Grand Gallery Inc.

What they do

Cosmos Group Holdings Inc. is a Nevada holding company with operations conducted through Hong Kong-based subsidiaries. The company operates in a single business segment: physical arts and collectibles. It provides authentication, valuation and certification (AVC) services, sale and purchase, hire purchase, financing, custody, security and exhibition (CSE) services to art and collectibles buyers. It also leverages blockchain technology by creating Digital Ownership Tokens (DOTs), which are smart contracts that include independent appraisals, 3D renderings, photos, AI recognition files, and legal documents to provide proof of ownership and provenance.

Revenue drivers

• Consultancy service income — In Q1 2025, total revenue of approximately $19,281 was mainly attributable to consultancy service income in the sale and distribution of arts and collectibles. This is the primary revenue source.
• Arts and collectibles sales and services — The company provides authentication, valuation, certification, custody, security, and exhibition services. Revenue has been very small, with annual revenue in 2024 at $6,408 and quarterly revenue around $19,000 in recent periods.
• Digital Ownership Tokens (DOTs) — The company plans to mint DOTs, which are blockchain-based smart contracts for art and collectible pieces. This is an intended revenue stream but has not yet generated significant revenue.

Recent performance

For Q1 2025, the company reported total revenue of approximately $19,281, mainly from consultancy service income. As of March 31, 2025, it had working capital of $41,261,443, an accumulated deficit of $200,806,742, and a shareholder equity deficit of $41.3 million. Cash and equivalents were only $23,503, and total assets were $23,503 against total liabilities of $41.3 million. Annual net income swung to $4.7 million in 2024, but operating cash flow was negative at -$3.5 million. The company continues to rely on stockholder support and external financing to meet obligations.

Strategy

The company is focused on expanding its physical arts and collectibles business through the use of blockchain technology, specifically through the creation of Digital Ownership Tokens (DOTs). DOTs are intended to resolve issues of provenance, authenticity, and ownership by providing a comprehensive digital record. The company plans to mint DOTs under the assumption they are not securities, and it initially targets customers in Hong Kong, with plans to expand throughout Asia and the rest of the world. Management emphasizes the need for continued financial support from existing shareholders and external financing to fund operations.

Risks

• Going concern risk — The company has an accumulated deficit of $200.8 million, negative shareholder equity, and minimal cash, which raises substantial doubt about its ability to continue as a going concern.
• Dependence on stockholder support — The company is dependent on the continued financial support of its majority shareholder and may not be able to meet obligations if that support is not forthcoming.
• Regulatory risk of DOTs — If Digital Ownership Tokens are deemed to be securities under U.S. or foreign laws, the company could face regulatory scrutiny, fines, and penalties, potentially harming its business.
• Hong Kong and PRC regulatory risk — Changes in PRC or Hong Kong regulations, including those related to foreign ownership, cybersecurity, or anti-monopoly, could disallow the holding company structure or impair the ability to operate and accept foreign investment, which could make the stock worthless.

Outlook

Management acknowledges that the company's continuation as a going concern depends on improving profitability and continued financial support from stockholders or other capital sources. They believe that continued support from existing shareholders and external financing will provide the additional cash necessary to meet obligations as they become due. The company plans to expand its DOT-based services and target customers in Asia and globally, but forward-looking statements indicate significant uncertainty.