ELITE TECHNOLOGIES INC /TX/
10-Q/A, 2001-01-17
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

              |X| For the Quarterly Period ended November 30, 2000

                                       Or

              | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE TRANSITION PERIOD FROM September 1,
                           2000 TO November 30, 2000



                         Commission File Number: 0-17597

                            ELITE TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)




              Texas
   (State or other Jurisdiction of                         76-0252296
    incorporation or organization)             (IRS Employer Identification No.)

                             5050 Oakbrook Parkway
                                    Suite 100
                                Norcross Georgia
                                     30093
                                  (Zip Code)
                    (Address of principal executive offices)

                                  770-559-4975
              (Registrant's telephone number, including area code)





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


The number of issued and  outstanding  shares of the  issuer's  class of capital
stock as of November  30,  2000,  the latest  practicable  date,  is as follows:
41,677,720 shares of Common Stock $.0001 par value.
--------------------------------------------------------------------------------


<PAGE>


                            ELITE TECHNOLOGIES, INC.

                                      Index


PART I - FINANCIAL INFORMATION

     Item 1. Condensed Financial Statements:

             Consolidated Balance Sheet-November 30, 2000 and May 31, 2000.    3

             Consolidated  Statement  of  Operations-Three  and Six  Months
               Ended 4 November 30, 2000 and November 30, 1999.

             Consolidated Statement of Cash Flow-Six Months Ended November   5-6
               30, 2000.

             Notes to Consolidated Financial Statements (unaudited)

             Report on Review by Independent Accountants

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

PART II - OTHER INFORMATION

     Item 3.  Legal Proceedings

     Item 4.  Changes in Securities

     Item 5.  Defaults upon Senior Securities

     Item 6.  Submission of matters to Vote of Security Holders

     Item 7.  Other Information

     Item 8.  Exhibits and Reports on Form 8-K

Exhibit Index

Signature

<PAGE>


PART Item I



                                     REPORT ON REVIEW BY INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders
Elite Technologies, Inc., and Subsidiaries

     We have  reviewed  the  accompanying  consolidated  balance  sheet of Elite
Technologies, Inc., and Subsidiaries (the "Company") as of November 30, 2000 and
May 31, 2000 and the related consolidated statements of operations for the first
three and six months ended  November  30, 2000 and  November  30, 1999,  and the
related  consolidated  statement of cash flows for the six months ended November
30, 2000.  These financial  statements are the  responsibility  of the Company's
management.

     We conducted our review in accordance  with  standards  established  by the
American  Institute  of  Certified  Public  Accountants.  A  review  on  interim
financial  information consists principally of applying analytical procedures to
financial  data and making  inquiries of persons  responsible  for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the  expression  of an opinion  regarding the  financial  statements  taken as a
whole. Accordingly, we do not express such an opinion.

     Based on our review,  with the  exception  of the matter  described  in the
following paragraph,  we are not aware of any material modifications that should
be made to the aforementioned  financial statements for them to be in conformity
with generally accepted accounting principles.

     A statement of cash flows for the six months ended  November 30, 1999,  the
previous  year,  has not  been  presented.  As  described  in the  notes  to the
consolidated  financial  statements,  generally accepted  accounting  principles
require that such a statement be presented when financial  statements purport to
present financial position and results of operations.

     We  previously  audited in  accordance  with  generally  accepted  auditing
standards,  the  consolidated  balance sheet as of May 31, 2000, and the related
consolidated  statements of operations,  of  stockholders/  equity,  and of cash
flows for the year then ended (not  presented  herein),  and in our report dated
November 9, 2000,  we expressed  an  unqualified  opinion on those  consolidated
financial  statements.  In our  opinion,  the  information  as set  forth in the
accompanying  consolidated  balance  sheet  information  as of May 31, 2000,  is
fairly stated in all material  respects in relation to the consolidated  balance
sheet from which it has been derived.

     The  accompanying  consolidated  financial  statements  have been  prepared
assuming that the Company will continue as a going concern. As discussed further
in the financial  information,  the Company has suffered  recurring  losses from
operations that raise substantial doubt about its ability to continue as a going
concern.  The consolidated  financial  statements do not include any adjustments
that might result from the outcome of this uncertainty.


/s/ Kirschner & Assoc.
     Kirschner & Assoc.

