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EX-32 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER - RegalWorks Media, Inc.exhibit_32.htm
EX-31 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER - RegalWorks Media, Inc.exhibit_31.htm

 
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Form 10-K
 
 
[mark one]

x           ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 
For the fiscal year period ended: December 31, 2011

 
o           TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 
For the transition period from ___________ to ____________

Commission File Number: 000-52846
 

 
AMERELITE SOLUTIONS™, INC.

(Name of small business issuer in its Charter) 
 
 
Nevada
76-0766174
(State or other jurisdiction of
(I.R.S. Employer
Incorporation or organization)
Identification No.)
 
3122 W. Clarendon Ave.
Phoenix, AZ 85017
(Address of Principal Executive Offices)

602-233-0540
(Registrant’s Telephone Number including Area Code)

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.00125 per share
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
o Yes     x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
 
o Yes     x No

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.
 
x Yes     o 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 files).

o Yes     x No
 


 
1

 




Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained , to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated filer
o
 
Accelerated Filer
o
         
Non-accelerated filer
o
(Do not check if smaller reporting company)  
Smaller Reporting Company
x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2) of the Exchange Act.
 
o Yes     x No
 
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2011 was $NIL based upon the price ($NIL) at which the common stock was last sold as of the last business day of the most recently completed second fiscal quarter, multiplied by the approximate number of shares of common stock held by persons other than executive officers, directors and five percent stockholders of the registrant without conceding that any such person is an “affiliate” of the registrant for purposes of the federal securities laws.

 
As of March 31, 2012 there were 14,181,088 shares of the registrant's  $0.00125 par value common stock issued and outstanding.


Documents incorporated by reference: None

 


 
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AmerElite Solutions, Inc.
(A Development Stage Company)

Table of Contents
 
   
Page
     
PART I
     
Item 1.
Description of Business 
4
     
Item 1A.
Risk Factors 
8
     
Item 1B.
Unresolved Staff Comments 
14
     
Item 2.
Description of Property 
14
     
Item 3.
Legal Proceedings 
14
     
Item 4.
Submission of Matters to a Vote of Security Holders 
14
     
PART II
     
Item 5.
Market for the Registrant's Common Equity, Related Shareholders Matters and Issuer Purchases of Equity Securities 
14
     
Item 6.
Selected Financial Data 
17
     
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations 
17
     
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk 
19
     
Item 8.
Financial Statements and Supplementary Data 
20
     
Item 9.
Changes In and Disagreements with Accountants on Accounting Policies 
21
     
Item 9A.
Controls and Procedures 
21
     
Item 9B.
Other Information 
22
     
PART III
     
Item 10.
Directors, Executive Officers and Corporate Governance 
22
     
Item 11.
Executive Compensation 
24
     
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
24
     
Item 13.
Certain Relationships and Related Transactions, and Director Interdependence 
26
     
Item 14.
Principal Accounting Fees and Services 
26
     
PART IV
     
Item 15.
Exhibits, Financial Statement Schedules 
26
     
Signatures
27
 
 


 
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FORWARD-LOOKING STATEMENTS
 
Statements made in this Form 10-K that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

AVAILABLE INFORMATION

AmerElite Solutions, Inc. files annual, quarterly, current reports, and other information with the Securities and Exchange Commission (the "Commission"). You may read and copy documents referred to in this Annual Report on Form 10-K that have been filed with the Commission at the Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1.800.SEC.0330. You can also obtain copies of our Commission filings by going to the Commission's website at http://www.sec.gov.
 
PART I

Item 1.    Description of Business

AmerElite Solutions, Inc. (“AMRX”, “the Company”, “we”, “our”, or “us”) is engaged in the business of developing, manufacturing, marketing and selling the Collesense™ Premium Skin Care Collection, a revolutionary skin care line combining next generation science with nature to form the most advanced beauty treatment available today.  The Company owns the worldwide rights to its intellectual property, Collamin_G®, a revolutionary anti-aging ingredient that is the main ingredient in the Collesense™ Skin Care Collection.

PRODUCTS AND SERVICES

AmerElite Solutions, Inc. provides a full spectrum of skin care products designed to naturally improve skin wellness and provide anti-aging properties with our Collesense™ Premium Skin Care Collection.  The Collesense™ system combines next generation science with nature to form the most advanced beauty treatment available today.  Utilizing aromatherapy and a variety of specific actives that include our proprietary ingredient, Collamin_G® - our innovative, botanically based formulas deliver a dramatic improvement in the general health, well-being and increased vitality for great looking skin.  Collesense™ products stimulate cell renewal, prevent and reduce the appearance of wrinkle and fine lines, dark circles, spider veins, rosacea, varicose veins and reduce under eye puffiness.
 
Collamin_G®, our intellectual property, is a revolutionary ingredient made of ingredients native to the body that provides nourishment to the skin.  The elements of Collamin_G® are broken down approximately 200-500 times smaller that the average skin pore.  These molecules rapidly penetrate the skin delivering essential nutrients beneath the top layer of skin that the body uses in the natural process of collagen regeneration.  Studies have shown a dramatic decrease in the appearance of fine lines and wrinkles after regular use of Serum_G®, our intensive wrinkle reducing formula that contains almost 50% Collamin_G®.

Principal Products
 
The Collesense™ Premium Skin Care Collection offers a daily system designed to work with the body’s natural systems to replenish, renew, and return the skin to a healthy, youthful state.  Each and every product in the Collesense™ family contains our proprietary ingredient, Collamin_G®, combined with natural, vegan and organic ingredients.  This unique combination creates the most advanced beauty treatment available today.  Collamin_G® is designed to provide nourishment to support the body’s natural process of collagen regeneration thereby creating tighter, firmer skin and reducing wrinkles and fine lines.  Combined with the science, we have developed a skin care line based on botanical derived products.  Botanically based products offer numerous advantages for the skin.  The skin recognizes, ‘biochemically’, plant derived products better that synthetic chemicals.  The result is healthy, balanced and hydrated that is effective on all skin types and in all climates. Used on a daily basis, the skin feels restored, refreshed and renewed.  The Collesense™ System encourages a step by step program with the use of these products to maximize results.


 

 
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Item 1.    Description of Business - continued
 
PRODUCTS AND SERVICES - continued
 
Collesense™ Cleansing Milk
 
This refreshing cleansing milk has been sold in our mall based test store and on the Company’s internet site.  Cleansing Milk has been sold both as an individual product and as part of the Collesense™ System.  It gently removes the build up of daily residue and make up, leaving the skin soft and radiant.  It will not dry out or strip your face as it cleans, soothes, and conditions the skin.
 
Collesense™ Facial Scrub
 
This micro-exfoliating scrub has been sold in our mall based test store and on the Company’s internet site.  Facial Scrub has been sold both as an individual product and as part of the Collesense™ System.  It gently and effectively aids in the removal of the accumulation of dead surface cells, and refines the pores as it brightens and polishes the skin.

Collesense™ Serum G®
 
This high potency serum has been sold in our mall based test store and on the Company’s internet site.  Serum_G® is the Company’s best selling product and has been sold both individually and as part of the Collesense™ System.  It is based on the revolutionary ingredient Collamin_G®.  Clinical studies have shown that when used daily, Serum_G® reduces the appearance of fine lines and wrinkles and the skin appears tightened.  The effectiveness of Collamin_G® is based on a formula of ingredients native to the skin that stimulates the skin’s own collagen molecules. The elements of Collamin_G® are approximately 200-500 times smaller than the pores of the skin, which means that approximately 200-500 elements penetrate the skin through a single pore at one time.  Made from ingredients native to the skin Collamin_G® contains nutrients that are essential to support the body’s natural process of collagen regeneration.

