COSMO COMMUNICATIONS CORP - FORM 10-Q

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EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 AND RULE 13A-14(A)/15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 - COSMO COMMUNICATIONS CORP	v231111_ex31-2.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 AND RULE 13A-14(A)/15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 - COSMO COMMUNICATIONS CORP	v231111_ex31-1.htm
EXCEL - IDEA: XBRL DOCUMENT - COSMO COMMUNICATIONS CORP	Financial_Report.xls
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - COSMO COMMUNICATIONS CORP	v231111_ex32-1.htm

10Q form10q 063011.htm REPORT FOR THE QUARTER ENDED June 30, 2011

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarter ended June 30, 2011

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________________to _______________________

Commission File No. 0-11968

COSMO COMMUNICATIONS CORPORATION

(Name of Small Business Issuer in its Charter)

FLORIDA	59-2268025
(State or Other Jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No)

Unit 2 - 55 Travail Road, Markham, Ontario, Canada

(Address of Principal Executive Offices)

(905) 209-0488

(Issuer's Telephone Number)

(Former Name or Former Address, 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 Company was required to file such

reports), and (2) has been subject to such filing requirements for the past 90 days.

(1) Yes x No ¨ (2) Yes x No ¨

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Not applicable

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated Filer ¨ Smaller Reporting Company x

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

Yes ¨ No x

(APPLICABLE ONLY TO CORPORATE ISSUERS)

State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date:

August 15, 2011

Common – 40,467,636 shares

DOCUMENTS INCORPORATED BY REFERENCE

A description of any "Documents Incorporated by Reference" is contained in Item 6 of this Report.

Transitional Small Business Issuer Format Yes ¨ No x

TABLE OF CONTENTS

		Page

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements
	§ Consolidated Balance Sheets	1
	§ Consolidated Statements of Operations	2
	§ Consolidated Statements of Cash Flows	3
	§ Notes to Consolidated Financial Statements	4 - 6
Item 2.	Management’s Discussion & Analysis of Financial Condition and Results of Operations	7 - 11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4.	Controls and Procedures	12

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	13

Item 2.	Unregistered Sales of Equity securities and Use of Proceeds	13
Item 3.	Defaults Upon Senior Securities	13
Item 4.	Submission of Matters to a Vote of Security Holders	13
Item 5	Other Information	13
Item 6.	Exhibits	14

COSMO COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	June 30,			March 31,
	2011			2011
	(Unaudited)			(Audited)
ASSETS
Current Assets:
Cash	$	564,734		$	375,365
Accounts receivable (net of allowance of $175,206 and $175,206 respectively)		1,164,887			1,971,806
Inventories (net of allowance of $673,529 and $752,822 respectively)		5,897,756			4,712,192
Prepaid expenses and deposits		1,941			9,702
Total Current Assets		7,629,318			7,069,065

Equipment and Other Assets
Deferred taxes		8,317			8,317
Total Equipment and Other Assets		8,317			8,317

Total Assets	$	7,637,635		$	7,077,382
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable	$	282,808		$	496,179
Accrued liabilities		568,024			391,463
Accounts payable to parent company		8,828,762			7,809,241
Interest payable to parent company		604,627			604,627
Total Current Liabilities		10,284,221			9,301,510

Stockholders’ Deficit:
Preferred stock, $0.01 par value, cumulative and convertible, 30,000 shares authorized, none issued and outstanding		-			-
Preferred stock, $0.01 par value, 9,970,000 shares authorized, none issued and outstanding		-			-
Capital stock, $0.05 par value, 50,000,000 shares authorized, 40,467,636 shares issued and outstanding		2,023,382			2,023,382
Additional paid-in capital		27,704,592			27,704,592
Accumulated other comprehensive income		348,428			355,598
Accumulated deficit		(32,722,988	)		(32,307,700	)

Total Stockholders' Deficit		(2,646,586	)		(2,224,128	)

Total Liabilities and Stockholders' Deficit	$	7,637,635		$	7,077,382

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

COSMO COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30

(Unaudited)

