E & M 10-Q 2010 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 333-156352

E & M GROUP, INC.

(Exact name of registrant as specified in its charter)

Nevada	88-0492246
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2373 208th St., Unit F4, Torrance, CA	90501
(Address of principal executive offices)	(Zip Code)

(213) 995-5036

(Registrant’s telephone number, including area code)

Copies of Communications to:

Stoecklein Law Group

402 West Broadway, Suite 690

San Diego, CA 92101

(619) 704-1310

Fax (619) 704-0556

Indicate by check mark whether the registrant (1) 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 has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨    No ¨

Indicate by check mark whether the registrant is a large 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 x    No ¨

The number of shares of Common Stock, $0.001 par value, outstanding on August 17, 2010, was 31,500,000 shares.

PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements.

E&M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
	June 30,			December 31,
	2010			2009
	(unaudited)			(audited)
ASSETS
Current assets:
Cash	$	3,937		$	27,057
Prepaid expenses		-			1,250
Deposits		485			-
Notes receivable - related party		10,000			10,000
Total current assets		14,422			38,307
Other assets:
Notes receivable - related party		1,000			-
Total other assets		1,000			-
Total assets	$	15,422		$	38,307
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	2,913		$	2,508
Total current liabilities		2,913			2,508
Long-term liabilities:
Notes payable - related party		74,700			49,000
Total long-term liabilities		74,700			49,000
Total liabilities		77,613			51,508
Stockholders' deficit:
Common stock, $0.001 par value, 100,000,000 shares
authorized, 31,500,000 and 31,500,000 shares issued and outstanding
as of June 30, 2010 and December 31, 2009, respectively		31,500			31,500
Additional paid-in capital		70,993			70,993
Deficit accumulated during development stage		(164,684	)		(115,694	)
Total stockholders' deficit		(62,191	)		(13,201	)
Total liabilities and stockholders' deficit	$	15,422		$	38,307

The accompanying notes are an integral part of these financial statements.

1

E&M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(unaudited)
													Inception
													(March 2, 2001)
	For the three months ended						For the six months ended						to
	June 30,						June 30,						June 30,
	2010			2009			2010			2009			2010
Revenue	$	-		$	-		$	-		$	5,000		$	15,000
Revenue - related party		-			-			-			-			38,500
Total revenue		-			-			-			5,000			53,500
Expenses:
General and administrative		14,843			3,332			35,159			9,277			65,402
Consulting fees		-			-			-			-			11,100
Consulting fees - stock based		-			-			-			-			22,500
Consulting fees - related party		-			-			-			-			5,000
Depreciation		1,263			-			1,474			-			1,474
Legal and professional fees		4,923			19,437			13,567			47,437			115,847
Total expenses		21,029			22,769			50,200			56,714			221,323
Net Operating Loss		(21,029	)		(22,769	)		(50,200	)		(51,714	)		(167,823	)
Other Income:
Forgiveness of debt		-			-			-			-			1,929
Gain on sale of assets		1,210			-			1,210			-			1,210
Total other income		1,210			-			1,210			-			3,139
Net Loss	$	(19,819	)	$	(22,769	)	$	(48,990	)	$	(51,714	)	$	(164,684	)
Weighted average number of common		31,500,000			31,500,000			31,500,000			31,500,000
shares outstanding - basic
Net loss per share - basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

The accompanying notes are an integral part of these financial statements.

