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EXCELSIS INVESTMENTS INC. - 10-Q/A - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

February 18, 2014

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS

On July 19, 2013, we acquired all of the issued and outstanding shares of common stock of Career Start, Inc., a Florida corporation, in consideration of 47,142,957 restricted shares of our common stock. Career Start, Inc. is a full service human resources firm that provides numerous services, including P.E.O., staffing, employee leasing, and payroll. Career Start works with governmental and charitable entities on a federal, state and local level to supplement its business. Our current website is www.careerstartinc.com.

Working Capital September 30, 2013 December 31, 2012 $ $ Current Assets 287,428 103,266 Current Liabilities 859,228 415,626 Working Capital (Deficit) (571,800) (312,360) Cash Flows September 30, 2013 September 30, 2012 $ $ Cash Flows from (used in) (239,170) N/A Operating Activities Cash Flows from (used in) 43,000 N/A Investing Activities Cash Flows from (used in) 150,200 N/A Financing Activities Net Increase (decrease) in Cash (45,970) N/A During Period Operating Revenues



During the three months ended September 30, 2013, the Company earned revenues of $2,140,239 and gross profit of $345,368 from contracting and consulting services.

During the nine months ended September 30, 2013, the Company earned revenues of $2,190,239 and gross profit of $395,368 from contracting and consulting services.

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Operating Expenses and Net Loss

During the three months ended September 30, 2013, the Company recorded operating expenses of $9,853,703. Operating expenses were comprised of $159,588 for payroll costs incurred for management and head office salaries, $142,407 for general and administrative expenses relating to overhead costs incurred for the Company's head office and business operations, $9,522,290 for consulting expenses including $9,500,000 for the issuance of 1,000,000 preferred shares to management of the Company, and $30,298 for professional fees relating to accounting, audit, and legal fees incurred for the Company's SEC filings.

During the nine months ended September 30, 2013, the Company recorded operating expenses of $10,122,843. Operating expenses were comprised of $250,725 for payroll costs incurred for management and head office salaries, $263,959 for general and administrative expenses relating to overhead costs incurred for the Company's head office and business operations, $9,525,796 for consulting expenses including $9,500,000 for the issuance of 1,000,000 preferred shares to management of the Company, and $83,003 for professional fees relating to accounting, audit, and legal fees incurred for the Company's SEC filings.

For the three months ended September 30, 2013, the Company had a net loss of $9,467,793 and basic and diluted net loss per share of $0.05. In addition to operating expenses, the Company also incurred a gain of $50,988 for the change in fair value of derivative liabilities relating to the floating conversion price of its' convertible debenture, and interest expense of $9,860 relating to interest charges incurred on its' convertible debenture.

For the nine months ended September 30, 2013, the Company had a net loss of $10,019,725 and loss per share of $0.07. In addition to operating expenses, the Company also incurred a loss of $269,112 for the change in fair value of derivative liabilities relating to the floating conversion price of its' convertible debenture, and interest expense of $23,138 relating to interest charges incurred on its' convertible debenture.

Liquidity and Capital Resources

As at September 30, 2013, the Company had a cash balance of $57,271 and asset total of $287,428 compared with $103,241 of cash and total assets of $103,266 as at December 31, 2012. The decrease in cash is due to the fact that the Company has incurred more cash for operating activities relating to overhead costs relating to the business operations of the Company and its wholly-owned subsidiary. The increase in total assets is due to the acquisition of Career Start, Inc. including accounts receivable of $226,047.

The overall working capital deficit increased from $312,360 at December 31, 2012 to $571,800 at September 30, 2013 due in part to the fact that the Company had a higher value of derivative liability relating to the fair value of the floating conversion price of the convertible debenture.

During the nine months ended September 30, 2013, the Company raised $150,200 from the issuance of 23,555,555 common shares, and also issued 47,142,858 common shares for the acquisition of Career Start, Inc., the Company's wholly-owned subsidiary. Furthermore, the Company issued 1,000,000 preferred shares with a fair value of $9,500,000 to its Chief Executive Officer and Chief Financial Officer of the Company as compensation for services.

Cashflow from Operating Activities

During the nine months ended September 30, 2013, the Company used $239,170 of cash for operating activities, which is reflective of the cash used for day-to-day business operations which included the operations of the Company and its wholly-owned subsidiary, Career Start Inc.

Cashflow from Investing Activities

During the nine months ended September 30, 2013, the Company received cash of $43,000 from the acquisition of Career Start, Inc.

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Cashflow from Financing Activities

During the nine months ended September 30, 2013, the Company received cash of $150,200 from the issuance of common shares.

Convertible Promissory Note

On December 6, 2012, the Company entered into a convertible promissory note agreement for $150,000. Pursuant to the agreement, the loan is unsecured, bears interest at 10% per annum, and is due on December 5, 2014. The note is also convertible into common shares at a conversion price equal to 25% of the average of the three lowest closing prices for the Company's common shares in the ten trading days prior to conversion, at the option of the note holder, commencing on December 6, 2012.

In accordance with ASC 815, "Accounting for Derivative Instruments and Hedging Activities", the Company recognized the intrinsic value of the embedded beneficial conversion feature of $150,000. During the period ended September 30, 2013, the Company recorded accretion expense of $11,919.

Critical Accounting Policies and Estimates

We prepared our financial statements and the accompanying notes in conformity with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions about future events that affect the reported amounts in the financial statements and the accompanying notes. We identified certain accounting policies as critical based on, among other things, their impact on the portrayal of our financial condition, results of operations, or liquidity and the degree of difficulty, subjectivity, and complexity in their deployment. Critical accounting policies cover accounting matters that are inherently uncertain because the future resolution of such matters is unknown. Management routinely discusses the development, selection, and disclosure of each of the critical accounting policies. The following is a discussion of our most critical accounting policies:

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Financial Instruments

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

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Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company's financial instruments consist principally of cash, accounts receivable, accounts payable and accrued liabilities, and convertible debenture. Pursuant to ASC 820, the fair value of our cash is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.


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Source: Edgar Glimpses


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