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EX-32.1 - CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - EliteSoft Global Inc.e321.htm
EX-31 - CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - EliteSoft Global Inc.e311.htm
EX-34.1 - CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - EliteSoft Global Inc.e341.htm
EX-33.1 - CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - EliteSoft Global Inc.e331.htm

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

FORM 10-Q

  [X]     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

          For the quarterly period ended MARCH 31, 2016

 

  [   ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 000- 55240

 

 

 

EliteSoft Global Inc.

(Exact name of registrant as specified in its charter)

 

  Delaware   47-1208256  
  (State or Other Jurisdiction of   (I.R.S. Employer  
  Incorporation or Organization)   Identification No.)  
         
         
  18582  NW Holly Street, Unit 202      
  Beaverton, OR   97006-7014  
  (Address of Principal Executive Offices)   (Zip Code)  
         

Registrant’s telephone number, including area code: (503) 830 2918

 

Unit A-9-4, Northpoint Office Suite, Mid Valley City No. 1, Medan Syed Putra

Utara, Kuala Lumpur, Malaysia

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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

 

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). Yes x No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

 

  Large accelerated filer           Accelerated filer                         
  Non-accelerated filer            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). Yes No x

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of May 4, 2016, the issuer had 12,000,000 shares of its common stock issued and outstanding. 

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TABLE OF CONTENTS

PART I    
Item 1. Condensed Unaudited Financial Statements 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 16
Item 3. Quantitative and Qualitative Disclosures About Market Risk 20
Item 4. Controls and Procedures 20
PART II    
Item 1. Legal Proceedings 22
Item 1A. Risk Factors 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Mine Safety Disclosures 22
Item 5. Other Information 22
Item 6. Exhibits 23
  Signatures 24

 

 

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PART I - FINANCIAL INFORMATION

Item 1. Condensed Unaudited Financial Statements.

  

 

EliteSoft Global Inc.

Condensed Financial Statements

(Unaudited)

 

 

 

Contents

Financial Statements PAGE
   
Condensed Balance Sheets as of March 31, 2016  (Unaudited) and December 31, 2015  4
   

Condensed Statements of Operations for the Three Months Ended March 31, 2016

and 2015 (Unaudited)

5
   

Condensed Statements of Cash Flows for the Three Months Ended March 31, 2016

and 2016 (Unaudited)

6
   
Notes to Condensed Unaudited Financial Statements 7
   

 

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EliteSoft Global Inc.

Condensed Balance Sheets

    March 31,   December 31,
    2016   2015
      (Unaudited)          
ASSETS
         
Current Assets:                
Cash   $ 470,492     $ 200,374    
Accounts receivable. Net     348,088       40,226    
Prepaid expense     1,000       1,000  
 Total Current Assets     819,580       241,600   
                 
Total Assets   $ 819,580     $ 241,600   
                 
 LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Liabilities                
Accounts payable and accrued liabilities   $ 498,733     $ 14,729  
Accounts payable and accrued expenses – related party     198,372       10,000  
Deferred revenue           150,000  
  Due to related parties     53,331       53,331  
  Income tax payable     18,700       –   
Total Current Liabilities     769,136       228,060  
                 
Total Liabilities     769,136       228,060  
                 
Stockholders' deficit:                
Preferred stock, $.0001 par value, 5,000,000                
shares authorized; none issued and outstanding     –         –    
Common stock $.0001 par value, 100,000,000                
shares authorized; 12,000,000 and 12,250,000 shares                
 issued and outstanding at March 31, 2016 and December 31, 2015, respectively     1,200       1,225  
Additional paid-in capital     44,085       49,060  
Retained earnings (accumulated deficit)     5,159       (36,745 )
Total Stockholders' Equity     50,444       13,540  
                 
Total Liabilities and Stockholders' Equity   $ 819,580     $ 241,600   

 

 

The accompanying notes are an integral part of these condensed unaudited financial statements.

 

 

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EliteSoft Global Inc.

