American Asset Development (EPYH) Inactive
Filed: 11 May 07, 12:00am
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, 2007_ | |
| [ ] | 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_____________________________________ | _88-0413417________________ |
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)
(Former name, former address and former fiscal year, if changed since last report)
Check whether the issuer
(1) 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
(2) 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, 2007, there were 9,858,066* shares of common stock issued and outstanding
Note: * Includes 22,501 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, 2007.
EMPYREAN HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
As of March 31, 2007 and December 31, 2006
(Unaudited)
See accompanying summary of accounting policies
and notes to financial statements.
EMPYREAN HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF INCOME & EXPENSES
Three Months Ended March 31, 2007 and 2006 and the
Period from December 30, 2004 (Inception) through March 31, 2007
(Unaudited)
Three Months Ended March 31, | Inception Through March 31, | ||||
2007 | 2006 | 2007 | |||
| INCOME | |||||
| Rental income | $ - |
| $ 6,714 | $ 6,714 | |
Total income | - | 6,714 | 6,714 | ||
| EXPENSES | |||||
| General & administrative | 20,494 | 15,814 | 547,945 | ||
| Depreciation expense | - | - | 21,232 | ||
| Interest expense | 261 | 7,372 | 78,687 | ||
| Cost of recapitalization | - | - | 115,479 | ||
| Loss on sale of property | - | - | 43,975 | ||
| Interest income | (1,973) | - | (1,973) | ||
| Write down of property to fair value | - | - | 11,500 | ||
| Loss on abandonment of investment property | - |
| - | 154,354 | |
Total expenses | 18,782 | 23,186 | 971,199 | ||
Net loss | $ (18,782) | $ (16,472) |
| $ (964,485) | |
| Basic and diluted net loss per | |||||
| common share | $ (0.00) |
| $ (0.00) | ||
| Weighted average common shares outstanding | 9,858,066 | 7,474,899 | |||
See accompanying summary of accounting policies
and notes to financial statements.
EMPYREAN HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2007 and 2006 and the
Period from December 30, 2004 (Inception) through March 31, 2007
(Unaudited)
Three Months Ended March 31, | Inception Through March 31, | ||||
2007 | 2006 | 2007 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||
| Net loss | $ (18,782) | $ (16,472) | $ (964,485) | ||
| Adjustments to reconcile net loss to | |||||
cash used in operating activities: | |||||
Stock issued for services | - | 5,000 | 243,000 | ||
Stock based compensation | - | - | 120,000 | ||
Cost of recapitalization | - | - | 115,479 | ||
Loss on sale of property | - | - | 43,977 | ||
Write down of property to fair value | - | - | 11,500 | ||
Loss on abandoned investment property | - | - | 154,354 | ||
Depreciation | - | - | 21,232 | ||
| Changes in: | |||||
Note receivable | (1,973) | - | (1,973) | ||
Deposits | - | - | (525) | ||
Accounts payable and notes | (14,628) | (14,781) | 110,106 | ||
| NET CASH USED IN OPERATING ACTIVITIES | (35,383) | (26,253) | (147,335) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Proceeds from sale of real estate | - | - | 330,023 | ||
Issuance of note receivable | - |
| - | (100,000) | |
| NET CASH PROVIDED BY INVESTING ACTIVITIES | - |
| - |
| 230,023 |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Payments on related party debt | - | (3,500) | (182,585) | ||
Proceeds from related party debt | 2,500 | 33,500 | 99,919 | ||
Proceeds from issuance of common stock | - |
| - |
| 2,538 |
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 2,500 |
| 30,000 | (80,128) | |
| NET CHANGE IN CASH | (32,883) | 3,747 | 2,560 | ||
Cash balance, beginning of period | 35,443 | 140 | - | ||
Cash balance, end of period | $ 2,560 |
| $ 3,887 |
| $ 2,560 |
| SUPPLEMENTAL DISCLOSURES: | |||||
Cash paid for interest | $ - | $ - | $ 10,914 | ||
Cash paid for income taxes | $ - | $ - | $ - | ||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||
Shares issued to settle related party debt | $ - | $ - | $ 72,759 | ||
Shares issued for property | $ - | $ - | $ 772,000 | ||
Forgiveness of related party debt | $ - | $ - | $ 226,334 | ||
See accompanying summary of accounting policies and notes
to financial statement.
