UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report under Section 13 or 15 (d) of
Securities Exchange Act of 1934
For the quarterly period ended March 31,June 30, 2010
Commission File Number 000-50045
EMPIRE GLOBAL CORP.
(Name of small business issuer in its charter)
Delaware 33-0823179
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
648 Finch Ave. East, Suite 2
Toronto, Ontario, M2K 2E6
(647) 229-0136
(Address and telephone number of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
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]
(Do not check if Smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
There were 18,675,800 shares of Common Stock outstanding as of March 31,June 30, 2010.
ITEM 1. FINANCIAL STATEMENTS
The unaudited quarterly financial statements for the period ended March 31,June 30,
2010, prepared by the company, immediately follow.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements F-1 - F-10F-12
Item 2. Management's Discussion and Analysis or Plan of Operation 1315
Item 3. Quantitative and Qualitative Disclosures About Market Risk 1719
Item 4. Controls and Procedures 1719
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 1820
Item 1A. Risk Factors 1921
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 1921
Item 3. Defaults Upon Senior Securities 1921
Item 4. Submission of Matters to a Vote of Security Holders 1921
Item 5. Other Information 1921
Item 6. Exhibits 1921
SIGNATURES
2
ITEM 1. FINANCIAL STATEMENTS
EMPIRE GLOBAL CORP.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHSMONTH and SIX MONTH PERIODS ENDED
MARCH 31,JUNE 30, 2010 and 2009
CONTENTS
Consolidated Balance Sheets F2
Consolidated Statements of Operations and Comprehensive Loss F3
Consolidated Statements of Cash Flows F4
Notes to Consolidated Financial Statements F-5 - F-10F-12
- F1 -
EMPIRE GLOBAL CORP.
Consolidated Balance Sheets
March 31,June 30, December 31,
2010 2009
US$ US$
(Unaudited)
--------- -----------
ASSETS
Current Assets - -
------- -------
Total Current Assets - -
Property and equipment, net 3,4813,298 3,664
Assets of discontinued operations - 207,906
------- -------
3,4813,298 211,570
======= =======
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
Accounts payable and accrued liabilities 75,482108,162 57,621
Advances from related party 2,500 1,448
Liabilities of discontinued operations - 200,000
------- -------
Total Current Liabilities 77,982110,662 259,069
Commitments and Contingencies - -
Stockholders Deficiency
Preferred Stock, $0.0001 par value,
20,000,000 shares authorized, none issued. - -
Capital Stock, $0.0001 par value,80,000,000 shares authorized;
issued and outstanding,
18,675,800 shares for both periods 1,868 1,868
Additional paid-in capital 4,902,455 4,902,455
Accumulated other comprehensive loss - (7,832)
Deficit (4,978,824)(5,011,686) (4,943,990)
------- -------
Total Stockholders' Deficiency (74,501)(107,364) (47,499)
------- -------
3,4813,298 211,570
======= =======
See notes to consolidated financial statements
- F2 -
EMPIRE GLOBAL CORP.
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
Three Months Ended March 31,
2010 2009
US$ US$
--------- -----------
Revenue - -
General and administrative expenses 20,544 56,817
Loss from continuing operations before income tax expenses (20,544) (56,817)
Income tax expenses - -
--------- -----------
Loss from continuing operations (20,544) (56,817)
Other income (expense)
Loss on sale of IMM Investments Inc. - discontinued
operations (15,738) -
Gain from forgiveness of debt 1,448 -
--------- -----------
Total other (income) expense (14,290) -
Net Loss (34,834) (56,817)
EMPIRE GLOBAL CORP.
(FORMERLY TRADESTREAM GLOBAL CORP.)
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
Three Months Ended June 30, Six months ended June 30,
2010 2009 2010 2009
US$ US$ US$ US$
--------- ----------- --------- -----------
Revenue - - - -
--------- ----------- --------- -----------
General and administrative expenses 32,863 47,458 53,407 104,275
Loss from continuing operations before income tax expenses (32,863) (47,458) (53,407) (104,275)
Income tax expenses - - - -
--------- ----------- --------- -----------
Loss from continuing operations (32,863) (47,458) (53,407) (104,275)
Other income (expense)
Loss on sale of IMM Investments Inc. - discontinued
operations - - (15,738) -
Gain from forgiveness of debt - - 1,448 -
--------- ----------- --------- -----------
Total other (income) expense - - (14,290) -
--------- ----------- --------- -----------
Net Loss (32,863) (47,458) (67,696) (104,275)
========= =========== ========= ===========
Other comprehensive income
Foreign currency translation adjustment - 14,640 - 8,478
--------- ----------- --------- -----------
Comprehensive Loss (32,863) (32,819) (67,696) (95,797)
========= =========== ========= ===========
Basic and fully diluted loss per share - continuing
operations (0.00) (0.00) (0.00) (0.00)
========= =========== ========= ===========
Basic and fully diluted loss per share - discontinued
operations (0.00) (0.00) (0.00) (0.00)
========= =========== ========= ===========
Basic and fully diluted loss per share (0.00) (0.00) (0.00) (0.01)
========= =========== ========= ===========
Basic and fully diluted weighted
average number of shares 18,675,800 18,675,800 18,675,800 18,675,800
========= =========== ========= ===========
Foreign currency translation adjustment - (6,162)
--------- -----------
Comprehensive Loss (34,834) (62,979)
========= ===========
Basic and fully diluted loss per share - continuing
operations (0.00) (0.00)
========= ===========
Basic and fully diluted loss per share - discontinued
operations (0.00) (0.00)
========= ===========
Basic and fully diluted loss per share (0.00) (0.00)
========= ===========
Basic and fully diluted weighted
average number of shares 18,675,800 18,675,800
========== ===========
See notes to consolidated financial statements
- F3 -
EMPIRE GLOBAL CORP.
