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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

x
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended February 29, 2012

o
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ______to ______

Commission file number:  000-25591

 
CHINA ELITE INFORMATION CO., LTD.
 
 
(Exact name of Registrant as Specified in its Charter)
 

 
BRITISH VIRGIN ISLANDS
 
11-3462369
 
 
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)
 

 
c/o DeHeng Chen, LLC, 225 Broadway, Suite 1910, NY, NY
 
10007
 
 
(Address of Principal Executive Offices)
 
(Zip Code)
 

 
(212) 608-6500
 
 
(Registrant’s telephone number, including area code)
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such filing). Yes x   No 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.
o Large accelerated filer
o Accelerated filer
o Non-accelerated filer
x Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes x   No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of April 16, 2012, there were 11,200,000 shares of common stock outstanding.

 
 

 

CHINA ELITE INFORMATION CO., LTD.
FORM 10-Q
FOR THE THREE MONTHS ENDED FEBRUARY 29, 2012

INDEX

Page
Number

1
     
Item 1.
1
     
 
1
     
 
2
     
 
3
     
 
4
     
Item 2.
5
     
Item 4.
7
     
8
     
Item 1.
8
     
Item 2.
8
     
Item 3.
8
     
Item 4.
8
     
Item 5.
8
     
Item 6.
8
     
9

 
 


PART I.   FINANCIAL INFORMATION

Item 1.
Condensed Interim Financial Statements
 

CHINA ELITE INFORMATION CO., LTD.
(A Development Stage Company)
CONDENSED INTERIM BALANCE SHEETS

(Expressed in U.S. Dollars)
 
February 29,
2012
(Unaudited)
   
November 30,
2011
(Audited)
 
             
ASSETS
           
             
Total assets
  $ -     $ -  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
               
Current Liabilities
               
Accounts payable and accrued expenses
  $ 11,672     $ 2,788  
Loans from shareholder
    577,151       573,147  
Total current liabilities
    588,823       575,935  
                 
Commitments and Contingencies
               
                 
Stockholders’ Deficiency
               
Preferred stock: $0.01 par value; 10,000,000 shares authorized; issued and outstanding: none
    -       -  
Common stock: $0.01 par value; 50,000,000 shares authorized; issued and outstanding: 11,200,000
    112,000       112,000  
Additional paid in capital
    154,465       154,465  
Deficit accumulated during the development stage
    (855,288 )     (842,400 )
Total stockholders’ deficiency
    (588,823 )     (575,935 )
                 
Total liabilities and stockholders’ deficiency
  $ -     $ -  


See condensed notes to interim financial statements.

 
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CHINA ELITE INFORMATION CO., LTD.
(A Development Stage Company)
CONDENSED INTERIM STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended February 29, 2012 and February 28, 2011, and
for the period from inception (December 19, 1997) to February 29, 2012

(Expressed in U.S. Dollars)
 
Cumulative
from
inception
   
2012
   
2011
 
                   
Revenues
  $ -     $ -     $ -  
                         
General and administrative expenses
                       
Salaries and benefits
    181,888       -       -  
General and administrative
    602,532       12,888       10,428  
Consulting fees – related party
    150,000       -       -  
Total general and administrative expenses
    934,420       12,888       10,428  
                         
Operating loss
    (934,420 )     (12,888 )     (10,428 )
                         
Other income (expense)
                       
Loss on disposal of property and equipment
    (1,473 )     -       -  
Interest expense
    (53,956 )     -       -  
Interest income
    134,561       -       -  
Total other income (expense)
    79,132       -       -  
                         
Net loss
  $ (855,288 )   $ (12,888 )   $ (10,428 )
                         
Basic and diluted net loss per share
          $ (0.00 )   $ (0.00 )
                         
Weighted average shares outstanding
            11,200,000       11,200,000  


See condensed notes to interim financial statements.

