Attached files
| file | filename |
|---|---|
| EX-32.1 - Empire Post Media, Inc. | v198474_ex32-1.htm |
| EX-31.2 - Empire Post Media, Inc. | v198474_ex31-2.htm |
| EX-31.1 - Empire Post Media, Inc. | v198474_ex31-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended August
31, 2010
|
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
|
For the
transition period from ______________ to _____________
Commission
file number: 333-163782
EMPIRE POST MEDIA,
INC.
(Exact
name of registrant as specified in its charter)
|
Nevada
|
27-1122308
|
|
|
(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
|
|
280
South Beverly Drive, Suite 205, Beverly Hills, California,
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90212
|
|
|
(Address
of principal executive offices)
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(Zip
Code)
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310-472-5138
(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 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. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” ion Rule 12b-2 of the Exchange Act.
|
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
|
Non-accelerated
filer ¨
|
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
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes ¨
No ¨
APPLICABLE
ONLY TO CORPORATE ISSUERS
Indicate
the number of shares outstanding of each of the issuer’s classes of common
equity, as of the latest practicable date:
As of
September 30, 2010, there were 24,000,000 shares of $0.001 par value common
stock issued and outstanding.
1
FORM
10-Q
EMPIRE
POST MEDIA, INC.
INDEX
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Page
|
|||
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PART
I.
|
Financial
Information
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3
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|
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Item
1. Financial Statements ( Unaudited)
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3
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||
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Item
2. Management’s Discussion and Analysis of Financial Condition or
Plan of Operation
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11
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||
|
Item
3. Quantitative and Qualitative Disclosures about Market
Risk
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14
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||
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Item
4. Controls and Procedures
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14
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||
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PART
II.
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Other
Information
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14
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|
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Item
1. Legal Proceedings
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14
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||
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Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
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14
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||
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Item
3. Defaults Upon Senior Securities
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14
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||
|
Item
4. Submission of Matters to a Vote of Security
Holders.
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15
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||
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Item
5. Other Information
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15
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||
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Item
6. Exhibits
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15
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||
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Signatures
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15
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2
PART
I - FINANCIAL INFORMATION
EMPIRE
POST MEDIA, INC.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
|
ASSETS
|
||||||||
|
August
31, 2010 (Unaudited)
|
November
30, 2009
|
|||||||
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CURRENT
ASSETS
|
||||||||
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Cash
and cash equivalents
|
$ | 440 | $ | 3,000 | ||||
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TOTAL
CURRENT ASSETS
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440 | 3,000 | ||||||
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PROPERTY
AND EQUIPMENT, net of accumulated depreciation of $4,429 and
$577, respectively
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10,979 | 14,831 | ||||||
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TOTAL
ASSETS
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$ | 11,419 | $ | 17,831 | ||||
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CURRENT
LIABILITIES
|
||||||||
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Accounts
Payable
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$ | 5,650 | - | |||||
|
Accounts
payable to shareholder
|
13,080 | $ | 565 | |||||
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Accrued
interest
|
1,777 | 155 | ||||||
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Note
payable to shareholder
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$ | 38,208 | $ | 15,408 | ||||
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TOTAL
CURRENT LIABILITIES
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$ | 58,715 | $ | 16,128 | ||||
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COMMITMENTS
AND CONTINGENCIES, note 4
|
||||||||
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SHAREHOLDERS'
EQUITY:
|
||||||||
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Preferred
stock, $0.001 par value, 10,000,000 shares authorized, 0 share issued and
outstanding
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$ | - | $ | - | ||||
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Common
stock, $0.001 par value, 50,000,000 shares authorized, 24,000,000 shares
issued and outstanding
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24,000 | 24,000 | ||||||
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Deficit
accumulated during the development stage
|
$ | (71,296 | ) | $ | (22,297 | ) | ||
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TOTAL
SHAREHOLDERS' EQUITY
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$ | (47,296 | ) | $ | 1,703 | |||
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TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 11,419 | $ | 17,831 | ||||
See Notes
to Financial Statements
3
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS
|
For
the quarter ended August 31, 2010 (unaudited)
|
For
the nine months ended August 31, 2010 (unaudited)
|
Cumulative
from October 13, 2009 (inception) to
August
31, 2010 (unaudited)
|
||||||||||
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REVENUE
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$ | - | $ | - | $ | - | ||||||
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EXPENSES:
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||||||||||||
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General
and Administrative
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$ | 9,629 | $ | 48,999 | $ | 71,296 | ||||||
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NET
LOSS
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$ | (9,629 | ) | $ | (48,999 | ) | $ | (71,296 | ) | |||
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Basic
and diluted loss per share
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$ | - | $ | - | ||||||||
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Weighted
average shares outstanding
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24,000,000 | 24,000,000 | ||||||||||
See Notes
to Financial Statements.