Condensed Statements of Operations

(Unaudited)

         

 

Three months ended

March 31,

2016   2015
                 
Revenue $ 798,133   $
Cost of revenues   726,976    
Gross Profit   71,157    
                 
General and administrative expenses   15,589     2,449
Income (loss) from operations   55,568     (2,449)
                 
Other income:          
    Interest income   36    
    Other income   5,000    
                 
Net income (loss) before income tax   60,604     (2,449)
           
Income tax expense   (18,700)    
           
Net income (loss) $ 41,904   $ (2,449)
                 
Basic & diluted income (loss) per common share $ 0.00   $  (0.00)
                 
Basic & diluted weighted average common shares outstanding   12,228,000     10,000,000

 

The accompanying notes are an integral part of these condensed unaudited financial statements.

 

 

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EliteSoft Global Inc.

Condensed Statement of Cash Flows

(Unaudited)

    Three Months Ended
March 31, 
2016
 

Three Months

Ended

March 31,
2015

         
Cash Flows from Operating Activities:                
Net income (loss)   $ 41,904     $ (2,449 )
Adjustments to reconcile net loss to net cash provided by                
  (used in) operating activities:                
Reversal of stock-based compensation     (5,000 )      
                 
Changes in operating assets and liabilities that (used)                
provided cash:                
Accounts receivable     (307,862 )      
Accounts payable and accrued liabilities     484,004       1,199  
Deferred revenue     (150,000 )     –    
Due to related parties     188,372       1,250  
Income tax payable     18,700        
Net Cash Provided by (Used in) Operating Activities     270,118        
                 
Net Increase in Cash and Cash Equivalent     270,118       –    
                 
Cash and Cash Equivalents , Beginning of Period     200,374       –    
                 
Cash and Cash Equivalents, End of Period    $ 470,492      $ –    
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW                
INFORMATION:                
Cash paid for interest   $ –       $ –    
Cash paid for taxes   $ –       $ –    

 

 

The accompanying notes are an integral part of these condensed unaudited financial statements.

  

 

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EliteSoft Global Inc.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2016

(UNAUDITED)

 

1.    DESCRIPTION OF BUSINESS AND HISTORY AND BASIS OF PRESENTATION


EliteSoft Global Inc., (the “Company”, or “EliteSoft Global”) was incorporated in the State of Delaware on June 23, 2014. The Company was formerly known as ANDES 3 Inc. and changed its name to EliteSoft Global Inc. on March 23, 2015. The Company currently generates revenue by providing web and IT services to a limited number of clients. The Company provides the following services: (a) Creation and design of corporate images and materials, (b) Website design and development, (c) Development of e-commerce software for sales transactions, (d) Supplying required computer hardware to operate online businesses, (e) 24/7 server monitoring, (f) Creation of social media strategies via Facebook, Twitter, Instagram, and (g) Video production services for infomercials.

 

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2. SUMMARY OF SIGNIFICANT POLICIES

 

Basis of Presentation – The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K for fiscal year 2015. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

 

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.

 

Cash and cash equivalents – The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. The carrying value of those investments approximates fair value.

 

Accounts receivable – Accounts receivable are uncollateralized customer obligations due under normal trade terms, and are stated at the amount the Company expects to collect from outstanding balances. The Company records an allowance for doubtful accounts based on specifically identified amounts that are believed to be uncollectible. Management considers accounts receivable to be fully collectible at March 31, 2016.

 

Revenue recognition – The Company derives its revenues primarily from providing web and IT services. Web and IT services revenues consist of fees from web design, software development, domain and hosting, and maintenance and other services. The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the price is fixed and determinable and collectability is reasonably assured. The Company's service arrangements are generally non-cancelable and do not provide for refunds to customers in the event of cancellations. The Company records revenues net of sales taxes. Revenues from web design, software development are generally recognized after the projects are completed and when delivery is made or title and risk of loss otherwise transfers to the customer, and the collection is reasonably assured. Revenues from IT consulting services, domain and hosting, and maintenance services are generally recognized on a straight-line basis over the length of the contract.  

 

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The Company also enters into arrangements with multiple deliverables that generally include web design and software development, domain and hosting, and maintenance and other services, with the term ranging from one month to two years. The Company analyzes its agreements to determine whether the elements can be separated and accounted for individually or as a single unit of accounting in accordance with the Financial Accounting Standards Board's (the “FASB”) Accounting Standards Codification (“ASC”) 605-25, “Revenue Arrangements with Multiple Deliverables,” and Staff Accounting Bulletin (“SAB”) 104, “Revenue Recognition”. Allocation of revenue to individual elements that qualify for separate accounting is based on the element’s fair value in accordance with ASC 605 and related revenues are recognized pursuant to the criteria described above. During the year ended December 31, 2015, in one of the arrangements that contain multiple deliverables, the Company acted as an agent in the transaction. As the agent, it records revenues on a net basis. Customer payments received in advance of the performance of services are recorded as deferred revenues in the balance sheets, and are recognized as revenue when the web and IT services are rendered.