 
2


CHINA ELITE INFORMATION CO., LTD.
(A Development Stage Company)
CONDENSED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
For the three months ended February 29, 2012 and February 28, 2011, and
for the period from inception (December 19, 1997) to February 29, 2012

(Expressed in U.S. Dollars)
 
Cumulative from inception
   
2012
   
2011
 
                   
Cash flows from operating activities
                 
Net loss
  $ (855,288 )   $ (12,888 )   $ (10,428 )
Adjustments to reconcile net loss to net cash flows used in operating activities
                       
Depreciation and organization costs
    11,492       -       -  
Loss on disposal of property and equipment
    1,473       -       -  
Common stock issued for services
    48,400       -       -  
Changes in assets and liabilities
                       
Interest receivable
    (1,483 )     -       -  
Accounts payable and accrued expenses
    11,672       8,884       2,117  
Net cash flows used in operating activities
    (783,734 )     (4,004 )     (8,311 )
                         
Cash flows from investing activities
                       
Cash paid for note receivable
    (1,117,602 )     -       -  
Cash received from note receivable
    1,117,602       -       -  
Cash paid for equipment
    (11,465 )     -       -  
Net cash flows used in investing activities
    (11,465 )     -       -  
                         
Cash flows from financing activities
                       
Loans from shareholder
    591,548       4,004       8,311  
Proceeds from issuance of stock
    1,531,250       -       -  
Cash paid for stock redemption
    (150,000 )     -       -  
Deferred offering costs against capital
    (25,927 )     -       -  
Acquisition of treasury stock
    (1,151,672 )     -       -  
Net cash flows provided by financing activities
    795,199       4,004       8,311  
                         
Increase (decrease) in cash
    -       -       -  
                         
Cash, beginning of period
    -       -       -  
                         
Cash, end of period
  $ -     $ -     $ -  
                         
Cash paid for interest and income taxes
  $ -     $ -     $ -  
                         
Supplemental noncash investing and financing activities:
                       
Common stock issued for services
  $ 48,400     $ -     $ -  
Loans payable converted to additional paid in capital
  $ 14,397     $ -     $ -  


See condensed notes to interim financial statements.

 
3


CHINA ELITE INFORMATION CO., LTD.
(A Development Stage Company)
CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

 
NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America. However, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted or condensed pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation have been included. The results for interim periods are not necessarily indicative of results for the entire year. These condensed financial statements and accompanying notes should be read in conjunction with the Company’s annual financial statements and the notes thereto for the fiscal year ended November 30, 2011 included in its Annual Report on Form 10-K.

Loss Per Share
 
Basic earnings or (loss) per share (“EPS”) is computed as net loss divided by the weighted average number of shares outstanding during the period in accordance with Earnings Per Share Topic of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Diluted EPS includes the effect from potential dilutive securities and is equal to basic loss per share for all periods presented because there are no potential dilutive securities and the Company has incurred a net loss. All per share information is adjusted retroactively to reflect stock splits and changes in par value.
 
NOTE 2 – GOING CONCERN

The accompanying unaudited financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern.  However, the Company has limited operations and has sustained substantial operating losses in recent years resulting in a substantial accumulated deficit. The Company’s cash requirements for working capital have been satisfied through loans from its majority shareholder and the Company expects to obtain additional capital through shareholder loans and/or a debt or equity financing to continue its operations.  There is no assurance the Company will be successful in raising the needed additional capital or that such additional funds will be available for the Company on acceptable terms, if at all.  The Company’s President, who is also the majority shareholder, has orally agreed to fund its operations for the next twelve months, based on the Company’s current level of expenditures, as necessary.  However, the Company’s need for capital may change dramatically if it acquires a suitable business opportunity during that period. In view of these matters, the continued existence of the Company is dependent upon its ability to meet its financing requirements on a continuing basis and to succeed in its future operations.

Management’s plans are to identify and pursue profitable business opportunities through mergers and acquisitions, so as to diversify the business risks and maximize the returns to stockholders.

To meet these objectives, the Company plans to seek potential merger candidates and expects to raise additional capital, through private equity and/or debt investment in order to support existing operations and expand the range and scope of its business.  There is no assurance that such additional funds will be available for the Company on acceptable terms, if at all.  Management believes that actions presently taken to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern.  The Company’s ability to achieve these objectives cannot be determined at this time.  If the Company is unsuccessful in its endeavors, it may have to cease operations.

 
4


NOTE 3 – RELATED PARTY TRANSACTIONS

Amount due to a stockholder of $577,151 at February 29, 2012 (at November 30, 2011: $573,147) represents a series of advances from the majority stockholder to fund working capital requirements.  There is no note and the amounts are unsecured, interest-free, and repayable on demand.  The Company’s President has orally agreed to fund the Company’s operations for at least the next twelve months.

