRIME ESTATES AND DEVELOPMENTS, INC.

(A Development Stage Company)

STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

The accompanying notes are an integral part of these financial statements

PRIME ESTATES AND DEVELOPMENTS, INC.

(A Development Stage Company)

STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

(Continued)

(Unaudited)

The accompanying notes are an integral part of these financial statements

PRIME ESTATES AND DEVELOPMENTS, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(Unaudited)

The accompanying notes are an integral part of these financial statements.

PRIME ESTATES & DEVELOPMENTS, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

APRIL 30, 2012

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Prime Estates and Developments, Inc. (“Prime Estates”, “The Company”, “we”, or “us”) was incorporated in the State of Nevada on July 21, 2009 for the purpose of acquiring and operating commercial real estate and real estate related assets. On the date of its inception, the Company issued 20 million shares of its common stock to three founders which were recorded at no value (offsetting increases and decreases in Common Stock and Additional Paid in Capital).

In the opinion of management, the accompanying financial statements includes all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the periods presented. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Interim results are not necessarily indicative of results for a full year.

Summary of Significant Accounting Policies

Basis of Financial Statement Presentation

The accompanying financial statements have been prepared in accordance with principles generally accepted in the United States of America.

Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of April 30, 2012 and July 31, 2011, there were no cash equivalents.

Development Stage Enterprise

The Company complies with the accounting rules related to the characterization of the Company as development stage.

Revenue Recognition

We plan to recognize revenues from real estate sales under the full accrual method which requires that revenues be recognized when the sale is consummated; when the initial and continuing investments by the buyer in the property are sufficient; All the risks and rewards of ownership reside with buyer; There is no continuing duty or involvement by the seller post-sale (after closing); and, There is no future subordination of any buyer receivable (seller financing cases).

The Company may also earn rental income and management fees. The fees are recognized as they are earned.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment in accordance with the accounting rules related to Property, Plant and Equipment (“Codification Topic 360”). Under these rules, long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment charge is recognized or the amount, if any, which the carrying value of the asset exceeds the fair value.

Fair Value of Financial Instruments

Financial instruments, including cash, receivables, accounts payable, and notes payable are carried at amounts which reasonably approximate their fair value due to the short-term nature of these amounts or due to variable rates of interest which are consistent with market rates. No adjustments have been made in the current period.

Income Taxes

The Company accounts for income taxes under the accounting rules related to income taxes (“Codification Topic 740”). Under these rules, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. There was no current or deferred income tax expense or benefits for the periods ending April 30, 2012 and July 31, 2011.

Basic and Diluted Net Loss Per Common Share

Basic and diluted net loss per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the periods presented. The per share amounts include the dilutive effect of common stock equivalents in years with net income. Basic and diluted loss per share is the same due to the anti dilutive nature of potential common stock equivalents.

Stock Based Compensation

The Company accounts for stock-based employee compensation arrangements using the fair value method in accordance with the accounting provisions relating to share-based payments (“Codification Topic 718”). The company accounts for the stock options issued to non-employees in accordance with these provisions.

The Company did not grant any stock options or warrants during the periods presented.

Organizational and Offering Costs

Costs incurred to organize the Company are expensed as incurred. Offering costs incurred in connection with the Company’s common share offerings are reflected as a reduction of capital upon the receipt of the net proceeds of the offering or charged to expense if the offering is not completed. No such costs have been incurred as of April 30, 2012.

Recent Accounting Pronouncements

Prime Estates does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.

NOTE 2 – GOING CONCERN

These financial statements have been prepared on a going concern basis, which implies Prime Estates will continue to meet its obligations and continue its operations for the next fiscal year. Realization value may be substantially different from carrying values as shown and these financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should Prime Estates be unable to continue as a going concern.

The Company had incurred losses and has a working capital deficit as of April 30, 2012; these factors among others raise substantial doubt about the Company’s ability to continue as a going concern.

The Company intends to acquire and operate commercial real estate but will require capital to do so. There is no guarantee that we will be able to raise the capital necessary to make our acquisitions or if, upon acquiring properties, we will be able to generate positive cash flows from operations. These factors raise substantial doubt regarding Prime Estates’ ability to continue as a going concern.

NOTE 3 – CAPITAL STRUCTURE

Common Stock

The Company is authorized to issue 200 million common shares. At July 31, 2011, we had 24,514,282 common shares issued and outstanding.