Marietta, Georgia
January 16, 2001






<TABLE>
<CAPTION>


                          ELITE TECHNOLOGIES, INC., AND SUBSIDIARIES
                                  Consolidated Balance Sheet

                                                               November 30,        May 31,
                                                                   2000              2000
                                                                (Unaudited)       (Audited)
<S>                                                             <C>               <C>
Assets

Current assets:

  Cash on hand and in banks                                           $183,501        -

  Accounts receivable, less allowance for doubtful

      accounts of $28,000 and $ 0 at November 30, 2000 and

      May 31, 2000, respectively.                                    1,375,355        -

  Note receivable on convertible debt obligation                             -          527,470

  Receivable from officer                                              528,542          289,084

  Other current assets                                                 648,940           30,000

           Total current assets                                      2,736,338          846,554

Property and equipment, net                                            195,809           31,004

Excess of cost over net assets of businesses acquired,

     less accumulated amortization of $899,808 and

     $487,308 at November 30, 2000, and May 31, 2000,                5,572,109        2,609,609
     respectively

Other assets                                                            43,789            6,789


                Total Assets                                        $8,548,045       $3,493,956
                                                                 ================= =================
                                                                 ================= =================
Liabilities and Stockholders' Equity

Current liabilities:

  Cash overdrafts                                                    -                  $35,106

  Notes payable                                                          291,899        112,895

  Accounts payable                                                   2,666,077          523,541

  Accrued expenses                                                      73,148          114,292

  Federal payroll taxes payable                                        929,468          931,888

  State payroll taxes payable                                          321,614          321,614

                                                                     4,282,206        2,039,336
Long-term liabilities:

  Notes payable                                                        100,000          100,000

  Other long-term debt                                                   220,778              -

  Convertible note payable                                           1,035,599        1,035,599

           Total liabilities                                         5,638,583        3,174,935


Stockholders' equity:

  Common stock, $.0001 par value; 500,000,000 shares

      authorized; 41,677,720  and 34,275,720 issued and

      outstanding at November 30, 2000 and May 31, 2000,

      respectively                                                       4,167            3,427

  Additional paid-in capital                                        14,190,140        8,479,400

  Retained earnings (deficit)                                      (11,284,845)      (8,163,806)


                Total stockholders' equity                           2,909,462          319,021

      Total liabilities and equity                                  $8,548,045       $3,493,956
                                                                ================= =================
                                                                ================= =================
</TABLE>


    The Notes to Financial Statements are an integral part of this statement.

                                        3



<TABLE>
<CAPTION>
                    ELITE TECHNOLOGIES, INC. AND SUBSIDIARIES

                       Consolidated Statement of Cash Flow
                                   (Unaudited)

                                                                                            Six Months Ended

                                                                                              November 30,

                                                                                                  2000
<S>                                                                                               <C>
Cash flows to operating activities:

  Net loss                                                                                           ($3,155,020)

   Adjustments to reconcile net loss to net

    cash used in operating activities:

      Depreciation and amortization                                                                      231,250

      Commitment to issue stock for investment

        banking services                                                                               2,465,500

      Decrease (increase) in:

        Accounts receivable                                                                           (1,375,355)

        Note receivable                                                                                  527,470

        Other assets                                                                                    (655,940)

      Increase (decrease) in:

        Accounts payable                                                                               2,142,536

        Federal payroll taxes payable                                                                     (2,420)

        Accrued expenses and other current liabilities                                                   (16,144)

              Net cash used in operating activities                                                      161,877



Cash flows to investing activities:

    Purchases of property and equipment                                                                 (183,555)

    Acquisition of businesses                                                                           (175,000)


    Receivable from officers                                                                            (239,458)

              Net cash used in investing activities                                                     (598,013)



Cash flows from financing activities:


    Proceeds from issuance of common stock                                                               140,000


    Proceeds from issuance of long-term debt                                                             399,782

    Contributed capital                                                                                  114,961

              Net cash provided by financing activities                                                  654,743


Net increase (decrease) in cash and cash equivalents                                                     218,607


Cash and cash equivalents (overdraft) at beginning of period                                             (35,106)


Cash and cash equivalents at end of period                                                              $183,501
                                                                                                     ==============

    The Notes to Financial Statements are an integral part of this statement.