Consolidated Statements of Cash Flows
(Unaudited)
ThreeSix Months Ended March 31,June 30,
2010 2009
US$ US$
------- --------
Cash Flows from Operating Activities
Net loss (34,834) (56,817)(67,696) (104,275)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 183 230366 459
Accounts payable and accrued expenses 17,861 26,58750,541 52,816
Prepaid expenses - 20,000
Changes in operating assets and liabilities
Assets of discontinued operations 207,906 -
Liabilities of discontinued operations (200,000) -
------- --------
Net cash (used in) operating activities (8,884) (10,000)(31,000)
------- --------
Cash Flows from Financing Activities
Advances from related party 1,052 10,00031,000
------- --------
Net cash provided by financing activities 1,052 10,00031,000
------- --------
Effect of foreign exchange fluctuation 7,832 -
Net (decrease) increase in cash and cash equivalents - -
Cash and cash equivalents - beginning of period - -
------- --------
Cash and cash equivalents - end of period - -
======= ========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest - -
======= ========
Income taxes - -
======= ========
See notes to consolidated financial statements
- F4 -
EMPIRE GLOBAL CORP.
Notes to Consolidated Financial Statements
(Unaudited)
1. Nature of Business and Operations
Empire Global Corp. ("Empire" or "the Company") was incorporated in the state of
Delaware on August 26, 1998 as Pender International Inc. The Company changed its
name to Vianet Technologies Group Ltd. followed by Tradestream Global Corp. and
subsequently to Empire Global Corp. The Company had an interest in Armistice
Resources Corp. and is actively seeking new business opportunities.
The Company's principal executive offices are headquartered in Canada.
2. Going Concern
These consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America with
the assumption that the Company will be able to realize its assets and discharge
its liabilities in the normal course of business.
During the quarter ended March 31,June 30, 2010, we had a loss of $34,834.$32,863. The Company
has incurred losses amounting to $4,978,824$5,011,686 since inception. Continuation as a
going concern is uncertain and dependant upon obtaining additional sources of
financing to sustain its existence and achieving future profitable operations,
the outcome of which cannot be predicted at this time. In the event the Company
cannot obtain the necessary funds, it will be unlikely that it will be able to
continue as a going concern. Management plans to mitigate its losses in future
years by significantly reducing its operating expenses and seeking out new
business opportunities. However, there is no assurance that the Company will be
able to obtain additional financing, reduce their operating expenses or be
successful in locating or acquiring a viable business.
The consolidated financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
3. Summary of Significant Accounting Policies
The Company's significant accounting policies and recent accounting
pronouncements are included in the Company's form 10-K dated and filed on
April 9, 2010 for the fiscal year ended December 31, 2009. A summary of
critical accounting policies are described below.
a) Basis of Financial Statement Presentation
The accompanying consolidated interim financial statements of the Company have
been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and the requirements
of Regulation S-X of the Securities and Exchange Commission (the "SEC"). Certain
information and disclosures normally included in financial statements prepared
in accordance with accounting principles generally accepted in the United States
of America have been condensed or omitted pursuant to the rules and regulations
of the SEC. The consolidated interim financial statements reflect all
adjustments (consisting only of normal recurring adjustments), which, in the
opinion of management, are necessary for a fair presentation of the financial
position and results of operations for the periods presented. Except for the
adoption of new accounting policies as disclosed in note 3, there have been no
significant changes in accounting policies since December 31, 2009. The results
of operations for the periods are not indicative of the results expected for the
full fiscal year or any future period. These consolidated financial statements
should be read in conjunction with the annual consolidated financial statements
and notes for the year ended December 31, 2009. The functional currency used by
the Company is the US dollar.
- F5 -
b) Principles of consolidation
These consolidated financial statements include the accounts of the Company and
its inactive wholly owned subsidiary, Montebello Developments Corp.
c) Reclassifications
Certain prior period amounts in the accompanying consolidated financial
statements have been reclassified to conform to the current period's
presentation. These reclassifications had no effect on the consolidated results
of operations or financial position for the periods presented.
d) Use of Estimates
In preparing the Company's financial statements in conformity with accounting
principles generally accepted in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosures of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of revenue and
expenses during the reporting periods. Actual results could differ from those
estimates.