Collesense™ Eye Balm
 
This elegant blend of botanicals and anti-oxidants has been sold in our mall based test store and on the Company’s internet site.  The Eye Balm has been sold both individually and as part of the Collesense™ System.  It replenishes, revitalizes and hydrates the delicate under eye area. The texture is creamy and delivers a very fine film to moisturize and soften the under eye area with no pilling or residue.  In addition, it may reduce the appearance of puffiness, dark circles, fine lines and wrinkles. 

Collesense™ Daytime Moisturizer
 
This ultimate rejuvenating hydrator with natural sun filters has been sold in our mall based test store and on the Company’s internet site.  This Daytime Moisturizer has been sold both individually and as part of the Collesense™ System.  It delivers a sustained release of extraordinary moisture into the skin while at the same time creates a sealing barrier on the skin that offers protection from the visible effects of the environment and time.   It reduces the appearance of fine lines and wrinkles making beautiful skin a daily reality.  Contains botanically based ingredients that acts as a sun-filtering agent.

Collesense™ Night Cream

This revolutionary treatment that supplies a mega dose of anti-oxidants, botanicals and vitamins has been sold in our mall based test store and on the Company’s internet site.  This Night Cream has been sold both individually and as part of the Collesense™ System.  It is synergistically blended to deeply nourish the skin for new cellular growth and counter balance all free radical reaction that may damage the skin.  The Night Cream strengthens firms and encourages cell recovery.

The Collesense™ System offers a step by step program that cleans, exfoliates, treats, moisturizes and hydrates the skin.  The uniqueness of the system lies in the science.  Collamin_G® is an ingredient in each botanically based product.  Combining science and nature, the Collesense™ System works on top of and below the skin to treat the cause of the wrinkles in addition to moisturizing and hydrating the skin.  The consumer begins with the Cleansing Milk to clean away any debris and pollutants while cleaning the face.  Next is the Facial Scrub to clear away any dead skin cells and fully expose the pores.  The Serum_G® follows this with maximum penetration into the skin to support the body’s natural regeneration processes.  After the Serum_G® quickly absorbs, the Daytime Moisturizer with sun filtering agents is applied to moisturize and protect the face.  Finally, the Eye Balm is applied to energize and tone the sensitive skin around the eyes.  Now they can put on their make-up and face the day.  The Night Cream with antioxidants and vitamins is designed to revitalize the skin while sleeping.  Our Research and Development Department is working on several other products to compliment the Collesense™  family of products such as: Facial Mask, Toner, Body Wash and Body Lotion.  Using the Collesense™ System daily helps dramatically reduce the appearance of fine lines and wrinkles and improves the condition of the skin.  The skin appears lifted and restored to a youthful essence.

 
 
5

 

 
Item 1.    Description of Business - continued
 
PRODUCTS AND SERVICES - continued
 
Marketing Plan
 
The goal of the marketing plan is to educate our target customers to truly understand the uniqueness of the Collesense™ Premium Skin Care Collection.  Our direct response plan and internet based advertising campaign fits within the overall business plan of controlling all aspects of the Collesense™ Premium Skin Care Collection line of products, from research and development, to manufacturing, warehousing, distribution and direct sales to the customer.  We intend to start with short and long form advertising broadcast nationwide.  The ads will educate the consumer to the uniqueness of Collesense™ and direct them to an informed sales representative or an Internet site.  Utilizing a professional sales team and the internet will allow the consumer to become educated to the unique benefits of using Collesense™ view testimonials and before and after photos, compare Collesense™ to existing skin care lines and place an order.
 
In addition to direct response advertising, Collesense™ will be aggressively promoted via the Internet.  We will work with outside professionals to develop, design, and implement a successful eStrategy in order to open up new markets, add in cross sales/up sells, offer new products, form qualified strategic partnerships, and launch an online affiliate solution.  
 
The second phase of our marketing plan is to roll out a kiosk program in high traffic, regional shopping centers across the country.  This will allow the consumer to experience Collesense™ as well as have a sales representative available to answer any questions.  The addition of the kiosk program will offer consumers three separate channels - telephone, Internet and retail – to research and purchase Collesense™.
 
This will be followed by regular TV ads to reinforce the message, plus radio and print ads to broaden the base of potential customers and to build product recognition. At each stage, the consumer will be invited to call an 800 number to place an order. Once a targeted level of penetration is achieved, we will add additional distribution and sales through a network of carts in regional malls selling the Collesense™ line of anti-aging/anti-wrinkle products.  Our commercial message will be updated approximately every 6 months to keep the message fresh.  We are continually testing our product line to provide exciting new items to bring to the public.

Dependence on One or a Few Major Customers

We do not anticipate dependence on one or a few major customers for at least the next 12 months or the foreseeable future.

Distribution Method
 
Initially, we plan to contract with a fulfillment center to ship orders received from the short and long form advertisements or taken from our Internet site.  The fulfillment center will also provide customer service support for all orders shipped and handle all credit card processing associated with the orders.  As the second phase of the marketing plan is initiated we will sell directly to licensed distributors running carts in major regional malls across the country.
 
Research & Development / New Product Development
 
The President of AmerElite Solutions is responsible for the Company’s Research and Development.  The President is performing the product development as part of his duties at no additional charge.  Our manufacturing firm is not charging the Company for their help in the development of the products other than having an exclusive agreement to manufacture the Company’s product. The Company has no expected Research and Development Expenses in the next twelve (12) months.

Since we introduced Collesense™, we have received outstanding input from our growing customer base.  Based on their comments, we have developed additional products to keep up with the evolving skin care market.  Currently ready for production is our ‘Serum_H’, an ultra-hydrator that ‘weather-proofs’ the skin.  This hydro-lipid restorer utilizes the ONLY botanically derived polymer available on the market today in order to naturally balance the moisture level of the skin for all climates.  In order to meet the growing demand from ethnic communities for a pale complexion, we have developed a skin brightening lotion that has been clinically proven to lighten the skin tone.  Products that are currently in the development stage include a lotion to reduce varicose veins, treat rosacea, a facial mask, toner, body lotion, body wash, shampoo, conditioner and a mist.  We are totally committed to the Research and Development necessary to ensure continuous flow of new and improved products to the marketplace.
 

 

 
 

 
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Item 1.    Description of Business continued

PRODUCTS AND SERVICES - continued

Intellectual Property
 
The Company’s intellectual property includes our proprietary formulas.  Our Trade Secret program has been installed to protect these formulas.  Trade Secret Agreements have been signed by Officers & Directors, employees, vendors, consultants, and suppliers and manufactures.   To protect the formulas to our products and our products’ sales, we our relying on a combination of:
 
·
Trade secret laws
 
·
Copyright, trademark and trade name laws
 
·
Confidentially, procedures and agreements
 
·
Having unique product formulas
 
The Company has successfully registered the following marks with the United States Patent and Trademark Office:
 
·
Collamin_G®
 
·
Serum_G®
 
Existing or Probable Government Regulations
 
We believe that our business is not subject to material regulation under the laws of the United States or any of the states in which the Company plans to sell its products.   Laws and regulations often differ materially between states and within individual states such laws and regulations are subject to amendment and reinterpretation by the agencies charged with their enforcement.  Moreover, regulatory requirements are subject to change from time to time and may in the future become more restrictive, thereby making compliance more difficult or expensive or otherwise affecting or restricting the Company’s ability to conduct our business as now conducted or proposed to be conducted.
 
Facilities

Our corporate office is being provided by one of our directors at no charge.  We do not own or lease interests in any property.

Employees

We are currently in the development stage.  During this development period, we plan to rely exclusively on the services of, our officers and directors, to establish business operations and perform or supervise the minimal services our business requires at this time.  We believe that they are capable of handling our initial operations, which are primarily administrative at this time.  We have no other full or part-time employees.

There is no intention of hiring other employees until the business has been successfully launched and we have sufficient, sustained revenues flowing to Amerelite Solutions from our operations or have raised sufficient equity capital.  Human resource planning will be part of an ongoing process that will include regular evaluation of operations and revenue realization.

