Attached files
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 September 30, 2009
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 September 30,
2009.
ITEM 1. FINANCIAL STATEMENTS
The un-audited quarterly financial statements for the period ended September 30,
2009, prepared by the company, immediately follow.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements F-1 - F-13
Item 2. Management's Discussion and Analysis or Plan of Operation 16
Item 3. Quantitative and Qualitative Disclosures About Market Risk 20
Item 4. Controls and Procedures 20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 1A. Risk Factors 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits 22
SIGNATURES
2
ITEM 1. FINANCIAL STATEMENTS
EMPIRE GLOBAL CORP.
(FORMERLY TRADESTREAM GLOBAL CORP.)
INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTH and NINE MONTH PERIODS ENDED
SEPTEMBER 30, 2009 and 2008
CONTENTS
Consolidated Balance Sheets F - 2
Consolidated Statements of Operations and Comprehensive Loss F - 3
Consolidated Statements of Cash Flows F - 4
Notes to Consolidated Financial Statements F - 5 - F - 13
- F1 -
EMPIRE GLOBAL CORP.
(FORMERLY TRADESTREAM GLOBAL CORP.)
Consolidated Balance Sheets
September 30, December 31,
2009 2008
US$ US$
--------- -----------
(Unaudited) (Audited)
ASSETS
Current Assets
Pre-paid and sundry assets - 20,000
------- -------
Total Current Assets - 20,000
Property and equipment, net 3,893 4,581
Investment in Armistice Resources Corp, net of
impairment 202,483 177,985
Organization Cost 1,599 1,406
------- -------
207,975 203,973
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities 104,168 25,122
Advances from related party 128,500 77,500
------- -------
Total Current Liabilities 232,668 102,622
Commitments and Contingencies - -
Stockholder's Equity
Preferred Stock, $0.0001 par value,
20,000,000 shares authorized, none issued and outstanding. - -
Common Stock, $0.0001 par value,80,000,000 shares authorized,
shares issued and outstanding,
18,675,800 for both periods 1,868 1,868
Additional - paid in capital 4,902,455 4,902,455
Accumulated other comprehensive loss (11,657) (36,347)
Deficit (4,917,359) (4,766,625)
------- -------
Total Stockholders' Equity (24,693) 101,351
------- -------
207,975 203,973
======= =======
See notes to consolidated financial statements
- F2 -
EMPIRE GLOBAL CORP.
(FORMERLY TRADESTREAM GLOBAL CORP.)
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
Three months ended September 30, Nine months ended September 30,
2009 2008 2009 2008
US$ US$ US$ US$
--------- ----------- --------- -----------
Revenue - - - -
--------- ----------- --------- -----------
General and administrative expenses 46,459 26,611 150,734 83,038
Operating loss (46,459) (26,611) (150,734) (83,038)
--------- ----------- --------- -----------
Loss from operations before income taxes (46,459) (26,611) (150,734) (83,038)
Income taxes - - - -
--------- ----------- --------- -----------
Net Loss (46,459) (26,611) (150,734) (83,038)
========= =========== ========= ===========
Foreign currency translation adjustment 16,213 (40,167) 24,691 (67,697)
--------- ----------- --------- -----------
Comprehensive Loss (30,246) (66,778) (126,043) (150,735)
========= =========== ========= ===========
Basic and fully diluted loss per common share (0.001) (0.002) (0.01) (0.005)
========= =========== ========= ===========
Basic and fully diluted weighted average number of
shares outstanding 18,675,800 18,675,800 18,675,800 17,307,187
========== =========== ========= ===========
See notes to consolidated financial statements
- F3 -
EMPIRE GLOBAL CORP.
(FORMERLY TRADESTREAM GLOBAL CORP.)