Significant estimates made by management are, among others, realizability of
long-lived assets, and deferred taxes. Management reviews its estimates on a
quarterly basis and, where necessary, makes adjustments prospectively.
e) Income Taxes
Income taxes are provided in accordance with (ASC 740) Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carryforwards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
f) Equipment and Depreciation
Revenue producing real estate and equipment are stated at cost less accumulated
depreciation. Depreciation, based on the estimated useful lives of the assets,
is provided as follows:
Equipment 20% Declining Balance
g) Organization Costs
Organization costs are recorded at cost and is not amortized as its life is
deemed to be indefinite. The cost is tested annually for impairment in
accordance with (ASC 350) SFAS No. 142, "Goodwill and Other Intangible Assets".
The impairment test consists of comparing the fair value of the incorporation
cost with its carrying amount. If the carrying amount exceeds the fair value, an
impairment loss is recognized in an amount equal to the excess. As of December
31, 2009 and March 31,June 30, 2010, no impairment losses have been identified.
- F6 -
h) Impairment of Long Lived Assets
In accordance with (ASC 360) SFAS No. 144, "Accounting for the Impairment or
Disposal of Long Lived Assets", long lived assets to be held and used are
analyzed for impairment whenever events or changes in circumstances indicate
that the related carrying amounts may not be recoverable but at least annually.
The Company evaluates at each balance sheet date whether events and
circumstances have occurred that indicate possible impairment. If there are
indications of impairment, the Company uses future undiscounted cash flows of
the related asset or asset grouping over the remaining life in measuring whether
the assets are recoverable. In the event such cash flows are not expected to be
sufficient to recover the recorded asset values, the assets are written down to
their estimated fair value. Long lived assets to be disposed of are reported at
the lower of carrying amount or fair value of asset less cost to sell.
i) Fair Value of Financial Instruments
The carrying value of the Company's short term investments, prepaid and sundry
assets, accounts payable and accrued charges, and advances from shareholder
approximate fair value because of the short term maturity of these financial
instruments.
j) Foreign Currency Translation
The Company accounts for foreign currency translation pursuant to (ASC 830)
SFAS No. 52, "Foreign Currency Translation". The Company's functional currency
was the Canadian dollar. Assets and liabilities are translated into United
States dollars using the current exchange rate, while revenues and expenses are
translated using the average exchange rates prevailing throughout the year.
Translation adjustments are included in other comprehensive income for the
period. The items which are subject to translation adjustments were the
investment in Armistice Resources Corp. and organization cost.
On January 4, 2010 we disposed of our wholly owned subsidiary IMM Investments
Inc. (IMM) (an Ontario corporation), therefore our operational currency is in US
Dollars. The operational currency of IMM was the Canadian Dollar. Although IMM
had no operations, it owned shares of Armistice Resources Corp. a Canadian
mining company. The purchase price and shares of Armistice are valued in
Canadian dollars.
All remaining expenses where incurred in US Dollars.
k) Comprehensive Income
The Company adopted (ASC 220) SFAS No. 130, "Reporting Comprehensive Income.",
SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income and its components in a full set of financial statements.
Comprehensive income is presented in the statements of operations, and consists
of net income and unrealized gains (losses) on available for sale marketable
securities; foreign currency translation adjustments and changes in market value
of future contracts that qualify as a hedge; and negative equity adjustments
recognized in accordance with (ASC 220) SFAS 87. SFAS No. 130 requires only
additional disclosures in the financial statements and does not affect the
Company's financial position or results of operations.
l) Concentration of Credit Risk
(ASC 715) SFAS No. 105, "Disclosure of Information About Financial Instruments
with Off Balance Sheet Risk and Financial Instruments with Concentration of
Credit Risk", requires disclosure of any significant off balance sheet risk and
credit risk concentration. The Company does not have significant off balance
sheet risk or credit concentration.
- F7 -
m) Recent Accounting Pronouncements
In March 2010, the FASB issued Accounting Standards Update ("ASU") No. 2010-11,
which is included in the Codification under ASC 815. This update clarifies the
type of embedded credit derivative that is exempt from embedded derivative
bifurcation requirements. Only an embedded credit derivative that is related to
the subordination of one financial instrument to another qualifies for the
exemption. This guidance became effective for the Company's interim and annual
reporting periods beginning January 1, 2010. The adoption of this guidance did
not have a material impact on the Company's consolidated financial statements.
In February 2010, the FASB issued ASU No. 2010-09, which is included in the
Codification under ASC 855, Subsequent Events ("ASC 855"). This update removes
the requirement for an SEC filer to disclose the date through which subsequent
events have been evaluated and became effective for interim and annual reporting
periods beginning January 1, 2010. The adoption of this guidance did not have a
material impact on the Company's consolidated financial statements.
In January 2010, the FASB issued ASU No. 2010-06, which is included in the
Codification under ASC 820, Fair Value Measurements and Disclosures ("ASC 820").
This update requires the disclosure of transfers between the observable input
categories and activity in the unobservable input category for fair value
measurements. The guidance also requires disclosures about the inputs and
valuation techniques used to measure fair value and became effective for interim
and annual reporting periods beginning January 1, 2010. The adoption of this
guidance did not have a material impact on the Company's consolidated financial
statements.