	2011			2010

Sales	$	1,703,076		$	3,492,975
Cost of products sold		1,550,299			3,126,017

Gross profit		152,777			366,958

Commission income		5,982			24,525
		158,759			391,483
Expenses:
Selling and delivery		137,460			262,475
Salaries and wages		247,686			267,053
General and administrative		176,287			186,608
Loss on foreign exchange		7,715			118,043
Financial		4,099			5,159
Depreciation		-			3,719
		573,247			843,057

Net loss before income taxes		(414,488	)		(451,574	)

Current income taxes		800			-
Net loss	$	(415,288	)	$	(451,574	)

Foreign currency translation adjustment		(7,170	)		(65,201	)

Comprehensive loss		(422,458	)		(516,775	)
Net loss per common share:
Basic and diluted	$	(0.01	)	$	(0.01	)
Weighted average shares outstanding:
Basic and diluted		40,467,636			40,467,636

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

COSMO COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED JUNE 30

(Unaudited)

	2011			2010
Cash Flows from Operating Activities:
Net loss	$	(415,288	)	$	(451,574	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation		-			3,719
		(415,288	)		(447,855	)
Changes in operating assets and liabilities:
Accounts receivable		806,919			13,409
Inventories		(1,185,564	)		1,182,092
Prepaid expenses and deposits		7,761			6,601
Accounts payable and accrued liabilities		(36,810	)		6,365
Taxes payable		-			(43,275	)
Accounts payable to parent company		1,019,521			(1,069,529	)
Net cash provided by (used in) operating activities		196,539			(352,192	)

Effect of foreign currency translation		(7,170	)		(65,201	)

Net (decrease) increase in cash		189,369			(417,393	)

Cash - beginning of period		375,365			635,516

Cash - end of period	$	564,734		$	218,123

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

COSMO COMMUNICATIONS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NATURE OF OPERATIONS

Cosmo Communications Corporation and subsidiaries (the "Company" or "Cosmo") market and distribute consumer electronic products. The Company has operations in Hong Kong, United States of America and Canada.

BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the Securities Exchange Commission (“SEC”) instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending March 31, 2012. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended March 31, 2011.

PRINCIPLES OF CONSOLIDATION

The Company includes, in consolidation, its wholly owned subsidiaries, Cosmo Communications Canada Inc. (“Cosmo Canada”), Cosmo Communications (H.K.) Limited (“Cosmo H.K.”) and Cosmo Communication USA Corporation (“Cosmo USA”). All significant intercompany transactions and balances have been eliminated upon consolidation.

Concentration of Credit Risk

The Company has cash in bank accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known. As of June 30, 2011, the Company provided reserves for doubtful accounts receivable in the amount of $175,206 (March 31, 2011 - $175,206); provided inventory reserves for estimated obsolescence for $673,529 (March 31, 2011 - $752,822); and provided reserves for defective inventory returns of $168,557 (March 31, 2011 - $252,977).

Fair Value of Financial Instruments

The Company's financial instruments include cash and cash equivalents, receivables, payables, and advances from the parent company.

The estimated fair value of financial instruments has been determined by the Company using available market information and valuation methodologies. Considerable judgment is required in estimating fair value. Accordingly, the estimates may not be indicative of the amounts the Company could realize in a current market exchange. At June 30, 2011 and March 31, 2011, the carrying amounts of cash, accounts receivable, accounts payable and accrued liabilities, and loans payable approximate their fair values due to the short-term maturities of these instruments.

Earnings or Loss Per Share

There were no anti-dilutive financial instruments for three months ended June 30, 2011 and 2010.

AMOUNTS PAYABLE TO PARENT COMPANY

As of June 30, 2011, the Company owed $9,433,389 (March 31, 2011 - $8,413,869) to The Starlight Group of Companies, the principal corporate shareholder of the Company ("Starlight"). Of this amount $8,828,762 (March 31, 2011- $7,809,242) was owed in the form of trade payable and the remainder was interest on prior advances. These amounts are unsecured, payable on demand and Starlight has agreed not to charge further interest on the accrued interest payable. Interest accrued as of June 30, 2011 was $604,627 (March 31, 2011 - $604,627).