Consolidated Statements of Cash Flows
(Unaudited)
Nine months September 30,
2009 2008
US$ US$
------- --------
Cash Flows - Operating Activities
Net loss (150,734) (83,038)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 688 861
Accounts payable and accrued expenses 79,046 79,829
Prepaid expenses 20,000 -
Amortization of prepaid expenses - 2,348
------- --------
Net cash used in operating activities (51,000) -
------- --------
Cash Flows - Financing Activities
Advance from related party 51,000 -
------- --------
Net cash used in financing activities 51,000 -
------- --------
Net 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.
(FORMERLY TRADESTREAM 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 has 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 September 31, 2009, we had a loss of $46,459. The
Company has incurred losses amounting to $4,917,359 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 the Company 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.
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
December 8, 2009 for the fiscal year ended December 31, 2008. 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 results for
the periods presented. Except for the adoption of new accounting policies as
disclosed in note 3, there have been no significant changes of accounting
policies since December 31, 2008. The results from operations for the periods
are not indicative of the results expected for the full fiscal year or any
future period. These consolidated interim financial statements should be read in
conjunction with the annual consolidated financial statements and notes for the
year ended December 31, 2008. 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
an inactive wholly owned subsidiary, Montebello Developments Corp., as well as
IMM Investments Inc. a wholly owned subsidiary.
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 any period 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 Statement of Financial Accounting
Standards No. 109 (SFAS 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 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, 2008 and September 30, 2009, no impairment losses have been identified.
- F6 -
h) Impairment of Long Lived Assets
In accordance with 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. 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 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.
The operational currency of our wholly owned subsidiary IMM Investments Inc.
(IMM) (an Ontario corporation) is the Canadian Dollar. Although IMM has no
operations, it owns shares of Armistice Resources Corp. a Canadian mining.
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 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 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
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 June 2009, the FASB issued Accounting Standards Update No. 2009-01,
"Generally Accepted Accounting Principles" (ASC Topic 105) which established the
FASB Accounting Standards Codification ("the Codification" or "ASC") as the
official single source of authoritative U.S. generally accepted accounting
principles ("GAAP"). All existing accounting standards are superseded. All other
accounting guidance not included in the Codification will be considered
non-authoritative. The Codification also includes all relevant Securities and
Exchange Commission ("SEC") guidance organized using the same topical structure
in separate sections within the Codification.
Following the Codification, the Board will not issue new standards in the form
of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts.
Instead, it will issue Accounting Standards Updates ("ASU") which will serve to
update the Codification, provide background information about guidance and
provide the basis for conclusions to the Codification.
The Codification, which became effective July 1, 2009, changes the referencing
and organization of accounting guidance and is effective for interim and annual
periods ending after September 15, 2009. The Company adopted the Codification on
July 1, 2009 which provides for changes in references to technical accounting
literature (if used) in the Quarterly Report on form 10-Q and subsequent
reports, but did not have a material impact on the Company's financial position,
results of operations, or cash flows.
Financial Accounting Standards Board ("FASB") Accounting Standard Codification
("ASC") 820, Fair Value Measurements and Disclosures ("ASC 820" and formerly
referred to as FAS-157), establishes a framework for measuring fair value in
GAAP, clarifies the definition of fair value within that framework, and expands
disclosures about the use of fair value measurements. ASC 820 is effective for
fiscal years beginning after November 15, 2007. ASC 820-10-65, Transition and
Open Effective Date Information, deferred the effective date of ASC 820, for
non-financial assets and liabilities that are not on a recurring basis
recognized or disclosed at fair value in the financial statements, to fiscal
years, and interim periods, beginning after November 15, 2008. The Company has
adopted the guidance within ASC 820 for non-financial assets and liabilities
measured at fair value on a nonrecurring basis at January 1, 2009 and will
continue to apply its provisions prospectively from January 1, 2009. The
application of ASC 820 for non-financial assets and liabilities did not have a
significant impact on earnings nor the financial position for the periods
presented.
