Note 3 - Stock-based Compensation and Discount On Common Stock Adjustment To Prior Period Results

6 Months Ended

Sep. 30, 2017

Note 3 - Stock-based Compensation and Discount On Common Stock Adjustment To Prior Period Results

NOTE 3 - STOCK-BASED COMPENSATION AND DISCOUNT ON COMMON STOCK ADJUSTMENT TO PRIOR PERIOD RESULTS

In preparing the Company's prior period June 30, 2017 unaudited interim financial statements, the Company determined that errors were made in the classification of discount on common stock of $390,500 in the year ended March 31, 2016 and $17,300 for the year ended March 31, 2017 and 1,000 shares of Series A Preferred stock valued at $22,240 was issued, however, not recorded in the fiscal year ended March 31, 2017.

The Company original recorded a discount on common stock related to certain proceeds attributable to the TCA Convertible Note agreement, dated December 18, 2015, and a Mammoth Convertible Notes agreement, dated November 18, 2015, as discount on common stock, however, upon further consideration the Company should have expensed the $407,800 in the fiscal year ended March 31, 2016 as stock compensation.

Additionally, the Company issued 1,000 shares of Series A Preferred stock, in January 2017, valued at $22,240 to the Company’s Chief Executive Officer. The Company did not record transactions of March 31, 2017 and consequently $22,240 of stock compensation attributable to our Chief Executive Officer was not recorded in the Statement of Operations as of March 31, 2017.

The Company assessed the materiality of this misstatement in the 2017 interim period financial statements in accordance with the SEC's Staff Accounting Bulletin (SAB) No. 99, Materiality, codified in ASC No. 250, Presentation of Financial Statements, and concluded that the misstatement was not material to the year ended March 31, 2017 and March 31, 2016. In accordance with SAB 108, the Company has adjusted the March 31, 2017 financial statements. There was no impact to September 30, 2017 financial statements.

	Year Ended March 31, 2017
	As Originally Reported	Adjustment	As Corrected
SHAREHOLDERS’ DEFICIT
Series A Preferred Stock	$ -	$ 22,240	$ 22,240

Discount on common stock	$ (407,800)	$ 407,800	$ -

Accumulated Deficit	$ (18,288,077)	$ (430,040)	$ (18,718,117)

Total Shareholder deficit	$ (2,166,905)	$ -	$ (2,116,905)

ELITE GROUP INC. 10-Q