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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|X| For the Quarterly Period ended November 30, 2000
Or
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM September 1,
2000 TO November 30, 2000
Commission File Number: 0-17597
ELITE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
76-0252296
Texas (IRS Employer Identification No.)
(State or other Jurisdiction of
incorporation or organization)
30093
5050 Oakbrook Parkway (Zip Code)
Suite 100
Norcross Georgia
(Address of principal executive offices)
770-559-4975
(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 |X|
The number of issued and outstanding shares of the issuer's class of capital
stock as of November 30, 2000, the latest practicable date, is as follows:
45,675,369 shares of Common Stock $.0001 par value.
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ELITE TECHNOLOGIES, INC.
Index
PART I - FINANCIAL INFORMATION
Item 1. Condensed Financial Statements:
Consolidated Balance Sheet-November 30, 2000 and May 31, 2000. 3
Consolidated Statement of Operations-Three and Six Months
Ended November 30, 2000 and November 30, 1999. 4
Consolidated Statement of Cash Flow-Six Months Ended November 5
30, 2000.
Notes to Consolidated Financial Statements (unaudited) 6-8
Report on Review by Independent Accountants
Item 2. Management's Discussion and Analysis of Financial Condition 8-9
And Results of Operations
PART II - OTHER INFORMATION
Item 3. Legal Proceedings 10
Item 4. Changes in Securities 10
Item 5. Defaults upon Senior Securities 10
Item 6. Submission of matters to Vote of Security Holders 10
Item 7. Other Information 10
Item 8. Exhibits and Reports on Form 8-K 10
Exhibit Index
Signature 11
PART Item I
Kirscher & Assoiciates, P.C.
REPORT ON REVIEW BY INDEPENDENT ACCOUNTANTS
To the board of Directors and stockholders
Elite Technologies, Inc. and Subsidiaries
We have reviewed the accompanying consolidated balance sheet of Elite
Technologies, Inc., and Subsidiaries (the "Company") as of November 30, 2000 and
the related consolidated statements of operations for the first three and six
months ended November 30, 2000 and November 30, 1999 and the related
consolidated statement of cash flows for the six months ended November 30, 2000.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review on interim
financial information consists principally of applying analytical procedures to
financial data and making inquires of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, with the exception of the matter described in the
following paragraph, we are not aware of any material modifications that should
be made to the aforementioned financial statements for them to be in conformity
with generally accepted principles.
A statement of cash flows for the six months ended November 30, 1999, the
previous year, has not been presented. As described in the notes to the
consolidated financial statements, generally accepted accounting principles
require such a statement be presented when financial statements purport to
present financial position and results of operations.
We previously audited in accordance with generally accepted auditing
standards, the consolidated balance sheet as of May 31, 2000, and the related
consolidated statements of operations, of stockholders' equity, and of cash
flows for the year then ended (not presented herein), and in our report dated
November 9, 2000, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information as set forth in the
accompanying consolidated balance sheet from which it has been derived.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed further
in the financial information, the Company has suffered recurring losses from
operations that raise substantial doubt about its ability to continue as a going
concern. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
KIRSCHNER &ASSOCIATES, P.C.
Marietta, Georgia
January 16, 2001, except for Note on Compliance Review as to which the date is
February 23, 2001.