FASB ASC 805, Business Combinations ("ASC 805" and formerly referred to as
FAS-141(R)) requires the acquisition method to be applied to all transactions
and other events in which an entity obtains control over one or more other
businesses, requires the acquirer to recognize the fair value of all assets and
liabilities acquired, even if less than one hundred percent ownership is
acquired, and establishes the acquisition date fair value as measurement date
for all assets and liabilities assumed. The guidance within ASC 805 is effective
prospectively for any acquisitions made after fiscal years beginning after
December 15, 2008.
FASB ASC 810, Consolidation ("ASC 810"), ASC 810-10-65, Transition and Open
Effective Date Information ("ASC 810-10-65" and formerly referred to as FAS-160)
establishes accounting and reporting standards for the non-controlling interest
in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
non-controlling interest in a subsidiary is an ownership interest in the
consolidated financial statements. ASC 810-10-65 is effective for fiscal years
beginning after December 15, 2008. The application of ASC 810-10-65 did not have
a significant impact on earnings nor the financial position.
- F8 -
m) Recent Accounting Pronouncements (cont'd)
FASB ASC 815, Derivatives and Hedging ("ASC 815"), ASC 815-10-65, Transition and
Open Effective Date Information ("ASC 815-10-65" and formerly referred to as
FAS-161) includes a requirement for enhanced disclosures about an entity's
derivative and hedging activities and thereby improves the transparency of
financial reporting. ASC 815 is effective prospectively for fiscal years
beginning after November 15, 2008. The application of ASC 815 expanded the
required disclosures in regards to the Company's derivative and hedging
activities.
FASB ASC 350, Intangibles - Goodwill and Other, ASC 350-30-65, Transition and
Open Effective Date Information ("ASC 350-30-65" and formerly referred to as
FSP FAS 142-3) amends the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a
recognized intangible. ASC 350-30-65 is effective for fiscal years beginning
after December 15, 2008, and interim periods within those fiscal years. The
guidance in this ASC 350-30-65 for determining the useful life of a recognized
intangible shall be applied prospectively to intangible assets acquired after
the effective date. The disclosure requirements of ASC 350-30-65, however, shall
be applied prospectively to all intangible assets recognized in the Company's
financial statements as of the effective date. The application of ASC 350-30-65
is not expected to have a material impact on earnings nor the financial
position.
FASB ASC 715, Compensation - Retirement Benefits, ASC 715-20-65, Transition and
Open Effective Date Information ("ASC 715-20-65" and formerly referred to as
FSP FAS-132(R)-1) provides guidance on an employer's disclosures about plan
assets of a defined benefit pension or other postretirement plans. ASC 715-20-65
is effective prospectively for fiscal years ending after December 15, 2009. The
application of ASC 715-20-65 will expand the Company's disclosures regarding
pension plan assets.
FASB ASC 825 Financial Instruments, ASC 825-10-65, Transition and Open Effective
Date Information ("ASC 825-10-65" and formerly referred to as FSP FAS 107-1 and
APB 28-1) requires disclosures about fair value of financial instruments for
interim reporting periods as well as in annual financial statements. This
guidance also requires those disclosures in summarized financial information at
interim reporting periods. ASC 825-10-65 is effective prospectively for interim
reporting periods ending after June 15, 2009. The application of ASC 825-10-65
expanded the Company's disclosures regarding the use of fair value in interim
periods.
FASB ASC 855, Subsequent Events ("ASC 855" and formerly referred to as FAS-165),
modified the subsequent event guidance. The three modifications to the
subsequent events guidance are: 1) To name the two types of subsequent events
either as recognized or non-recognized subsequent events, 2) To modify the
definition of subsequent events to refer to events or transactions that occur
after the balance sheet date, but before the financial statement is issued or
available to be issued and 3) To require entities to disclose the date through
which an entity has evaluated subsequent events and the basis for that date,
i.e. whether that date represents the date the financial statements were issued
or were available to be issued. This guidance is effective for interim or annual
financial periods ending after June 15, 2009, and has been applied
prospectively.
- F9 -
n) Investment in Armistice Resources Corp.
The investment in Armistice Resources Corp. consists of 5,000,000 shares of that
Company and was stated at cost at December 31, 2006. These shares are currently
in escrow and accordingly are considered neither trading nor available for sale.