RESEARCH AND DEVELOPMENT

The President of AmerElite is performing the product development as part of his duties at no additional charge.  
 
 


 
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Item 1.    Description of Business continued
 
COST AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS

None.

Item 1A.    Risk Factors

INVESTING IN SHARES OF OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.   WE HAVE NOT GENERATED ANY SIGNIFICANT REVENUES AND HAVE NOT MADE A PROFIT SINCE INCEPTION.

Failure To Properly Manage Growth And Expansion Could Adversely Affect Our Business And Shareholder’s Equity.
 
We anticipate future growth from existing products and possible growth through newly developed products.   This growth will increase the demands on our management, operating systems and internal controls.  Consequently, our existing management resources and operational, financial, human and management information systems and controls may be inadequate to support its future operations.  We do not know if we will be able to manage our growth successfully.  As a result of these concerns, we may not be able to grow, or, if we do grow we do not know at what growth rate.

We Are A Development Stage Company, Have Not Generated Revenues, And May Not Generate Significant Revenues For Some Months.
 
AmerElite is a developmental stage company.  In the last 12 months we have not yet generated any revenues, and we can not expect to generate substantial revenues until we have our advertising plan in operation.  We do not know when, if ever, our operations will be profitable.
 
Our Proposed Operations Are Subject To All Business Risks Associated With Newly Formed Enterprises That Intend To Rely On Direct Response Marketing, Including The Need To Make Substantial And Increasing Expenditures For Marketing, Research And Development.
 
Our potential success must be considered in light of the problems, expenses, difficulties, complications and delays, frequently encountered in connection with the competitive environment in which we operate.  We expect that our profitability if any will result from (a) increased revenues from sales; (b) increased consumer demand and (c) development of new products.   As with most new businesses, it may be difficult for us to generate revenues and profits in the future.

Our Business And Financial Results Cannot Be Predicted, And Will Vary From Expectations.
 
We expect that our results will vary significantly in the future due to a number of reasons, including:
 
 
·
Our ability to establish acceptance and usage of our products,
 
 
·
Our ability to contract with competent manufactures and appropriate retailers,
 
 
·
Costs related to future growth and capital investments
 
 
·
Results of strategic agreements with companies that supply and product our products,
 
 
·
Our ability to attract, retain and motivate qualified personnel
 



 
8

 

 
Item 1A.    Risk Factors - continued
 
We Will Be Operating In A Highly Competitive Direct Response Marketing And Retail Environment.
 
We are aware of many competitors to our skin care collection, many of which are more, established and have significantly more financial resources than we do.  Our success in this industry is largely dependent on our ability to educate the consumer as to why our product is better than our competition and establish the consumer’s need for the products.  Our ability to compete effectively in this industry also depends on our ability to be competitive in pricing, servicing and performance.
  
Loss Of Key Management Personnel Could Adversely Affect Our Business
 
Our success depends largely on the skills of certain key management personnel.  The loss of one or more members of our key management team may materially and adversely affect its business, financial condition, and results of operations. We particularly depend on our principal executive officers, Robert L. Knapp and Courtney Knapp. We intend on obtaining, but presently we do not have any key man insurance.

Our Officers And Directors May Be Subject To Conflicts Of Interest

Our officers and directors serve only part time and may be subject to conflicts of interest. They devote part of their working time to other business endeavors, including consulting relationships with other corporate entities, and have responsibilities to these other entities. Such conflicts include deciding how much time to devote to our business affairs, as well as what business opportunities should be presented to us. Because of these relationships, our officers and directors may be subject to conflicts of interest.
 
Dependence On Advertising And Marketing Firms.
 
AmerElite will require aggressive efforts in placing quality advertisements for the budgeted price that will reach the expected number of consumers.  We do not know if we will be able to obtain optimal advertising placement at our projected budget.
 
Failures Or Lack Of Reliability In Our Products Could Result In Loss Of Business.
 
Only a limited amount of our products have been sold and used here in the United States.  Among other risks:
 
 
·
Our products may fail to provide the expected results,
 
 
·
We may experience limited availability of quality ingredients for manufacturing
 
 
·
We may experience poor quality manufacturing
 
 
·
Our products may have new competition from other companies attempting to duplicate our formulas.
 
 
·
Our customers could experience results different from our test results

Dependence On Independent Operators Operating Retail Outlets For Our Products.
 
The success of our cart program in regional malls is dependent on signing license agreements with owner/operators.  The cart program is also dependent on the independent owner operators signing lease agreements with the malls. For us to continue a long-term relation with the owner/operators, the owner/operators have to be successful.  It is our intention to help the owner/operators be successful. If such owner/operators are ultimately not successful, we will need to replace the owner/operators to continue to maintain our retail outlets.  We do not know if our owner/operators will be successful or that we can replace unsuccessful owner/operators with adequate replacements.
 
Current And Potential Competition.
 
The retail industry for skin care products is tremendous.  If we are unable to educate the public through our infomercials, TV, radio and newspaper advertisements that our products are more beneficial to our customers, we may not successfully compete with others with greater financial resources and more established name recognition.

Control By Management.
 
Currently the Company’s two Officers and Directors own 12% of the outstanding shares of common stock along with 72% of the Convertible Preferred Stock.  With conversion of the Preferred Stock into common shares, the Officers and Directors could own as much as 22% of the common stock.  Together with their immediate families they could control as much as 73%.  These officers with their family may be able to elect virtually all of the directors and control all operations of AmerElite
Solutions, Inc.


 
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Item 1A.    Risk Factors - continued
 
Critical Accounting Policies

The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.

Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made. Note 2 to the financial statements, included elsewhere in this prospectus, includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.

Seasonality
           
We have not noted a significant seasonal impact in our business.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, obligations under any guarantee contracts or contingent obligations. We also have no other commitments, other than the costs of being a public company that will increase our operating costs or cash requirements in the future.

Risks Relating To Patents, Copyrights, Trademarks, And Trade Names.
 
We believe that trade names, trademarks, and copyrights that we purchased will be increasingly important to us.  Applications will be filed to register additional trade names, trademarks and copyrights for products we will sell.  We will also institute an internal program to have all employees, consultant and vendors sign a Confidential Information and Trade Agreement.  Enforcing trade names, trademarks and copyrights against infringements, or defending against claims of infringement by others, can be time-consuming and expensive. Given our current stage of development, enforcing such claims could be cost-prohibitive to us.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
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Item 1A.    Risk Factors - continued
  
If We Are Unable To Protect Our Intellectual Property, Our Business Could Suffer.
 
Our future sales and expansion into additional markets will depend heavily upon our products that have been developed and upon products that are currently being developed.  Our Trade Secret program is currently being instituted to protect our proprietary formulas and these formulas are always at risk.  There is no assurance you that we can adequately protect this intellectual property.  If we fail to protect our intellectual property, we may lose any competitive advantage over our competitors, and our business could suffer.

To protect the formulas to our products and our products’ sales we may rely on a combination of:
 
·
Trade secret laws,
·
Copyright, trademark and trade name laws,
·
Confidentiality procedures and agreements,
·
Having unique product formulas.
 
These methods of protection may not be adequate to protect against using our technology and business methods. Accordingly, we cannot assure you that we will be able to maintain the advantage associated with our business methods, services or competitive features.
 
Despite our efforts to formally protect our intellectual property and keep information confidential, we may not be able to protect and use our intellectual property.  We may not be able to protect our formulations because:
 
·
Even if issued, new patents, trademarks, trade name or copyright registration may be challenged, invalidated or designed around.
·
We may not be granted adequate protection for our products, formulations and processes and parts of our technology may be found to be unable to be registered.
·
Time-consuming and costly litigation may be necessary to protect the Company’s proprietary technologies.
·
Policing unauthorized use of our intellectual property may be difficult and expensive.
·
Competitors may independently develop similar technology or design around our intellectual property.

