-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, W1AH8GA1kmABM6ILfl0g4OO+3CaXmcqp6AHvPlAPEgr5u3YRh6Li1swb1VZBfVVl GXW1wq885ThA4tABNh18YQ== 0001005477-99-004813.txt : 19991021 0001005477-99-004813.hdr.sgml : 19991021 ACCESSION NUMBER: 0001005477-99-004813 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990831 FILED AS OF DATE: 19991020 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELITE TECHNOLOGIES INC /TX/ CENTRAL INDEX KEY: 0000835909 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 760252296 STATE OF INCORPORATION: TX FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17597 FILM NUMBER: 99731272 BUSINESS ADDRESS: STREET 1: 3700 CRESTWOOD PARKWAY STREET 2: SUITE 1000 CITY: DULUTH STATE: GA ZIP: 30096 BUSINESS PHONE: 7703818089 MAIL ADDRESS: STREET 1: 700 CRESTWOOD PARKWAY STREET 2: SUITE 1000 CITY: DULUTH STATE: GA ZIP: 30096 FORMER COMPANY: FORMER CONFORMED NAME: CONCAP INC DATE OF NAME CHANGE: 19990826 FORMER COMPANY: FORMER CONFORMED NAME: ELITE TECHNOLOGIES INC/TX DATE OF NAME CHANGE: 19990825 FORMER COMPANY: FORMER CONFORMED NAME: CONTINENTAL CAPITAL RESOURCES INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [MARK ONE] [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1999 OR |_| 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: 0-17597 ELITE TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) TEXAS 76-0252296 (State or other Jurisdiction ( I.R.S. Employer Identification No.) of incorporation or organization) 3700 CRESTWOOD PARKWAY 30096 SUITE 1000 (Zip Code) DULUTH, GA (Address of principal executive offices) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 381-8089 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 |_| The number of shares of the issuer's class of capital stock as of October 1, 1999, the latest practicable date, is as follows: 18,730,170 shares of Common Stock $.0001 par value. - -------------------------------------------------------------------------------- PART 1 FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Balance Sheet Income Statement Statement of Cash Flow 1. ELITE TECHNOLOGIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AUGUST 31, 1999 (UNAUDITED) Organization Elite Technologies, Inc., formerly CONCAP, Inc., (the "Company") was established in 1988 in the State of Texas. Elite Technologies, Inc. is a full service technology company providing information technology ("IT") services to medium and large enterprises. IT services involve the facilitation of the flow of information within a company or between a company and external sources. These services typically involve computer hardware, software and "integration" efforts to allow diverse systems to communicate with one another. Elite is organized in three branded divisions: Elite Integration, Elitetech.com, and Workstream Staffing. Elite Integration serves as the outsource, integration and software VAR for clients and software partners; Elitetech.com provides Internet Development and Internet Solutions and houses the Internet Incubator Lab; and Workstream Staffing is the full service IT Staffing entity. The divisions work closely together, cross-selling and acting as client and internal support. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash or cash equivalents. Furniture and Equipment Furniture and equipment are recorded at cost and are depreciated primarily using straight line depreciation over three to seven years. Revenue Recognition The Company's revenue results are of the revenue received by Elite Technologies, Inc. and its subsidiary corporations. Revenue from subsidiary corporations is recognized upon signing of a contract for services, provided that amounts are due within one year and collection is considered probable. If significant delays are expected in collecting more than 50% of the contract value, the revenue from the sale of the contract is recognized using contract accounting. Deferred Revenues Revenue may be deferred due to installation, delivery or fulfillment not yet performed. Deferred Liabilities Liabilities may be deferred due to expected expenditure of labor costs. Payroll Taxes Payable Payroll Taxes payable includes a liability of approximately $754,000.00, the assumption of which was part of the agreement to acquire Intuitive Technology Consultants, Inc. Management has entered into an installment agreement with the Internal Revenue Service to satisfy this Liability and has been funding payments from the cash generated by operations. Management believes it can continue to reduce the liability accordingly without adversely affecting the continuing operations of the company. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the Financial Statements and Notes thereto included elsewhere in this filing. Certain statements made in this "Management's Discussion and Analysis of Financial Condition and Results of Operations are forward-looking statements. The forward-looking statements contained herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Overview Elite Technologies, Inc. is a full service technology company seeking to grow internally and to acquire corporations whose primary focus is technical, including software development, staffing and consulting. It should be noted, however, that the Company is not limiting itself to these areas. The Company's revenue consists of revenue as results of operations of its subsidiary corporations. The financial results referred to herein reflect the historical results of the Company. The Company has recently entered into definitive agreements with three companies, the closings of which are scheduled to take place in second quarter Fiscal Year 2000. Prior to June 8, 1998, the Company had no material assets or operations. On July 8, 1998, the Company acquired all of the issued and outstanding capital stock of Intuitive Technology Consultants, Inc. ("ITC"). On November 15, 1998, ITC was merged with Elite Technologies, Inc., with Elite becoming the surviving member. Elite is composed of three branded operating divisions: Elite Integration, Workstream Staffing and Elitetech.com. Elite Integration The Elite Integration division is the "outsource services group" of Elite. Elite Integration provides custom software development, including Client/Server applications, design and development to Fortune 1000 companies, government agencies, public institutions and other medium to large enterprises. Most recently, Elite Integration has focused on assisting companies in managing the transition to Microsoft-centric platforms. A recent report by Computer Intelligence shows that 86 percent of all Fortune 1000 firms have already deployed a Windows NT Server. This represents a 200 percent increase in Windows NT deployments in the past 12 months alone. Windows NT is emerging as the platform of choice for departmental and enterprise applications as it decreases the cost of deploying and managing enterprise solutions, and has the added benefit of integrated Web, application and communication services. To date, Elite Integration has focused on Internet and Client / Server development (which are deployed using Windows NT) for clients in the Southeast region and is seeking currently to expand into new markets. Recent clients include Ernst & Young, Quest Group Telecommunications, and AT&T. Elite Integration targets companies for potential partnerships that are developing technologies which it believes will be important to, and likely to be widely deployed by, its current and potential customers. Through these partnerships, Elite Integration often gains an early and comprehensive understanding of critical emerging technologies, and is therefore well positioned to service the continued needs of these technology vendors, as well as the needs of their customer base. Elite Integration incorporates the knowledge and expertise derived from each of its client projects into its own implementation methodology, which allows Elite Integration to retain and distribute the techniques and knowledge it gains through work on client projects throughout the organization at Elite. As a result, Elite has decreased costs and increased the quality and speed of delivery of business solutions. Workstream Staffing Workstream Staffing is the IT staffing augmentation division of Elite Technologies that locates and offers permanent employees, temporary contractors and temp-to-perm (try before you hire) employees to the Workstream customer base. Workstream has developed proprietary software, the "RMS" Recruiting Management System, to manage the client-contractor relationship from pre-screening to renewal. The result is improved customer service and reduced collection times. Marketing efforts are centered in the Atlanta area, which was recently named by USA Today as the number one IT job market in the United States for the next 25 years. However, Workstream also fills staffing requirements for clients throughout the country. Recent clients include Gulfstream, Quest Communications, Lanier Worldwide, Shop n' Check and Crawford & Company. Workstream also assists the Company's other divisions with staffing needs for internal projects and actively cross-sells Integration and Elitetech.com products and services. Elitetech.com The Internet Development division, Elitetech.com, specializes in full service web development projects and Internet based server applications. Services include web site design, Internet deployment and strategies, web enabled applications, network solutions, e-commerce solutions, search engine placement services, multimedia creation, and an Internet Incubator Lab for Internet start-up ventures with strong growth potential. Elitetech.com provides scalable solutions ranging from static web site development to network solutions that use the Internet to add functionality and efficiency to our clients' web existence. The Integration division provides programming and database development support to the Internet division for network applications. Elitetech.com currently includes, "Virtualbride.com." The Virtual Bride is a full service on-line wedding planner and bridal registry targeted at 30 US markets. Additional strategic relationships are under development with