UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☒ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended February 28, 2017
| ☐ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from ______to ______
Commission file number: 000-25591
| | CHINA ELITE INFORMATION CO., LTD. | |
| | (Exact name of Registrant as Specified in its Charter) | |
| | BRITISH VIRGIN ISLANDS | | 11-3462369 | |
| | (State or other jurisdiction of incorporation or organization) | | (IRS Employer Identification No.) | |
| | c/o DeHeng Chen, LLC, 233 Broadway, Suite 2200, NY, NY | | 10279 | |
| | (Address of Principal Executive Offices) | | (Zip Code) | |
| | (212) 608-6500 | |
| | (Registrant’s telephone number, including area code) | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such filing). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
| ☐ Large accelerated filer | ☐ Accelerated filer |
| ☐ Non-accelerated filer | ☒ Smaller reporting company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of April 14, 2017, there were 11,200,000 shares of common stock outstanding.
CHINA ELITE INFORMATION CO., LTD.
FORM 10-Q
FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017
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| Item 1. | Condensed Interim Financial Statements |
CHINA ELITE INFORMATION CO., LTD.
CONDENSED INTERIM BALANCE SHEETS
| (Expressed in U.S. Dollars) | | February 28, 2017 (Unaudited) | | | November 30, 2016 (Audited) | |
| | | | | | | |
ASSETS | | | | | | |
| | | | | | | |
| Total assets | | $ | - | | | $ | - | |
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LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 22,089 | | | $ | 9,040 | |
| Loans from shareholder | | | 746,365 | | | | 746,365 | |
| Total current liabilities | | | 768,454 | | | | 755,405 | |
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| Commitments and Contingencies | | | | | | | | |
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| Stockholders’ Deficiency | | | | | | | | |
| Preferred stock: $0.01 par value; 10,000,000 shares authorized; issued and outstanding: none | | | - | | | | - | |
| Common stock: $0.01 par value; 50,000,000 shares authorized; issued and outstanding: 11,200,000 | | | 112,000 | | | | 112,000 | |
| Additional paid in capital | | | 154,465 | | | | 154,465 | |
| Deficit accumulated | | | (1,034,919 | ) | | | (1,021,870 | ) |
| Total stockholders’ deficiency | | | (768,454 | ) | | | (755,405 | ) |
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| Total liabilities and stockholders’ deficiency | | $ | - | | | $ | - | |
See condensed notes to interim financial statements.
CHINA ELITE INFORMATION CO., LTD.
CONDENSED INTERIM STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended February 28, 2017 and February 29, 2016
| (Expressed in U.S. Dollars) | | 2017 | | | 2016 | |
| | | | | | | |
| Revenues | | $ | - | | | $ | - | |
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| General and administrative expenses | | | | | | | | |
| General and administrative | | | 13,049 | | | | 12,860 | |
| Total general and administrative expenses | | | 13,049 | | | | 12,860 | |
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| Operating loss | | | (13,049 | ) | | | (12,860 | ) |
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| Other income (expense) | | | | | | | | |
| Total other income (expense) | | | - | | | | - | |
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| Net loss | | $ | (13,049 | ) | | $ | (12,860 | ) |
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| Basic and diluted net loss per share | | $ | (0.00 | ) | | $ | (0.00 | ) |
| | | | | | | | | |
| Weighted average shares outstanding | | | 11,200,000 | | | | 11,200,000 | |
See condensed notes to interim financial statements.
CHINA ELITE INFORMATION CO., LTD.
CONDENSED INTERIM
STATEMENTS OF CASH FLOWS
(Unaudited)
For the three months ended February 28, 2017 and February 29, 2016
| (Expressed in U.S. Dollars) | | 2017 | | | 2016 | |
| | | | | | | |
Cash flows from operating activities | | | | | | |
| Net loss | | $ | (13,049 | ) | | $ | (12,860 | ) |
| Adjustments to reconcile net loss to net cash flows used in operating activities | | | | | | | | |
| Changes in assets and liabilities | | | | | | | | |
| Accounts payable and accrued expenses | | | 13,049 | | | | 2,437 | |
| Net cash flows used in operating activities | | | - | | | | (10,423 | ) |
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Cash flows from financing activities | | | | | | | | |
| Loans from shareholder | | | - | | | | 10,423 | |
| Net cash flows provided by financing activities | | | - | | | | 10,423 | |
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| Increase (decrease) in cash | | | - | | | | - | |
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| Cash, beginning of period | | | - | | | | - | |
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| Cash, end of period | | $ | - | | | $ | - | |
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| Cash paid for interest and income taxes | | $ | - | | | $ | - | |
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| Supplemental noncash investing and financing activities | | $ | - | | | $ | - | |
See condensed notes to interim financial statements.