During the nine months ended April 30, 2012, we issued 100,000 shares to a law firm for one year of legal services pertaining to our Exchange Act filings. We valued the shares at the closing price on the grant date and charged general and administrative expenses with $60,000.

Also during the nine months ended April 30, 2012, we issued 23,500 shares for $14,100 in cash and 25,000 shares for $10,000 in cash.

On August 18, 2011, we entered into an agreement with a consulting firm to propose investment opportunities in the area of distressed residential and commercial real estate. We issued 46,500 shares of common stock, valuing them at the fair value at the grant date. We charged general and administrative expense with $27,900.

Preferred Stock

The Company is authorized to issue 100 million shares of preferred stock which has preferential liquidation rights over common stock and is non-voting. As of April 30, 2012, no shares have been issued.

Potentially Dilutive Securities

No options, warrants or other potentially dilutive securities have been issued as of April 30, 2012.

NOTE 4 – INCOME TAXES

The Company has tax losses which may be applied against future taxable income. The potential tax benefits arising from these loss carry-forwards expire beginning in 2029 and are offset by a valuation allowance due to the uncertainty of profitable operations in the future. The estimated net tax loss carry-forward was approximately $362,000 at April 30, 2012 resulting in a potential tax benefit of approximately $141,040.

The significant components of the deferred tax asset as of April 30, 2012 and July 31, 2011 are as follows:

NOTE 5 – RELATED PARTY TRANSACTIONS

In January, 2010, a shareholder paid expenses on behalf of the company totaling $15,872. Again in March, 2011 this shareholder paid expenses of $1,650. This contribution is not evidenced by a promissory note and bears no interest.

On March 18, 2011 the shareholder was repaid the advances of $17,522.

During the nine months ended April 30, 2012, two of our directors collectively loaned the Company $14,823. The loan is not witnessed by a promissory note and there is no maturity date. The Company has agreed to repay the amount when cash becomes available to do so. During the nine months ended April 30, 2012, we imputed $469 on these advances, charging Interest Expenses and increasing Additional Paid in Capital.

NOTE 6 – AGREEMENT WITH GREEN ERA LTD.

On February 17, 2011, we entered into a license agreement with GreenEra, Ltd., (“GreenEra”), a company formed under the laws of the Cyprus Republic, to acquire the rights of exploitation of a 60,000 hectares (approximately 150,000 acres) of forest land in Novo Aripuana, State of Amazones, Brazil.  GreenEra acquired these rights from the landowner in 2009. These rights expire on December 28, 2044.

The property can be developed and can probably produce carbon credits that when sold could produce profits. Any profits that will be gained from the development or the sale of the carbon credits will be shared 50-50 between PMLT and the owner of the forest land. The parties agree that:

GreenEra acquired the exclusive rights to develop and to obtain these carbon credits when it contracted with the landowner on December 28, 2009.  Therefore, Prime Estates & Developments Inc. has inherited the rights and obligations of that agreement which stipulates, in part:

Our Directors, Mr. Panagiotis Drakopoulos and Mr. Vasileios Mavrogiannis, are also shareholders but not directors or officers of GreenEra Ltd.

As of April 30, 2012, we have accrued $65,000 of costs on this contract and have made no cash payments to GreenEra. For the nine months ended April 30, 2012, we have imputed $2,990 of interest on the unpaid balance, charging Interest Expense and increasing Additional Paid in Capital.

NOTE 7 – SUBSEQUENT EVENTS

We have evaluated subsequent events through the date of issuance of the financial statements.

Item 2.   Management’s Discussion and Analysis or Plan of Operation.

This 10−Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the financial statements and accompanying notes and the other financial information appearing else where in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.

Overview

Prime Estates and Developments, Inc. (“Prime Estates”, “The Company”, “we”, or “us”) was incorporated in the State of Nevada on July 21, 2009 for the purpose of acquiring and operating commercial real estate and real estate related assets. Our principal office is located at 200 South Wacker Drive, Suite 3100, Chicago, Illinois 60606. Telephone: 312.674.4529.

Our Business

We intend to acquire and operate commercial real estate and real estate related-assets in Greece, Bulgaria, Romania and the United States. We intend to focus on acquiring commercial properties such as those requiring development, redevelopment or repositioning, those located in markets and submarkets with what we believe to be high growth potential and those available from sellers who are distressed or face time-sensitive deadlines.