                                        5
</TABLE>


<TABLE>
<CAPTION>


                   ELITE TECHNOLOGIES, INC., AND SUBSIDIARIES
                      Consolidated Statement of Operations
                                   (Unaudited)


                                                   Three Months Ended          Six Months Ended
                                             November 30,                        November 30,
                                                 2000              1999              2000              1999
<S>                                             <C>                 <C>              <C>               <C>
 Revenues                                         $3,703,578          $400,013        $7,334,396         $778,010

 Cost of Sales                                     3,595,238                 -         6,626,446                -

                Gross Profit                         108,340           400,013           707,950          778,010

 Salaries, wages and benefits                        139,148            16,456           239,226          102,106

 Depreciation and amortization                       115,625                 -           231,250                -

 Other operating expenses                            134,344           203,001           897,635          760,313

                                                     389,117           219,457         1,368,111          862,419

             Operating income (loss)                (280,777)          180,556          (660,161)         (84,409)

 Operating epenses                                         -                 -         2,465,500                -

 Interest expense                                          -                 -            12,100                -

 Interest income                                           -                 -                 -                -

 Other expenses - net                                 15,546                 -            17,259                -

                                                      15,546                 -         2,494,859                -

             Loss before income taxes               (296,323)          180,556        (3,155,020)         (84,409)

 Income taxes                                              -                 -                 -                -

             Net loss                              ($296,323)         $180,556       ($3,155,020)        ($84,409)
                                                  =============    =============   ===============     ==============
                                                  =============    =============   ===============     ==============


 Weighted average shares - basic                  37,877,635        12,647,920        41,578,630       12,647,085
                                                  ==============   =============   ===============     ==============
                                                  ==============   =============   ===============     ==============


 Basic Earnings (Loss) Per Share                      ($0.08)            $0.01            ($0.08)          ($0.01)
                                                  =============   =============   ===============     ==============
                                                  ==============   =============   ===============     ==============

 Adjusted weighted average shares

   dilutive                                       38,343,655        12,570,000        42,044,880       12,647,085
                                                  ==============   =============   ===============     ==============
                                                  ==============   =============   ===============     ==============


 Diluted Earnings (Loss) Per Share

   (antidilutive in 2000)                             ($0.08)            $0.01            ($0.08)          ($0.01)
                                                  ==============   =============   ===============     ==============
                                                  ==============   =============   ===============     ==============
</TABLE>


    The Notes to Financial Statements are an integral part of this statement.

                                        4






   ELITE TECHNOLOGIES, INC., AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED
               FINANCIAL STATEMENTS November 30, 2000 (UNAUDITED)

Accounting Policies

In the opinion of management the accompanying  unaudited  consolidated financial
statements reflect all normal adjustments, exclusive of any adjustments that may
be  required  as a result  of going  concern  issues  discussed  further  in the
financial  information,  necessary to present  fairly the financial  position of
Elite Technologies,  Inc., and Subsidiaries at November 30, 2000 and the results
of operations  for the three and six months ended November 30, 2000 and 1999 and
cash flows for the six months ended November 30, 2000. The results of operations
for  the  three-and  six-month  periods  ended  November  30,  2000  should  not
necessarily  be taken as  indicative  of the results of  operations  that may be
expected for the entire year May 31, 2001.

The financial  information as of November 30, 2000 should be read in conjunction
with the financial  statements  contained in Elite Technologies,  Inc. Form 10-K
Annual Report for 2000.

Recognition and Revenue Expense

Web site development and consulting  services are generally  performed on a time
and materials basis and are recognized as the services are performed.  All other
revenue and expense is accrued as incurred.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original  maturities of
three months or less to be cash  equivalents.  Cash overdrafts are classified as
debt.

Property and Equipment

Property and equipment are carried at cost.  Expenditures  for  maintenance  and
repairs  that do not  significantly  extend the  useful  lives of the assets are
expensed as incurred, while major replacements and betterments are capitalized.

Depreciation is computed  principally  using the  straight-line  method over the
estimated  useful  lives  of the  assets,  generally  five  years  for  computer
equipment  and  furniture  and  fixtures,  and three to five years for purchased
software.

