Mail Stop 3561
March 14, 2006
Ms. Carol Atkinson
Chief Financial Officer
Cosmo Communications Corporation
Unit 2-55 Travail Road
Markham, Ontario, Canada
Re: Cosmo Communications Corporation
Form 10-KSB for the Fiscal Year Ended March 31, 2005
Filed July 26, 2005
Form 10-QSB for the Quarter Ended September 30, 2005
Form 10-QSB for the Quarter Ended December 31, 2005
File No. 0-11968
Dear Ms. Atkinson:
We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-KSB for the Fiscal Year Ended March 31, 2005
General
1. Where a comment below requests additional disclosures or other
revisions to be made, these revisions should be included in your
future filings, as applicable.
2. Please be advised that you are not a "small business issuer" as
defined in Item 10 of Regulation S-B. An S-B issuer cannot be a
majority-owned subsidiary of a foreign private issuer.
Consequently,
it appears that you should have been reporting under the S-X/S-K
system in the year following the year in which you became a
majority-
owned subsidiary of Starlight. Notwithstanding your ineligibility
to
report under Regulation S-B in prior years, it appears that you
must
file a Form 10-K for the year ending March 31, 2006 since your
sales
for the past two consecutive years have been greater than
$25,000,000. Refer to Item 10(a) of Regulation S-B.
3. Please include the all the information required by Items 307
and
308(c) of Regulation S-K under "Item 9A. Controls and Procedures"
of
Form 10-K. Also, please supplementally tell us whether your
disclosure controls and procedures were effective as of March 31,
2005 and tell us whether there were any changes in your internal
control over financial reporting that occurred during your last
fiscal quarter (fourth fiscal quarter in the case of an annual
report) that materially affected, or was reasonably likely to
materially affect your internal control over financial reporting.
Refer to SEC Release No. 33-8238 and Item 307 and 308 of
Regulation
S-K.
4. Please include all the information required by Item 9(e) of
Schedule 14A under "Item 14. Principal Accountant Fees and
Services"
which was added by Release No. 33-8183. The new disclosure
requirements were effective for annual reports for the first
fiscal
year ending after December 15, 2003.
Management`s Discussion and Analysis, page 6
5. With a view towards enhancing your disclosure, please review
SEC
Release No. 33-8350 and revise your MD&A to provide a more
thoughtful, qualitative discussion regarding the quality of, and
potential variability of your earnings and cash flows so that
readers
can ascertain the likelihood that past performance is indicative
of
future performance. Following are some specific revisions you
should
consider:
* Consider starting your MD&A with an executive-level overview
section that provides context for the remainder of the discussion.
* Identify and discuss key performance indicators that are used to
manage the business and would be material to investors.
* Identify and discuss known trends, events, demands, commitments
and
uncertainties that are reasonably likely to have a material effect
on
cash flows, liquidity, financial condition and/or operating
performance.
* Expand your discussion of the changes in financial statement
line
items to indicate whether the changes represent trends expected to
continue into the future.
6. Please revise to include a discussion of your critical
accounting
estimates. Ensure that your discussion focuses on the level of
subjectivity and judgment involved in the application of your
accounting policies and the likelihood that materially different
amounts would be reported under different conditions or if using
different assumptions. Refer to SEC Release No. 33-8350.
Financial Statements, page 15
7. Please provide Schedule II - Valuation and Qualifying Accounts
for
the activity in your allowance for sales returns and your
allowance
for doubtful accounts. Alternatively, you may provide such
disclosure in the notes to the financial statements. Refer to
Rules
5-04 and 12-09 of Regulation S-X for guidance.
Report of Registered Public Accounting Firm, page 16
8. Please revise the audit report to state that the audit was
conducted in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Your current audit
report, which refers to the "auditing" standards of the Public
Company Accounting Oversight Board (United States) is not
sufficient
in this regard as the reference to the standards of the Public
Company Accounting Oversight Board (PCAOB) should not be limited
in
any way. Please refer to PCAOB Auditing Standard No. 1 and SEC
Release 34-49707.