Third Parties May Prevent Us From Developing Or Using Intellectual Property.
 
We may not be able to use the intellectual property or further develop our business because of third parties.  We cannot assure you that third parties will not in the future claim infringement by us with respect to the current or future products.  These claims of infringement, whether successful or not, could seriously harm our business, or results of operations.

Third parties:
 
·
May bring claims of copyright, trade name or trademark infringement against us,
·
May obtain patents or other intellectual property rights which may limit our ability to use certain technologies or require us to license or cross license technology, or
·
May bring costly, time-consuming lawsuits.
 
We are not aware of any issued patents that cover formulations similar to the formulations in the products we have developed.
 


 
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Item 1A.    Risk Factors - continued
 
Receive A ‘Going Concern Opinion’ From Auditor.

In AmerElite’s December 31, 2011 & 2010 Financial Statement, the Company has received a “Going Concern Opinion” from its auditors.  The Company’s ability to execute its Business Plan is dependent upon its ability to raise funds for its direct-response marketing program.  Management’s plan is to raise capital by borrowing funds and/or offering shares of its common stock, $0.00125 par value, on a “Best Efforts” basis to accredited investors only, pursuant to the exemption from registration contained in Section 4(2) and Regulation D adopted under the Securities Act of 1933 as amended.  Because the outcome or this future event is not susceptible to reasonable estimation by management it was determined that a “Going Concern Opinion” was appropriate.

Earnings Needed For Expansion.

We intend to retain most future earnings, net of dividends that may be paid on common stock, to fund the operation and expansion.  We may not generate profits and that will not permit us to pay cash dividends on our common shares.

We Will Require Additional Funding In The Future.

Based upon our historical losses from operations, we will require additional funding in the future. If we cannot obtain capital through financings or otherwise, our ability to execute our future exploration programs will be greatly limited. Our current plans require us to make capital expenditures for the future exploration of our natural resources properties. Historically, we have funded our operations through the issuance of equity and short-term debt financing arrangements. We may not be able to obtain additional financing on favorable terms, if at all. Our future cash flows and the availability of financing will be subject to a number of variables, including potential production and the market prices of certain resources. Further, debt financing could lead to a diversion of cash flow to satisfy debt-servicing obligations and create restrictions on business operations. If we are unable to raise additional funds, it would have a material adverse effect upon our business operations.

Government Regulation And Legal Uncertainties Could Adversely Affect The Company’s Business.
 
We believe that our business is not subject to material regulation under the laws of the United States or any of the states in which it plans to sell its products.  Laws and regulations often differ materially between states and within individual states such laws and regulations are subject to amendment and reinterpretation by the agencies charged with their enforcement.  If we become subject to any licensing or regulatory requirements, the failure to comply with any such requirements could lead to a revocation, suspension or loss of licensing status, termination of contracts and legal and administrative enforcement actions.  We cannot be sure that a review of our current and proposed operations will not result in a determination that could materially and adversely affect our business, results of operations and financial condition.  Moreover, regulatory requirements are subject to change from time to time and may in the future become more restrictive, thereby making compliance more difficult or expensive or otherwise affecting or restricting our ability to conduct our business as now conducted or proposed to be conducted.

Nevada Law And Our Articles Of Incorporation May Protect Our Directors From Certain Types Of Lawsuits.

Nevada law provides that our officers and directors will not be liable to us or our stockholders for monetary damages for all but certain types of conduct as officers and directors. Our Bylaws permit us broad indemnification powers to all persons against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against our officers and directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our officers and directors against claims, including claims arising out of their negligence, poor judgment, or other circumstances.

Risks Associated With Our Common Stock
 
Absence Of Public Market For Our Common Stock Creates Uncertainty In Liquidity And In Market Price.
 
There is presently no public trading market for our common stock; however it is likely that an active public trading market can be established and sustained in the near term.  We intend to have our common stock quoted on the OTC Bulletin Board as soon as practicable.  However, there can be no assurance that AMRX’s shares will be quoted on the OTC Bulletin Board.  Until there is an established trading market, holders of our common stock may find it difficult to sell their stock or to obtain accurate quotations for the price of the common stock.  If a market for our common stock does develop, our stock price may be volatile.
 


 
12

 

 
Item 1A.    Risk Factors - continued
 
Broker-Dealers May Be Discouraged From Effecting Transactions In Our Shares Because They Are Considered Penny Stocks And Are Subject To The Penny Stock Rules.
 
There Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934 impose sales practice and disclosure requirements on FINRA broker-dealers who make a market in “penny stocks”.  A penny stock generally includes any non-Nasdaq equity security that has a market price of less than $5.00 per share.  Our shares currently are not traded on NASDAQ nor on any other exchange nor are they quoted on the OTC/Bulletin Board or “OTCBB”.  In April of 2011, the Company filed its 15c-211 application with FINRA.  If we are successful in establishing a market maker and successful in applying for quotation on the OTCBB, it is very likely that our stock will be considered a “penny stock”.   In that case, purchases and sales of our shares will be generally facilitated by FINRA broker-dealers who act as market makers for our shares.  The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sales of our shares in the secondary market.

Under  the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000 or $300,000 together with his or his spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt.

In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt.  A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities.  Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.

We Became Subject To The Periodic Reporting Requirements Of The Securities Exchange Act Of 1934, Which Required Us To Incur Audit And Legal Fees In Connection With The Preparation Of Such Reports.  These Additional Costs Will Negatively Affect Our Ability To Earn A Profit.

The issuer has been a fully-reporting Company since the second quarter of 2008 and is required to file periodic reports with the Securities and Exchange Commission pursuant to the Securities and Exchange Act of 1934, and the rules and regulations hereunder.  In order to comply with such requirements, we utilize an outside accounting firm to prepare our financial statements and our independent registered auditors will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis.  Moreover, our legal counsel will have to review and assist in the preparation of such reports.  The costs charged by the by these professionals for such services cannot be accurately predicted at this time.  The incurrence of such costs will obviously be an expense to our operations, when incurred.
 
Because We Do Not Intend To Pay Any Dividends On Our Common Stock, Investors Seeking Dividend Income Or Liquidity Should Not Purchase Shares Of Our Common Stock.

We have not declared or paid any dividends on our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future.  Investors seeking dividend income or liquidity should not invest in our common stock.
 
Because We Can Issue Additional Shares Of Common Stock, Purchasers Of Our Common Stock May Incur Immediate Dilution And May Experience Further Dilution.

We are authorized to issue up to 20,000,000 share of common stock of which 14,181,088 shares are issued and outstanding as of December 31, 2011.  We are authorized to issue up to 2,000,000 shares of preferred stock, of which 1,250,000 shares are issued and outstanding as of December 31, 2011.  Our Board of Directors has the authority to cause us to issue additional shares of common stock and preferred stock, and to determine the rights, preferences and privilege of such shares, without consent of any of our stockholders.   Consequently, the stockholders may experience more dilution in their ownership of AMRX in the future.
 



 
13

 


Item 1B.    Unresolved Staff Comments

As of the date of this Annual Report, there are no unresolved comments pending from the Securities and Exchange Commission.
 
Item 2.    Description of Property

We do not own or lease interests in any property.

We do not intend to renovate, improve, or develop any real property. We are not subject to competitive conditions for property and currently have no property to insure.  We have no policy with respect to investments in interests in real estate and no policy with respect to investments in real estate mortgages.  Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities.

Item 3.    Legal Proceedings

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Annual Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings
pending or that have been threatened against us or our properties.

Item 4.    Submission of Matters to a Vote of Security Holders

During fiscal year ended December 31, 2011, no matters were submitted to our stockholders for approval.