 

Cost of revenues – Cost of revenues includes all costs associated with the providing website development and IT services for its clients and primarily consists of subcontracted services.

 

Earnings (loss) per share – Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. At March 31, 2016, the Company had a $50,000 loan from a stockholder which is convertible on demand. Management has not determined the conversion rate on this potentially dilutive security at March 31, 2016.

 

Stock-based compensation – The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10, Compensation- Stock Compensation, and FASB ASC 505-50, Equity- Based Payments to Non-Employees. Costs are measured at the estimated fair value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of the equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services.

 

Related parties – A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company's management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

 

Income taxes – The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards. Accounting standards regarding income taxes requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, the Company’s experience with operating loss and tax credit carryforwards not expiring unused, and tax planning alternatives.

 

 

-9

The Company recorded valuation allowances on the net deferred tax assets. Management will reassess the realization of deferred tax assets based on the accounting standards for income taxes each reporting period. To the extent that the financial results of operations improve and it becomes more likely than not that the deferred tax assets are realizable, the Company will be able to reduce the valuation allowance.

 

Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely, based solely on the technical merits, of being sustained on examinations. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes.

 

Fair value of financial instruments – The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are as follows:

 

Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

Level 2 – Inputs are inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly or indirectly.

 

Level 3 – Inputs are unobservable inputs for the asset or liability.

 

The Company does not have any financial assets or liabilities that are required to be fair valued on a recurring basis. For certain of the Company's financial instruments, including cash and cash equivalents, accounts receivables, prepaid expenses, accounts payable and accrued expenses, and deferred revenue, the carrying amounts approximate fair values due to their short maturities.

 

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature.

  

Foreign currency transactions and translation – The Company records and settles all transactions in U.S. Dollars based on the current exchange rate prevailing at each transaction date, therefore there are no translation adjustments at the balance sheet date that should be included in accumulated other comprehensive income.

 

 

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Accounting standards note yet adopted

 

In August 2015, FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently in the process of evaluating the impact of the adoption on its financial statements.

 

In November 2015 the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which changes how deferred taxes are classified on the Company’s balance sheets and is effective for financial statements issued for annual periods beginning after December 15, 2016, with early adoption permitted. ASU 2015-17 requires all deferred tax assets and liabilities to be classified as non-current. Upon adoption, we anticipate no effect on our balances sheets as the Company has no deferred tax assets and liabilities at March 31, 2016 and recorded a valuation allowance reducing our net deferred tax assets and liabilities to zero at December 31, 2015.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes ASC 840, Leases.  This ASU is based on the principle that entities should recognize assets and liabilities arising from leases.  The ASU does not significantly change the lessees’ recognition, measurement and presentation of expenses and cash flows from the previous accounting standard.  Leases are classified as finance or operating.  The ASU’s primary change is the requirement for entities to recognize a lease liability for payments and a right of use asset representing the right to use the leased asset during the term on operating lease arrangements.  Lessees are permitted to make an accounting policy election to not recognize the asset and liability for leases with a term of twelve months or less.  Lessors’ accounting under the ASC is largely unchanged from the previous accounting standard.  In addition, the ASU expands the disclosure requirements of lease arrangements.  Lessees and lessors will use a modified retrospective transition approach, which includes a number of practical expedients.  The effective date will be the first quarter of fiscal year 2020 with early adoption permitted.  Management continues to assess the overall impact the adoption of ASU 2016-02 will have on the Company’s financial statements.

 

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In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”. The amendments in this ASU are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations by amending certain existing illustrative examples and adding additional illustrative examples to assist in the application of the guidance. The effective date and transition of these amendments is the same as the effective date and transition of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. Public entities should apply the amendments in ASU 2014-09 for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein. The Company is currently in the process of evaluating the impact of the adoption on its financial statements.

 

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The amendments are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The Company is currently in the process of evaluating the impact of the adoption on its financial statements.