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this Form 10-Q that are not purely historical are forward-looking statements.  These include statements about the Company’s expectations, beliefs, intentions or strategies for the future, which are indicated by words or phrases such as “anticipate”, “expect”, “intend”, “plan”, “will”, “the Company believes”, “management believes” and similar words or phrases.  The forward-looking statements are based on the Company’s current expectations and are subject to certain risks, uncertainties and assumptions.  The Company’s actual results could differ materially from results anticipated in these forward-looking statements.  All forward-looking statements included in this document are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements.  Readers are also urged to carefully review and consider the various disclosures made by the Company that are to advise interested parties of the factors which affect the Company’s business, in this report, as well as the Company’s periodic reports on Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission.

These risks and uncertainties, many of which are beyond our control, include (i) the sufficiency of existing capital resources and the Company’s ability to raise additional capital to fund cash requirements for future operations; (ii) uncertainties involved in the acquisition of an operating business in targeted industry and/or a targeted geographic region; (iii) the Company’s ability to achieve sufficient revenues through an operating business to fund and maintain operations; (iv) volatility of the stock market; and (v) general economic conditions.  Although the Company believes the expectations reflected in these forward-looking statements are reasonable, such expectations may prove to be incorrect.  Investors should be aware that they could lose all or substantially all of their investment.

Critical Accounting Policies

Based on the Company’s current level of limited operations and development stage status, the Company does not believe it has any critical accounting policies at this time.

 
5


Results of Operations – The Three Months Ended February 29, 2012 Compared to the Three Months Ended February 28, 2011

Revenues

The Company did not recognize any revenue in each of the three-month periods ended February 29, 2012 and February 28, 2011.

General and Administrative

General and administrative expenses consist primarily of public company compliance expenses, including legal and accounting expenses.  General and administrative expenses for the three-month period ended February 29, 2012 increased 23.6%, or $2,460, to $12,888 from $10,428 for the three-month period ended February 28, 2011. The higher expenses in current period were primarily due to the increase of audit fee and legal expense.

Other (Income) Expense

The Company did not incur any interest expense or earn any interest income for the three-month periods ended February 29, 2012 and February 28, 2011.

Capital Resources and Liquidity

The Company does not currently have any cash or have any other significant assets. However, the Company believes that, based on an oral commitment from its President and majority shareholder to fund the Company’s operating activities at its current level of expenditures, it has sufficient resources to meet the anticipated needs of its operations, such as maintaining its required continuous disclosure and reporting requirements with the Securities and Exchange Commission, for the next twelve months, though there can be no assurances to that effect. The Company had no revenues for the three months ended February 29, 2012 and its need for capital may change dramatically if it acquires a suitable business opportunity during the next twelve months. Therefore, the Company plans to rely on shareholder loans and the raising of debt or equity capital to continue its operations. There is no assurance the Company will be successful in raising the needed capital.

We have incurred net losses since inception, expect to incur losses in the future associated with the costs of operating as a public company, and may never achieve revenues or profitability unless we complete a successful merger. We are a development stage company and have never recognized any revenue from the sale of products or any other source. Our operating losses have had, and will continue to have, an adverse impact on our working capital, total assets and stockholders’ equity. We do not know when or if we will ever generate revenue or become profitable because of the significant uncertainties with respect to our ability to acquire a suitable business opportunity.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 
6


Item 4.
Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer (the “Certifying Officer”) evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Certifying Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (a) accumulated and communicated to our management, including our Certifying Officer, as appropriate to allow timely decisions regarding required disclosure; and (b) recorded, processed, summarized and reported, within the time specified in the SEC’s rules and forms. Since that evaluation process was completed, there have been no significant changes in our disclosure controls or in other factors that could significantly affect these controls.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal controls over financial reporting identified in connection with this evaluation that occurred during the period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 
7


PART II.   OTHER INFORMATION

Item 1.
Legal Proceedings

None.

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.
Defaults Upon Senior Securities

None.

Item 4.
Mine Safety Disclosures

Not applicable.

Item 5.
Other Information

None.

Item 6.
Exhibits

 
(a)
Exhibits:

Exhibit 31 - Certification of President, Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32 - Certification of President, Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101.INS - XBRL Instance Document

Exhibit 101.SCH  - XBRL Schema Document

Exhibit 101.CAL - XBRL Calculation Linkbase Document

Exhibit 101.DEF - XBRL Definition Linkbase Document

Exhibit 101.LAB - XBRL Label Linkbase Document

Exhibit 101.PRE - XBRL Presentation Linkbase Document

 
8



Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


   
CHINA ELITE INFORMATION CO., LTD.
       
       
Date:  April 16, 2012
By
/s/ Li Kin Shing
 
   
Li Kin Shing
 
   
President and Chief Executive Officer
 

 
9