CHINA ELITE INFORMATION CO., LTD.
CONDENSED
NOTES TO INTERIM
FINANCIAL STATEMENTS
NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America. However, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted or condensed pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation have been included. The results for interim periods are not necessarily indicative of results for the entire year. These condensed financial statements and accompanying notes should be read in conjunction with the Company’s annual financial statements and the notes thereto for the fiscal year ended November 30, 2016 included in its Annual Report on Form 10-K.
Loss Per Share
Basic earnings or (loss) per share (“EPS”) is computed as net loss divided by the weighted average number of shares outstanding during the period in accordance with Earnings Per Share Topic of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Diluted EPS includes the effect from potential dilutive securities and is equal to basic loss per share for all periods presented because there are no potential dilutive securities and the Company has incurred a net loss. All per share information is adjusted retroactively to reflect stock splits and changes in par value.
NOTE 2 – GOING CONCERN
The accompanying unaudited financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern. However, as is evident in the accompanying financial statements, Management has considered that the Company has limited operations and has sustained substantial operating losses in recent years resulting in a substantial accumulated deficit of $1,034,919. For the three months ended February 28, 2017, the Company had a net loss of $13,049. As a result of its evaluation of conditions and events, Management has concluded they are of such significance as to raise substantial doubt as to the Company’s ability to meet its financial obligations as they come to continue as a going concern. The Company’s cash requirements for working capital have been satisfied through loans from its majority shareholder and the Company plans to seek additional capital as needed through shareholder loans and/or a debt or equity financing to continue its operations. The Company’s President, who is also the majority shareholder, has orally agreed to fund its operations for the next twelve months, based on the Company’s current level of expenditures, as necessary. However, Management believes that the Company’s need for capital may change dramatically if it acquires a suitable business opportunity during that period. In view of these matters, the continued existence of the Company and its ability to succeed in any future operations is dependent upon its ability to meet its financing requirements on a continuing basis.
Management’s plans are to identify and pursue profitable business opportunities through mergers and acquisitions, so as to diversify the business risks and maximize the returns to stockholders. To meet these objectives, the Company plans to seek potential merger candidates and to seek to raise additional capital through private equity and/or debt investment in order to support existing operations and expand the range and scope of its business.
There can be no assurance that such additional funds will be available for the Company on acceptable terms, if at all. The Company’s ability to achieve these objectives cannot be determined at this time. If the Company is unsuccessful in its endeavors, it may have to cease operations.
NOTE 3 – RELATED PARTY TRANSACTIONS
Amount due to a stockholder of $746,365 at February 28, 2017 (at November 30, 2016: $746,365) represents a series of advances from the majority stockholder to fund working capital requirements. There is no note and the amounts are unsecured, interest-free, and repayable on demand. The majority stockholder, who is also the Company’s President, has orally agreed to fund the Company’s operations for at least the next twelve months.
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in this Form 10-Q that are not purely historical are forward-looking statements. These include statements about the Company’s expectations, beliefs, intentions or strategies for the future, which are indicated by words or phrases such as “anticipate”, “expect”, “intend”, “plan”, “will”, “the Company believes”, “management believes” and similar words or phrases. The forward-looking statements are based on the Company’s current expectations and are subject to certain risks, uncertainties and assumptions. The Company’s actual results could differ materially from results anticipated in these forward-looking statements. All forward-looking statements included in this document are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. Readers are also urged to carefully review and consider the various disclosures made by the Company that are to advise interested parties of the factors which affect the Company’s business, in this report, as well as the Company’s periodic reports on Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission.