2

E&M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(unaudited)
							Inception
							(March 2, 2001)
	For the six months ended						to
	June 30,						June 30,
	2010			2009			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(48,990	)	$	(51,714	)	$	(164,684	)
Adjustments to reconcile net loss
to net cash used in operating activities:
Shares issued for services		-			-			22,500
Depreciation		1,474			-			1,474
Gain on sale of assets		(1,210	)					(1,210	)
Changes in operating assets and liabilities:
Decrease in prepaid expenses		1,250			-			-
(Increase) in deposits		(485	)		-			(485	)
Increase in accounts payable		405			500			2,913
Net cash used in operating activities		(47,556	)		(51,214	)		(139,492	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from repayment of notes receivable - related party		-			-			20,000
Payments for notes receivable - related party		(1,000	)		-			(31,000	)
Purchase fixed assets		(25,264	)		-			(25,264	)
Sale of fixed assets		25,000			-			25,000
Net cash used in investing activities		(1,264	)		-			(11,264	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, net of offering costs		-			-			9,000
Proceeds from donated capital		-			-			70,993
Proceeds from notes payable		-			-			49,000
Proceeds from notes payable - related party		25,700			47,437			40,700
Payments to notes payable - related party		-			-			(15,000	)
Net cash provided by financing activities		25,700			47,437			154,693
NET CHANGE IN CASH		(23,120	)		(3,777	)		3,937
CASH AT BEGINNING OF PERIOD		27,057			6,559			-
CASH AT END OF PERIOD	$	3,937		$	2,782		$	3,937
SUPPLEMENTAL INFORMATION:
Interest paid	$	-		$	-		$	-
Income taxes paid	$	-		$	-		$	-
Non-cash activities:
Number of shares issued for services		-			-			22,500,000
Fair value of shares issued for services	$	-		$	-		$	22,500

The accompanying notes are an integral part of these financial statements.

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E & M Group, Inc. (Formerly Madison Management, Inc.)

Notes To Financial Statements

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these condensed interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2009 and notes thereto included in the Company’s 10-K filed on March 31, 2010. The Company follows the same accounting policies in the preparation of interim reports.

Results of operations for the interim period are not indicative of annual results.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.

Cash and Cash Equivalents

For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.

Earnings per share

The Company follows ASC Topic 260. Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

Concentrations

For the six months ended June 30, 2010 and 2009, one customer accounted for 0% and 100% of sales, respectively.

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E & M Group, Inc. (Formerly Madison Management, Inc.)

Notes To Financial Statements

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fixed Assets

Property and equipment are recorded at cost.  Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred.  When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period.  Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes.  The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate.  The estimated useful lives for significant property and equipment categories are as follows:

Vehicles         5 years

The Company reviews the carrying value of property, plant and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition.  In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets.  The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors.  Based on this assessment there was no impairment as June 30, 2010.

Recent pronouncements

Below is a listing of the most recent accounting standards and their effect on the Company.

In May 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-19 (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.

In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-18 (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-a consensus of the FASB Emerging Task Force.The amendments in this Update are effective 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.  The amendments are to be applied prospectively. Early application is permitted.  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.

5

E & M Group, Inc. (Formerly Madison Management, Inc.)

Notes To Financial Statements

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent pronouncements (continued)

In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-17 (ASU 2010-17), Revenue Recognition-Milestone Method (Topic 605): Milestone Method of Revenue Recognition.  The amendments in this Update are 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 the amendments retrospectively from the beginning of the year of adoption.  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.

In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-16 (ASU 2010-16), Entertainment-Casinos (Topic 924): Accruals for Casino Jackpot Liabilities-a consensus of the FASB Emerging Issues Task.  The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2010.  The amendments should be applied by recording a cumulative-effect adjustment to opening retained earnings in the period of adoption.  The Company does not expect the provisions of ASU 2010-16 to have a material effect on the financial position, results of operations or cash flows of the Company.

In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-15 (ASU 2010-15), Financial Services-Insurance (Topic 944): How Investments held through Separate Accounts Affect an Insurer’s Consolidation Analysis of Those Investments-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 after December 15, 2010.  Early adoption is permitted.  The amendments in this Update should be applied retrospectively to all prior periods upon the date of adoption.  The Company does not expect the provisions of ASU 2010-15 to have a material effect on the financial position, results of operations or cash flows of the Company.

In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-13 (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.

6

E & M Group, Inc. (Formerly Madison Management, Inc.)