4
EMPIRE
POST MEDIA, INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
|
For
the nine
months
ended
August
31, 2010 (unaudited)
|
Cumulative
from October 13, 2009 (inception) to
August
31, 2010 (unaudited)
|
|||||||
|
CASH
FLOW FROM OPERATING ACTIVITIES
|
||||||||
|
Net
loss
|
$ | (48,999 | ) | $ | (71,296 | ) | ||
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
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Common
stock issued for services
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- | 21,000 | ||||||
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Depreciation
expense
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3,852 | 4,429 | ||||||
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Increase
in:
|
||||||||
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Accounts
Payable
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5,650 | 5,650 | ||||||
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Accounts
payable to shareholder
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12,515 | 13,080 | ||||||
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Accrued
interest
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1,622 | 1,777 | ||||||
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NET
CASH USED IN OPERATING ACTIVITIES
|
(25,360 | ) | ( 25,360 | ) | ||||
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CASH
FLOW FROM FINANCING ACTIVITIES
|
||||||||
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Shareholder
Loans
|
22,800 | 22,800 | ||||||
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Proceeds
from sale of common stock
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- | 3,000 | ||||||
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NET
CASH PROVIDED BY FINANCING ACTIVITIES
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22,800 | 25,800 | ||||||
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NET
INCREASE (DECREASE) IN CASH
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(2,560 | ) | 440 | |||||
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CASH
AT BEGINNING OF PERIOD
|
3,000 | - | ||||||
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CASH
AT END OF PERIOD
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$ | 440 | $ | 440 | ||||
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SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
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Income
taxes paid in cash
|
$ | - | $ | - | ||||
|
Interest
expense paid in cash
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$ | - | $ | - | ||||
See Notes
to Financial Statements.
5
(A
DEVELOPMENT STAGE COMPANY)
FOR THE
PERIOD FROM OCTOBER 13, 2009
THROUGH
AUGUST 31, 2010
STATEMENT
OF SHAREHOLDERS' EQUITY (Unaudited)
|
Additional
|
||||||||||||||||||||
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Common
Stock
|
Paid
in
|
Accumulated
|
||||||||||||||||||
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Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
||||||||||||||||
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BALANCE,
October 13, 2009 (Date of Inception)
|
||||||||||||||||||||
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Issuance
of shares for cash in October 2009 ($0.001 per share)
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3,000,000 | $ | 3,000 | - | $ | - | $ | 3,000 | ||||||||||||
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Issuance
of shares for services in October 2009($0.001 per share)
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21,000,000 | $ | 21,000 | - | 21,000 | |||||||||||||||
|
Net
Loss
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- | - | - | (22,297 | ) | (22,297 | ) | |||||||||||||
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BALANCE,
November 30, 2009
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24,000,000 | $ | 24,000 | - | (22,297 | ) | 1,703 | |||||||||||||
|
Net
loss
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- | - | - | (48,999 | ) | (48,999 | ) | |||||||||||||
|
BALANCE,
August 31, 2010
|
24,000,000 | $ | 24,000 | $ | - | $ | (71,296 | ) | $ | (47,296 | ) | |||||||||
See Notes
to Financial Statements.