These risks and uncertainties, many of which are beyond our control, include (i) the sufficiency of existing capital resources and the Company’s ability to raise additional capital to fund cash requirements for future operations; (ii) uncertainties involved in the acquisition of an operating business in a targeted industry and/or a targeted geographic region; (iii) the Company’s ability to achieve sufficient revenues through an operating business to fund and maintain operations; (iv) volatility of the stock market; and (v) general economic conditions. Although the Company believes the expectations reflected in these forward-looking statements are reasonable, such expectations may prove to be incorrect. Investors should be aware that they could lose all or substantially all of their investment.
Critical Accounting Policies
Based on the Company’s current level of limited operations, the Company does not believe it has any critical accounting policies at this time.
Results of Operations – The Three Months Ended February 28, 2017 Compared to the Three Months Ended February 29, 2016
Revenues
The Company did not recognize any revenue in each of the three-month periods ended February 28, 2017 and February 29, 2016.
General and Administrative
General and administrative expenses consist primarily of public company compliance expenses, including legal and accounting expenses. General and administrative expenses for the three-month period ended February 28, 2017 increased 1.5%, or $189, to $13,049 from $12,860 for the three-month period February 29, 2016. The higher expenses were primarily due to the increase in audit fees.
Other (Income) Expense
The Company did not incur any interest expense or earn any interest income for the three-month periods ended February 28, 2017 and February 29, 2016.
Capital Resources and Liquidity
The Company does not currently have any cash or any other significant assets. However, the Company believes that, based on an oral commitment from its majority stockholder, who is also the President of the Company, to fund the Company’s operating activities at its current level of expenditures, it has sufficient resources to meet the anticipated needs of its operations, such as maintaining its required continuous disclosure and reporting requirements with the Securities and Exchange Commission, for the next twelve months, though there can be no assurances to that effect. The Company had no revenues for the three months ended February 28, 2017 and its need for capital may change dramatically if it acquires a suitable business opportunity during the next twelve months. Therefore, the Company plans to rely on shareholder loans and the raising of debt or equity capital to continue its operations. There is no assurance the Company will be successful in raising the needed capital.
We have incurred net losses since inception, expect to incur losses in the future associated with the costs of operating as a public company, and may never achieve revenues or profitability unless we complete a successful merger. We have never recognized any revenue from the sale of products or any other source. Our operating losses have had, and will continue to have, an adverse impact on our working capital, total assets and stockholders’ equity. We do not know when or if we will ever generate revenue or become profitable because of the significant uncertainties with respect to our ability to acquire a suitable business opportunity.
In its report dated February 28, 2017, on our audited financial statements as of and for the years ended November 30, 2016 and 2015, our independent registered accounting firm, Keeton CPA, expressed substantial doubt as to the Company’s ability to continue as a going concern.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Evaluation of Disclosure Controls and Procedures
The Company’s Chief Executive Officer and Chief Financial Officer (the “Certifying Officer”) evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Certifying Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is (a) accumulated and communicated to our management, including to our Certifying Officer, as appropriate to allow timely decisions regarding required disclosure; and (b) recorded, processed, summarized and reported within the time specified in the SEC’s rules and forms. Since that evaluation process was completed, there have been no significant changes in our disclosure controls or in other factors that could significantly affect these controls.
Changes in Internal Controls over Financial Reporting
There were no changes in our internal controls over financial reporting identified in connection with this evaluation that occurred during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
None.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
None.
| Item 3. | Defaults Upon Senior Securities |
None.
Not applicable.
None.
Exhibit 31 - Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32 - 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.
Exhibit 101.INS - XBRL Instance Document
Exhibit 101.SCH - XBRL Schema Document
Exhibit 101.CAL - XBRL Calculation Linkbase Document
Exhibit 101.DEF - XBRL Definition Linkbase Document
Exhibit 101.LAB - XBRL Label Linkbase Document
Exhibit 101.PRE - XBRL Presentation Linkbase Document
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | CHINA ELITE INFORMATION CO., LTD. |
| | | |
| Date: April 14, 2017 | By | /s/ Li Kin Shing | |
| | | Li Kin Shing |
| | | President and Chief Executive Officer |
