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, 20182019
| ☐ | 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 (IRS Employer Identification No.) |
| c/o DeHeng Chen, LLC, 233 Broadway, Suite 2200, NY, NY | | 10279 |
(Address (Address of Principal Executive Offices) | | (Zip (Zip Code) |
| | |
(Registrant’s | (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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”filer”, “accelerated filer,”filer”, “smaller reporting company,”company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
☐ Large accelerated filer | ☐ Accelerated filer |
☐ Non-accelerated filer
| ☒ Smaller reporting company |
| ☐Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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 16, 2018,15, 2019, 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, 20182019
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PART I. | PART I. FINANCIAL INFORMATION |
| Item 1. | Interim Financial Statements |
CHINA ELITE INFORMATION CO., LTD.
| (Expressed in U.S. Dollars) | | February 28, 2018 (Unaudited) | | | November 30, 2017 (Audited) | | | February 28, 2019 (Unaudited) | | | November 30, 2018 (Audited) | |
| | | | | | | | | | | | | |
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| Total assets | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
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| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | | | | | | | | | | | | | | | | |
| Current liabilities | | | | | | | | | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 1,363 | | | $ | 8,601 | | | $ | 1,749 | | | $ | 20,691 | |
| Loans from shareholder | | | 791,477 | | | | 780,915 | | | | 823,861 | | | | 802,357 | |
| Total current liabilities | | | 792,840 | | | | 789,516 | | | | 825,610 | | | | 823,048 | |
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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 | | | | 112,000 | | | | 112,000 | |
| Additional paid-in capital | | | 154,465 | | | | 154,465 | | | | 154,465 | | | | 154,465 | |
| Deficit accumulated | | | (1,059,305 | ) | | | (1,055,981 | ) | | | (1,092,075 | ) | | | (1,089,513 | ) |
| Total stockholders’ deficiency | | | (792,840 | ) | | | (789,516 | ) | | | (825,610 | ) | | | (823,048 | ) |
| | | | | | | | | | | | | | | | | |
| Total liabilities and stockholders’ deficiency | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
See condensed notes to interim financial statements.
CHINA ELITE INFORMATION CO., LTD.
INTERIM STATEMENTS OF OPERATIONS (Unaudited)
For the three months ended February 28, 20182019 and 20172018
| (Expressed in U.S. Dollars) | | 2018 | | | 2017 | | | 2019 | | | 2018 | |
| | | | | | | | | | | | | |
| Revenues | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | |
| General and administrative expenses | | | | | | | | | | | | | | | | |
| General and administrative | | | 3,324 | | | | 13,049 | | | | 2,562 | | | | 3,324 | |
| Total general and administrative expenses | | | 3,324 | | | | 13,049 | | | | 2,562 | | | | 3,324 | |
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| Operating loss | | | (3,324 | ) | | | (13,049 | ) | | | (2,562 | ) | | | (3,324 | ) |
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| Other income (expense) | | | | | | | | | | | | | | | | |
| Total other income (expense) | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | |
| Net loss | | $ | (3,324 | ) | | $ | (13,049 | ) | | $ | (2,562 | ) | | $ | (3,324 | ) |
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| Basic net loss per share | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) |
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| Weighted average shares outstanding | | | 11,200,000 | | | | 11,200,000 | | | | 11,200,000 | | | | 11,200,000 | |
See condensed notes to interim financial statements.
CHINA ELITE INFORMATION CO., LTD.