 
PART II

Item 5.    Market for the Registrant’s Common Equity, Related Shareholders Matters and Issuer Purchases of Equity Securities

Shares of our common stock have not commenced trading on any active exchange. We, however, have been assigned a symbol "AMRX". We are currently preparing a Form 15c-211 to be filed with the Financial Industry Regulatory Authority (“FINRA”) seeking approval and listing on the Over-the-counter Bulletin Board trading system.

Holders

As of December 31, 2011, there were 76 holders of record of our common stock

Dividends

No dividends have ever been declared by the Board of Directors on our common stock. We do not anticipate paying cash dividends on our common stock in the foreseeable future.

Equity Compensation Plan
 
We do not have any equity compensation plans authorized or adopted however, we reserve the right to do so at a later date.

Unregistered Securities Sold
 
As of the date of this Annual Report and during fiscal year ended December 31, 2011, we did not issue any shares of our common stock to provide capital through private placement offerings.

Preferred Stock
 
The Company has 2,000,000 shares of authorized Class A Convertible Preferred Stock having a par value of $0.001 per share, as of December 31, 2011 there are 1,250,000 shares issued and outstanding.  The Preferred Stock shall have the right to be converted at any time after two (2) years from the date of issuance into two (2) shares of common stock.

Ranking:   Our Series A Preferred Stock (“Class A Stock”) ranks, as to dividends and upon liquidation, senior and prior to our common stock, par value $0.00125 per share (the “Common Stock”) and to all other classes of class of stock issued by the Issuer, except as otherwise approved by the affirmative vote or consent of the holders of a majority of the shares of outstanding Class A Stock.


 
14

 

 
Item 5.    Market for the Registrant’s Common Equity, Related Shareholders Matters and Issuer Purchases of Equity Securities - continued
 
Liquidation Rights:  With respect to rights on liquidation, the Class A Stock shall rank senior and prior to our Common Stock and to all other classes or series issued by us, except as otherwise approved by the affirmative vote or consent of the holders of at least a majority of outstanding Class A Stock.

Shareholder Matters

As an issuer of "penny stock" the protection provided by the federal securities laws relating to forward looking statements does not apply to us if our shares are considered to be penny stocks which they currently are and probably will be for the foreseeable future. Although the federal securities law provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harbor protection in the event of any claim that the material provided by us, including this prospectus, contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading.
 
As a Nevada corporation, we are subject to the Nevada Revised Statutes ("NRS" or "Nevada law"). Certain provisions of Nevada law described below create rights that might be deemed material to our shareholders. Other provisions might delay or make more difficult acquisitions of our stock or changes in our control or might also have the effect of preventing changes in our management or might make it more difficult to accomplish transactions that some of our shareholders may believe to be in their best interests.
 
Directors' Duties. Section 78.138 of the Nevada law allows our directors and officers, in exercising their powers to further our interests, to consider the interests of our employees, suppliers, creditors and customers. They can also consider the economy of the state and the nation, the interests of the community and of society and our long-term and short-term interests and shareholders, including the possibility that these interests may be best served by our continued independence. Our directors may resist a change or potential change in control if they, by a majority vote of a quorum, determine that the change or potential change is opposed to or not in our best interest. Our board of directors may consider these interests or have reasonable grounds to believe that, within a reasonable time, any debt which might be created as a result of the change in control would cause our assets to be less than our liabilities, render us insolvent, or cause us to file for bankruptcy protection
 
Dissenters' Rights.  Among the rights granted under Nevada law which might be considered material is the right for shareholders to dissent from certain corporate actions and obtain payment for their shares (see Nevada Revised Statutes ("NRS") 92A.380-390). This right is subject to exceptions, summarized below, and arises in the event of mergers or plans of exchange. This right normally applies if shareholder approval of the corporate action is required either by Nevada law or by the terms of the articles of incorporation.
 
A shareholder does not have the right to dissent with respect to any plan of merger or exchange, if the shares held by the shareholder are part of a class of shares which are:
 
·             listed on a national securities exchange,
·             included in the national market system by the National Association of Securities Dealers, or
·             held of record by not less than 2,000 holders.

This exception notwithstanding, a shareholder will still have a right of dissent if it is provided for in the articles of incorporation or if the shareholders are required under the plan of merger or exchange to accept anything but cash or owner's interests, or a combination of the two, in the surviving or acquiring entity, or in any other entity falling in any of the three categories described above in this paragraph.
 
Inspection Rights. Nevada law also specifies that shareholders are to have the right to inspect company records (see NRS 78.105). This right extends to any person who has been a shareholder of record for at least six months immediately preceding his demand. It also extends to any person holding, or authorized in writing by the holders of, at least 5% of outstanding shares. Shareholders having this right are to be granted inspection rights upon five days' written notice. The records covered by this right include official copies of:
 
                    i.         the articles of incorporation, and all amendments thereto,
 
                   ii.         bylaws and all amendments thereto; and
 
                  iii.         a stock ledger or a duplicate stock ledger, revised annually, containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, if known, and the number of shares held by them, respectively.
 


 
15

 


Item 5.    Market for the Registrant’s Common Equity, Related Shareholders Matters and Issuer Purchases of Equity Securities - continued
 
In lieu of the stock ledger or duplicate stock ledger, Nevada law provides that the corporation may keep a statement setting out the name of the custodian of the stock ledger or duplicate stock ledger, and the present and complete post office address, including street and number, if any, where the stock ledger or duplicate stock ledger specified in this section is kept.
 
Control Share Acquisitions. Sections 78.378 to 78.3793 of Nevada law contain provisions that may prevent any person acquiring a controlling interest in a Nevada-registered company from exercising voting rights. To the extent that these rights support the voting power of minority shareholders, these rights may also be deemed material. These provisions will be applicable to us as soon as we have 200 shareholders of record with at least 100 of these having addresses in Nevada as reflected on our stock ledger. While we do not yet have the required number of shareholders in Nevada or elsewhere, it is possible that at some future point we will reach these numbers and, accordingly, these provisions will become applicable. We do not intend to notify shareholders when we have reached the number of shareholders specified under these provisions of Nevada law. Shareholders can learn this information pursuant to the inspection rights described above and can see the approximate number of our shareholders by checking under Item 5 of our annual reports on Form 10-K. This form is filed with the Securities and Exchange Commission within 90 days of the close of each fiscal year hereafter. You can view these and our other filings at www.sec.gov in the "EDGAR" database.
 
Under NRS Sections 78.378 to 78.3793, an acquiring person who acquires a controlling interest in company shares may not exercise voting rights on any of these shares unless these voting rights are granted by a majority vote of our disinterested shareholders at a special shareholders' meeting held upon the request and at the expense of the acquiring person. If the acquiring person's shares are accorded full voting rights and the acquiring person acquires control shares with a majority or more of all the voting power, any shareholder, other than the acquiring person, who does not vote for authorizing voting rights for the control shares, is entitled to demand payment for the fair value of their shares, and we must comply with the demand. An "acquiring person" means any person who, individually or acting with others, acquires or offers to acquire, directly or indirectly, a controlling interest in our shares. "Controlling interest" means the ownership of our outstanding voting shares sufficient to enable the acquiring person, individually or acting with others, directly or indirectly, to exercise one-fifth or more but less than one-third, one-third or more but less than a majority, or a majority or more of the voting power of our shares in the election of our directors. Voting rights must be given by a majority of our disinterested shareholders as each threshold is reached or exceeded. "Control shares" means the company's outstanding voting shares that an acquiring person acquires or offers to acquire in an acquisition or within 90 days immediately preceding the date when the acquiring person becomes an acquiring person.
 
These Nevada statutes do not apply if a company's articles of incorporation or bylaws in effect on the tenth day following the acquisition of a controlling interest by an acquiring person provide that these provisions do not apply.
 