ELITE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
Restated
November 30, May 31,
2000 2000
Assets
Current assets:
Cash and cash equivalents $246,596 -
Accounts receivable, less allowance for doubtful
accounts of $26,000 and $ 0 at November 30, 2000 and
May 31, 2000, respectively. 1,403,355 -
Note receivable on convertible debt obligation - 527,470
Receivable from officer 528,542 289,084
Other current assets 648,940 30,000
-------------- ---------------
Total current assets 2,827,433 846,554
Property and equipment, net 195,809 31,004
Excess of cost over net assets of businesses acquired,
less accumulated amortization of $ 1,364,186 and
$ 597,198 at November 30, 2000, and May 31, 2000, 6,496,418 4,987,844
respectively
Other assets 43,789 6,789
-------------- ---------------
9,563,449 5,872,191
============== ===============
Liabilities and Stockholders' Equity
Current liabilities:
Cash overdrafts - 35,106
Notes payable 441,682 112,895
Accounts payable 2,666,077 523,541
Accrued expenses 61,048 114,292
Federal payroll taxes payable 929,468 931,888
State payroll taxes payable 321,614 321,614
-------------- ---------------
4,419,889 2,039,336
-------------- ---------------
Long-term liabilities:
Notes payable - 100,000
Other long term debt 178,995 -
Convertible note payable 1,035,599 1,035,599
-------------- ---------------
Total liabilities 5,634,483 3,174,935
-------------- ---------------
Stockholders' equity:
Common stock, $.0001 par value; 500,000,000 shares
authorized; 45,675,369 and 34,275,720 issued and
outstanding at November 30, 2000 and May 31, 2000,
respectively 4,567 3,427
Additional paid-in capital 39,372,817 35,206,634
Retained earnings (deficit) (35,448,418) (32,512,805)
-------------- ---------------
3,928,966 2,697,256
-------------- ---------------
9,563,449 5,872,191
============== ===============
The Notes to Financial Statements are an integral part of this statement.
3
ELITE TECHNOLOGIES, INC., AND SUBSIDIARIES
Consolidated Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
November 30, November 30,
Restated Restated
2000 1999 2000 1999
Revenues $3,703,578 $400,013 $7,334,396 $778,010
3,595,238 - 6,563,351 -
Cost of Sales
-------------- ------------ ----------- --------------
Gross Profit 108,340 400,013 771,045 778,010
-------------- ------------ ----------- --------------
Salaries, wages and benefits (88,875) 16,456 239,226 102,106
Depreciation and amortization 466,222 - 766,988 -
Other operating expenses 376,389 203,001 869,635 760,313
Investment banking fees - - 1,584,031 -
--------------- ------------ ----------- --------------
753,736 219,457 3,459,880 862,419
-------------- ------------ ----------- --------------
Operating income (loss) (645,396) 180,556 (2,688,835) (84,409)
-------------- ------------ ----------- --------------
Interest expense - - 12,100 -
Other expenses - net 15,546 - 17,259 -
-------------- ------------ ----------- --------------
15,546 - 29,359 -
-------------- ------------ ----------- --------------
Loss before income taxes (660,942) 180,556 (2,718,194) (84,409)
Income taxes - - - -
-------------- ------------ ----------- --------------
Net loss ($660,942) $180,556 ($2,718,194) ($84,409)
============== ============= ============ ==============
Net Earnings (Loss) Per Share of Common Stock:
Basic and Diluted ($0.02) $0.01 ($0.07) ($0.01)
=============== ============== ============ ===============
Weighted Average Number of
Common Shares Used In Calculating
Net Loss Per Share of Common Stock:
Basic and Diluted 37,877,635 12,570,000 41,578,630 12,647,085
=============== ================ ============ ================
The Notes to Financial Statements are an integral part of this statement.