6
EMPIRE
POST MEDIA, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES TO
FINANCIAL STATEMENTS
AUGUST
31, 2010 (Unaudited)
|
1.
|
ORGANIZATION
AND BASIS OF PRESENTATION
|
Organization and Nature of
Operations
Empire
Post Media, Inc. (the “Company”) was founded in the State of Nevada on October
13, 2009. The Company is in the business of providing post production
services to the movie and television industry. The services include
both two-dimensional and three-dimensional formats and are offered on a
collateralized-deferred basis to producers and owners of feature films;
television movies, specials and series; short subjects and documentaries. In the
opinion of management, the accompanying unaudited condensed financial statements
reflect all adjustments, which are of a normal recurring nature, necessary for a
fair presentation of the results for the period presented. This
report on Form 10-Q for the quarter ended August 31, 2010 should be read in
conjunction with the Company's audited financial statements for the period ended
November 30, 2009, which appear on Form S-1/A filed with the SEC on April 2,
2010.
Development Stage
Activities
Since
inception the Company has not conducted any revenue-producing business
operations. All of the operating results and cash flows reported in the
accompanying financial statements from October 13, 2009 through August 31, 2010
are considered to be those related to the development stage activities and
represent the 'cumulative from inception' amounts required to be reported
pursuant to the accounting standards for Development Stage
Enterprises. The Company is focusing its efforts on developing its
business of providing post production services.
Going
Concern
The
Company has no revenue and has generated a net operating loss since its
inception. The Company also has a negative working capital and
accumulated deficit at August 31, 2010. These factors indicate that
the company may be unable to continue as going concern. The accompanying
financial statements have been prepared on a going concern basis of accounting,
which contemplates continuity of operations, realization of assets and
liabilities and commitments in the normal course of business. The
accompanying financial statements do not reflect any adjustments that might
result if the Company is unable to continue as a going concern. The Company’s
ability to continue as a going concern and the appropriateness of using the
going concern basis is dependent upon, among other things, additional cash
infusions. Management plans to raise additional capital through stock
offerings in order to build up the business and name
recognition. However, there can be no assurance that the Company will
be able to raise sufficient capital to fully implement its business
model.
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
Cash and Cash
Equivalents
The
Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
Property and
Equipment
Property
and equipment are stated at cost and consists solely of computer
equipment. All of the computer equipment was purchased by an
officer/shareholder of the Company immediately preceding its transfer to the
Company. Therefore the transferor’s historical cost is the same as the cost of
the asset. Depreciation of computer equipment is computed on the
straight-line basis over 3 years, the estimated useful life of the
equipment.
Use of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Management uses its
knowledge of its business in making estimates. Accordingly, actual results
could differ from those estimates.
7
(A
DEVELOPMENT STAGE COMPANY)
NOTES TO
FINANCIAL STATEMENTS
AUGUST
31, 2010 (Unaudited)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
Fair Value of Financial
Instruments
The
carrying amount of certain financial instruments, including cash and cash
equivalents, accounts payable and notes payable, approximates fair value due to
the relatively short maturity of such instruments.
The fair
value of financial instruments is categorized based upon the level of judgment
associated with the inputs used to measure their fair value. The categories are
as follows:
|
Level
Input:
|
Input
Definition:
|
|
|
Level
I
|
Inputs
are unadjusted, quoted prices for identical assets or liabilities in
active markets at the measurement date.
|
|
|
Level
II
|
Inputs,
other than quoted prices included in Level I, that are observable for the
asset or liability through corroboration with market data at the
measurement date.
|
|
|
Level
III
|
Unobservable
inputs that reflect management's best estimate of what market participants
would use in pricing the asset or liability at the measurement
date.
|
The
following table summarizes fair value measurements by level at October 13, 2009
(inception date), for assets and liabilities measured at fair value on a
non-recurring basis:
|
Level
I
|
Level
II
|
Level
III
|
Total
|
|||||||||||||
|
Note
payable to shareholder
|
$ | - | $ | - | $ | 15,408 | $ | 15,408 | ||||||||
We
considered the guidance of Topic ASC 835-30-25-2 which states that if
determinable, the established exchange price of property acquired in
consideration for the note may be used to establish the present value of the
note. The fair value of the note approximates its carrying
amount, due to its short maturity. Discounting the future payments
using an imputed rate of interest different from the stated rate would not have
a significant impact on the note, as the note is due on demand.
Revenue
Recognition
Revenue
will be recognized in accordance with the guidance of FASB ASC 605-10-25, which
is when the revenue is realized or realizable, and when revenue is
earned. Revenue is considered earned when the services to be rendered
under the contracts are substantially completed. All contracts will
be collateralized with a legally perfected, secured interest in each project’s
distribution receipts and other revenues.