According to NRS 78.378, the provisions referred to above will not restrict our directors from taking action to protect the interests of our Company and its shareholders, including without limitation, adopting or executing plans, arrangements or instruments that deny rights, privileges, power or authority to a holder of a specified number of shares or percentage of share ownership or voting power. Likewise, these provisions do not prevent directors or shareholders from including stricter requirements in our articles of incorporation or bylaws relating to the acquisition of a controlling interest in the Company.
 
Our articles of incorporation and bylaws do not exclude us from the restrictions imposed by NRS 78.378 to 78.3793, nor do they impose any more stringent requirements.
 
Certain Business Combinations. Sections 78.411 to 78.444 of the Nevada law may restrict our ability to engage in a wide variety of transactions with an "interested shareholder." As was discussed above in connection with NRS 78.378 to 78.3793, these provisions could be considered material to our shareholders, particularly to minority shareholders. They might also have the effect of delaying or making more difficult acquisitions of our stock or changes in our control. These sections of NRS are applicable to any Nevada company with 200 or more stockholders of record and that has a class of securities registered under Section 12 of the 1934 Securities Exchange Act, unless the company's articles of incorporation provide otherwise. By this registration statement, we are registering our common stock under Section 12(g) of the Exchange Act.  Accordingly, upon the effectiveness of this registration statement on Form 10-SB we will be subject to these statutes as our Articles of Incorporation do not exempt us from them.
 
These provisions of Nevada law prohibit us from engaging in any "combination" with an interested stockholder for three years after the interested stockholder acquired the shares that cause him to become an interested shareholder, unless he had prior approval of our board of directors. The term "combination" is described in NRS 78.416 and includes, among other things, mergers, sales or purchases of assets, and issuances or reclassifications of securities. If the combination did not have prior approval, the interested shareholder may proceed after the three-year period only if the shareholder receives approval from a majority of our disinterested shares or the offer meets the requirements for fairness that are specified in NRS 78.441-42. For the above provisions, "resident domestic corporation" means a Nevada corporation that has 200 or more shareholders. An "interested stockholder" is defined in NRS 78.423 as someone who is either:
 
§           the beneficial owner, directly or indirectly, of 10% or more of the voting power of our outstanding voting shares; or
 
§           our affiliate or associate and who within three years immediately before the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our outstanding shares at that time.


 
16

 

 
Item 5.    Market for the Registrant’s Common Equity, Related Shareholders Matters and Issuer Purchases of Equity Securities - continued
 
Amendments to Bylaws - Our articles of incorporation provide that the power to adopt, alter, amend, or repeal our bylaws is vested exclusively with the board of directors. In exercising this discretion, our board of directors could conceivably alter our bylaws in ways that would affect the rights of our shareholders and the ability of any shareholder or group to effect a change in our control; however, the board would not have the right to do so in a way that would violate law or the applicable terms of our articles of incorporation.

Voting:  The Class A Stockholders shall be entitled to ten (10) votes for each share of Class A Stock held on any matters requiring a shareholder vote of AMRX.
 
Conversion:  Any Class A Stockholder shall have the right, at any time after two (2) years from the date of issuance, to convert any or all of its Class A Stock into two (2) shares of fully paid and non-assessable shares of Common Stock for each share of Class A Stock so converted.
 
Item 6.    Selected Financial Data

Not Applicable

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is a discussion and analysis of our financial condition and results of operations for the 12 months ended December 31, 2011  and significant factors that could affect our prospective financial condition and results of operations.  Historical results may not be indicative of future performance.

This report on Form 10-K contains forward-looking statements within the meaning of and which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements.  Forward-looking statements generally are accompanied by words such as “anticipates”, “believes”, “estimates”, “expects”, “intends”, “plans” and similar statements and should be considered uncertain and forward-looking.  Any forward-looking statements speak only as of the date on which such statement is made, are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict.  Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements, whether as a result of new information, future events or otherwise.

Factors that could cause such results to differ materially from the results discussed in such forward looking statements include, without limitation; uncertain continued ability to meet our operational needs in view of continued severe ongoing working capital constraints; need for substantial additional capital to fully implement our plan of operations; no assurances of and uncertainty of profitability; no assurances of the Company’s ability to effect sufficient product sales so as to maintain exclusivity in certain territorial markets, the result of which could materially adversely effect the Company’s results of operations; need for additional management, sales and marketing personnel, which is contingent upon our receipt of additional capital; competition from companies having substantially greater financial, marketing and other resources than the Company, including name and brand recognition; the impact of competitive services and pricing; changing consumer tastes and trends; and the legal, auditing and administrative cost of compliance associated the Sarbanes Oxley Act.

Many of such factors are beyond out control.  New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each factor on our business or the extent to which any factor, or combination of factors may cause actual results to differ materially from those contained in any forward looking statements.  In light of these risks and uncertainties, there can be no assurance that the results anticipated in these forward-looking statements in this report will in fact occur.  All forward-looking statements wherever they may appear are expressly qualified in their entirety by the cautionary statements in this section.  We undertake no obligation to update any such forward-looking statements.

Overview

AmerElite Solutions, Inc. is a development stage company with limited operations and revenues to date, limited financial backing and its assets are predominately intangible.   The current stage of our Business Plan  is to establish ourselves as a company that has developed and manufactured and is attempting to obtain financing so that it can market and sell the Collesense™ Premium Skin Care Collection.  Distribution will initially be based on direct response and Internet based advertising campaign.  As a follow up, we plan to introduce Collesense™  on a kiosk program in high traffic, regional shopping centers across the country.  We are planning to target the rapidly growing baby boomers generation offering a full spectrum of skin care products designed to naturally improve skin wellness and provide anti-aging properties.  These markets continue to expand with double-digit annual growth.


 
17

 


Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued
 
As of December 31, 2011, the Company’s Notes Payable was $55,300.  Currently, the Company has an average of $1,200 per month in costs and expenses.  The Company’s President has made arrangements to borrow these funds on an interim basis until the Company can obtain funds to capitalize itself.

During the first stages of AmerElite’s growth, our officers and directors will provide the majority of all the labor required to execute our business plan.  The officers, directors and a key consultant have agreed to take the company’s restricted common stock in lieu of any monetary compensation.  Since we intend to operate with very limited administrative support, the officers and directors have decided to work with industry experts in order to produce and market our direct-response advertisements and Internet sales sites. In order to fully execute the business management will need to hire 2-3 part time workers to handle order confirmation, customer support and accounting.
 
During the first year of operations, we will rely on third party’s to properly analyze and select the necessary time slots, channels and regions in which to air our short and long form advertising.  In addition, we will contract with an outside expert to develop a comprehensive Internet eStrategy to capitalize of one of the fastest growing channels for cosmetic products.  At present, we have no plans to market our products outside of the United States.  

 In May 2005 AmerElite Solutions, Inc. purchased our intellectual property – the anti-aging ingredient we have named Collamin_G®.  This ingredient became the basis for our first product Serum_G®.  We conducted two separate studies to determine the efficacy of our anti-aging serum.  Over half of the participants volunteered to have before and after photos taken over the test period.  Participants in each of the studies were asked to fill out a subjective questionnaire daily in which they answered questions and were encouraged to write additional comments regarding the effects that resulted from using Serum_G® twice a day.

After the first two test groups completed their test period and the results were analyzed we contracted with a manufacturing firm based in Phoenix, AZ to produce a full line of skin care products.  An initial set of samples was produced in order to obtain feedback on the quality of each product.  We commissioned several focus groups comprised of cosmetologists, aestheticians and consumers.  Each of the individuals was presented product samples and then asked to evaluate and respond to the following:
 
·      Absorption
·      Fragrance
·      Texture
·      Color

The results of both the Serum_G® test and of the focus groups were valuable and overwhelmingly positive.  The study of the absorption of Serum_G® and the instant and lasting effect of Serum_G® on the appearance of fine lines and wrinkles showed encouraging results.  These positive responses have had a direct effect on the message that we are conveying to our target market.  The before and after photos that were taken are not retouched and show a significant improvement in the skin around the eyes.  These photos have also been used in our marketing materials, and promotional videos.  Several participants have given testimonials as to the results of using Serum_G® and have signed affidavits verifying the validity of such statements.