leading merchandise and service vendors in each market. RESULTS OF OPERATIONS Three Months Ended August 31, 1999 Compared to Three Months Ended May 31, 1999. Revenue Total revenue decreased between fourth quarter 1999 and first quarter 2000 due to reorganization of the staffing division, whereby emphasis is now being placed on the more profitable contract placements. In addition, the Company's subsidiary, Scanlan Music, realized a temporary reduction in revenue during the opening of their second location. It is anticipated that revenue will quickly return to projected levels. Total revenue of the subsidiary companies consists of software programming, permanent and temporary placement fees and consulting fees, as well as retail sales by the Company's Scanlan Music subsidiary. Software Programming Fees. Software programming fee revenue accounted for less than 10% of the revenue of Elite Technologies. Temporary and Permanent Placement Fees. Billings remained at the same level as fourth quarter 1999, but disputes with American Factors corporation have temporarily effected collections and growth. Management anticipates a successful resolution with American Factors and a return to the growth objectives set forth by Management. Cost of Revenue The cost of revenue consists primarily of consultant and employee salaries and other personnel expenses incurred in the implementation of projects and placements. Costs of revenue increased proportionately primarily due to the increase of obligations under contracts for services. Operating Expenses Sales and Marketing. Sales and marketing expenses include salaries, commissions and other personnel related costs, travel expenses, advertising programs and other promotional activities. General and Administrative. General and administrative expenses consist primarily of salaries and other personnel related costs of executive, financial and secretarial personnel, as well as facilities, legal, insurance, accounting and other administrative expenses. The increase in general and administrative expenses was principally due to increased legal fees as a result of the acquisition of the subsidiaries Elevations Strategic Partners, Inc. and Virtual Enterprise, Inc. and investigation of the possible acquisition targets for the Company. The Company's operations and related revenue and operating results could vary substantially from quarter to quarter. Among the factors causing these potential variations are fluctuations in the demand for the Company's services, price competition in the Company's markets, the length of the Company's sales process, the Company's success in expanding its services as well as its direct sales force, commercial strategies adopted by competitors and general economic conditions. A substantial portion of the Company's operating expenses, particularly personnel and facilities costs, are relatively fixed in advance of any particular operating results in any particular quarter. Elite's ability to undertake new projects and increase revenue is substantially dependant on the availability of consultants/personnel in the marketplace. As a result of the foregoing and other factors, the Company believes that Quarter to Quarter comparisons of results are not necessarily meaningful, and such comparisons should not be relied upon as indications of future performance. LIQUIDITY AND CAPITAL RESOURCES Since inception, Elite has funded its operations to date primarily through cash generated form operations. In addition, Elite has received approximately $1,300,000.00 from outside sources. The Company has in pervious quarters utilized line of credit for Accounts Receivable financing from American Factors Corporation of Dallas, Texas for a maximum of up to $1,000,000.00. Due to irregularities in the funding practices of American Factors, the Company has elected not to renew the agreement for the period starting November, 1999. As part of the ongoing dispute, American Factors has withheld funding to the Company, with the corresponding amounts moved temporarily to the "Allowance for Doubtful Accounts" on the Balance Sheet. In order to fuel internal growth and acquisitions, the Company has entered into an agreement for $10,000,000 in equity financing. The Company believes that its existing liquidity and capital resources, combined with the capital raise, and the cash generated from operations during fiscal 1999 are sufficient to satisfy its cash requirements for the next twenty-four months. To the extent that such amounts are insufficient, the Company will be required to raise additional funds through equity or debt financing. There can be no assurance that the Company will be successful in raising additional funds on favorable terms or at all. IMPACT OF THE YEAR 2000 ISSUE The Year 2000 issue is the result of computer programs being written using two digits rather than four digits to define the applicable year. Any of the Company's computer programs or hardware that have date-sensitive software or embedded chips may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices or engage in similar normal