4
ELITE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flow
(Unaudited)
Restated
Three Months Ended Six Months Ended
November 30, November 30,
2000 2000
Cash flows from (to) operating activities:
Net loss ($660,942) ($2,718,194)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 466,222 766,988
Commitment to issue stock for investment
banking services - 1,584,031
Decrease (increase) in:
Accounts receivable (366,431) (1,403,355)
Note receivable - 527,470
Other assets 42,205 (618,940)
Increase (decrease) in:
Accounts payable 176,067 2,142,536
Payroll taxes payable - (2,420)
Accrued expenses and other current liabilities 29,336 (53,244)
-------------- ----------------
Net cash used in operating activities (313,543) 224,872
-------------- ----------------
Cash flows from (to) investing activities:
Purchases of property and equipment - (244,204)
Acquisition of businesses - (175,000)
Receivable from officers 45,161 (239,458)
-------------- ----------------
Net cash used in investing activities 45,161 (658,662)
-------------- -----------------
Cash flows from (to) financing activities:
Proceeds from issuance of common stock 223,645 140,000
Proceeds from issuance of long-term debt 50,783 425,000
Contributed capital - 150,492
-------------- ----------------
Net cash provided by financing activities 274,428 715,492
-------------- ----------------
Net increase (decrease) in cash 6,046 281,702
Cash and cash equivalents at beginning of period 240,550 (35,106)
-------------- ----------------
Cash and cash equivalents at end of period $246,596 $246,596
============== ================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $12,100 $12,100
-------------- ----------------
Income taxes
- -
-------------- ----------------
Acquision of businesses:
Fair value of assets acquired, including goodwill
- $2,275,562
Fair value of liabilities assumed - -
Promissory note issued - (425,000)
Fair value of common stock issued - (1,675,562)
-------------- ----------------
Net cash paid for acquisitions
- $175,000
============== ================
The Notes to Financial Statements are an integral part of this statement.
5
ELITE TECHNOLOGIES, INC., AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS November 30, 2000 (UNAUDITED)
Accounting Policies
In the opinion of management the accompanying unaudited consolidated financial
statements reflect all normal adjustments, exclusive of any adjustments that may
be required as a result of going concern issues discussed further in the
financial information, necessary to present fairly the financial position of
Elite Technologies, Inc., and Subsidiaries at November 30, 2000 and the results
of operations for the three and six months ended November 30, 2000 and 1999 and
cash flows for the three and six months ended November 30, 2000. The results of
operations for the three and six month periods ended November 30, 2000 should
not necessarily be taken as indicative of the results of operations that may be
expected for the entire year May 31, 2001.
The financial information as of November 30, 2000 should be read in conjunction
with the financial statements contained in Elite Technologies, Inc. Form 10-K/A
Annual Report for 2000.
Recognition and Revenue Expense
Web site development and consulting services are generally performed on a time
and materials basis and are recognized as the services are performed. All other
revenue and expense is accrued as incurred.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents. Cash overdrafts are classified as
debt.
Property and Equipment
Property and equipment are carried at cost. Expenditures for maintenance and
repairs that do not significantly extend the useful lives of the assets are
expensed as incurred, while major replacements and betterments are capitalized.
Depreciation is computed principally using the straight-line method over the
estimated useful lives of the assets, generally five years for computer
equipment and furniture and fixtures, and three to five years for purchased
software.
Cost of property sold or otherwise disposed of and the related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
recognized in income currently.
Excess of Cost Over Net Assets of Business Acquired
The excess of cost over net assets of businesses acquired (goodwill) is being
amortized using the straight-line method over five years. The amortization
period is based on, among other things, the nature of the products and markets,
the competitive position of the acquired companies, and the adaptability of
changing market conditions of the acquired companies. At each balance sheet
date, the Company assesses the recoverability of this intangible asset by
determining whether the amortization of the goodwill balance over its remaining
life can be recovered through undiscounted future operating cash flows of the
acquired operation.
The amount of goodwill impairment, if any, is measured based on projected
discounted future operating cash flows using a discount rate equal to the rate
of return that would be required by the Company for a similar investment with
like risks. The assessment of the recoverability of goodwill will be impacted if
estimated future operating cash flows are not achieved.
6
Income Taxes
The Company accounts for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Statement of Cash Flows
The statement of cash flows for the three and six months ended November 30, 1999
has not been presented. Generally accepted accounting principles require that a
statement be presented when financial statements purport to present financial
position and results of operations. Record keeping limitations prevented certain
accumulation of cash flow data. Accordingly, management is unable to present the
statement of cash flows for that period, at this time.