The terms of escrow contain an undertaking with respect to respondents named in
allegations of the Ontario Securities Commission (Commission) action described
in Note 11 (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
require the resignation of any of these individuals if deemed unacceptable to
the TSX.
Through September 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 an increase of $24,691 for
the nine month period ended September 30, 2009 and is reflected in the cost
value of our investment in Armistice on September 30, 2009. On September 30,
2009 shares in Armistice had a quoted market value of $0.14 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 are impaired.
4. Impairment of Investment in Armistice Resources Corp.
The Company tests its investment in Armistice for recoverability
(FASB ASC 360-10-35-21, formerly SFAS 144, par. 8) if events or changes in,
circumstances, such as the following, indicate that its carrying amount may not
be fully recoverable:
a. Significant decrease in the asset's market price
b. Significant adverse change in the asset's use or in its physical condition
c. Significant adverse changes in legal factors or business climate, including
an adverse action or assessment by a regulator
d. Costs to acquire or construct an asset that significantly exceed original
expectations
e. Current-period operations or cash flow loss combined with a history of
operations or cash flow losses or a projection or forecast showing
continuing losses associated with an asset
f. A current expectation that it is more likely than not (greater than 50
percent likelihood) that a long-lived asset will be sold or disposed of
significantly before the end of its previously estimated useful life.
On July 9, 2004, the Company acquired IMM Investment Inc. an Ontario Corporation
that owns 5,000,000 shares of Armistice Resources Corp. The carrying amount of
IMM was based on the purchase price of $630,000 paid in stock of the Company in
exchange for the net assets of IMM of $1,479,173 which included the fair value
of the investment in Armistice and organization costs less liabilities resulting
in negative goodwill of $849,173. The purchase price of the shares of Armistice
was $0.40 Canadian per share.
- F10 -
4. Impairment of Investment in Armistice Resources Corp. (cont'd)
During the fourth quarter of 2008, we determined that due to the terms of escrow
agreement described in 3(n) and the estimated legal costs to recover the shares
of Armistice as well as selling costs, it is more likely than not that the
assets of IMM would be disposed of significantly before its previously estimated
useful life. As a result, at December 31, 2008 the Company performed an
impairment test and determined that an impairment of the value of our investment
in Armistice is reasonable as follows:
Fair value of Armistice determined at the quoted market price of Armistice in
Canadian dollars on the Toronto Stock Exchange:
Market value of Armistice at purchase
(5,00,000 shares at CDN $0.40/sh): $ 1,486,989
Market value of Armistice on December 31, 2008
(5,000,000 shares at CDN $0.06/sh): $ 203,050
Decrease in fair value of Armistice since purchase: ($ 1,283,495)
Years ended December 31, Valuation decrease
2008 2007 Other Comprehensive
Income
----------- ----------- -----------
Investment in Armistice at cost $802,924 $986,589 $183,665
--------- --------- ---------
Decrease in value of Armistice at cost $183,665
---------
Impairment of Armistice $624,939
---------
Investment in Armistice net
of impairment $177,985
=========
Other comprehensive loss for the year ended December 31, 2008 also included $322
from other sources.
5. Equipment
Equipment of operations at September 30, 2009 consists of the following:
Telephone system $ 11,192
Less accumulated depreciation 7,299
---------
$ 3,893
=========
6. Advances from Related Party
Advances due from related parties are non-interest bearing and are due on
demand. Advances from related parties as of September 30, 2009 are as follows:
Prosper consulting (Retainer for Chan action) $ 40,000
Gold Street Capital (Retainer for SF Group) 17,500
Braydon Capital Corp. 71,000
---------
$ 128,500
=========
- F11 -
7. Share based payments and Shareholder Equity
On May 5, 2008 at a meeting of the Board of directors, the board resolved to
issue 2,500,000 restricted shares of common stock for a value of $175,000 with
an effective date of December 31, 2007 to independent contractors in exchange
for cancellation of debt owed respectively to each contractor for services
rendered to the Company for the period ended December 31, 2007.
