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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
| (Mark One) [X ] | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended __March 31, 2006_ |
| [ ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from _________________ to _________________ |
| |
Commission file number ___0-30118____ |
EMPYREAN HOLDINGS INC.
(exact name of small business issuer as specified in its charter)
___NEVADA_____________________________________
(State or other jurisdiction of incorporation or organization) | _88-0413417________________
(IRS Employer Identification No.) |
11200 Westheimer Rd., Suite 900
Houston, TX 77042
(address of principal executive offices)
Issuers telephone number: (713) 243 8731
(Registrant's telephone number, including area code)
EMPYREAN COMMUNICATIONS, INC.
10700 Richmond Avenue, Suite 100,
Houston, TX 77042
(Former name, former address and former fiscal year, if changed since last report)
Check whether the issuer
- filed all documents and reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 12months(or for such shorter period that the registrant was required to file such reports)and
- has been subject to such filing requirements for the past 90 days (X) Yes ( ) No
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes _____ No X__
As of March 31, 2006, there were 381,744,939* shares of common stock issued and outstanding
Note: * Does not include 1,150,000 shares "on hold" and awaiting return from third party
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
Following are the unaudited financial statements for the period ended March 31, 2006.
EMPYREAN HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
As of March 31, 2006 and December 31, 2005
See accompanying summary of accounting policies
and notes to financial statements.
EMPYREAN HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF INCOME & EXPENSES
(Unaudited)
Three Months Ended March 31, 2006 and 2005, and the
Period from December 30, 2004 (Inception) through March 31, 2006
See accompanying summary of accounting policies
and notes to financial statements.
EMPYREAN HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31, 2006 and 2005, and the
Period from December 30, 2004 (Inception) through March 31, 2006
See accompanying summary of accounting policies
and notes to financial statements.
EMPYREAN HOLDINGS, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Empyrean Holdings, Inc. (formerly Tradewinds International Corp.) (hereinafter collectively referred to as the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the Company's audited 2005 year end financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period have been reflected herein. The results of operations for interim periods are, however, not necessarily indicative of the results to be expected for the full year.
Use of Estimates. In preparing financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenue and expenses in the statements of income and expenses. Actual results could differ from those estimates.
NOTE 2 - SHARE-BASED COMPENSATION
On January 1, 2006, the Company adopted SFAS No. 123(R), "Share-Based Payment" ("SFAS 123(R)"). SFAS 123(R) replaced SFAS No. 123 and supersedes APB Opinion No. 25. SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS 123 are no longer an alternative to financial statement recognition. The Company adopted SFAS 123(R) using the modified prospective method which requires the application of the accounting standard as of January 1, 2006. The consolidated financial statements as of and for the quarter ended March 31, 2006 reflect the impact of adopting SFAS 123(R). In accordance with the modified prospective method, the consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123(R). Since the Company has not granted options during the quarter ended March 31, 2006 or during any period prior to January 1, 2006, the adoption of SFAS 123(R) had no impact.
NOTE 3 - NOTES PAYABLE - RELATED PARTY
Current | |
Note Payable - Independent Management Resources, LLC; advances made from time to time on an as needed basis, due on demand; interest accrues at a rate of 8%; includes accrued interest through March 31, 2006. | $ 126,916 |
| |
Note Payable - Thomas Bojadzijev; advances made from time to time on an as needed basis, due on demand; accrues interest at a rate of 8%; includes accrued interest through March 31, 2006. | 15,504 |
Current notes payable - related party | $ 142,420 |
| | |
Non-Current | |
Note Payable - Hesperia; dated March 7, 2005; balloon payment (including principal and accrued interest) due March 6, 2008; interest accrues at a rate of 6.5%; includes accrued interest through March 31, 2006. | $ 222,725 |
NOTE 4 ' EQUITY
On July 20, 2005, the Company's Board of Directors declared a 25% stock split, payable in the form of a 25% stock dividend to shareholders of record as of August 30, 2005. All share and per share information has been retroactively restated in the consolidated financial statements to reflect the stock split.
On February 4, 2006, 500,000 restricted shares were issued to Falcon Consulting Group, Inc. as a retainer for providing consulting services. This transaction resulted in a charge to share-based compensation of $5,000.
On February 21, 2006, 7,500,000 restricted shares were issued to an officer of the Company as consideration for debt of $72,759 that was due to him from the Company.
Item 2. Management's Plan of Operation.
The company's principal activities are presently limited to organizational matters, revising its business plan, prospect development, and acquisition of interests. As the company has no record of revenue-producing operations, there is no operating history upon which to base any assumption that the company will be able to achieve its business plans.
Discussions with Hesperia Advisors Limited on arriving at a fair solution to make up for the loss of the Key West condominium in December last year continues but so far no firm agreement has been reached. Management intends to pursue this matter as a matter of priority and remain confident that an equitable conclusion in line with the Stock purchase agreement of April 8, 2005 will be obtained in the near future.
The plans in place to raise working capital to participate as a minority partner in real estate development projects are in the process of finalization. These projects are currently being undertaken by Empyrean's affiliate United Construction Group (UCG), an established national real estate development and construction company. Several projects in WI and CA are being considered, but the Company's efforts to raise up to $15 million in working capital will be given priority. This is being arranged by the company's financial consultants, Falcon Financial Consulting (www.falcon.com) of San Diego, CA.
The company's wholly owned subsidiary, Empyrean Properties, Inc, remains dormant but consideration is being given to utilizing it for the development projects to be undertaken with UCG.
The company is presently working on diversifying into the financial services business. The acquisition of viable businesses in other sectors should suitable ventures be identified is also an option being considered. In brief, the long term master plan is to grow Empyrean into a diversified holding company that will enhance shareholder value greatly.
Liquidity
During the next 12 months, the company will need significant working capital to fund its current plans to participate in real estate development projects with UCG and to make other acquisitions as and when suitable opportunities arise.
As a close working relationship has been established with the company's financial consultants, Falcon Financial Consulting, financing procedures are expected to be move more rapidly from now on.
Item 3. Controls and Procedures
As of March 31, 2006, the Company carried out an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined by Rule 13a-14(c) under the Securities Exchange Act of 1934) under the supervision and with the participation of the Company's chief executive officer and chief financial officer. Based on and as of the date of such evaluation, the aforementioned officers have concluded that the Company's disclosure controls and procedures were effective.
The Company also maintains a system of internal accounting controls that is designed to provide assurance that assets are safeguarded and that transactions are executed in accordance with management's authorization and properly recorded. This system is continually reviewed and is augmented by written policies and procedures, the careful selection and training of qualified personnel and an internal audit program to monitor its effectiveness. During the three-month period ended March 31, 2006, there were no significant changes to this system of internal controls or in other factors that could significantly affect those controls.
PART II -- OTHER INFORMATION
Item 5. Other Information - None.
Item 6. Exhibits and Reports on Form 8-K.
Exhibit No. Document Location
3(i) Articles of Incorporation Previously Filed
3(ii) Bylaws Previously filed
31 Certification Included
32 Certification Included
_____________________________________________________________________________________________
Reports on Form 8-K.
No filing of any Form 8-K report was done during the first quarter.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EMPYREAN HOLDINGS, INC.
/s/ Robert L. Lee____________________ May 15, 2006
Robert L. Lee, President and Director Date