Notes To Financial Statements

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent pronouncements (continued)

In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-12 (ASU 2010-12), Income Taxes (Topic 740): Accounting for Certain Tax Effects of the 2010 Health Care Reform Acts.  After consultation with the FASB, the SEC stated that it “would not object to a registrant incorporating the effects of the Health Care and Education Reconciliation Act of 2010 when accounting for the Patient Protection and Affordable Care Act”. The Company does not expect the provisions of ASU 2010-12 to have a material effect on the financial position, results of operations or cash flows of the Company.

In March 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-11 (ASU 2010-11), Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives.  The amendments in this Update are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010.  Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after issuance of this Update.  The Company does not expect the provisions of ASU 2010-11 to have a material effect on the financial position, results of operations or cash flows of the Company.

In February 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-09 (ASU 2010-09), Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements.  This amendment addresses both the interaction of the requirements of this Topic with the SEC’s reporting requirements and the intended breadth of the reissuance disclosure provision related to subsequent events (paragraph 855-10-50-4).  All of the amendments in this Update are effective upon issuance of the final Update, except for the use of the issued date for conduit debt obligors. That amendment is effective for interim or annual periods ending after June 15, 2010.  The Company does not expect the provisions of ASU 2010-09 to have a material effect on the financial position, result s of operations or cash flows of the Company.

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the development stage and, accordingly, has not yet generated revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start up costs and expenses. As a result, the Company incurred accumulated net losses from Inception (March 2, 2001) through the period ended June 30, 2010 of ($164,684). In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.

7

E & M Group, Inc. (Formerly Madison Management, Inc.)

Notes To Financial Statements

(Unaudited)

NOTE 2 – GOING CONCERN (CONTINUED)

The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

NOTE 3 – NOTES RECEIVABLE – RELATED PARTY

Notes receivable consists of the following at:

	June 30, 2010	December 31, 2009
Note receivable to an entity owned and controlled by officers and directors of the Company, unsecured, 0% interest, due upon demand but cannot be demanded before November 2010	$            10,000	$            10,000
Note receivable to an entity owned and controlled by officers and directors of the Company, unsecured, 0% interest, due upon demand but cannot be demanded before December 2020	1,000	-
	$            11,000	$            10,000

Interest income for the six months ended June 30, 2010 and December 31, 2009 was $0 and $0, respectively.

NOTE 4 – FIXED ASSETS

Fixed assets consist of the following at:

	June 30, 2010	December 31, 2009
Vehicles	$           -	$                      -
Accumulated depreciation	-	-
	$           -	$                      -

On June 30, 2010, the Company sold its vehicle to a director of the Company for $25,000.  The Company recorded a gain of $1,210 on the sale.

Depreciation for the six months ended June 30, 2010 and 2009 was $1,474 and $0, respectively.

8

E & M Group, Inc. (Formerly Madison Management, Inc.)

Notes To Financial Statements

(Unaudited)

NOTE 5 – NOTES PAYABLE AND NOTES PAYABLE – RELATED PARTY

Notes payable consists of the following at:

	June 30, 2010	December 31, 2009
Note payable to an entity owned and controlled by officers and directors of the Company, unsecured, 0% interest, due upon demand but cannot be demanded before December 2020	$            49,000	$            49,000
Note payable to an entity owned and controlled by officers and directors of the Company, unsecured, 0% interest, due upon demand but cannot be demanded before December 2020	25,700	-
	$            74,700	$            49,000

Interest expense for the six months ended June 30, 2010 and 2009 was $0 and $0, respectively.

NOTE 6 – STOCKHOLDERS’ EQUITY

Common Stock

The Company is authorized to issue 25,000,000 shares of its $0.001 par value common stock.  Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders.  Holders of common stock do not have cumulative voting rights and are entitled to share ratably in dividends, if any.  In the event of a liquidation, dissolution or winding up of our Company, the holders of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities.  All of the outstanding shares of common stock are fully paid and non-assessable.  Holders of common stock have no preemptive rights to purchase our common stock.  There are no conversion or redemption rights or sinking fund provisions with respect to the common stock.

On December 11, 2009, the Company amended its articles of incorporation and increased its authorized capital to 100,000,000 shares of it $0.001 par value common stock.

