CORRESP 1 filename1.htm
Cosmos Holdings Inc. f/k/a Prime Estates & Developments, Inc.
January 10, 2014
Jennifer Gowetski, Senior Counsel
United States Securities and Exchange Commission
Division of Corporation Finance
100 F. St., N.E.
Washington, D.C. 20549-7010
Re: Prime Estates and Developments, Inc.
Form 8-K/A
Filed November 14, 2013
File No. 000-54436
Dear Ms. Gowetski,
On January 3, 2014, after we filed with the SEC the last Form 8-K/A and response on January 3, 2014, the Company was contacted by its prior auditor M&K CPAS, PLLC (“M&K”). M&K had not been given a draft of this filing or the cover letter response before filing. In its contact with the company, M&K in effect requested that as the filing did include their opinion on financial statements, they be furnished the entire filing with the SEC, including the response correspondence which is not available on EDGAR. The Company promptly complied with this request.
After the exchange of several e-mails with M&K, the Company was advised by M&K that they wished to have additional language added to the Company’s response letter in response to Comment 1. M&K was specifically asked by us if they requested any additional changes in the Form 8-K/A itself and the Company was advised that M&K only requested additional language be provided to the staff as correspondence in response to part of SEC’s Comment 1 in its Comment Letter dated January 3, 2014.
M&K’s requested additional language is set forth below.
M&K disclosure request
M&K CPAS, PLLC (“M&K”) believes that the Company was unable to substantiate the existence of their customers or the work performed. M&K further believes that they were supplied with documents purported to be internally generated work products to be delivered to customers that were in fact copyrighted works of others used without reference or permission.
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Company Supplemental Response
The Company believes their response to the SEC on January 3, 2014 was fully compliant with the SEC’s comment. The Comment is as follows:
We note your Form 8-K filed November 25, 2013 relating to the fact that your former accountant resigned on November 20, 2013 as a result of you “being unable to substantiate revenue.” Please revise this filing to include this information, explain how you are unable to substantiate revenue and describe how it impacts your business operations.
For reference, we have attached the response letter exactly as received from M&K to this Correspondence. The exact words used in the resignation are: “Our resignation is the result of the Company being unable to substantiate revenue.”
There was no other language included in M&K’s resignation letter as to the matters they now raise above. These items were discussed with the Company in November, but these items were not mentioned at all in M&K’s formal resignation letter.
The required Form 8-K filed on November 25, 2013 in connection with M&K’s resignation contained the exact same only language as was in their formal resignation letter. Specifically, the Form 8-K disclosed “M&K advised us that their immediate resignation on November 20, 2013 was ‘a result of the Company being unable to substantiate revenue.’” We note our compliance with the requirements to show this Form 8-K to M&K and obtain a letter from them, which we did and filed as Exhibit 16.1. No mention of these matters is made in the Exhibit 16.1 letter either. We also note that M&K’s audit was included in the original Form 8-K filed on October 3, 2013. M&K reviewed this filing and gave their consent to file, with and none of the issues raised above were ever mentioned during the process of preparing this filing. They also gave their approval to file the Form 8-K/A filed on November 14, 2013 with and none of the issues raised above were ever mentioned during the process of preparing this filing either. We note that both of these filings were made before M&K formally resigned.
We leave it to others to draw whatever conclusions they may about the timing of the raising of this language not included in M&K’s resignation letter or in Exhibit 16.1 to the resignation 8-K or not having been raised during the preparation and filing of the original Form 8-K filed on October 3, 2013 or the Form 8-K/A filed on November 14, 2013. However, it is absolutely certain that if M&K had included the above language in their formal resignation or had advised us that it objected to the Form 8-K filed on November 25, 2013, the Company certainly would have included this language in the Form 8-K filed on November 25, 2013 as well as in the response to the comment letter and in the Form 8-K/A filed on January 3, 2014 and in the related response to the comment letter. It is equally certain that if these issues were raised during the preparation and filing of the original Form 8-K filed on October 3, 2013 or the Form 8-K/A filed on November 14, 2013 they would have been addressed in either or both of these filings.
Had such language been so raised, included or requested by M&K at any time related to any of the above filings, the Company’s response would have been as follows:
It is obvious that the Company did not fully understand the level of documentation required under GAAP to record revenues. This matter is extensively discussed in the Form 8-K/A and response letter filed January 3, 2013. The Company, with the advice and counsel of their new auditor and SEC Counsel now understand that without proper documentation on all matters required for revenue recognition under GAAP, revenue cannot be recognized.