In April 2010, the FASB issued ASU 2010-13, Compensation-Stock Compensation
(Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment
Award in the Currency of the Market in Which the Underlying Equity Security
Trades - a consensus of the FASB Emerging Issues Task Force. The amendments in
this Update are effective for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2010. Earlier application is
permitted. The Company does not expect the provisions of ASU 2010-13 to have a
material effect on the financial position, results of operations or cash flows
of the Company.
The FASB issued ASU 2010-17, Revenue Recognition - Milestone Method
(Topic 605): Milestone Method of Revenue Recognition. This ASU codifies the
consensus reached in EITF Issue No. 08-9, "Milestone Method of Revenue
Recognition." The amendments to the Codification provide guidance on defining a
milestone and determining when it may be appropriate to apply the milestone
method of revenue recognition for research or development transactions.
Consideration that is contingent on achievement of a milestone in its entirety
may be recognized as revenue in the period in which the milestone is achieved
only if the milestone is judged to meet certain criteria to be considered
substantive. Milestones should be considered substantive in their entirety and
may not be bifurcated. An arrangement may contain both substantive and
nonsubstantive milestones, and each milestone should be evaluated individually
to determine if it is substantive.
- F8 -
ASU 2010-17 is effective on a prospective basis for milestones achieved in
fiscal years, and interim periods within those years, beginning on or after
June 15, 2010. Early adoption is permitted. If a vendor elects early adoption
and the period of adoption is not the beginning of the entity's fiscal year, the
entity should apply 2010-17 retrospectively from the beginning of the year of
adoption. Vendors may also elect to adopt the amendments in this ASU
retrospectively for all prior periods. The Company does not expect the
provisions of ASU 2010-17 to have a material effect on the financial position,
results of operations or cash flows of the Company.
ASU 2010-18, Receivables (Topic 310): Effect of a Loan Modification When the
Loan Is Part of a Pool That Is Accounted for as a Single Asset, codifies the
consensus reached in EITF Issue No. 09-I, "Effect of a Loan Modification When
the Loan Is Part of a Pool That Is Accounted for as a Single Asset." The
amendments to the Codification provide that modifications of loans that are
accounted for within a pool under Subtopic 310-30 do not result in the removal
of those loans from the pool even if the modification of those loans would
otherwise be considered a troubled debt restructuring. An entity will continue
to be required to consider whether the pool of assets in which the loan is
included is impaired if expected cash flows for the pool change. ASU 2010-18
does not affect the accounting for loans under the scope of Subtopic 310-30 that
are not accounted for within pools. Loans accounted for individually under
Subtopic 310-30 continue to be subject to the troubled debt restructuring
accounting provisions within Subtopic 310-40.
ASU 2010-18 is effective prospectively for modifications of loans accounted for
within pools under Subtopic 310-30 occurring in the first interim or annual
period ending on or after July 15, 2010. Early application is permitted. Upon
initial adoption of ASU 2010-18, an entity may make a one-time election to
terminate accounting for loans as a pool under Subtopic 310-30. This election
may be applied on a pool-by-pool basis and does not preclude an entity from
applying pool accounting to subsequent acquisitions of loans with credit
deterioration. The Company does not expect the provisions of ASU 2010-18 to
have a material effect on the financial position, results of operations or cash
flows of the Company.
In May 2010, the FASB issued ASU 2010-19, Foreign Currency (Topic 830): Foreign
Currency Issues: Multiple Foreign Currency Exchange Rates. The amendments in
this Update are effective as of the announcement date of March 18, 2010. The
Company does not expect the provisions of ASU 2010-19 to have a material effect
on the financial position, results of operations or cash flows of the Company.
Other accounting standards that have been issued or proposed by FASB that do
not require adoption until a future date are not expected to have a material
impact on the consolidated financial statements upon adoption.
- F9 -
n) Discontinued Operations - Investment in Armistice Resources Corp.
On January 4, 2010 we disposed of our wholly owned subsidiary IMM Investments
Inc. (IMM) which owned 5,000,000 shares of Armistice Resources Corp.
(Armistice).
The investment in Armistice consisted of 5,000,000 shares of that company that
were held in escrow. The terms of escrow contained an undertaking with respect
to respondents named in allegations of the Ontario Securities Commission
(Commission) action described in Note 117 (2) found elsewhere in this report as
follows: that (a) none of the respondents will be appointed an officer or
director of Armistice (Corporation); (b) until the Commission's investigations
relating to the allegations against the Respondents is complete IMM will not
nominate any individual to the board of directors without the consent of the
TSX; (c) IMM will execute an amendment to an escrow agreement providing that its
securities being held in escrow cannot be voted without the consent of the TSX
(which amendment was executed by IMM on June 5, 2006); (d) none of the
respondents will participate in future financings of the Corporation until the
Commission has completed its investigation; and (e) until the Commission's
investigation is complete, if any derogatory information is found on any officer
or director of the Corporation, the TSX may requirehave required the resignation of any
of these individuals if deemed unacceptable to the TSX.