In addition, given current economic circumstances in the real estate industry, our investment strategy may also include investments in real estate-related assets that we believe present opportunities for significant current income. Such investments may also have what we believe to be opportunities for capital gain, whether as a result of a discount purchase or related equity participations.

We may acquire a wide variety of commercial properties, including office, industrial, retail, hospitality, recreation and leisure, single-tenant, multifamily and other real properties such as forests. These properties may be existing, income-producing properties, newly constructed properties or properties under development or construction and may include multifamily properties purchased for conversion into condominiums and single-tenant properties that may be converted for multifamily use.

Assuming we raise sufficient funding, our investment strategy is designed to provide investors with a diversified portfolio of real estate assets. Although we have reviewed the real estate markets in the countries in which we intend to acquire properties, we have no contract, agreement or commitment to acquire any property as of the date of this filing.

Specifically, we have taken the following steps in furtherance of our business plan:

We have enriched our knowledge in the real estate market in Greece, Bulgaria, Romania and the United States by studying the existing statistics on this market and by having extensive discussions with many experts of the market as follows:

In December 2010 we started to examine the possibility of adding forests, or signing joint venture agreements with companies or individuals that own management rights of forests, in order to take advantage of the economic benefits that can derive from these forests, including the so called “carbon credits”. A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one ton of carbon dioxide or carbon dioxide equivalent. We could sell carbon credits that derive from forestry to commercial and individual customers who are interested in lowering their carbon footprint.

Our discussions with various individuals concerning these properties and projects has included general discussions of acquiring properties directly either ourselves or in a joint venture with others or of developing properties either ourselves or in a joint venture with others, as described above. As of the date of this filing, all such discussions have been general and we have no specific plan as to whether we will acquire or develop ourselves or jointly any specific properties or projects.

On February 17, 2011, we entered into an agreement with GreenEra, Ltd., a company formed under the laws of the Cyprus Republic, to acquire the rights of exploitation of a 60,000 hectares (approximately 150,000 acres) of forest land in Novo Aripuana, State of Amazones, Brazil.  The property can be developed and can probably produce carbon credits that when sold could produce profits. Any profits that will be gained from the development or the sale of the carbon credits will be shared 50-50 between PMLT and the owner of the forest land. The parties agree that:

GreenEra acquired the exclusive rights to develop and to obtain these carbon credits when it contracted with the landowner on December 28, 2009.  Therefore, Prime Estates & Developments Inc. has inherited the rights and obligations of that agreement which stipulates, in part:

Our Directors, Mr. Panagiotis Drakopoulos and Mr. Vasileios Mavrogiannis, are also shareholders but not directors or officers of GreenEra Ltd.

In August 18, 2011, we signed a JV with Pelion Exclusive. Pelion Exclusive will actively seek and propose investment opportunities especially in the area of distressed residential and commercial real estate properties for merger and/or acquisition. Pelion Exclusive may also assist Prime in the financing and development of real estate projects. It may also perform property management, asset management and propose possible buyers for the ultimate disposition of the properties.

On December 1, 2011, we signed an MOU with Mr. Konstantinos Gogos and Mr. Anton Spaniol with a purpose to provide energy projects (solar parks) from their own portfolio or from third parties to Prime Estates. The specific project(s) and the amount of shares issued for its acquisition will be determined on a new contract if and when all parties reach an agreement.

During the first three months of 2012, we have been involved in discussions with Mave Sa, a Greek logistics company that holds real estate assets, concerning a potential business combination. However, as of the date of this report, we have not entered into any formal oral or written memorandum of understanding, letter of intent or similar non-binding understanding and have not entered into any oral or written binding agreement, commitment or understanding concerning this potential business combination. There is no assurance that we will ever enter into any formal written memorandum of understanding, letter of intent or similar non-binding understanding or any formal binding agreement, commitment or understanding concerning this potential business combination.

There is no limitation in the amount of funds we may invest in either property acquisition or property development. There is no limitation on or percentage allocation of funds or assets between property acquisition and property development or between 100% ownership or joint venture ownership.

Results of Operations

Nine Months Ended April 30, 2012 versus 2011

We incurred $267,404 of general and administrative expenses for the nine months ended April 30, 2012 versus only $107,199 for the same period in 2011. This increase is principally due to our accrual of our monthly costs associated with our agreement with GreenEra, Ltd and our inclusion of Officer and Director salaries which began in April, 2011. In addition, we incurred $87,900 in non-cash compensation expense for the nine months ended April 30, 2012 whereas we had no such charge during the same period in 2011.

