UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDED FORM 10-Q
(Mark One) [X ] | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended __June 30, 2008_ | |
[ ] | 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)
Registrant’s 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)
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. [X] Yes [ ] 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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
Smaller reporting company [X]
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 03, 2009 there were 12,008,066 shares of common stock issued and outstanding
Note: * Includes 22,501 shares “on hold” and awaiting return from third party
EXPLANATORY PARAGRAPH
The Company filed a Form 10-Q on August 19, 2008 which had not been reviewed by an independent public accountant, as required by SEC Rules. The Company has subsequently submitted this report, and the financial statements included herein, for review by its independent public accountant and is filing this amended 10Q with changes made pursuant to that review process.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
Following are the unaudited financial statements for the period ended June 30, 2008:
EMPYREAN HOLDINGS, INC | |||
(A Development Stage Company) | |||
CONSOLIDATED BALANCE SHEET | |||
(Unaudited) | |||
| June 30, 2008 | December 31, 2007 | |
CURRENT ASSETS |
|
| |
Cash | $ 8,076 | $ 1,969 | |
Prepaid expenses | 6,172 | 7,500 | |
Account Receivable | 1,175 | 1,495 | |
Employee Advances | 9,000 | - | |
|
|
| |
Deposits | 1,495 | 1,175 | |
Real Estate Held For Sale | 97,000 | 202,000 | |
Total current assets | 122,918 | 214,139 | |
|
|
| |
Fixed Assets, net of accumulated depreciation of $8,376, and $2,792 respectively | 33,124 | 38,708 | |
|
|
| |
TOTAL ASSETS | $ 156,042 | $ 252,847 | |
|
|
| |
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
| |
|
|
| |
CURRENT LIABILITIES |
|
| |
Accounts payable - trade | $ 129,453 | $ 64,979 | |
Accrued expenses |
| 120,000 |
|
Note Payable - related parties | 230,968 | 157,238 | |
Total current liabilities | 480,421 | 222,217 | |
|
|
| |
COMMITMENTS AND CONTINGENCIES |
| - | |
|
|
| |
STOCKHOLDERS' EQUITY (DEFICIT) |
|
| |
Preferred stock, $.001 par, 200,000,000 shares authorized, 15,140,000 shares issued and outstanding | 15,140 | 15,140 | |
Common stock, $0.001 par value per share; 1,000,000,000 shares authorized; 12,008,099 and 10,258,066 shares issued and outstanding, respectively | 12,008 | 10,258 | |
Additional paid-in capital | 1,815,734 | 1,791,234 | |
|
|
| |
Accumulated deficit during development stage | (2,167,261) | (1,786,002) | |
Total stockholders' equity (deficit) | (324,379) | 30,630 | |
|
|
| |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 156,042 | $ 252,847 | |
The accompanying notes are an integral part of these financial statements.
EMPYREAN HOLDING, INC | ||||||||
(A Development Stage company) | ||||||||
CONSOLIDATED STATEMENTS OF INCOME & EXPENSES | ||||||||
Three Months Ended June 30, 2008 and 2007 and the | ||||||||
Six Months Ended June 30, 2008 and 2007 and the | ||||||||
Period from December 30, 2004 (Inception) through June 30, 2008 | ||||||||
(Unaudited) | ||||||||
|
|
|
|
|
| |||
| Three Months Ended June 30 | Six Months Ended June 30 |
| |||||
|
|
|
|
| Inception through June 30, 2008 | |||
2008 | 2007 | 2008 | 2007 | |||||
INCOME |
|
|
|
|
| |||
Rental Income | - |
|
|
| 6,714 | |||
Construction Income | - |
| 8,257 |
| 8,257 | |||
Payroll Processing and Other | - |
|
|
| 16,564 | |||
Sale of real estate | 45,000 |
| 94,000 |
| 978,200 | |||
Total Income | 45,000 | - | 102,257 | - | 1,009,735 | |||
|
|
|
|
|
| |||
COST AND EXPENSES |
|
|
|
|
| |||
Cost of real estate sold | 48,874 |
| 122,971 |
| 1,138,924 | |||
General and administrative | 115,999 | 98,386 | 206,205 | 118,804 | 1,524,645 | |||
Compensation Expense | 146,250 |
| 146,250 |
|
| |||
Impairment of Note receivable - related party | - |
| - |
| 162,148 | |||
Loss on abandonment of property held for sale | - |
| - |
| 154,354 | |||
Total Costs and Expenses | 311,123 | 98,386 | 475,426 | 118,804 | 2,980,071 | |||
|
|
|
|
|
| |||
OTHER INCOME (EXPENSES) |
|
|
|
|
| |||
Interest income (expense) | (5,321) | 995 | (8,090) | 2,707 | (81,445) | |||
Cost of recapitalization | - |
|
|
| (115,479) | |||
|
|
|
|
| - | |||
Total other income (expenses) | (5,321) | 995 | (8,090) | 2,707 | (196,924) | |||
|
|
|
|
|
| |||
NET LOSS | (271,444) | (97,391) | (381,259) | (116,097) | (2,167,260) | |||
|
|
|
|
|
| |||
Deemed dividend on preferred stock issuance | - | 373,200 |
| 373,200 | 373,200 | |||
Net loss attributable to common shareholders | (271,444) | (470,591) | (381,259) | (489,297) | (2,540,460) | |||
|
|
|
|
|
| |||
TOTAL BASIC AND DILUTED NET LOSS PER SHARE | (0.03) | (0.05) | (0.04) | (0.05) |
| |||
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 10,316,333 | 9,858,066 | 10,287,167 | 9,858,066 |
| |||
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these 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. 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 2007 year end financial statements contained in the 10-KSB. 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.