Let us then look at M&K’s “beliefs” set forth above.
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M&K CPAS, PLLC (“M&K”) believes that the Company was unable to substantiate the existence of their customers or the work performed.
The Company now understands that in fact it had not provided M&K with the nature and level of documentation required to prove the existence of its customers or work performed. It now understands that it must provide such documentation and, as disclosed in the Form 8-K/A filed on January 3, 2014, the Company is in the process of obtaining this information. As discussed below, information concerning work performed is now going to be independently confirmed directly with the Company’s clients by the Company’s current auditor.
M&K further believes that they were supplied with documents purported to be internally generated work products to be delivered to customers that were in fact copyrighted works of others used without reference or permission.
The second “belief” raised by M&K needs a bit more explanation. The Company believes that this aspect of M&K’s requested disclosure relates to an inquiry made by M&K to the Company and the Company’s response, as set forth below:
M&K request: Please provide copies of the final product that you delivered.
Company reply: See enclosed 3 of those. If you want me to send you more, I can, but I must first delete some things for IP reasons. I am sending you their draft version. If you need more, please feel free to ask.
The Company is attaching to this supplemental response letter one of the three documents furnished to M&K in response to the request. It is in fact something the Company found on the internet in doing research in response to a question raised by the Client. The other two are similar articles.
In analyzing the “believe” of M&K, we note that in our response, M&K was specifically told this was a draft, not final work product, nor the final product itself. Second, the Company believes that M&K has no idea what the client requested or how the requested the work is required to be done under standards for performing this kind of work for EU countries, where both the company providing the services and the company receiving the services are located. The Company’s client for whom this work was being performed requested information on these topics. The client didn’t express any requirement that the information be Company generated, just that the Company go out and find the information and answer its questions. Which the Company did. Perhaps the Company could have provided a Google link as well, but the Company believes, based upon its knowledge of the client and the nature of work requested that that wasn’t necessary to meet the clients work order for the specific work requested. The Company believes that the final work product delivered was fully compliant with EU laws, rules and regulations.
As to all of the matters raised by M&K, including the existence of clients, work actually being performed and whether or not the client got exactly what they requested and was satisfied that the job was done the way the client wanted, the Company believes that all of this information is better answered by the client in direct communication with the auditor without the Company as intermediary. Not by an auditor’s “belief.” Not by the Company’s representations. The Company believes, as noted in the 8-K/A, the procedure for doing that is to have the new auditor, Malone Bailey, obtain invoices for work requests, one of which is for this project; and for the auditor to independently send out confirmation that the client exists, that the work was requested, and that the work was actually performed and completed was the client’s satisfaction and that the client actually paid the Company for the work. That, as discussed in the Form 8-K/A filed on January 3, 2014, is exactly what is being done.
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The Company denies any attempt to ever pass off to a client documents purported to be internally generated work products that were in fact copyrighted works of others. As for use without reference or permission, these were articles found on the internet and copied and furnished as the client requested. There was no attempt and never has been any attempt by the Company to pass off to a client work done by someone else as work internally generated by the Company. The Company often uses information found on the internet to help prepare responses to work requests, and this is just an example of the research done.
Finally, as stated in the Form 8-K/A and response letter filed with the SEC on January 3, 2014, not one single penny of revenue, even for money the Company actually has received from its clients and is actually in the Company’s bank account, will be recognized on the Company’s financial statement, now or in the future, until the Company’s auditor is fully satisfied that all of the GAAP requirements for recognizing revenue are met.
Perhaps this is all the result of “a failure to communicate.” But whatever the reason, the Company is absolutely clear on what has to happen now and in all future contracts for revenue recognition and is taking appropriate action in connection therewith, again, all as fully described in the Form 8-K/A and response letter filed with the SEC on January 3, 2014
The Company believes that full disclosure has been made on this matter in the Form 8-K/A and response letter filed with the SEC on January 3, 2014, including but not limited to SEC Comment 1 in its December 16, 2013 letter. M&K did not request and additional information be added to the 8-K itself. Further, by sending this letter, the Company has now done exactly what M&K has requested.
This letter was shown to M&K on January 9, 2013 before being filed and M&K’s response in relevant part is as follows: “We don’t plan to provide any additional comments to the draft sent by Michael [Williams, the Company’s SEC Counsel] yesterday afternoon.”
Cosmos Holdings Inc. f/k/a Prime Estates & Developments, Inc., a Nevada corporation.

| By: | /s/ Dimitrios Goulielmos |
|  | Dimitrios Goulielmos, President |

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