Also, on the same day the board resolved to issue 3,000,000 restricted shares of
common stock to pay independent contractors for administrative services and work
performed in preparing our financial reports, therefore, the 3,000,000 shares
with a value of $200,000 were used to pay independent contractors in exchange
for cancellation of debt owed respectively to each contractor for services
rendered to the Company for the period ended December 31, 2008.
During 2008, our director of operations provided in-kind contributions of $2,059
to pay for expenses related to general office expenses comprised of the
following:
Transfer agent fees $ 2,059
=======
8. 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. Because of the
uncertainties inherent in litigation, the company cannot predict whether the
outcome which remains unresolved will have a material adverse affect. The
Company is unrepresented by legal counsel in this matter.
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
will continue in January, 2010.
- F12 -
9. Subsequent Events
The Company has evaluated subsequent events through December 11, 2009, the
filing date of this quarterly report on form 10-Q for the period ended
September 30, 2009 and there have been no subsequent events that warrant
disclosure by the Company.
- F13 -
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, 2008). 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, 2008. 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.
as well as IMM Investments Inc. (IMM) mean "we", "us" or "our" and will be
referred to as such throughout the balance of this document.
- 16 -
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 three and nine months ended September 30, 2009, we had no revenue.
Due to limited operations, we are presently seeking new business opportunities.
Challenges and Risks
We have accumulated a deficit of approximately $4,917,359 to September 30, 2009
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, 2008 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.
- 17 -
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 $232,668 of current liabilities at September 30, 2009 is
$128,500 in advances from related parties. None of the amounts due to related
parties bear interest, have any fixed terms of repayment or are secured.
COMPARISON OF THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
Revenues
We had no revenue during the three and nine months ended September 30, 2009 and
2008 from our operations.
Operating Expenses
Our operating expenses increased to $150,734 for nine months ended September 30,
2009 from $83,038 over the same period in the previous year and to $46,459 for
the three month period ended September 30, 2009 from $26,611 over the same
period in the 2008. This increase was largely a result of the costs associated
with preparation of our financial reports and auditing fees.
We expect our operating costs to be approximately $207,000 over the next year,
unless we locate a new viable business.
- 18 -
Liquidity and Capital Resources
The Company had no cash balance at September 30, 2009 or on December 31, 2008.
The notes to our unaudited consolidated financial statements as of September 30,
2009, contain footnote disclosure regarding our uncertain ability to continue as
a going concern. We have not generated revenues to cover our expenses, and have
accumulated a deficit of $4,917,359. As of September 30, 2009, we had $232,668
in current liabilities and no current assets, as such we are left with a working
capital deficit of approximately $232,668 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 nine
months ended September 30, 2009.
Net Cash Used In Operating Activities
Net cash used in operating activities during the three and nine months ended
September 30, 2009 was $20,000 and $51,000 respectively compared to no cash used
during the same periods ended September 30, 2008.
Net Cash Provided By Financing Activities
Net cash provided by financing activities during the three and nine months ended
September 30, 2009 was $20,000 and $51,000 respectively from advances from a
related party compared to no cash provided during the same periods ended
September 30, 2008.
Net Cash Used In Investing Activities
We did not have any investing activities during the three and nine months ended
September 30, 2009 or September 30, 2008.
Contingencies and Commitments
We had no contingencies or long-term commitments at September 30, 2009.
Contractual Obligations
None.
Inflation
We do not believe that inflation will have a material impact on our future
operations.
- 19 -
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(b) 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.
- 20 -
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
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 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. Because
of the uncertainties inherent in litigation, the company cannot predict whether
the outcome, which remains unresolved, will have a material adverse affect.
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 will
continue 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").
- 21 -
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
- 22 -
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: December 11, 2009.
-------------------------
Vic Dominelli
Chairman of the Board,
Interim Chief Executive Officer and
Principal Financial Office