Cost of property  sold or  otherwise  disposed  of and the  related  accumulated
depreciation  are removed from the accounts,  and any resulting  gain or loss is
recognized in income currently.

Excess of Cost Over Net Assets of Business Acquired

The excess of cost over net assets of  businesses  acquired  (goodwill) is being
amortized  using the  straight-line  method  over five years.  The  amortization
period is based on, among other things,  the nature of the products and markets,
the  competitive  position of the acquired  companies,  and the  adaptability of
changing  market  conditions  of the acquired  companies.  At each balance sheet
date,  the Company  assesses  the  recoverability  of this  intangible  asset by
determining  whether the amortization of the goodwill balance over its remaining
life can be recovered  through  undiscounted  future operating cash flows of the
acquired operation.

The amount of  goodwill  impairment,  if any,  is  measured  based on  projected
discounted  future  operating cash flows using a discount rate equal to the rate
of return that would be required  by the Company for a similar  investment  with
like risks. The assessment of the recoverability of goodwill will be impacted if
estimated future operating cash flows are not achieved.


Income Taxes

The Company  accounts  for income  taxes under the asset and  liability  method.
Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases and operating loss and tax credit  carryforwards.  Deferred tax assets and
liabilities  are measured  using enacted tax rates  expected to apply to taxable
income in the years in which  those  temporary  differences  are  expected to be
recovered  or settled.  The effect on deferred tax assets and  liabilities  of a
change in tax rates is  recognized  in income in the period  that  includes  the
enactment date.

Statement of Cash Flows

The  statement of cash flows for the six months ended  November 30, 1999 has not
been  presented.   Generally  accepted  accounting  principles  require  that  a
statement be presented when financial  statements  purport to present  financial
position and results of operations. Record keeping limitations prevented certain
accumulation of cash flow data. Accordingly, management is unable to present the
statement of cash flows for that period, at this time.

Payroll Taxes Payable

Payroll Taxes payable includes a liability,  the assumption of which was part of
the  agreement to acquire  Intuitive  Technology  Consultants,  Inc.  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.  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.

Overview

ORGANIZATION

         Elite  Technologies,  Inc.  (referred  to  herein  as  "Elite"  or  the
"Company") is a full service technology company offering information  technology
("IT") services to small, 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. The company

         Elite was  founded  as a  Georgia  corporation  in 1996  under the name
Intuitive Technology  Consultants,  Inc. ("ITC"). In July, 1998, ITC Acquisition
Group,  LLP,  consisting  of management  of ITC,  acquired a majority  interest,
through a reverse  merger,  in CONCAP,  Inc..  On April 22,  1999,  the  Company
changed its name to Elite  Technologies,  Inc. The Company's charter was revoked
on February 11, 2000 for the failure to file  franchise tax returns in the State
of Texas, however the Company is presently seeking to reinstate its charter.

             Elite through its divisions offered a variety of services in fiscal
year 2000. Accordingly, Elite has suspended most of its operations following the
acquisition  of Ace  Manufacturing  Group,  Ltd.  ("AMG") in April  2000.  Elite
intends to acquire other companies to fulfill the services of its divisions.  As
part of Elite's acquisition strategy,  the Company has entered into an agreement
to  acquire  substantially  all of the  capital  stock of AC  Travel,  Inc.  and
International  Electronic Technologies of Georgia, Inc. Elite does not presently
have any other definitive  agreements to acquire additional  companies and there
can be no assurance that it will do so.

         The Company's principal executive offices are located at 5050  Oakbrook
Parkway,  Suite  100  Norcross,  Georgia  30093.  Telephone: (770)-559-4975. The
Company's Internet address is www.elitetech-usa.com.

RECENT DEVELOPMENTS

              Elite's  objective is to establish itself as a leading provider of
content solutions,  hardware  distribution,  software development services,  and
kiosk manufacturing/distribution. The Company intends to utilize acquisitions to
support the growth of its business, such as content and hardware providers.  The
Company intends to utilize the kiosk's content and advertising platform to serve
as a means by which  retailers and other  connectivity  solutions  providers can
access a viewer base with quantifiable online purchasing habits.

         On December 15, 2000, the Company  entered into a Letter of Intent with
Intelligent Software Solutions, Inc. for the purchase and exclusive distribution
of its kiosk  units in  Puerto  Rico and the  Caribbean  Islands.  A  definitive
agreement is expected to be executed in January, 2001. The contract will require
a minimum purchase by Intelligent Software Solutions, Inc. per month.