OurThrough June 30, 2009, our investment in Armistice was considered neither
trading nor available for sale and was recorded at cost and included in long
term assets, with unrealized gains and losses recognized as accumulated other
comprehensive income (loss). The effect of fluctuation in the value of the
Canadian dollar versus the United States dollar was a decreaseresulted in an increase of
$6,162$8,478 for the threesix month period ended March 31,June 30, 2009 and iswas reflected in the
cost value of our investment in Armistice on March 31,June 30, 2009. On March 31,June 30, 2009
shares in Armisticethat Company had a quoted market value of $0.20$0.15 Canadian per share.
As explained in Note 4 below due to risks inherent with the terms of the
aforementioned escrow the company believes that our ability to realize these
assets was impaired.
- F8F10 -
4. Discontinued Operations - Impairment of Investment in Armistice Resources
Corp.
During the fourth quarter of 2008, we determined that due to the terms of escrow
agreement described in 3(n), the estimated legal costs to recover the shares of
Armistice as well as selling costs, it was more likely than not that the assets
of IMM would be disposed of significantly before our previously estimates of its
useful life. Therefore, at December 31, 2008 the Company performed an impairment
test resulting in an impairment of $624,939 in the value of our investment in
Armistice. As a result, our investment in Armistice as of December 31, 2008 was
$177,985.
Our assets held for sale of $207,905 on December 31, 2009 included our
investment in Armistice as well as foreign currency translation of $28,291 and
organizational costs of IMM of $1,629. On January 4, 2010 we disposed of our
wholly owned subsidiary IMM Investments Inc. (IMM) which owned 5,000,000 shares
of Armistice in exchange for the elimination of $200,000 of debt. The loss on
the sale of IMM during the three months ended is as follows:
Investment in Armistice net of impairment $ 206,277
Organizational cost 1,629
----------
207,906
----------
Liabilities $ 200,000
----------
Loss on sale of IMM, excluding foreign currency translation loss $ 7,906
Foreign currency translation $ 7,832
----------
Net loss on sale $ 15,738
==========
5. Property and Equipment
Equipment consists of the following:
March 31,June 30, 2010 December 31, 2009
-------- -----------
Telephone system $ 11,191 $ 11,191
Less accumulated depreciation 7,7117,893 7,527
--------- ---------
$ 3,4813,298 $ 3,664
========= =========
6. Advances from Related Party
Advances due from a related party for operations are non-interest bearing and
are due on demand. Advances from related parties as of March 31,June 30, 2010 are as
follows:
March 31,June 30, 2010 December 31, 2009
-------- -----------
Braydon Capital Corp. 2,500 1,448
-------- ---------
Total advances from related parties: $ 2,500 $ 1,448
======== =========
- F9F11 -
7. Commitments and Contingencies
The Company is subject to claims arising in the ordinary course of business. The
Company and Management believe that, after consultation with counsel, the
allegations against the Company included in the claims described below are
subject to substantial legal defences, and the Company is vigorously defending
each of the allegations. At this time, it is not possible to estimate the
ultimate loss or gain, if any, related to these claims, nor if any such loss
will have a material adverse effect on the Company's results of operations or
financial position.
1 On November 1, 2005, the Company was served with a Statement of Claim filed
in the Ontario Superior Court of Justice by Advanced Refractive Technologies
Inc. ("Advanced") claiming $6,000,000 in aggregate damages plus unspecified
amounts against 16 co-respondents including the Company for unknown loses
claimed by Advanced in its dealings with an unknown and unrelated entity or
person (the "unrelated entity"). Advanced alleges that this unrelated entity,
in a private transaction with Advanced, may have promised to exchange shares
of the Company that the unrelated entity had claimed to have owned. The
Company has never been a party to any dealings with Advanced and prior to
receiving notice from Advanced had never heard of Advanced. The Company
denies any wrongdoing and is vigorously defending this claim.
on May 3, 2010 our board members authorized retaining Mr. David Pomer, LLB
to represent the Company. A court date has been set down on June 24, 2010 to
argue a motion to dismiss the matter for delay. Because of the uncertainties
inherent in litigation, the company cannot predict whether the outcome, which
remains unresolved, will have a material adverse affect.
2.
On December 10, 2004, the Ontario Securities Commission ("OSC") served upon the
former President and C.E.O. of the Company (the "former executive"), and
companies controlled by the former executive, as well as a shareholder of the
Company related to the father of our former Chairman Kalson Jang and an
unrelated party collectively the "respondents" an order to cease trading in
shares of the Company formerly known as Pender International, Inc. ("Pender").
The allegations stated among other things that Armistice was a worthless,
flooded mine and that there was no basis for the increase in the share price of
the Company. On September 26, 2006 the Royal Canadian Mounted Police ("RCMP")
charged our former executive. Our former executive has denied the allegations
and has consented to a committal to trial as described in Legal Matters found
elsewhere in this report. Our former executive and the Company have been
complying with orders imposed by the OSC and cooperating with informal inquiries
made by the United States Securities and Exchange Commission ("SEC").