Our interest expense for the nine months ended January 31, 2012 versus 2011 witnessed an increase from $635 to $3,459, principally due to our imputation of interest expense on outstanding GreenEra debt.

Three Months Ended April 30, 2012 versus 2011

We incurred $52,825 of general and administrative expenses for the three months ended April 30, 2012 versus $87,190 for the same period in 2011. The decrease is primarily due to non-cash compensation recorded during the three months ended April 30, 2011, for which we have no counterpart in the current year.

Interest expense is also higher ($1,739 for the nine months ended April 30, 2012 versus only $159 for the same period in 2011). This is owing to higher accrued expenses and notes payable to related parties on which we impute interest costs.

Liquidity and Capital Resources

We will need to secure a minimum of $120,000 in funds to finance our business in the next 12 months, in addition to the funds which will be used to stay public, which funds will be used as set forth below. However in order to become profitable we may still need to secure additional debt or equity funding. We hope to be able to raise additional funds from an offering of our stock in the future. However, this offering may not occur, or if it occurs, may not raise the required funding. We do not have any plans or specific agreements for new sources of funding, except for the anticipated loans from management as described below, or any planned material acquisitions, although we are involved in preliminary discussions concerning joint venture or similar agreements to become involved in solar parks in Europe. Our independent auditor’s report expresses substantial doubt about our ability to continue as a going concern.  At April 30, 2012, we had only $35 in cash in our bank account.  We anticipate our monthly burn rate for the next 12 months to be approximately $10,000 per month, including the maximum estimated $50,000 costs of staying public as described herein.  

Until we generate operating revenues or receive other financing, all our costs, which we will incur irrespective of our business development activities, including bank service fees and those costs associated with SEC requirements associated with staying public, estimated to be less than $ 50,000 annually, will be funded as a loan from our officers and directors with no interest, to the extent that funds are available to do so. Our Officers and Directors are not obligated to provide these or any other funds although they have indicated that they currently intend to do so and that they have sufficient liquid assets to meet all of these anticipated future obligations if we do not generate operating revenues or secure other funding. There is no dollar limit to the amount they have agreed to provide. For the nine months ended April 30, 2012, our directors loaned the Company $14,823.

Additionally, since our inception, we have raised $196,229 for operations through the sale of our stock under transactions exempt from registration under Regulation S (see Note 3 to the financial statements).

If we fail to meet these requirements, we may lose the qualification and our securities would no longer trade on the over the counter bulletin board. Further, if we fail to meet these obligations and as a consequence we fail to satisfy our SEC reporting obligations, investors will now own stock in a company that does not provide the disclosure available in quarterly and annual reports filed with the SEC and investors may have increased difficulty in selling their stock as we will be non-reporting.

Plan of Operation in the Next Twelve Months

Our activities currently consist of website creation, and establishing additional cooperation agreements with real estate agents to establish the flow of real estate opportunities.  We do not intend to activate a website until we acquire properties and do not intend to put investor info on the site once activated. We have not completed any closings that would result in revenue to date and there can be no assurances that any future closings will result in revenue.

Specifically, our plan of operations for the next 12 months is as follows:

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act) during the fiscal quarter ended April 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)                 Unregistered Sales of Equity Securities.

In October 2010, we sold 56,322 shares of common stock to 4 non-U.S. investors at $0.40 for total consideration of $22,528.80.

In March and April, 2011, we sold 159,000 shares of common stock to 4 non-US investors at $0.60 per share for total consideration of $95,400.

In August, 2011, we issued 23,500 shares of common stock at $0.60 per share for total consideration of $14,100.

In March, 2012, we issued 25,000 shares of common stock at $0.40 per share for total consideration of $10,000.

During the nine months ended April 30, 2012, we issued 146,500 shares for services.

We relied upon Regulation S of the Securities Act of 1933, as amended for the above issuances to non US citizens or residents.

We believed that Regulation S was available because:

In connection with the above transactions, although some of the investors may have also been accredited, we provided the following to all investors:

Prospective investors were invited to review at our offices at any reasonable hour, after reasonable advance notice, any materials available to us concerning our business. Prospective Investors were also invited to visit our offices.

(b)                 Use of Proceeds.

The Registrant did not sell any registered securities during the three months ended April 30, 2012.

Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved).

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

*  This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Prime Estates & Developments, Inc.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.