COMMITMENTS

The Company leases premises under an operating lease with a five year term in Canada and shares the facilities for its Hong Kong operation. In September 2008 the Company extended the current operating lease in Canada for five years commencing on October 1, 2008. Minimum lease commitments under the leases at June 30, 2011 were:

2012 (Nine months)		265,441
2013		356,760
2014		179,799
	$	802,000

RELATED PARTY TRANSACTIONS

Apart from those as disclosed in Amounts Payable to Parent Company, the Company's transactions with related parties were, in the opinion of the directors, carried out on normal commercial terms and in the ordinary course of the Company's business.

During the three months ended June 30, 2011, the Company purchased $1,518,024 (three months ended June 30, 2010 - $2,060,564) of goods from Starlight and sold $23,000 of goods to Singing Machine Company, Inc., an associate company. (June 30, 2010 – none)

ECONOMIC DEPENDENCE

The Company is economically dependent on its parent company for the supply of inventory products to its customers. A mass-market merchandiser and chain store located in Canada and US is the Company's largest customer, which accounted for approximately 33% of sales for the three months ended June 30, 2011 and 88% for the three months ended June 30, 2010. Economic dependence exists with this identified customer. Loss of the customer may have significant adverse results to the financial position of the Company.

As of June 30, 2011, the accounts receivable from this customer amounted to approximately $246,282 (March 31, 2011 - $486,207) and claims payable for inventory returns amounted to approximately $15,811 (March 31, 2011 - $20,420).

OPERATING SEGMENT INFORMATION

The Company operated in one business segment and all of its sales are consumer electronic products. The Company's customers are principally in Canada and in the USA. Borrowings are principally in the United States.

	Canada			Hong Kong			United States			Total
June 30, 2011
Assets		6,848,008			13,816			775,811			7,637,635

Three Months Ended June 30, 2011
Sales, net		992,768			603,614			106,694			1,703,076
Gross margin		116,583			107,034			(70,840	)		152,777
Net (loss) income		(404,049	)		70,650			(81,889	)		(415,288	)

March 31, 2011
Assets		6,044,244			136,493			896,645			7,077,382

Three Months Ended June 30, 2010
Sales, net		2,746,245			574,748			171,982			3,492,975
Gross margin		253,321			48,116			65,520			366,957
Net loss		(453,965	)		(12,907	)		15,298			(451,574	)

SUPPLEMENTAL CASH FLOW INFORMATION

During the three months ended June 30, 2011 the Company paid interest of $4,099 (three months ended June 30, 2010 - $5,159) and paid income taxes of $800 (three months ended June 30, 2010– none).

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information contained in our consolidated financial statements and the notes thereto appearing elsewhere in this quarterly report, and in conjunction with the Management's Discussion and Analysis set forth in (1) our annual report on Form 10-K for the year ended March 31, 2011.

As used in this quarterly report, to term “we”, “us”, our”, “Cosmo”, the “Company” or “our company refer to Cosmo Communications Corporation, a Florida corporation.

Preliminary Note Regarding Forward-Looking Statements

This quarterly report and the documents incorporated herein by reference contain forward-looking statements within the meaning of the federal securities laws, which generally include the plans and objectives of management for future operations, including plans and objectives relating to our future economic performance and our current beliefs regarding revenues we might earn if we are successful in implementing our business strategies. The forward-looking statements and associated risks may include, relate to or be qualified by other important factors. You can identify forward-looking statements generally by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “intends,” “plans,” “should,” “could,” “seeks,” “pro forma,” “anticipates,” “estimates,” “continues,” or other variations of those terms, including their use in the negative, or by discussions of strategies, opportunities, plans or intentions. You may find these forward-looking statements in this Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations, as well as throughout this quarterly report. A number of factors could cause results to differ materially from those anticipated by forward-looking statements.

These forward-looking statements necessarily depend upon assumptions and estimates that may prove to be incorrect. Although we believe that the assumptions and estimates reflected in the forward-looking statements are reasonable, we cannot guarantee that we will achieve our plans, intentions or expectations. The forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ in significant ways from any future results expressed or implied by the forward-looking statements.

Any of the factors described in this quarterly report, including in this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, could cause our financial results, including our net income (loss) or growth in net income (loss) to differ materially from prior results, which in turn could, among other things, cause the price of our common stock to fluctuate substantially. We base the forward-looking statements on information currently available to us, and we assume no obligation to update them.