Payroll Taxes Payable
Payroll Taxes payable includes a liability, the assumption of which was part of
the agreement to acquire Intuitive Technology Consultants, Inc. Management
believes it can continue to reduce the liability accordingly without adversely
affecting the continuing operations of the company.
Compliance Review
Management received a compliance review letter from the United States Securities
and Exchange Commission dated November 20, 2000. The principle provisions of the
letter involve interpretation of valuation practices of the Company's common
stock issued subsequent to May 31, 1999.
The following schedule summarizes the major differences between management and
the Commission as impacting the Company's financial position as of November 30,
2000, and the results of operations for the six months then ended:
Form 10-Q and Form 10-Q/A and
Financial statements Financial statements
As originally filed As amended
Depreciation and amortization $231,250 $766,988
Investment banking fees 2,465,500 1,584,031
Net loss (3,155,020) (2,718,194)
Loss per share (0.08) (.07)
Goodwill, net of amortization 5,572,109 6,496,418
Total assets 8,548,045 9,563,449
Additional paid-in capital 14,190,140 39,372,817
Retained earnings (deficit) (11,284,845) (35,448,418)
Stockholders' equity 2,909,462 3,928,966
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the Financial
Statements and Notes thereto included elsewhere in this filing. Certain
statements, made in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations are forward-looking statements. The
forward-looking statements contained herein are based on current expectations
and entail various risks and uncertainties that could cause actual results to
differ materially from those expressed in such forward-looking statements. In
some cases, you can identify forward-looking statements by the use of certain
terminology, such as "may," "will," "should," "would," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential," "continue," or
the negative of such terms or other comparable terminology. Any expectations
based on these forward-looking statements are subject to risks and
uncertainties. These risks and uncertainties could affect the Company's future
financial and operating results and cause actual results to differ materially
from expectations based on forward-looking statements made in this document or
elsewhere by or on behalf of the Company.
Overview
ORGANIZATION
Elite Technologies, Inc. (referred to herein as "Elite" or the "Company")
is a full service technology company offering information technology ("IT")
services to small, medium and large enterprises. IT services involve the
facilitation of the flow of information within a company or between a company
and external sources. These services typically involve computer hardware,
software and "integration" efforts to allow diverse systems to communicate with
one another. The company
Elite was founded as a Georgia corporation in 1996 under the name Intuitive
Technology Consultants, Inc. ("ITC"). In July, 1998, ITC Acquisition Group, LLP,
consisting of management of ITC, acquired a majority interest, through a reverse
merger, in CONCAP, Inc.. On April 22, 1999, the Company changed its name to
Elite Technologies, Inc. The Company's charter was revoked on February 11, 2000
for the failure to file franchise tax returns in the State of Texas, however the
Company is presently seeking to reinstate its charter.
Elite through its divisions offered a variety of services in fiscal year
2000. Accordingly, Elite has suspended most of its operations following the
acquisition of Ace Manufacturing Group, Ltd. ("AMG") in April 2000. Elite
intends to acquire other companies to fulfill the services of its divisions. As
part of Elite's acquisition strategy, the Company has entered into an agreement
to acquire substantially all of the capital stock of AC Travel, Inc. and
International Electronic Technologies of Georgia, Inc. Elite does not presently
have any other definitive agreements to acquire additional companies and there
can be no assurance that it will do so.
The Company's principal executive offices are located at 5050 Oakbrook
Parkway, Suite 100 Norcross, Georgia 30093. Telephone: (770)-559-4975. The
Company's Internet address is www.elitetech-usa.com.
RECENT DEVELOPMENTS
Elite's objective is to establish itself as a leading provider of
content solutions, hardware distribution, software development services, and
kiosk manufacturing/distribution. The Company intends to utilize acquisitions to
support the growth of its business, such as content and hardware providers. The
Company intends to utilize the kiosk's content and advertising platform to serve
as a means by which retailers and other connectivity solutions providers can
access a viewer base with quantifiable online purchasing habits.