The date for trial had been set down to begin on September 8, 2009, however was
adjourned until October 2010. Pre-trial motions proceeded in the Ontario
Superior Court of Justice in Toronto during the month of November, 2009 and were
continued in January, 2010.
8. Subsequent Events
The Company has evaluated subsequent events through the filing date of this
quarterly report on form 10-Q for the period ended March 31,June 30, and there have been
no subsequent events that warrant disclosure by the company.
- F10F12 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain information included in this form 10-Q and other materials filed or to
be filed by us with the Securities and Exchange Commission (as well as
information included in oral or written statements made by us or on our behalf),
may contain forward-looking statements about our current and expected
performance trends, growth plans, business goals and other matters. These
statements may be contained in our filings with the Securities and Exchange
Commission, in our press releases, in other written communications, and in oral
statements made by or with the approval of one of our authorized officers. Words
or phrases such as "believe," "plan," "will likely result," "expect," "intend,"
"will continue," "is anticipated," "estimate," "project," "may," "could,"
"would," "should," and similar expressions are intended to identify
forward-looking statements. These statements, and any other statements that are
not historical facts, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, as codified in Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, as amended from time to time (the "Act").
In connection with the "safe harbor" provisions of the Act, we have identified
and filed important factors, risks and uncertainties that could cause our actual
results to differ materially from those projected in forward-looking statements
made by us, or on our behalf (see Part I, Item 1, "Risk Factors" included in our
form 10-K for the fiscal year ended December 31, 2009). These cautionary
statements are to be used as a reference in connection with any forward-looking
statements. The factors, risks and uncertainties identified in these cautionary
statements are in addition to those contained in any other cautionary
statements, written or oral, which may be made or otherwise addressed in
connection with a forward-looking statement or contained in any of our
subsequent filings with the Securities and Exchange Commission. Because of these
factors, risks and uncertainties, we caution against placing undue reliance on
forward-looking statements. Although we believe that the assumptions underlying
forward-looking statements are reasonable, any of the assumptions could be
incorrect, and there can be no assurance that forward-looking statements will
prove to be accurate. Forward-looking statements speak only as of the date on
which they are made. We do not undertake any obligation to modify or revise any
forward-looking statement to take into account or otherwise reflect subsequent
events or circumstances arising after the date that the forward-looking
statement was made.
General
This discussion and analysis should be read in conjunction with our interim
unaudited consolidated financial statements and related notes on this form 10-Q
and the audited consolidated financial statements and related notes thereto
included in our Annual Report on form 10-K for the fiscal year ended December
31, 2009. The inclusion of supplementary analytical and related information
herein may require us to make appropriate estimates and assumptions to enable us
to fairly present, in all material respects, our analysis of trends and
expectations with respect to our results of operations and financial position
taken as a whole.
Empire Global Corp. (Empire) and its subsidiaries Montebello Development Corp.
mean "we", "us" or "our" and will be referred to as such throughout the balance
of this document.
- 1315 -
Our Objectives and Areas of Focus
Empire was organized under the laws of the State of Delaware on August 26, 1998.
The Company went through various name changes prior to September 2005 when the
name was changed to Empire Global Corp. We currently intend to purchase, merge
with or acquire any business or assets which management believes has potential
for being profitable.
During the threesix months ended March 31,June 30, 2010, we had no income.
Due to limited operations, we are presently seeking new business opportunities.
Challenges and Risks
We have accumulated a deficit of approximately $4,978,824$5,011,686 to March 31,June 30, 2010 and
will require additional debt or equity financing to continue operations and to
seek out new business opportunities. We plan to mitigate our losses in future
years through maintaining minimal operational costs and locating a viable
business.
There is no assurance that we will be able to obtain additional financing, be
successful in seeking new business opportunities, or that we will be able to
reduce operating expenses. Our consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
Critical Accounting Policies
Our significant accounting policies and recent accounting pronouncements
described in Note 3 to our consolidated financial statements are included in the
annual report for the year ended December 31, 2009 and a summary of critical
accounting policies and recent accounting pronouncements is included in Note 1
of this form 10-Q.
We prepare our financial statements in conformity with U.S. GAAP, which requires
our management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities on the date of the financial statements and the reported amounts of
revenues and expenses during the financial reporting period. Since the use of
estimates is an integral component of the financial reporting process, actual
results could differ from those estimates. Some of our accounting policies
require higher degrees of judgment than others in their application and as a
result, such estimates may significantly impact our consolidated financial
results. The precision of these estimates and the likelihood of future changes
depend on a number of underlying variables and a range of possible outcomes. We
have applied our critical accounting policies and estimation methods
consistently. A comprehension of our critical accounting policies is necessary
to understand our financial results as their application places the most
significant demands on our management's judgment.
- 1416 -
Overall Results of Operations
As a result of our limited business operations, we had minimal changes in our
overall results.