 

 

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3.    GOING CONCERN

 

The accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has retained earnings of $5,159 as of March 31, 2016. The Company requires capital for its contemplated operational and marketing activities. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

4.    RELATED PARTY TRANSACTIONS

In February 2015, a Company stockholder advanced the Company $50,000 and the cash was received in May 2015. The advance is unsecured, bears no interest, contains no formal repayment terms and is convertible on demand into shares of restricted common stock. Management has not determined the conversion rate on this potentially dilutive security at March 31, 2016. The Loan is not yet convertible as the shares are not publically traded on an exchange

 

During the quarter ended September 30, 2015, Mr. Cornelius Ee, Vice President of the Company, advanced the Company $3,331 for general operating expenses. The advance is unsecured, non-interest bearing and has no specific terms of repayment. As of March 31, 2015, the Company owed $3,331 to Mr. Cornelius Ee.

 

During 2015, the Company entered into a six-month service contract with ELITESOFT ASIA PTE LTD, a shareholder of the Company, to provide the Company with website design, development and integration with the Company’s CRM Program as well as web-based automated tracking system for the Company’s nationwide operations –customer relation management program. The total contract value is approximately $414,000. During the three months ended March 31, 2016, the Company incurred cost of $248,372 under this contract. Included in accounts payable and accrued expenses – related party is $198,372 related to this contract.

 

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5.    STOCKHOLDERS’ EQUITY

 

Preferred Stock – The Company is authorized to issue 5,000,000 shares of $.0001 par value preferred stock. As of March 31, 2015, no shares of preferred stock had been issued.

 

Common Stock - The Company is authorized to issue 100,000,000 shares of $.0001 par value common stock. As of March 31, 2016, 12,000,000 shares were issued and outstanding respectively.

 

On March 23, 2016, the Company cancelled 250,000 shares of common stock of the Company that had been previously issued due to termination of consulting agreement dated May 1, 2015 and reversed stock-based compensation of $5,000 that was recognized during the year ended December 31, 2016.  The $5,000 was recorded as other income during the three months ended March 31, 2016.

 

6.    CUSTOMER CONCENTRATION

 

During the three months ended March 31, 2016, the Company generated revenues from five customers and each of the five customers’ accounts for 97.32%, 0.25%, 0.19%, 0.75% and 1.49% of the Company’s revenue, respectively. The accounts receivable from these five customers were 89.04%, 3.09%, 0.43%, 4.02% and 3.42% of the total accounts receivable, respectively. The loss of any of these customers could have an adverse effect on the Company’s business, operating results, or financial condition.

 

 

7.    SUBSEQUENT EVENTS

 

Management has evaluated subsequent events up to and including May 14, 2016, which is the date the statements were available for issuance and determined there are no reportable subsequent events.

 

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Special Note Regarding Forward-Looking Statements

 

Information included or incorporated by reference in this Quarterly Report on Form 10-Q contains forward-looking statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Forward-looking statements may contain the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions, and are subject to numerous known and unknown risks and uncertainties. Additionally, statements relating to implementation of business strategy, future financial performance, acquisition strategies, capital raising transactions, performance of contractual obligations, and similar statements may contain forward-looking statements.  In evaluating such statements, prospective investors and shareholders should carefully review various risks and uncertainties identified in this Report, including the matters set forth under the captions “Risk Factors” and in the Company’s other SEC filings. These risks and uncertainties could cause the Company’s actual results to differ materially from those indicated in the forward-looking statements. The Company disclaims any obligation to update or publicly announce revisions to any forward-looking statements to reflect future events or developments.

 

Although forward-looking statements in this Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risk Factors Related to Our Business” below, as well as those discussed elsewhere in this Form 10-Q. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. We file reports with the Securities and Exchange Commission (“SEC”). You can read and copy any materials we file with the SEC at the SEC’s Public Reference Room, 100 F. Street, NE, Washington, D.C. 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.

 

We disclaim any obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Annual Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

 

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

 

We are an information technology (IT) web, systems integration and applications solutions company. We combine leading technology and draw upon our experience as professional IT specialists to create, design, develop and maintain corporate websites, e-commerce, social media strategies, server monitoring and supply computer hardware equipment on a global basis. We work to achieve this mission by using technology that is scalable, off-the-shelf, customizable, and communicates a clear message to our clients' target market. We market third-party vendor software, IT services, and hardware that deliver new opportunities, greater convenience, and enhanced value to our client's business. We have also established our in-house research and development (R&D) team to focus on ecommerce solutions, mobile payment, and financial services as an increasing effort for our company to provide full life cycle solutions to clients. The company maintains an office in Kuala Lumpur, Malaysia, as its primary business focus is obtaining and servicing clients within the Asia-Pacific region.