On March 2, 2010, the Company effected a 10-for-1 forward stock split of its $0.001 par value common stock.

All share and per share amounts have been retroactively restated to reflect the splits discussed above.

Common Stock

As of June 30, 2010, there have been no other issuances of common stock.

9

E & M Group, Inc. (Formerly Madison Management, Inc.)

Notes To Financial Statements

(Unaudited)

NOTE 7 – WARRANTS AND OPTIONS

As of June 30, 2010, there were no warrants or options outstanding to acquire any additional shares of common stock.

NOTE 8 – SUBSEQUENT EVENTS

During July 2010, the Company received a loan of $13,000 from a director of the Company.  The loan is unsecured, bears interest at 0% per annum, and is due upon demand, but no earlier than December 31, 2020.

10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, among other things, statements regarding:

o   increased competitive pressures from existing competitors and new entrants;

o   increases in interest rates or our cost of borrowing or a default under any material debt agreements;

o   our ability to efficiently and effectively finance our operations, and/or purchase orders;

o   deterioration in general or regional economic conditions;

o   adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

o   inability to achieve future sales levels or other operating results;

o   the unavailability of funds for capital expenditures and/or general working capital;

o   operational inefficiencies in distribution or other systems;

o   the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;

o   adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

o   changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;

o   inability to efficiently manage our operations;

o   the inability of management to effectively implement our strategies and business plans;

as well as other statements regarding our future operations, financial condition and prospects, and business strategies. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, and in particular, the risks discussed under the heading “Risk Factors” in Part II, Item 1A and those discussed in other documents we file with the Securities and Exchange Commission. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautione d not to place undue reliance on such forward-looking statements.

11

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this quarterly report.  References in the following discussion and throughout this quarterly report to “we”, “our”, “us”, “E & M Group”, “the Company”, and similar terms refer to E & M Group, Inc. (formerly Madison Management, Inc.) unless otherwise expressly stated or the context otherwise requires.

OVERVIEW AND OUTLOOK

We are a development stage company incorporated in the State of Nevada in March 2001. We were formed to provide business development, market development and financial goal-setting to prospective small businesses.

Since inception, we have relied on equity financing to fund our operations to date. We have incurred a net loss of $164,684 and we have generated $53,500 in revenues since our inception through June 30, 2010. In the three and six months ended June 30, 2010, we incurred a net loss of $19,819 and $48,990, respectively.

As a result of our lack of revenue generation, we plan to re-assess our business plan, and aggressively seek out other business opportunities. In an effort to substantiate stockholder value, we are seeking compatible business opportunities. We can provide no assurance that we will be able to locate compatible business opportunities. We have been in preliminary discussions with a private company interested in a potential merger. As of the date of this filing, there have been no definitive agreements reached with this company. If and when we enter into a definitive agreement with any company, we will file a current report on Form 8-K.

Going Concern

The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company is in the development stage and, accordingly, has generated minimal revenues from operations.  As shown on the accompanying financial statements, the Company has incurred a net loss of $164,684 for the period from inception to June 30, 2010. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its business opportunities.

Results of Operations

Revenues

In this period ended June 30, 2010, we did not generate any revenues.  In comparable six month period ended June 30, 2009, we generated $5,000.  Since our inception on March 2, 2001 through June 30, 2010, we have generated $53,500 in revenues.

12

Expenses

Expenses totaled $21,029 during the three months ended June 30, 2010 as compared to $22,769 in the prior year.  Expenses primarily consisted of general and administrative fees and legal and professional fees in the three months ended June 30, 2010.

General and administrative fees increased $11,511 from the three months ended June 30, 2009 to the three months ended June 30, 2010.  This increase was due to an increase in rent expense of $6,961 due to the monthly rent increasing from $250 to $2,514.  Additionally, automobile expenses increased by $2,747 related to the purchase of the vehicle during 2010.

Legal and professional fees decreased $14,514 from the three months ended June 30, 2009 to the three months ended June 30, 2010.  The decrease was due to a reduction in legal expenses related to the process of filing with FINRA and the SEC.  During 2010, the legal and professional fees consist of annual and quarterly filings with the SEC.