NOTE 2 - - GOING CONCERN
As shown in the accompanying financial statements, Empyrean has incurred net losses of $381,259 through the six months ended June 30, 2008, which increased the accumulated deficit to $2,167,261 as of June 30, 2008. These conditions raise substantial doubt about Empyrean's ability to continue as a going concern. Management is trying to raise additional capital through sales of common stock as well as seeking financing from third parties. The financial statements do not include any adjustments that might be necessary if Empyrean is unable to continue as a going concern.
NOTE 3 - NOTES PAYABLE – RELATED PARTY
Advances made to the Company 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 $18,095 inclusive of accrued interest through June 30, 2008.
During the current period, Empyrean received advances totaling $31,360 from a Director of the company’s wholly owned subsidiary, Empyrean Construction, Inc. The loan bears interest at 8% per annum and $17,200 has been repaid reducing the amount payable to $45,038 as of June 30, 2008.
As no further advances have been received from IMR, LLC during the period ending June 30, 2008 the total outstanding amount due to IMR including interest has increased minimally to $146,728. This Note incurs interest at the rate of 8% per annum and is payable on demand.
Advances made by an officer total $21,107 as of June 30, 2008.
NOTE 4 – SALE OF REAL ESTATE.
A lot owned by the company in Kewaskum, Wisconsin was sold in early April 2008 for $45,000. In addition, another lot was purchased during 2007 for $97,000.
NOTE 5-COMMON STOCK
On June 27,2008, the Company has awarded 1,750,000 shares of common stock, with a value of $26,250 using the quoted market price, to its officer for past consulting services. The shares are to be issued before August 2008.
Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations.
The company continues to pursue its long-term corporate development plan to become a diversified holding company that will eventually provide competitive returns to shareholders and investors. Due to the current difficult economic situation, however, progress for this quarter has been slow. A brief report on the present situation for the Company’s subsidiaries follows.
Empyrean Properties, Inc. (“Empyrean Properties”):
In April 2008 another lot in Kewaskum, Wisconsin was sold and the net proceeds of $41,903 were used as working capital. The company now only owns one lot in Green Bay, Wisconsin with a carrying value of $97,000. With the present serious downturn in the real property market it is doubtful that Empyrean Properties will be active till financing is obtained or share swaps for real properties can be found.
Empyrean Staffing, Inc. (“Empyrean Staffing”)
Since the termination of its short lived payroll processing business at the end of last year, Empyrean Staffing has remained dormant. The financing needed for this subsidiary to make a fresh start as a P.E.O, as outlined in its business plan, has been included in the financing package being pursued for the company
Empyrean Financial Services, Inc. (“EFS”)
EFS will also remain a dormant subsidiary until funds are obtained to reactive the PEO business for Empyrean Staffing.
Empyrean Construction, Inc., (“Empyrean Construction”)
Empyrean Construction holds general contractor’s licenses for the States of California and Nevada. Though only a few small jobs have been successfully completed to-date, the marketing strategies formulated to cater for the difficult period being faced by the construction industry has recently started to produce results.
The unanticipated slow progress experienced in the 1st quarter of 2008 has made the reduction of one employee necessary. Two well qualified and experienced employees, however, remain in employment and top priority is being given to obtaining the financing needed to finalize agreements for the projects recently identified.
The objective of offering a majority interest in Empyrean Construction to an entity that will contribute industry expertise, related services, goodwill and existing development projects remains a possibility.
Liquidity
During the next 12 months, significant working capital will be needed to fund Empyrean Construction until it breaks even, to develop the businesses for the company’s other subsidiaries and to pursue other business opportunities.
Though several sources of financing are being reviewed a firm decision has yet to be made on the type of financing or the amounts to be raised for executing its business plan. It appears at this stage that either equity or debt financing, or a combination of both, may be needed to raise sufficient capital to advance the Company’s business.
A recent offer from a financing company to provide a $10 million Equity line of Credit is under consideration but there can be no guarantee that any such financing will be successful or that it will be made available at terms that are beneficial to the Company.
Without obtaining additional financing, on favorable terms, the Company may be forced to scale back or halt the development of the various businesses of its subsidiaries. These factors raise substantial doubt about the Company’s ability to continue as a going concern. 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 must be prepared to lose some or all of their investment.
Item 4. Controls and Procedures
As of June 30, 2008, 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 not 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. Action to improve our internal control over financial reporting has been taken. The CEO/FO has institued closer controls of all aspects of account procedures working in close consultation with the Company’s part-time accountant. There were noother 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 June 30, 2008, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
Item 5. Other information
Board meetings:
1.
The Board of Directors, at a special meeting held in Houston, Texas on June 26, 2008 acknowledged and recorded that the sole officer and Director of the company continues to provide his full time services without any compensation. Compensation in the form of restricted shares and consulting fees was approved but cash payments will only be due for payment when the company has obtained the financing being pursued.
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
32.1
Section 906 Certification
Included
____________________________________________________________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly 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: March,5, 2009