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. 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, and should be read in conjunction with Empyrean's audited 2006 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 - NOTE RECEIVABLE
The 8 % per annum interest bearing loan of $100,000 made to Independent Management Resources, LLC, at the end of December 2006 has yet to be repaid. The extension of the repayment date of this loan for another 120 days commencing May 1, 2007, as requested by the borrower, is under consideration.
NOTE 3 - NOTES PAYABLE - RELATED PARTY
Advances made by Tom Bojadzijev before his termination as a real estate consultant for the company continue to accrue interest at 8% per annum. The amount of this Note is $16,536 inclusive of accrued interest through March 31, 2007.
On March 30, 2007, an advance was made by an officer in the amount of $2,500. The advance is due on demand with no stated interest rate and is unsecured.
Item 2. Management's Plan of Operation.
The company continues to pursue its long-term corporate development plan to become a diversified holding company providing competitive returns to shareholders and investors. Brief updates on progress made by the Company's subsidiaries follow.
Empyrean Properties, Inc. ("Empyrean Properties") is an active real estate company, and is pursuing the sale of two town homes it owns in Kewaskum, WI (the "Properties"). As of March 31, 2007, the carrying value of the Properties is $386,500. There are no monetary encumbrances on the Properties. Funds obtained from these sales, if consummated, will be utilized for working capital and to fund other corporate activities. Negotiations are in progress to purchase additional properties through the use of shares of the Company as consideration. There is no guarantee that any of these transactions will be completed.
Empyrean Staffing, Inc. ("Empyrean Staffing") is moving forward on the development of its Professional Employer Organization (PEO) business. Current plans call for a third party to receive, in exchange for contributing assets and an ongoing outsourcing business to Empyrean Staffing, 70% of the common stock of Empyrean Staffing. Leading consultants and advisors in the outsourcing industry are being used to assist the Company to successfully grow this business.
Empyrean Financial Services, Inc. ("EFS") hopes to finalize agreements to provide financial accounting and consulting services to several clients. Due to some recent business restructuring by these clients, initial revenues expected from fees is estimated at $120,000 per annum assuming that all these clients sign up. However, the agreements have not been finalized and even if EFS is successful in entering into such agreements there is no guarantee it will realize any revenues resulting from the agreements.
The Company has also formed another subsidiary, Empyrean Construction, Inc. ("Empyrean Construction"). Empyrean Construction is currently in the process of negotiations whereby it will receive, in consideration for a majority interest in Empyrean Construction, contributions of services, goodwill and existing development projects from a third party.
Liquidity
During the next 12 months, significant working capital will be needed to fund businesses to be undertaken by our two most recently formed subsidiaries, Empyrean Staffing. and Empyrean Construction.
A final decision has yet to be made on the source of financing for the Company or the amounts required to execute its business plan. It is expected that either equity or debt financing, or a combination of both, will be needed to raise sufficient capital to advance the Company's business. There can be no guarantee that any such financing will be located or if financing is obtained that it will be available on terms that are beneficial to the Company.
Without locating additional financing, on favorable terms, the Company may be forced to scale back or halt the development of the various businesses of its subsidiaries. In such an event it is unlikely the Company will continue to operate as a going concern and its stock may become worthless. Holders of Company stock may be faced with the inability to liquidate part or all of their investment on terms which are financially profitable. Because an investment in Company stock is highly speculative, investors in Company stock must be prepared to lose some or all of their investment in the stock.
Item 3. Controls and Procedures
As of March 31, 2007, we carried out an evaluation of the effectiveness of our 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 our chief executive officer and chief financial officer. Based on and as of the date of such evaluation, the aforementioned officers have concluded that our disclosure controls and procedures are effective for timely gathering, analyzing and disclosing the information we are required to disclose in our reports filed under the Securities Exchange Act of 1934, as amended. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(F) and 15d-15(f) under the 1934 Act) during the period ended March 31, 2007, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II -- OTHER INFORMATION
Item 6. Exhibits
Exhibit No. Document Location
3(i) Articles of Incorporation Previously Filed
3(ii) Bylaws Previously filed
31.1 Section 302 Certification Included
31.2 Section 302 Certification Included
32.1 Section 906 Certification Included
32.2 Section 906 Certification Included
_______________________________________________________________________
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
Robert L. Lee,
President and Director Date: May 10, 2007