In addition, readers are also advised to refer to the information contained in our filings with the Commission, especially on Forms 10-K, 10-Q and 8-K, in which we discuss in more detail various important factors that could cause actual results to differ from expected or historic results. It is not possible to foresee or identify all such factors. As such, investors should not consider any list of such factors to be an exhaustive statement of all risks and uncertainties or potentially inaccurate assumptions.

Overview

Cosmo Communications Corporation (the “Company”, “Cosmo”, “we”, “us” or “our”) was incorporated in the state of Florida in 1983.

The Company is engaged in the development, production, distribution, marketing and sale of consumer electronic audio and video equipment, accessories and clocks. Our products are sold primarily in Canada and to selective customers in USA, United Kingdom, and South America through mass merchandisers, department stores, electronic stores, chains, and specialty stores.

Our products are currently sold in stores such as Wal-Mart, Super-Stores, Home Hardware, Bargain Shop, and Best Buy/Future Shop.

Results of Operations for the Quarter Ended June 30, 2011 (“2011”) and For the Quarter Ended June 30, 2010 (“2010”)

The following table sets forth, for the periods indicated, certain items related to our consolidated statements of operations as a percentage of net revenues for the three months ended June 30, 2011 and 2010.

	Three months ended			Three months ended
	June 30, 2011			June 30, 2010
Sales		100	%		100	%
Cost of products sold		90.8	%		89.5	%

Gross profit		9.2	%		10.5	%

Commission income		-	%		0.7	%

Expenses:
Salaries and wages		14.5	%		7.6	%
General and administrative		10.4	%		5.3	%
Selling and delivery		8	%		7.5	%
Financial		0.1	%		0.1	%
Loss on foreign exchange		-	%		3.4	%
Depreciation		-	%		0.1	%
Net loss before income tax		(24.2	)%		(12.9	)%
Net loss		(24.2	)%		(12.9	)%

The following is a discussion and analysis of our results of operations for the above periods:

Net Sales:

Sales for the three months ended June 30, 2011 decreased by approximately $1,789,900 or 51% as compared to the corresponding period in 2010. The largest decrease was in the video products category which decreased by approximately $1.3 million due to the loss of sales to our largest customer in Canada. Sales decreased in all other categories, partly due to slower production which delayed the normal June shipments to July and also from slower purchasing decisions from our customers.

Cost of Sales and Gross Margin:

Gross margin was 9.2% for the three months ended June 30, 2011 as compared to 10.5% for the same period in 2010. The decrease in gross profit margin was primarily due to higher costs of purchases which we were unable to pass onto our customers.

Commission Income:

Commission income decreased by $18,543 compared with the corresponding period in 2010. Decrease in reverse logistic income was due to slower sales resulting in less defective products returned.

Selling, General and Administrative Expenses:

Our general and administrative expenses decreased by $10,000 for the three months ended June 30, 2011 compared with the same period in 2010, largely in cutting back office expenses. Salaries and wages decreased by $20,000 due to reduction in warehouse staff. Our selling expenses decreased by $125,000, which represents cost savings in warehouse storage and freight in and freight out expenses.

Financial:

There were no major changes in our financial costs in the two periods in comparison.

Net Earnings:

The net loss for the three months ended June 30, 2011 was $415,288 compared with a net loss of $451,574 in the corresponding period in 2010. Despite lower sales revenue and a reduction in gross profit margin compared with the corresponding period, net loss improved due to a smaller loss realized in foreign exchange and cost savings in operations.

Foreign exchange:

Exchange loss was $4,099 compared with an exchange loss $118,043. The Canadian dollar was stable against the US dollar in the three months ended June 30, 2011.

Liquidity and Capital Resources

During the three months ended June 30, 2011, net cash provided by operating activities was $196,539. The main source of our working capital during this quarter came from collecting our receivable and trade credits provided by our parent company. The ratio of current assets to current liabilities was 0.74 to 1, as compared to 0.76 to 1 on March 31, 2011.

Seasonal and Quarterly Results

Historically, our operations have been seasonal, with the highest net sales occurring in the second and third quarters (reflecting increased orders for electronic audio and video equipment during the Christmas selling months) and to a lesser extent the first and fourth quarters of the fiscal year. The current trend is we will receive less direct import orders and more domestic sales orders from our customers. In effect, the timing of placing orders will be delayed. Our results of operations often fluctuate from quarter to quarter as a result of the amount and timing of orders placed and shipped to customers, as well as other factors. The fulfillment of orders can therefore significantly affect results of operations on a quarter-to-quarter basis.