In January 2007 we manufactured the 6 products in the Collesense™ Premium Skin Care Collection.  In February 2007 we opened a kiosk in a local regional shopping center to run a market test and gain additional feedback regarding the products and price points.  In March 2007 we contracted with a local company to run short features on Saturday mornings on a local TV station.  We ran four different offers featuring various combinations of Collesense™ products at four price points.

Based on input from industry professionals, management is reviewing several alternative names for a product line that will consist of the same 6 products that made up the Collesense™  Premium Skin Care Collection.  The new product line will be manufactured and packaged for both domestic and international markets.



 
18

 


Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued
 
During the year ended December 31, 2011 we have continued the following steps to implement our business plans:

 
·
Conducted research on new products and packaging
 
·
Explored opportunities with other companies to distribute our product through a private label program
 
·
Met with public relation firms
 
·
Meeting with representatives of e-commerce firms in order to market our product

We are a startup business engaged in the development, manufacturing and marketing of a premium skin care collection designed to provide a full spectrum of skin care products that naturally improve skin wellness and provide anti-aging properties to a rapidly expanding health and wellness market.

We have earned no revenues in 2011 from our business operations.  Accordingly, we may be required to raise cash from sources other than our operations in order to continue our business plan.  We may raise this additional capital either through debt or equity.  No assurance can be given that such efforts will be successful.  We have no specific plans at present for raising additional capital.

Since our inception, we have been engaged in business planning activities, including the launch of our product line, product research with professional focus groups, production of an infomercial, launch of a e-commerce website, developing our economic models and financial forecasts.

Results of Operations:
 
During the twelve months ended December 31, 2011, we generated $0 in revenue compared to revenues of $0 for the same period ending December 31, 2010. Net losses for the twelve months ending December 31, 2011 were $(13,701) compared to net losses of $(77,829) for the same period ending December 31, 2010, and were primarily attributable to administrative expenses, professional and consulting fees.  The reason for a reduction in net loss is due to the decision of the officers and directors to no longer receive compensation for their services as of April 1, 2010.  In addition, one of the officers is providing office space to the company at no charge as of the same date.

For the year ended December 31, 2011, we continued to promote the six products that make up the Collesense Premium Skin Care Collection.  Due to the absence of an advertising and marketing budget and retail operation in 2011, we had no revenue from sales.  The total Operating Expenses for the period ending December 31, 2011 were $13,701.  These expenses were comprised of $0 for salaries and wages; $9,452 for professional and consulting fees; $4,249 for general and administrative expense.  With a Gross Profit of $0 and operating expenses totaling $13,701 the Company had a loss from operation in the twelve (12) months ending December 31, 2011 of $13,701.

Liquidity and Capital Resources:
 
At December 31, 2011, the Company’s total current liabilities of $295,844 exceeded total assets of $1,945. We had cash on hand of $610.  The Company’s current cash requirement is an average of $1,200 per month.   AmerElite does not anticipate cash flows from revenues will be adequate to fund our operations and business plan over the next twelve (12) months.  We have no lines of credit or other bank financing arrangements.  The Company’s management made arrangements to borrow $10,400 to pay for the necessary expenses during the year ending December 31, 2011.  The Company’s management plans to raise the majority of this capital needed by borrowing funds and/or from private placement of equity.  However, there is no assurance that financing will be available on reasonable terms or at all.  AmerElite Solutions intends to use its working capital principally to purchase inventory, fund media advertising and fund the Company’s overhead and operating costs.

Item 7A.  Quantitative and Qualitative Disclosers About Market Risk.

Not Applicable
 

 


 
19

 

Item 8.  Financial Statements and Supplementary Data
 

 
AmerElite Solutions, Inc.
 
 
(A Development Stage Company)
 
 
Index to Financial Statements
 
 
Page
   
Report of Independent Registered Public Accounting Firm
F-1
   
Balance Sheets as of December 31, 2011 and 2010
F-2
   
Statements of Operations for the Years Ended December 31, 2011 and 2010 and from Inception (July 26, 1994) to December 31, 2011
F-3
   
Statements of Stockholders' Equity from Inception (July 26, 1994) to December 31, 2011
F-4 to F-6
   
Statements of Cash Flows for the Years Ended December 31, 2011 and 2010 and from Inception (July 26, 1994) to December 31, 2011
F-7
   
Note to the Financial Statements
F-8 to F-10
 

 
 
 
 
 
20

 
 
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado  80014
Telephone (303)306-1967
Fax (303)306-1944


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
AmerElite Solutions, Inc.
Phoenix, Arizona

I have audited the accompanying balance sheets of AmerElite Solutions, Inc. (a development stage company) as of December 31, 2011 and 2010, and the related  statements of operations, stockholders’ equity and cash flows for the years then ended, and for the period from July 26, 1994 (inception) through December 31, 2011. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the  financial position of AmerElite Solutions, Inc. as of December 31, 2011 and 2010 and the results of its operations and its cash flows for the years then ended, and for the period from July 26, 1994 (inception) through December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.

The accompanying  financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements the Company has suffered losses from operations and has a working capital deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Aurora, Colorado
Ronald R. Chadwick, P.C.
April 4, 2012 
RONALD R. CHADWICK, P.C.
 
 
 
 
 
 
 
 
 
 
 
 
F-1

 
 
AmerElite Solutions, Inc.
(A Development Stage Company)
 
 
Balance Sheets
 
   
December 31,
   
December 31,
 
   
2011
   
2010
 
             
ASSETS
 
             
Current Assets:
           
Cash and Cash Equivalents
  $ 610     $ 757  
Accounts Receivable
    -       -  
Inventory
    -       -  
                 
Total Current Assets
    610       757  
                 
Fixed Assets:
               
Furniture and Equipment, net
    -       1,941  
Other Assets:
               
Pre-Paid Expenses
    -          
Deposits
    1,335       1,135  
                 
Total Assets
  $ 1,945     $ 3,833  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
                 
Current Liabilities
               
Accounts Payable
  $ 240,544     $ 251,162  
Notes Payable
    55,300       44,900  
Related Party Payables
    -       70,000  
                 
Total Current Liabilities
    295,844       366,062  
                 
Total Liabilities
    295,844       366,062  
                 
Stockholders' Equity/(Deficit)
               
                 
Preferred Stock, authorized 2,000,000
               
shares, par value $0.001, issued and
               
outstanding 1,250,000 shares
    1,250       1,250  
                 
Common Stock, authorized 20,000,000
               
shares, par value $0.00125, issued and
               
14,824,353 (2011) and 15,084,353 (2010)
               
shares issued and outstanding
    18,529       18,854  
                 
Additional Paid-in Capital
    2,998,663       2,992,533  
Subscriptions (Receivable)
    -       (76,226 )
Accumulated Deficit during Development Stage
    (3,312,341 )     (3,298,640 )
                 
Total Stockholders' Equity/(Deficit)
    (293,899 )     (362,229 )
                 
Total Liabilities and Stockholders' Equity
  $ 1,945     $ 3,833  
                 
                 
The accompanying notes are an integral part of these statements
         
 
 
 
F-2

 
 
 
AmerElite Solutions, Inc.
(A Development Stage Company)
 
 
Statements of Operations
 
   
Twelve Months Ended
   
July 26, 1994
 
   
Dec 31
   
Dec 31
   
(Inception)
 
               
to Dec. 31
 
   
2011
   
2010
   
2011
 
                   
                   