We have no cash as of the date of this filing and therefore are not able to
satisfy our working capital needs for the next year. We anticipate funding our
working capital needs for the next twelve months through private advances and
loans from our management and key shareholders, or if available, equity capital
markets. Although the foregoing actions are expected to cover our anticipated
cash needs for working capital and capital expenditures for at least the next
twelve months, no assurance can be given that we will be able obtain financing
or raise sufficient cash to meet our cash requirements.
Over the next twelve months we plan to seek out a viable new business
opportunity. If we enter into a new business opportunity, will need to raise
additional working capital and we may be required to hire additional employees,
independent contractors as well as purchase or lease additional equipment. We
plan to raise this additional working capital through the private placement of
shares, private advances and loans.
We anticipate continuing to rely on equity sales of common stock to fund our
operations and to seek out or enter into new business opportunities. The
issuance of any additional shares will result in dilution to our existing
shareholders.
Related-Party Transactions
Included in the $77,982$110,662 of current liabilities at March 31,June 30, 2010 is $2,500 in
advances from related parties to pay for auditing fees. None of the amounts due
to related parties bear interest, have any fixed terms of repayment or are
secured.
COMPARISON OF THE THREE AND SIX MONTHS ENDED MARCH 31,JUNE 30, 2010 AND 2009
Revenues
We had no revenue from operations during the three and six months ended
March 31,June 30, 2010.
Operating Expenses
Our operating expenses decreased by $36,273 or 63.8%, from $56,817to $53,407 for threesix months ended March 31, 2009June 30, 2010
compared to $20,544$104,275 over the same period in the previous year and to $32,863
for the three months ended March 31,
2010.June 30, 2009 compared to $47,458 over the same
period in 2009. This decrease was largely a result of the costs associated with
preparation of our financial reports and auditing fees.limited operations.
We expect our operating costs to be approximately $311,121 over the next year,
unless we locate a new viable business.
- 1517 -
Liquidity and Capital Resources
The Company had no cash balance at March 31,June 30, 2010 or on December 31, 2009. The
notes to our unaudited consolidated financial statements as of March 31,June 30, 2010,
contain a disclosure regarding our uncertain ability to continue as a going
concern. We have not generated revenues to cover our expenses, and we have
accumulated a deficit of $4,978,824.$5,011,686. As of March 31,June 30, 2010, we had $77,982$110,662 in
current liabilities and no current assets, as such we are left with a working
capital deficit of $77,982$110,662 and cannot assure that we will succeed in locating a
viable business opportunity or that we will be able to achieve a profitable
level of operations sufficient to meet our ongoing cash needs.
Below is a discussion of our sources and uses of funds for the three and six
months ended March 31,June 30, 2010.
Net Cash Used In Operating Activities
Net cash used in operating activities during the three months ended March 31,June 30,
2010 was $8,884 compared to $10,000$31,000 used for the period ended March 31,June 30, 2009.
The difference arrises asis a result of reduced administrative costs.
Net Cash Provided By Financing Activities
Net cash provided by financing activities during the three and six months ended
June 30, 2010 was $1,052 compared to $31,000 from an advance from a related
party provided for the period ended June 30, 2009. The change is a result of the
disposal of our wholly owned subsidiary IMM Investments Inc. on January 4, 2010.
Net Cash Provided By Financing Activities
Net cash provided by financing activities during the three months ended
March 31, 2010 was $1,052 compared to $10,000 from an advance from a related
party provided for the period ended March 31, 2009. The difference is a result
of reduced administrative costs.
Net Cash Used In Investing Activities
We did not have any investing activities during the three and six months ended
March 31,June 30, 2010 or March 31,June 30, 2009.
Contingencies and Commitments
We had no contingencies or long-term commitments at March 31,June 30, 2010.
Contractual Obligations
None.
Inflation
We do not believe that inflation will have a material impact on our future
operations.
- 1618 -
Off-Balance-Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenue or expenses, results of operations, liquidity, capital
expenditures or capital resources that we expect to be material to investors. We
do not have any non-consolidated, special-purpose entities.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Empire is a smaller reporting company as defined by Rule 12b-2 of the Exchange
Act and is not required to provide the information required under this item.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Pursuant to Rule 13a-15(e) under the Securities Exchange Act of 1934 ("Exchange
Act"), the Company carried out an evaluation, with the participation of the
Company's management, Director of Operations including the Company's Chief
Executive Officer ("CEO") and Chief Financial Officer (the Company's principal
financial officer), of the effectiveness of the Company's disclosure controls
and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of
the end of the period covered by this report. Based upon that evaluation and the
identification of material weaknesses in our internal control over financial
reporting, the Company's CEO and CFO concluded that the Company's disclosure
controls and procedures are not effective to ensure that information required to
be disclosed by the Company in the reports that the Company files or submits
under the Exchange Act, is recorded, processed, summarized and reported, within
the time periods specified in the SEC's rules and forms.
Changes in Internal Controls
During the quarter of the fiscal year covered by this report, there were no
changes in Empire's internal controls or, to Empire's knowledge, in other
factors that have materially affected, or are reasonably likely to materially
affect, these controls and procedures subsequent to the Evaluation Date.