business activities. When the Company assessed its internal computer systems it was determined that modification, replacement or deletion of certain software and hardware systems was needed so that those systems will properly recognize dates beyond December 31, 1999. The Company currently believes that with the modifications to its existing software and hardware, the Year 2000 issue can be mitigated. The Company's plan to resolve the Year 2000 issue involved the following four phases: assessment, remediation, testing and implementation. To date, the Company has completed its assessment of all critical systems that could be significantly affected by the Year 2000. Based on this assessment, the Company has selected Year 2000 compliant software and hardware to replace systems that are not Year 2000 compliant. With respect to its information technology exposures, the Company has completed 100% on the remediation phase and the reprogramming and replacement. These phases ran concurrently for different systems. To date, the Company has completed 100% of its testing and has implemented 100% of its remedied systems. The Company has completed its assessment of key vendors, customers and other parties. The Company has not incurred and does not expect to incur significant costs related to Year 2000 issues other than the time required by internal personnel to complete the Company's Year 2000 plans. Management believes the Company's program will be effective to resolve the Year 2000 issued in a timely manner. As noted above, the Company has completed all phases of the Year 2000 program. The Company has contingency plans for most of its critical applications and is developing contingency plans for the remaining applications. These contingency plans involve, among other actions, manual workarounds and staffing strategy adjustments. Manual workarounds would consist of preparing billings and cash disbursements from hard copy source documents, which the Company currently maintains. FORWARD LOOKING STATEMENTS This Annual Report contains various forward-looking statements that are based on management's belief as well as assumptions made by management based on information currently available to management. In some cases, you can identify forward-looking statements by the use of certain terminology, such as "may," "will," "should," "would," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of such terms or other comparable terminology. Any expectations based on these forward-looking statements are subject to risks and uncertainties. These risks and uncertainties could affect the Company's future financial and operating results and cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by or on behalf of the Company. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company, both on its own and through its subsidiaries is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount of potential liability with respect to these potential actions would not materially affect the financial position or results of operations of the Company. ITEM 2. CHANGES IN SECURITIES. NONE ITEM 3. DEFAULTS UPON SENIOR SECURITIES. NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. NONE ITEM 5. OTHER INFORMATION. In connection with the foregoing acquisition the Registrant effectuated a 1-for-100 reverse stock split. As a result of the reverse stock split, and other issuance of stock in connection with the acquisitions, the Registrant now has outstanding 18,730,170 shares of common stock. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None Pursuant to the requirements 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. Date: October 20, 1999 By: /s/ Scott Schuster, President ---------------------------------- Scott Schuster, President Elite Technologies, Inc. and Subsidiaries Consolidated Balance Sheets Q1/2000 Q4/1999 31-Aug-99 31-May-99 ASSETS Current Assets Accounts Receivable $ 199,327 285,309 Loans to Officers 215,583 215,583 Other Current Assets 53,619 53,619 ----------- ----------- Total Current Assets 468,529 554,511 Property and Equipment Furniture, Fixtures and Equip. 66,304 66,304 Other Depreciable Property 21,968 21,968 ----------- ----------- Total Property and Equipment 88,272 88,272 Other Assets Organization Costs 1,688,415 1,688,415 ----------- ----------- Total Other Assets 1,688,415 1,688,415 Total Assets $ 2,245,216 2,331,198 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities Accounts Payable $ 473,211 245,811 N/P - American Factors Corp. 177,124 177,124 Accrued Expenses 33,942 33,942 Federal Payroll Taxes Payable 654,463 629,415 GA State Payroll Taxes Payable 271,597 251,177 Medical Withheld Payable 1,538 Medical Company Portion 405 Current Portion of Long-Term Debt 88,504 88,504 Other Current Liabilities 210,713 210,713 ----------- ----------- Total Current Liabilities 1,911,497 1,636,686 Long-Term Liabilities Notes Payable-Noncurrent 37,399 37,399 Other Long-Term Liabilities 97,496 97,496 ----------- ----------- Total Long-Term Liabilities 134,895 134,895 Total Liabilities $ 2,046,392 1,771,581 =========== =========== Stockholders' equity (deficit): Common Stock 1,257 1,257 Additional Paid-in Capital 3,908,205 3,995,318 Accumulated deficit (3,710,639) (3,436,958) Total Stockholders' equity 198,823 ----------- ----------- Commitments and contingencies 559,617 Total Liabilities and Stockholders' equity $ 2,245,216 2,331,198 =========== =========== Unaudited - For Management Purposes Only Elite Technologies, Inc. and Subsidiaries Consolidated Income Statement For the Three Months Ending August 31, 1999 8/31/99 Year to Date Revenues Programming Fees 377,997 754,075 ------------ ------------ Total Revenues 377,997 754,075 Cost of Sales ------------ ------------ Total Cost of Sales 0 0 ------------ ------------ Gross Profit 377,997 125,682 ------------ ------------ Expenses Advertising Expense 20,613 20,613 Auto Expenses 343 343 Computer Equipment Expenses 11,704 11,704 Dues and Subscriptions Exp 1,393 1,393 Gifts and Donations Expense 15 15 Insurance Expense 10,824 10,824 Legal and Professional Expense 53,119 53,119 Meals and Entertainment Exp 32 32 Office Expense 2,953 2,953 Payroll Tax Expense 33,553 33,553 Penalties and Fines Exp 2,249 2,249 Postage and Delivery Expense 25 25 Rent or Lease Expense 59,649 59,649 Lease on Automobiles 5,157 5,157 Lease on Furniture & Equipment 5,458 5,458 Salaries Expense 299,895 299,895 Medical Company Paid 8,198 8,198 Commissions Paid 6,125 6,125 Contract Labor 3,219 3,219 Supplies Expense 8,699 8,699 Telecommunications Expense 3,441 3,441 Telephone Expense 11,733 11,733 Travel Expense 2,703 2,703 Temporary Labor Fees 9,424 9,424 Employee Reimbursed Expense 1,214 1,214 Utilities Expense 206 206 Wages Expense 85,650 85,650 Other Expense 3,776 3,776 Late Fees 306 306 ------------ ------------ Total Expenses 651,677 651,677 Net Income $ (273,680) $ (273,680) ============ ============ For Management Purposes Only Elite Technologies, Inc. and Subsidiaries Consolidated Statement of Changes in Financial Position For the three months ended August 31, 1999 8/31/99 Year To Date Sources of Working Capital Net Income $ (273,680) $ (273,680) Add back items not requiring working capital ------------ ------------ Working capital from operations (273,680) (273,680) Other sources Additional Paid in Capital 841,404 841,404 ------------ ------------ Total sources 567,724 567,724 ------------ ------------ Uses of Working Capital Additional Paid in Capital (1,028,517) (1,028,517) ------------ ------------ Total uses (1,028,517) (1,028,517) ------------ ------------ Net change $ (460,793) $ (460,793) ============ ============ Analysis of components of changes Increase (Decrease) in Current Assets Accounts Receivable $ (85,982) $ (85,982) (Increase) Decrease in Current Liabilities Accounts Payable (227,400) (189,898) Federal Payroll Taxes Payable (125,047) (125,047) GA State Payroll Taxes Payable (20,420) (20,420) Medical Withheld Payable (1,538) (1,538) Medical Company Portion (405) (405) Net change $ (460,793) $ (460,793) ============ ============ For Management Purposes Only Elite Technologies, Inc. and Subsidiaries Consolidated Statement of Cash Flow For the three Months Ended August 31, 1999
8/31/99 5/31/99 Cash Flows from operating activities Net Loss $ (273,680) $ (2,888,364) Adjustments to reconcile net income to net cash provided by operating activities Stockbased Compensation 827,431 Accounts Receivable 85,981 Other Assets (38,312) Commitment to issue stock for investment banking services 126,667 Accounts Payable 227,400 195,327 Deferred Rent Expense 55,910 Federal Payroll Taxes Payable 125,048 186,842 GA State Payroll Taxes Payable 20,420 161,367 Accrued expenses and other current liabilities 33,942 Medical Withheld Payable 1,538 Medical Company Portion 405 ------------ Net Cash provided by Operations 187,113 (1,339,190) Cash Flows from investing activities Purchases of Property and equipment (7,922) Acquisitions of businesses (15,000) Notes Receivable to officers (130,584) ------------ ------------ Net cash used in investing 0 (153,506) ------------ ------------ Cash Flows from financing activities Proceeds From issuance of common stock 852,500 (Payments to) advances from factoring company, net (43,434) (Payments of) proceeds from notes Additional Paid In Capital 841,404 Other capital contributions 114,700 Contributed capital from THC 289,277 Increase in cash overdraft 190,855 (Decrease) increase in related party advances (22,073) ------------ Additional Paid In Capital (1,028,517) 1,381,825 ------------ Net cash used in financing (187,113) ------------ Net increase (decrease) in cash $ 0 $ ============ ============ Summary Cash Balance at End of Period $ 0 $ Cash Balance at Beginning of Period 119,921 Net Increase (Decrease) in Cash $ 119,921 $ ============ ============
Unaudited - For Internal Use Only. EX-27 2 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS. 3-MOS MAY-31-1999 JUN-01-1999 AUG-31-1999 0 0 199,327 0 0 468,529 88,272 0 2,245,216 1,911,497 0 0 0 1,257 558,360 2,245,216 377,997 377,997 0 767,318 0 0 0 (273,680) 0 (273,680) 0 0 0 (273,680) (0.02) (0.02)
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