Revenue
  $ -     $ -     $ 21,759  
                         
Total Revenue
    -       -       21,759  
                         
Cost of Goods Sold
    -       -       5,320  
                         
Gross Profit
    -       -       16,439  
                         
Operating Expenses
                       
Salaries and Wages
    -       57,500       1,059,698  
General and Administrative
    4,249       8,243       913,502  
Professional and Consulting
    9,452       12,086       551,981  
Product Development
                    84,851  
Marketing
                    289,551  
Investor Relations
    -       -       465,672  
                         
Total Expenses
    13,701       77,829       3,365,255  
                         
(Loss) from Operations
    (13,701 )     (77,829 )     (3,348,816 )
                         
Other Income/(Expense)
                       
Other Income
            -       4,519  
Interest Income
                    45,173  
Interest Expense
                    (13,217 )
                         
Total Other Income/(Expense)
    -       -       36,475  
                         
Net Income/(Loss) Before Income Taxes
    (13,701 )     (77,829 )     (3,312,341 )
                         
Income Tax Expense
    -       -       -  
                         
Net Income/(Loss)
  $ (13,701 )   $ (77,829 )   $ (3,312,341 )
                         
Basic (Loss) per Share
  $ (0.00 )   $ (0.01 )        
                         
Weighted Average Number of Common Shares
    15,041,020       15,084,353          
                         
                         
The accompanying notes are an integral part of these statements
                 
 
 
 
F-3

 
 
 
AmerElite Solutions, Inc.
(A Development Stage Company)
 
 
Statements of Stockholders' Equity
 
Inception 26-Jul-1994 to 31- Dec. 2011
 
                                       
(Deficit)
       
                                       
Accumulated
       
                                 
Stock
   
During
       
   
Preferred Stock
   
Common Stock
   
Paid in
   
Subscriptions
   
Development
   
Total
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
(Receivable)
   
Stage
   
Equity
 
Balance, Inception July 26, 1994
    -     $ -       -     $ -     $ -     $ -       -     $ -  
                                                                 
Common Shares issued to founders
                                                               
   26-Jul-1994 @ $0.00125 per share
                    2,080,000       2,600       -                       2,600  
                                                                 
Common Shares issued for services
                                                               
   26-Jul-1994 @ $0.00125 per share
                    80,000       100       -                       100  
                                                                 
Net (Loss)
                                                    (49,500 )     (49,500 )
                                                                 
Balance, December 31, 1994
    -       -       2,160,000       2,700       -       -       (49,500 )     (46,800 )
                                                                 
Common Shares issued for Cash on
                    80,000       100       49,900                       50,000  
29-June-1995 @ $1.25 per share
                                                    (181,369 )     (181,369 )
                                                                 
Balance, December 31, 2004
    -       -       2,240,000     $ 2,800     $ 49,900     $ -       (230,869 )   $ (178,169 )
                                                                 
Common Shares issued for Cash on
                                                               
   3-May-05 @ $0.50 per share
                    200,000       250       99,750       (85,000 )             15,000  
                                                                 
Common Shares issued to purchase
                                                               
   Assets on 11-May-05 @ $0.50
                    800,000       1,000       399,000                       400,000  
Common Shares issued for Cash on
                                                               
   21-Jul-05 @ $1.00 per share
                    250,000       313       249,687       (250,000 )             -  
                                                                 
Common Shares issued for Service
                                                               
   on 13-Oct-05 @ $0.83 per share
                    370,000       462       443,538                       444,000  
                                                                 
Common Shares returned and cancelled
                                                               
   on 13-Oct-05 @ $0.83 per share
                    (50,000 )     (63 )     (59,937 )                     (60,000 )
                                                                 
Net (Loss)
                                                    (483,422 )     (483,422 )
                                                                 
Balance, December 31, 2005
            -       3,810,000       4,762       1,181,938       (335,000 )     (714,291 )     137,409  
                                                                 
Common Shares issued for Service on
                                                               
27-Jan-06 @ $0.683 per share
                    205,000       256       139,744                       140,000  
                                                                 
Common Shares issued for employee
                                                               
Compensation on 27-Jan-06 @ $0.60
                    327,500       410       196,090                       196,500  
                                                                 
Common Shares issued for Service
                                                               
   on 8-May-06 @ $0.828 per share
                    20,360       25       16,835                       16,860  
                                                                 
Common Shares issued for Service
                                                               
   on 14-Jul-06 @ $0.312 per share
                    410,000       513       127,487                       128,000  
                                                                 
Common Shares issued for Service
                                                               
   on 17-Jul-06 @ $0.50 per share
                    500,000       625       249,375                       250,000  
Common Shares issued for Service
                                                               
   on 8-Nov-06 @ $0.50 per share
                    30,000       37       14,963                       15,000  
                                                                 
 Net (Loss)
                                                    (936,760 )     (936,760 )
 
 
 
F-4

 
 
Statements of Stockholders' Equity - continued
                                                                 
Balance, December 31, 2006
    -       -       5,302,860       6,628       1,926,432       (335,000 )     (1,651,051 )     (52,991 )
                                                                 
Common Shares issued for Service
                                                               
   on 24-Jan-07 @ $0.33 per share
                    160,000       200       52,800                       53,000  
                                                                 
Cash Received on Subscriptions
                                            258,774               258,774  
                                                                 
Preferred Shares issued for Officer
                                                               
   compensation on 20-Feb-07 @ $0.30
    250,000       250                       74,750                       75,000  
                                                                 
Common Shares issued for employee
                                                               
   compensation on 3-Jul-07 @ $0.10
                    900,000       1,125       88,875                       90,000  
                                                                 
Common Shares issued for Service
                                                               
   on 3-Jul-07 @ $0.10 per share
                    550,000       688       54,312                       55,000  
                                                                 
Preferred Shares issued for Officer
                                                               
   compensation on 3-Jul-07 @ $0.10
    300,000       300                       29,700                       30,000  
                                                                 
Common Shares issued for Service
                                                               
   on 10-Jul-07 @ $0.03 per share
                    500,000       625       14,375                       15,000  
                                                                 
Common Shares issued for Service
                                                               
   on 24-Jul-07 @ $0.167 per share
                    360,000       450       59,550                       60,000  
                                                                 
Common Shares issued to Retire Debt
                                                               
   on 24-Jul-07 @ $0.199 per share
                    892,387       1,115       177,362                       178,477  
                                                                 
 Net (Loss)
                                                    (469,583 )     (469,583 )
                                                                 
Balance, December 31, 2007
    550,000       550       8,665,247       10,831       2,478,156       (76,226 )     (2,120,634 )     292,677  
                                                                 
 Net (Loss)
                                                    (814,847 )     (814,847 )
                                                                 
Balance, December 31, 2008
    550,000     $ 550       8,665,247     $ 10,831     $ 2,478,156     $ (76,226 )   $ (2,935,481 )   $ (522,170 )
                                                                 
Common Shares returned and cancelled
                                                               
   in April 09 @ $0.00125 per share
                    (1,694,280 )     (2118 )     2118                       0  
                                                                 
Common Shares issued to Retire Debt
                                                               
   on 01-June-09 @ $0.03 per share
                    4,066,669       5,083       116,917                       122,000  
                                                                 
Common Shares issued to Retire Debt
                                                               
   on 08-June-09 @ $0.02 per share
                    125,000       156       2,344                       2,500  
                                                                 
Preferred Shares (700,000 shares at
                                                               
$0.10 per share for $70,000 total) and
                                                               
Common Shares (2,703,550 shares at
                                                               
$0.10 per share for $270,355 total)
                                                               
issues for debt relief of $283,755 and
    700,000       700                       69,300                       70,000  
$56,600 of compensation on 09-June-09
                    2,703,550       3,379       266,976                       270,355  
                                                                 
                                                                 
Common Shares issued for Service
                                                               
   on 09-June-09 @ $0.03 per share
                    908,167       1,135       26,110                       27,245  
                                                                 
Common Shares issued for debt relief