Consolidated Statements of Earnings, page 19
9. We note on page 7 that you grant advertising and handling
allowances to your major customers as contributions to promote and
handle your products in their stores. Please tell us why you have
included these payments as selling and administrative expenses
rather
than a reduction of sales. Refer to EITF 01-9.
Notes to Financial Statements, page 23
2. Summary of Significant Accounting Policies, page 23
10. Please disclose the types of expenses that you include in the
cost of sales line item and the types of expenses that you include
in
the general and administrative and the selling and delivery
expense
line items. In doing so, please disclose specifically whether you
include inbound freight charges, receiving costs, inspection
costs,
warehousing costs, internal transfer costs and the other costs of
your distribution network in cost of sales. If you currently
exclude
a significant portion of these costs from cost of sales, please
provide cautionary disclosure in MD&A that your gross margins may
not
be comparable to others, since some entities include the costs
related to their distribution network in cost of sales and others
like you exclude all or a portion of them from gross margin,
including them instead in a line item such as general and
administrative or selling and delivery expenses. To the extent
the
excluded costs are material to your operating results, quantify
these
amounts in MD&A.
11. Please disclose your policy for classifying shipping and
handling
costs in the statements of earnings. If shipping costs or
handling
costs are significant and are not classified in cost of sales,
disclose the amount(s) of these costs and the line item that
includes
them. See EITF 00-10. Please also confirm to us supplementally
that
amounts paid to you by customers for shipping and handling are
included in sales.
f) Revenue Recognition, page 24
12. Please disclose your revenue recognition policy for your
commissions and other income line item. Also describe how you
earn
commission income and disclose the types of earnings you include
in
other income. Based on your presentation within your consolidated
statements of earnings, we assume you are presenting this line
item
"net" pursuant to EITF 99-19. If true, please also disclose this
fact and the indicators that support net reporting.
13. Operating Segment Information, page 33
13. Please help us understand why you have included your sales
made
in Canada in the "foreign" column of your reconciliation. Since
your
country of domicile is Canada, we would expect sales made in
Canada
to be included in the "domestic" column. Refer to paragraph 38 of
SFAS 131.
Form 10-QSB for the Quarter Ended September 30, 2005
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 10
14. We note on page 11 you disclose that you changed your
accounting
for sales with brokerage commissions which caused your gross
margin
percentage to be exceptionally high in 2004. Please tell us more
about your accounting change. Specifically, tell us what your
accounting policy was prior to and after the change; tell us what
impact the accounting change had on your sales, cost of sales and
selling and administrative expenses; and the factors that led you
to
change your accounting policy.
Form 10-QSB for the Quarter Ended December 31, 2005
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 11
15. Please present a discussion of your results of operations for
the
interim period up to the date that a balance sheet is presented.
For
example, in this quarterly report, your results of operations
should
also include a discussion of the changes for the nine month period
ended December 31, 2005 to the nine month period ended December
31,
2004. Refer to Item 303(b)(2) of Regulation S-K.
Certification
16. Please confirm to us that the inclusion of the titles of the
Chief Executive Officer and Chief Financial Officer in the
introductory paragraphs was not intended to limit the capacity in
which such individuals provided the certifications. In future
filings please omit the titles in the introductory paragraph to
conform to the format provided in Item 601(b)(31)(i) of Regulation
S-
K. Also refer to Question 11 of the Staff`s Frequently Asked
Questions regarding the Sarbanes-Oxley Act of 2002 issued in
November
2002 and available on our website at www.sec.gov.
* * * * *
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a letter that keys your responses to our comments
and
provides any requested information. Detailed letters greatly
facilitate our review. Please understand that we may have
additional
comments after reviewing your response to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings to be certain that the
filings include all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filings or
in
response to our comments on your filings.
You may contact Yong Kim at (202) 551-3323 if you have
any
questions regarding these comments. Please contact me at (202)
551-
3716 with any other questions.
Sincerely,
William Choi
Branch Chief
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Ms. Carol Atkinson
Cosmo Communications Corporation
March 14, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404
DIVISION OF
CORPORATION FINANCE