COSMOS GROUP HOLDINGS INC. The following discussion and analysis of our Company's financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in the report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors. See "Cautionary Note Concerning Forward-Looking Statements" on page 2.
Unless otherwise noted, all currency figures quoted as "
Overview
The Company is engaged in the physical arts and collectibles business, and
intend to provide authentication, valuation and certification (AVC) services,
sale and purchase, hire purchase, financing, insurance, custody, security and
exhibition (CSE) services. On
On
The Company will also issue 55,641,014 shares to complete the acquisitions of 12 business entities with Massive Treasure has signed. As of the date of this report, these acquisitions have not yet consummated.
Change in Control
On
In connection with the sale, Miky Y.C. Wan, our CEO, President and CFO resigned
from her positions as director and CEO and CFO of the Company. Concurrently,
Messrs.
Prior to the change in control, we were a
Entry Into Collectibles Business
On
Results of Operations.
Comparison of the three months ended
As of
16
Table of Contents
The following table sets forth certain operational data for the three months
ended
Three months ended June 30,
2021 2020
Revenue $ - $ 30,415
Cost of revenue - (62,619 )
Gross profit (loss) - (32,204 )
Operating Expenses (5,975 ) (74,122 )
Loss from operations (5,975 ) (106,326 )
Total other income (expense) 686,638 (377 )
Income tax expense - -
Gain on disposal of discontinued operations - 21,472
NET INCOME (LOSS) $ 680,663 $ (85,231 ) During the three months ended
Three Months ended June 30,
June 30, 2020 2020
Percentage Accounts
Revenues of revenues receivable
Lee Tat Logistic Holding Limited $ 30,276 99 % $ 103,268 All of our major customers are located in
Revenue. Revenue for the three months ended
Cost of Revenue. Cost of revenue for the three months ended
Gross Profit (loss).
We achieved a gross profit (loss) of
Operating Expenses.
We incurred G&A expenses of
Other Income (Expenses), net. We incurred net other income (expenses) of
Income Tax Expense. Our income tax expenses for the three months ended
Net Income (Loss)
. During the three months ended
17
Table of Contents
Comparison of the six months ended
The following table sets forth certain operational data for the six months ended
Six months ended June 30,
2021 2020
Revenue $ - $ 193,715
Cost of revenue - (175,585 )
Gross profit - 18,130
Operating Expenses (55,669 ) (130,275 )
Loss from operations (55,669 ) (112,145 )
Total other income (expense) 686,638 (941 )
Income tax expense - -
Loss from discontinued operations, net of tax - (6,286 )
Gain on disposal of discontinued operations - 21,472
NET INCOME (LOSS) $ 630,969 $ (97,900 ) During the six months ended
Six Months ended June 30,
June 30, 2020 2020
Percentage Accounts
Revenues of revenues receivable
Lee Tat Logistic Holding Limited $ 103,188 53 % $ 103,268
Hip Tung Cables Company Limited 61,283 32 % 3,969
Peaceman Cable Engineering Limited 26,477 14 % -
Total $ 190,948 99 % $ 107,237 All of our major customers are located in
Revenue
. Revenue for the six months ended
Cost of Revenue. Cost of revenue for the six months ended
Gross Profit. We achieved a gross profit of
Operating Expenses.
We incurred G&A and professional expenses of
Other Income (Expenses), net. We incurred net other income (expenses) of
Income Tax Expense. Our income tax expenses for the six months ended
Net Income (Loss). During the six months ended
Liquidity and Capital Resources
As of
18
Table of Contents
We expect to incur significantly greater expenses in the near future as we develop our artificial intelligence education business or enter into strategic partnerships. We also expect our general and administrative expenses to increase as we expand our finance and administrative staff, add infrastructure, and incur additional costs related to being reporting act company, including directors' and officers' insurance and increased professional fees.
We have never paid dividends on our Common Stock. Our present policy is to apply cash to investments in product development, acquisitions or expansion; consequently, we do not expect to pay dividends on Common Stock in the foreseeable future.
Going Concern Uncertainties
Our continuation as a going concern is dependent upon improving our
profitability and the continuing financial support from our stockholders. Our
sources of capital in the past have included the sale of equity securities,
which include common stock sold in private transactions and public offerings,
lease liability and short-term and long-term debts. In addition, with respect to
the ongoing and evolving coronavirus (COVID-19) outbreak, which was designated
as a pandemic by the
Six Months Ended June 30,
2021 2020
Net cash used in operating activities
- -
Net cash provided by financing activities
For the six months ended
For the six months ended
We expect to continue to rely on cash generated through financing from our existing shareholders and private placements of our securities, however, to finance our operations and future acquisitions.
For the six months ended
Net Cash Provided By Financing Activities.
For the six months ended
For the six months ended
19
Table of Contents
Off-Balance Sheet Arrangements
We have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
Contractual Obligations and Commercial Commitments
We have contractual obligations and commercial commitments as of
On
The Company will also issue 55,641,014 shares to complete the acquisitions of 12 business entities which Massive Treasure has signed with and remain outstanding.
Off-Balance Sheet Arrangements
We have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in
? Basis of consolidation
The condensed consolidated financial statements include the financial statements of COSG and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
? Accounts receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from completion of service. Credit is extended based on evaluation of a customer's financial condition, the customer's credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of fiscal year, the Company specifically evaluates individual customer's financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.
? Property, plant and equipment
20
Table of Contents
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
Expected useful life
Service vehicle 8 years
Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
? Impairment of long-lived assets
In accordance with the provisions of ASC Topic 360, "Impairment or Disposal of Long-Lived Assets", all long-lived assets such as property, plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
? Revenue recognition
Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company derives its revenues from the rendering of transportation services and recognizes in full upon completion of delivery to the receiver's location. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
• identify the contract with a customer; • identify the performance obligations in the contract; • determine the transaction price; • allocate the transaction price to performance obligations in the contract; and • recognize revenue as the performance obligation is satisfied. ? Income taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, "Income Taxes" ("ASC 740"). Under this method, 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 income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any 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.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
The Company conducts major businesses in
? Foreign currencies translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
21
Table of Contents
The reporting currency of the Company is the United States Dollar ("US$"). The
Company's subsidiaries in
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, "Translation of Financial Statement", using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders' equity.
? Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
? Fair value of financial instruments
The carrying value of the Company's financial instruments (excluding short-term bank borrowing and finance lease): cash and cash equivalents, accounts and retention receivable, prepayments and other receivables, accounts payable, income tax payable, amount due to a related party, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of short-term bank borrowings and note payable approximate the carrying amount.
The Company also follows the guidance of the ASC Topic 820-10, "Fair Value Measurements and Disclosures" ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
• Level 1: Inputs are based upon unadjusted quoted prices for identical
instruments traded in active markets;
• Level 2: Inputs are based upon quoted prices for similar instruments in
active markets, quoted prices for identical or similar instruments in markets
that are not active, and model-based valuation techniques (e.g. Black-Scholes
Option-Pricing model) for which all significant inputs are observable in the
market or can be corroborated by observable market data for substantially the
full term of the assets or liabilities. Where applicable, these models
project future cash flows and discount the future amounts to a present value
using market-based observable inputs; and
• Level 3: Inputs are generally unobservable and typically reflect management's
estimates of assumptions that market participants would use in pricing the
asset or liability. The fair values are therefore determined using
model-based techniques, including option pricing models and discounted cash
flow models.
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
22
Table of Contents
? Recent accounting pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
© Edgar Online, source