Inflation

Inflation has not had a significant impact on the Company's operations. The Company has historically passed any price increases on to its customers since prices charged by the Company are generally not fixed by long-term contracts.

Critical Accounting Policies and Estimates

The methods, estimates and judgments Cosmo uses in applying its accounting policies have a significant impact on the results reported in its consolidated financial statements. Cosmo evaluates its estimates and judgments on an on-going basis. Cosmo bases its estimates on historical experience and assumptions that Cosmo believes to be reasonable under the circumstances. Cosmo’s experience and assumptions form the basis for its judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may vary from what Cosmo anticipates and different assumptions or estimates about the future could change its reported results.

Cosmo believes the following accounting policies are the most critical to Cosmo, in that they are important to the portrayal of Cosmo’s consolidated financial statements and they require Cosmo’s most difficult, subjective or complex judgments in the preparation of its consolidated financial statements:

Use of Estimates

Revenue Recognition

Sales, net of estimated sales returns, are recognized upon passage of title to the customer. This occurs upon shipment or upon receipt by the customer depending on the country of the sale and the agreement with the customer. Revenue is recognized if persuasive evidence of an agreement exists, the sales price is fixed or determinable, and collectability is reasonably assured.

Commission income is derived from reverse logistic services that consist of handling other distributor companies returned goods. In providing these services, the Company acts as an agent or broker without assuming the risks and rewards of ownership of the goods and therefore reports the commissions on a net basis. Revenue is recognized based on the completion of the contracted services.

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost is determined on average cost. Inventory is comprised of finished products that the Company intends to sell to its customers. The Company periodically makes judgments and estimates regarding the future utility and carrying value of its inventory. The carrying value of inventory is periodically reviewed and impairments, if any, are recognized when the expected future benefit from the inventory is less than its carrying value. The Company has inventory reserves for estimated obsolescence or unmarketable inventory which is equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions.

Foreign Translation Adjustment

The accounts of the foreign subsidiaries were translated into U.S. dollars in accordance with the provisions of Accounting Standards Codification “ASC” 830 Foreign Currency Translation. Management has determined that the Hong Kong dollar is the functional currency of the Hong Kong subsidiaries and the Canadian dollar is the functional currency of the Canadian subsidiary. Certain current assets and liabilities of these foreign entities are denominated in U.S. dollars. In accordance with the provisions of ASC 830, transaction gains and losses on these assets and liabilities are included in the determination of income for the relevant periods. Adjustments resulting from the translation of the financial statements from their functional currencies to United States dollars are accumulated as a separate component of accumulated other comprehensive income and have not been included in the determination of income for the relevant periods.

Income Taxes

The Company accounts for income taxes pursuant to ASC 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period.

Fair Value of Financial Instruments

The Company's financial instruments include cash and cash equivalents, receivables, payables, and advances from the parent company.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material changes in the Company’s market risk during the first fiscal quarter ended June 30, 2011. For additional information, refer to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2011.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon that evaluation, management concluded that our disclosure controls and procedures are effective to cause the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC, and that such information is accumulated and communicated to management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There was no change in our internal controls over financial reporting identified in connection with the requisite evaluation that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. - LEGAL PROCEEDINGS

We are from time to time involved in routine litigation incidental to our business, most of which is adequately covered by insurance and none of which is expected to have a material adverse affect on our business, financial condition or results of operation.

ITEM 2. - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. - DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5. - OTHER INFORMATION

Not applicable.

ITEM 6. - EXHIBITS

The following exhibits are being filed as part of this quarterly report:

Exhibit No.		Description

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	COSMO COMMUNICATIONS CORPORATION

	By:	/s/ Peter Horak
		Name: Peter Horak Title: Chief Executive Officer

	Date: August 15, 2011

	By:	/s/ Carol Atkinson
		Name: Carol Atkinson Title: Chief Financial Officer

	Date: August 15, 2011

COSMO COMMUNICATIONS CORP - FORM 10-Q - August 15, 2011

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