General and administrative fees increased $25,882 from the six months ended June 30, 2009 to the six months ended June 30, 2010.  This increase was due to an increase in rent expense of $13,725 due to the monthly rent increasing from $250 to $2,514.  Additionally, automobile expenses including auto insurance increased by $3,359 related to the purchase of the vehicle during 2010.  The accounting fees increased by $2,250 primarily due to the increase in audit fees.

Legal and professional fees decreased $33,870 from the six months ended June 30, 2009 to the six months ended June 30, 2010.  The decrease was due to a reduction in legal expenses related to the process of filing with FINRA and the SEC.  During 2010, the legal and professional fees consist of annual and quarterly filings with the SEC.

Liquidity and Capital Resources

The following table summarizes total current assets, total current liabilities and working capital at June 30, 2010 compared to December 31, 2009.

	June 30, 2010	December 31, 2009	Increase / (Decrease)
			$	%
Current Assets	$14,422	$38,307	$(23,885)	(62%)
Current Liabilities	2,913	2,508	405	16%
Working Capital (deficit)	$11,509	$35,799	$(24,290)	(68%)

Liquidity is a measure of a company’s ability to meet potential cash requirements.  We have historically met our capital requirements through the issuance of stock, by borrowings, and through sales-generated revenue.  In the future, we anticipate we will be able to provide the necessary liquidity we need by the revenues generated from the sales of our products.

13

As of June 30, 2010, our cash balance was $3,937.

During the six months ended June 30, 2010, Donghwan Kim, a Director of the Company, loaned the Company $25,700. The loan bears interest at 0% per annum.

Additionally, during July 2010, Mr. Kim loaned the Company $13,000. The loan is unsecured, bears interest at 0% per annum, and is due upon demand, but no earlier than December 31, 2020.

Since inception, we have financed our cash flow requirements through issuance of common stock. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations. We anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. There can be no assurance we will be successful in raising the necessary funds to execute our business plan.

We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the f ailure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

Off-Balance Sheet Arrangements

We do not have any 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, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions.

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Recent pronouncements

Below are the most recent accounting standards and their effect on the Company.

In May 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-19 (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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We do not expect to enter into financial instruments for trading or hedging purposes. We do not currently anticipate entering into interest rate swaps and/or similar instruments.

Item 4T. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our Principal Executive Officer, Jooin Kim, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on his evaluation, Mr. Kim concluded that our disclosure controls and procedures are effective in timely alerting him to material information relating to us required to be included in our periodic SEC filings and in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We are not a party to any material legal proceedings.

Item 1A. Risk Factors.

Our significant business risks are described in Item 1A to Form 10-K for the year ended December 31, 2009 to which reference is made herein.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

We have no recent sales of unregistered securities.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the quarter covered by this report.

Item 3. Defaults Upon Senior Securities.

None.

Item 5. Other Information.

   None.

Item 6. Exhibits.

			Incorporated by reference
Exhibit number	Exhibit description	Filed herewith	Form	Period ending	Exhibit	Filing date
3(i)(a)	Articles of Incorporation of filed on March 2, 2001		S-1		3(i)(a)	12/19/08
3(i)(b)	Amended and Restated Articles of Incorporation, filed on December 11, 2009		10-K	12/31/09	3(i)(b)	3/31/10
3(i)(c)	Amended and Restated Articles of Incorporation, filed on January 14, 2010		10-K	12/31/09	3(i)(c)	3/31/10
3(ii)(a)	Bylaws		S-1		3(ii)(a)	12/19/08
31.1	Certification of Jooin Kim pursuant to Section 302 of the Sarbanes-Oxley Act	X
32.1	Certification of Jooin Kim pursuant to Section 906 of the Sarbanes-Oxley Act	X

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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.

E & M GROUP, INC.

By:/S/ Jooin Kim                                                                

       Jooin Kim, President

      (On behalf of the registrant and as

       principal executive officer)

Date: August 18, 2010

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