8
On December 15, 2000, the Company entered into a Letter of Intent with
Intelligent Software Solutions, Inc. for the purchase and exclusive distribution
of its kiosk units in Puerto Rico and the Caribbean Islands. A definitive
agreement is expected to be executed in January 2001. The contract will require
a minimum purchase by Intelligent Software Solutions, Inc. per month.
On December 29, 2000, the Company entered into a letter of intent to
purchase Smartmedia, Inc. The company expects to reach a definitive agreement in
January 2001. Smartmedia provides a patent pending technology that uses wireless
telemetry technology in the newspaper and shipping industries.
In January 2001, the Company consolidated its operations to one address to
reduce its expenditures for operational costs.
In December 2000 the company satisfied the $300,000 indebtedness as to
owned under the purchase agreement of IET, International Electronic Technology
of Georgia ( "IET"). Payment was made in stock.
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED NOVEMBER 30, 2000 AND NOVEMBER 30, 1999.
Revenues. Revenues from operations for the second quarter ended November
30, 2000 increased by 826% from the same period, 1999. Revenues for the six
months ended November 30, 2000, increased by 842.7% from the same period, 1999.
The increase in revenues is related to (i) the internal restructuring of the
business and (ii) the acquisition of International Electronic Technology of
Georgia (IET) and AC Travel.
Salaries, Wages and Benefits. Salaries, Wages and Benefits, of ($88,875) is
represented by payroll adjustments as made by a newly acquired company. An
increase of $137,120 and 134.3% higher for the six months ended November 30,
2000 over the same period, 1999. The increase is due primarily to the
acquisition of IET.
Other Operating Expenses. Other Operating Expenses increased by $173,388
and 85% during the second quarter ended November 30, 2000 over the same quarter
ended, 1999. The increase of $ 109,322 and 14% for the six-month period ended
November 30, 2000, over the same period, 1999. These increases are attributed to
the restructuring of the business and the recent acquisition of IET and AC
Travel.
Depreciation and Amortization. Elite depreciates its assets, including
goodwill, on a straight-line basis over three to five years. Depreciation and
amortization increased to $ 766,988. This is attributed to the amortization of
goodwill recorded in connection with the acquisitions completed in 2000.
Net Loss. Net losses decreased to $ 2,718,194 as a function of the
Compliance review as stated above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements have principally related to the
acquisition of businesses, working capital needs and capital expenditures for
growth. These requirements have been met through a combination of private
placements and internally generated funds. Although the Company incurred direct
costs for acquisitions, the Company completed these acquisitions primarily in
stock for stock transactions. The Company currently lacks the working capital
required to continue as a going concern and to achieve its acquisition program
and internal growth objectives. Management expects to enter into agreements for
debt or equity funding during the third and fourth quarters of fiscal year 2001
in order to meet the needs of internal growth and acquisitions. Management
believes that such agreements for debt or equity funding will be sufficient to
enable the Company to continue operating as a going concern. However, there is
no assurance that agreement for such additional funding will be consummated.
9
PART II
OTHER INFORMATION
ITEM 3. LEGAL PROCEEDINGS
The Company is, from time to time, a party to routine litigation incidental to
operating a business, including claims of discrimination, wrongful termination,
and other similar claims.
ITEM 4. CHANGES IN SECURITIES.
The company issued securities in exchange for $140,000 in cash during the
second quarter.
ITEM 5. DEFAULTS UPON SENIOR SECURITIES. NONE
ITEM 6. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. NONE
ITEM 7. OTHER INFORMATION. NONE
ITEM 8. EXHIBITS AND REPORTS ON FORM 8-K. NONE
10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: January 16, 2001 ELITE TECHNOLOGIES, INC.
February 23, 2001
By:/s/ Scott Schuster
Name: Scott Schuster
Title: Chief Executive Officer
11