INTERIM STATEMENTS OF CASH FLOWS (Unaudited)
For the three months ended February 28, 20182019 and 20172018
| (Expressed in U.S. Dollars) | | 2018 | | | 2017 | | | 2019 | | | 2018 | |
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Cash flows from operating activities | | | | | | | | | | | | |
| Net loss | | $ | (3,324 | ) | | $ | (13,049 | ) | | $ | (2,562 | ) | | $ | (3,324 | ) |
| Adjustments to reconcile net loss to net cash flows used in operating activities | | | | | | | | | | | | | | | | |
| Changes in assets and liabilities | | | | | | | | | | | | | | | | |
| Accounts payable and accrued expenses | | | (7,238 | ) | | | 13,049 | | | | (18,942 | ) | | | (7,238 | ) |
| Net cash flows used in operating activities | | | (10,562 | ) | | | - | | | | (21,504 | ) | | | (10,562 | ) |
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Cash flows from financing activities | | | | | | | | | | | | | | | | |
| Loans from shareholder | | | 10,562 | | | | - | | | | 21,504 | | | | 10,562 | |
| Net cash flows provided by financing activities | | | 10,562 | | | | - | | | | 21,504 | | | | 10,562 | |
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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, 20172018 included in its Annual Report on Form 10-K.
Loss Per Share
Basic loss per share is computed as net loss divided by the weighted average number of shares outstanding during the period. There is no diluted per share information presented due to losses in all periods. In addition, there are no potentially dilutive securities outstanding.
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 no assets, limited operations and has sustained substantial operating losses in recent years resulting in a substantial accumulated deficit of $1,059,305.$1,092,075. For the three months ended February 28, 2018,2019, the Company had a net loss of $3,324.$2,562. 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 due and continue as a going concern.
The Company’s cash requirements for working capital have been satisfied for the past several years 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 at least the next twelve months. However, Management believes that the Company’s need for capital may change dramatically if it identifies and 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.
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. These financial statements do not include any adjustments that might result from this uncertainty.
Management currently has no specific plan to address these conditions except to continue to maintain its status as a reporting public shell for the foreseeable future.
NOTE 3 – RELATED PARTY TRANSACTIONS
Amount due to a stockholder of $791,477$823,861 at February 28, 20182019 (at November 30, 2017: $780,915)2018: $802,357) 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.
NOTE 4 – INCOME TAX STATUS
The entity is taxable only in a foreign jurisdiction where Net Operating Loss (“NOL”) carryforwards are not available.
| 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. 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.
Overview
The Company has limited operations solely intended to maintian its status as a reporting public shell and has sustained substantial operating losses in recent years resulting in a substantial accumulated deficit of $1,059,305$1,092,075 as at February 28, 2018.2019.
Critical Accounting Policies and Estimates
Based on the Company’s current level of limited operations, the Company does not believe it has any critical accounting policies or estimates at this time.
Results of Operations – The Three Months Ended February 28, 2018,2019, Compared to the Three Months Ended February 28, 20172018
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, 20182019 decreased 74.5%22.9%, or $9,725,$762, to $3,324$2,562 from $13,049$3,324 for the three-month period February 28, 2017.2018. The lower expenses were primarily due to the decrease in audit fee and consultancy expenses for preparing the Company’s Form 10-K which was filed on March 15, 2018 and such expenses will be recorded in the next quarter accordingly.legal expenses.
Capital Resources and Liquidity
The Company does not currently have any cash or any other significant assets. However, the Company believes that, based on its oral commitment from its President and majority stockholder 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, 20182019 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.
Accordingly, in their report dated March 12, 2018,February 28, 2019, our independent registered public accounting firm expressed substantial doubts as to the Company’s ability to continue as a going concern.
Conflicts of Interest
Certain conflicts of interest have existed and will continue to exist between management, their affiliates and the Company. Management has other interests including business interests to which he devotes his primary attention. Management may continue to do so notwithstanding the fact that management time should be devoted to the business of the Company and in addition, management may negotiate an acquisition resulting in a conflict of interest..interest.
Off-Balance Sheet Arrangements
We do 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 conditions, 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.
PART II. | PART II. OTHER INFORMATION |
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. |
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Date: April 16, 201815, 2019 | By | /s/ Li Kin Shing | |
| | | Li Kin Shing | |
| | | President and Chief Executive Officer | |
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