 

During the next 12 months we anticipate incurring costs related to the filing of Exchange Act reports and in operating our business consistent with our business plan. We anticipate that these costs will be in excess of $20,000, and that we will be able to meet these costs as necessary, through loans or equity invested in us by our stockholders, management or other investors. We anticipate allocating the entire amount towards the filing of Exchange Act reports.

 

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The Company incorporates by reference the Form 8-K filed on September 4, 2015 (commonly referred to as the “Super 8”). See also Part II, Item 5. In further disclosure, several conditions and events cast substantial doubt about the Company’s ability to continue as a going concern.  The Company has retained earnings of $5,195 as of March 31, 2016, has generated revenues and requires additional financing in order to finance its business activities on an ongoing basis.  The Company’s future capital requirements will depend on numerous factors including, but not limited to, the ability to raise capital through a private offering of its securities or a public offering through an effective registration statement. Furthermore, the Company’s future business strategy is contingent upon securing and servicing additional credit facilities. We have no assurance that future financing will be available to us on acceptable terms.  If financing is not available to us on satisfactory terms, we may be unable to continue, develop or expand our operations.  Equity financing could result in additional dilution to our existing shareholders.

 

We cannot guarantee we will be successful in our business operations.  Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns. Notwithstanding these risks, which are inherent in any company under our current circumstances, the Company believes that it is well-positioned from a management standpoint entering into its second quarter of 2016. The Company is committed to raising capital in pursuit of its short-term and long-term business plan, as set forth in its Super 8.

 

Results of Operations

The following table sets forth the summary income statement for the three months ended March 31, 2016 and 2015: 

    Three Months Ended
      March 31, 2016 March 31, 2015
Revenue     $      798,133 $                  –
Cost of Revenues     $      726,976 $                  –
Operating Expense     $        15,589 $           2,449
Net Income (Loss)     $        41,904 $        (2,449)
         

 

For the three months ended March 31, 2016 and 2015, we reported a net income of $41,904 and net loss of $2,449, respectively. The change in net loss between the three months ended March 31, 2016 and 2015 was primarily attributable to the revenue generated during the three months ended March 31, 2016 as compared to $nil during the three months ended March 31, 2015.

 

Revenue - Total revenues for the three months ended March 31, 2016, were $798,133, compared to $nil for the three months ended March 31, 2015. This resulted in an increase of approximately $798,133 from the comparable period. The increase in revenue is primarily a result of additional sales.

 

Operating Expenses - Operating expenses for the three months ended March 31, 2016, was $15,589, as compared to $2,449 for the three months ended March 31, 2015. The increase is primarily attributable to the increase of $13,140 in general and administrative expense for the three months ended March 31, 2016 due to an increase in professional and consulting fees and overhead expenses.

 

 

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Liquidity and Capital Resources

 

Working Capital

  March 31, 2016 December 31, 2015
Current Assets $ 819,580 $ 241,600  
Current Liabilities $ 769,136 $ 228,060  
Working Capital $ 50,444 $ 13,540  

 

Liquidity is a measure of our ability to meet potential cash requirements, maintain our assets, fund our operations and other general business needs. Our liquidity, to a certain extent, is subject to general economic, financial, competitive and other factors that are beyond our control. Our near-term liquidity requirements consist primarily of purchasing our target assets, restoring and leasing properties and funding our operations.

 

Our long-term liquidity needs primarily of funds necessary to pay for the acquisition and maintenance of properties; non-recurring capital expenditures; interest and principal payments on our indebtedness; and general and administrative expenses. We seek to satisfy our long-term liquidity needs through cash flow from operations, long-term secured and unsecured indebtedness, the issuance of debt and equity securities, and property dispositions. We have financed our operations and acquisitions to date through the funding by members and third party loans. We believe our current available cash along with anticipated revenues may be insufficient to meet our cash needs for the near future if we do not receive additional funding. Our assets are illiquid by their nature. Thus, a timely liquidation of assets might not be a viable source of short-terms liquidity should a cash flow shortfall arise that cause a need for additional liquidity. It could be necessary to source liquidity from other financing alternatives should any such scenario arise. There can be no assurance that financing will be available in amounts or terms acceptable to us, if at all. In that event, we would be required to change our growth strategy and seek funding on that basis, if at all.