         On December  29, 2000,  the Company  entered into a letter of intent to
purchase Smartmedia, Inc. The company expects to reach a definitive agreement in
January 2001. Smartmedia provides a patent pending technology that uses wireless
telemetry technology in the newspaper and shipping industries.

         In  January,  2001,  the Company  consolidated  its  operations  to one
address to reduce its expenditures for operational costs.

             In December 2000 the company satisfied the $300,000 indebtedness as
to  owned  under  the  purchase  agreement  of  IET,  International   Electronic
Technology of Georgia ( "IET"). Payment was made in stock.


RESULTS OF OPERATIONS

             THREE AND SIX MONTHS ENDED NOVEMBER 30, 2000 AND NOVEMBER 30, 1999.

         Revenues.  Revenues  from  operations  for  the  second  quarter  ended
November 30, 2000 increased by 825.9% from the same period,  1999.  Revenues for
the six months  ended  November  30,  2000,  increased  by 842.7%  from the same
period,  1999.  The  increase  in  revenues  is  related  to  (i)  the  internal
restructuring  of  the  business  and  (ii)  the  acquisition  of  International
Electronic Technology of Georgia (IET) and AC Travel.

            Salaries,  Wages and Benefits.  Salaries,  Wages and  Benefits,  are
$122,692 and 745.6 % higher in the second quarter and $137,120 and 134.3% higher
for the six months ended  November  30, 2000 over the same  periods,  1999.  The
increase is due primarily to the acquisition of IET.

         Other Operating Expenses. Other Operating Expenses increased by $68,657
and 33.8%  during the  second  quarter  ended  November  30,  2000 over the same
quarter  ended,  1999.  The  increase  is $ 137,322  and 18.1% for the six month
period ended November 30, 2000, over the same period,  1999. These increases are
attributed to the  restructuring  of the business and the recent  acquisition of
IET and AC Travel.

         Depreciation and Amortization.  Elite depreciates its assets, including
goodwill,  on a straight-line  basis over three to five years.  Depreciation and
amortization  increased to $ 231,250.  This is attributed to the amortization of
goodwill recorded in connection with the acquisitions completed in 2000.

         Operating  Loss.  Operating  losses  increased  to $  3,155,020  from $
2,858,697  representing a 10 % increase in the loss due to increased operational
costs attributed to the acquisition(s) completed by Elite.



LIQUIDITY AND CAPITAL RESOURCES

         The Company's  capital  requirements  have  principally  related to the
acquisition of businesses,  working capital needs and capital  expenditures  for
growth.  These  requirements  have been met  through a  combination  of  private
placements and internally generated funds.  Although the Company incurred direct
costs for acquisitions,  the Company completed these  acquisitions  primarily in
stock for stock  transactions.  The Company  currently lacks the working capital
required to continue as a going concern and to achieve its  acquisition  program
and internal growth objectives.  Management expects to enter into agreements for
debt or equity funding during the third and fourth  quarters of fiscal year 2001
in order to meet the  needs of  internal  growth  and  acquisitions.  Management
believes that such  agreements  for debt or equity funding will be sufficient to
enable the Company to continue operating as a going concern.  However,  there is
no assurance that agreement for such additional funding will be consummated.



<PAGE>


PART II

OTHER INFORMATION

ITEM 3. LEGAL PROCEEDINGS

The Company is, from time to time, a party to routine  litigation  incidental to
operating a business, including claims of discrimination,  wrongful termination,
and other similar claims.

ITEM 4. CHANGES IN SECURITIES.  The company issued securities in exchange for
        $140,000 in cash  during the second quarter.

ITEM 5. DEFAULTS UPON SENIOR SECURITIES. NONE

ITEM 6. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. NONE

ITEM 7. OTHER INFORMATION. NONE

ITEM 8. EXHIBITS AND REPORTS ON FORM 8-K. NONE



<PAGE>





SIGNATURES

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


Dated: January 16, 2001                         ELITE TECHNOLOGIES, INC.


                                                By: /s/ Scott Schuster
                                                Name:   Scott Schuster
                                                Title:  Chief Executive Officer



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