Management's Report on Internal Controls over Financial Reporting
Empire is a smaller reporting company as defined by Rule 12b-2 of the Exchange
Act and is not required to provide the information required under this item.
- 1719 -
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is subject to claims arising in the ordinary course of business. The
Company and Management believe that, after consultation with counsel, the
allegations against the Company included in the claims described below may be
subject to substantial legal defences, and the Company is vigorously defending
each of the allegations. At this time, it is not possible to estimate the
ultimate loss or gain, if any, related to these claims, nor if any such loss
will have a material adverse effect on the Company's results of operations or
financial position.
Pending Legal Matters
Directly affecting the Company
The Company is currently not directly involved in any legal proceedings and is
not aware of any pending or potential legal actions.
On November 1, 2005,June 22, 2010, a notice of discontinuance without costs on consent of the
Companyparties was served with a Statement of Claim filedentered in the Ontario Superior Court of Justice byin the matter
between Advanced Refractive Technologies Inc.
("Advanced") claiming $6,000,000 in aggregate damages plus unspecified amounts
against 16 co-respondents includingand Empire Global Corp. as well as our
director of operations, Mr. Michael Ciavarella.
The matter, first reported on our annual report on form 10-KSB for the Companyyear
ended December 31, 2005, and recently updated on our interim quarterly report
for unknown loses claimed by
Advanced in its dealings with an unknown and unrelated entity or person (the
"unrelated entity"). Advanced alleges that this unrelated entity, in a private
transaction with Advanced, may have promised to exchange sharesthe period ended March 31, 2010 was mutually settled out of the Company
that the unrelated entity had claimed to have owned. The Company has never been
a party to any dealings with Advanced or the unrelated party and prior to
receiving notice from Advanced had never heard of Advanced. The Company denies
any wrongdoing and is vigorously defending this claim. Although the claim
remains a live issue, Advanced has made no attempt to further its claim.
on May 3, 2010 our board members authorized retaining Mr. David Pomer, LLB
to represent the Company. A court date has been set down on June 24, 2010 to
argue a motion to dismiss the matter for delay. Because of the uncertainties
inherent in litigation, the company cannot predict whether the outcome, which
remains unresolved, will have a material adverse affect.without
costs.
Pending Legal Matters Indirectly affecting the Company
On December 10, 2004, the Ontario Securities Commission ("OSC") served upon the
former President and C.E.O. of the Company (the "former executive"), and
companies controlled by the former executive, as well as a shareholder of the
Company related to the father of our former Chairman Kalson Jang and an
unrelated party collectively the "respondents" an order to cease trading in
shares of the Company formerly known as Pender International, Inc. ("Pender")
and subsequently issued a Statement of Allegations against the respondents on
December 21, 2004. The Company is aware of the proceedings; however, is not a
respondent to these proceedings. The order was purportedly issued to allow the
OSC an opportunity to investigate trading in shares of Pender over the period
between October 27, 2004 and November 19, 2004. The allegations stated among
other things that Armistice was a worthless, flooded mine and that there was no
basis for the increase in the share price of the Company.
The Royal Canadian Mounted Police, and the Ontario Securities Commission
(jointly IMET "Integrated Market Enforcement Team") conducted an investigation
into the allegations and on September 26, 2006 the Royal Canadian Mounted Police
("RCMP") charged our former executive.
Our former executive is vigorously denying the allegations and challenging the
charges and consequently has consented to a committal to trial. Between February
and March 2008 a preliminary inquiry was held in the Ontario Court of Justice in
respect of this matter.
On June 25, 2008 the Securities and Exchange Commission ("SEC") issued a notice
to Michael Ciavarella, our former officer and director. The notice advised that
the (SEC) investigation has been completed as to Mr. Ciavarella, against whom
they do not intend to recommend enforcement by the commission.
The date for trial had been set down to begin on September 8, 2009, however was
adjourned until October 2010. Pre-trial motions proceeded in the Ontario
Superior Court of Justice in Toronto during the month of November, 2009 and
continued in January, 2010.
Our former executive and the Company have been complying with orders imposed by
the OSC and cooperating with informal inquiries made by the United States
Securities and Exchange Commission ("SEC").
- 1820 -
Item 1A. Risk Factors.
Empire is a smaller reporting company as defined by Rule 12b-2 of the Exchange
Act and is not required to provide the information required under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders through the solicitation
of proxies or otherwise, during the quarter of the fiscal year covered by this
report.
Item 5. Other Information.
During the quarter of the fiscal year covered by this report, Empire reported
all information that was required to be disclosed in a report on form 8-K.
Item 6. Exhibits
(a) Index to and Description of Exhibits
All Exhibits required to be filed with the form 10-Q are included in this
quarterly filing or incorporated by reference to Empire's previous filings with
the SEC, which can be found in their entirety at the SEC website at www.sec.gov
under SEC File Number 000-50045.
31 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
- 1921 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EMPIRE GLOBAL CORP.
By: /s/ Vic Dominelli Date: May 21,August 12, 2010.
- -------------------------
Vic Dominelli
Chairman of the Board,
Interim Chief Executive Officer and
Principal Financial Officer