 

Our working capital accounts consist of accounts receivable and prepaid assets. Claims against working capital include accounts payable and accrued expenses and deferred revenue. Our working capital may be impacted by factors in future periods, certain amounts and timing of which are seasonal, such as billings to customers for support services and the subsequent collection of those billings. The Company had working capital of $50,444 and $13,540 as of March 31, 2016 and December 31, 2015.

 

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Cash Flow Information

 

Net cash provided by operating activities for the three months ended March 31, 2016 and 2015 was $270,118 and $nil, respectively. The increase in cash provided by operating activities was primarily related to the timing of collections from our customers and the timing of payments to our vendors. We did not have any net cash activity associated with investing and financing activities for the three months ended March 31, 2016 and 2015.

 

Our estimated working capital requirement for the next 12 months is $60,000 with an estimated burn rate of $5,000 per month. As reflected in the accompanying financial statements, we had cash of $470,492 on hand on March 31, 2016.

 

Off-Balance Sheet Arrangements

 

We have not entered into any off-balance sheet arrangements or contractual commitments that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

 

For an unlimited period of time additional funds will be contributed from existing stockholders, including Swee Seong "Eugene" Wong, our Chief Executive Officer, and Chairman of the Board of Directors, or another source, in the form of a loan. There can be no assurances that any loan obtained by another source will be on favorable terms, if at all.

 

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

We have not utilized any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts or interest rate swaps and futures. We believe that adequate controls are in place to monitor any hedging activities. We do not have any borrowings (however, our wholly-owned subsidiary does service debt related to the properties owned by the subsidiary), and, consequently, we are not affected by changes in market interest rates. We currently have sales or own assets and operate facilities in countries outside the United States and, consequently, we are affected by foreign currency fluctuations or exchange rate changes. Overall, we believe that our exposure to interest rate risk and foreign currency exchange rate changes is not material to our financial condition or results of operations.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As required by Rule 13a-15 of the Exchange Act, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and the United States Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

 

As described in Basis of Presentation in this First Quarter Report for fiscal year 2016, the Company recently determined that a material weakness existed in the Firm's internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) as of March 31, 2016. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. As a result of that determination, the Company's Chief Executive Officer and Chief Financial Officer have since concluded that the Firm's disclosure controls and procedures were not effective as of March 31, 2016.

 

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We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

 

 

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Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2015 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There are not presently any material pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

 

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

 

The Company incorporates by reference all prior disclosures for the period identified herein. See Part II, Item 6.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

The Company incorporates by reference all prior disclosures for the period identified herein.

 

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Item 6. Exhibits. 

 

      Incorporated by reference
Exhibit Exhibit Description Filed herewith   Period ending   Filing date
31.1

Certification of the Chief Executive Officer pursuant

to Section 302 of the Sarbanes-Oxley Act of 2002

X        
32.1

Certification of the Chief Financial Officer pursuant

to Section 302 of the Sarbanes-Oxley Act of 2002

X        
33.1

Certification of the Chief Executive Officer pursuant

to Section 906 of the Sarbanes-Oxley Act of 2002

X        
34.1

Certification of the Chief Financial Officer pursuant

to Section 906 of the Sarbanes-Oxley Act of 2002

X        
101.INS XBRL Instance Document X        
101.SCH XBRL Taxonomy Extension Schema Document X        
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document X        
101.LAB XBRL Taxonomy Extension Label Linkbase Document X        
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X        
101.DEF XBRL Taxonomy Extension Definition Linkbase Definition X        

 

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SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

EliteSoft Global Inc.

 

By: /s/ Swee Seong "Eugene" Wong

Swee Seong "Eugene" Wong

Chief Executive Officer (Principal Executive Officer) and Chairman of the Board of Directors

(Principal Executive Officer)

 

 

By:  /s/ Khoo Mae Ling
Khoo Mae Ling

Chief Financial Officer, Secretary and Director

(Principal Financial Officer)

  

Date:  May 14, 2016 

 

 

 

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