Consulting
Fees
Consulting
fees include fees for services provided by officers/shareholders of the Company
and an attorney. During the nine months ended August 31, 2010, the Company
recorded $11,950 payable to an Officer/Shareholder of the Company for Consulting
Services rendered.
8
EMPIRE
POST MEDIA, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES TO
FINANCIAL STATEMENTS
August
31, 2010 (Unaudited)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
Income
Taxes
The
Company accounts for income taxes under the liability method in accordance with
FASB ASC 740-10. Under this standard, deferred income tax liabilities and
assets are determined based on the difference between the financial statement
and tax bases of assets and liabilities using the enacted tax rates expected to
be in effect for the year in which the differences are expected to reverse.
Deferred income tax assets are reduced by a valuation allowance when the
Company is unable to make the determination that it is more likely than not that
some portion or all of the deferred income tax asset will be
realized.
Earnings (Loss) per
Share
Basic
earnings per share are computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding.
Diluted earnings per share is computed similar to basic earnings per share
except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common shares
had been issued and if the additional common shares were dilutive. Common
equivalent shares are excluded from the computation if their effect is
anti-dilutive.
Recently Issued Accounting
Pronouncements
The
Company adopted the changes issued by the Financial Accounting Standards Board
(“FASB”) to the authoritative hierarchy of Generally Accepted Accounting
Principles (“GAAP”). These changes establish the FASB Accounting Standards
Codification TM
(“Codification”) as the source of authoritative accounting principles recognized
by the FASB to be applied by nongovernmental entities in the preparation of
financial statements in conformity with GAAP. Rules and interpretive releases of
the Securities and Exchange Commission (“SEC”) under authority of federal
securities laws are also sources of authoritative GAAP for SEC registrants. The
FASB will no longer issue new standards in the form of Statements, FASB Staff
Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue
Accounting Standards Updates (“ASU”). ASU’s will not be authoritative in their
own right as they will only serve to update the Codification. These changes and
the Codification itself do not change GAAP. Other than the manner in which new
accounting guidance is referenced, the adoption of these changes had no impact
on the Company’s financial statements.
In August
2009, the FASB issued ASU 2009-15, which changes the fair value accounting for
liabilities. These changes clarify existing guidance that in circumstances in
which a quoted price in an active market for the identical liability is not
available, an entity is required to measure fair value using either a valuation
technique that uses a quoted price of either a similar liability or a quoted
price of an identical or similar liability when traded as an asset, or another
valuation technique that is consistent with the principles of fair value
measurements, such as an income approach (e.g., present value technique). This
guidance also states that both a quoted price in an active market for the
identical liability and a quoted price for the identical liability when traded
as an asset in an active market when no adjustments to the quoted price of the
asset are required are Level 1 fair value measurements. This ASU was effective
on January 1, 2010. Adoption of this ASU did not to have a material
impact on the Company’s financial statements.
At August
31, 2010, the Company has an outstanding note payable balance, bearing 8%
interest, due on demand, due from an officer/shareholder of the Company in the
amount of $38,208. Interest accrued on this note totaled $1,777 since
inception.
9
EMPIRE
POST MEDIA, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES TO
FINANCIAL STATEMENTS
May 31,
2010 (Unaudited)
|
4.
|
COMMITMENTS
AND CONTINGENCIES
|
Cash
Deposits
The
Company maintains its cash at a financial institution. The account is
insured by the Federal Deposit Insurance Corporation (“FDIC”) up to
$100,000. On May 20, 2009, the FDIC temporarily increased its
coverage from $100,000 to $250,000 per depositor through December 31,
2013. The Company’s cash account, at times, may exceed federally
insured limits.
|
5.
|
INCOME
TAXES
|
At May
31, 2010, total deferred income tax assets consist principally of net operating
loss carry forwards in amounts still to be determined. For financial
reporting purposes, a valuation allowance has been recognized in an amount equal
to such deferred income tax assets due to the uncertainty surrounding their
ultimate realization.
|
6.
|
RELATED
PARTY TRANSACTIONS
|
The
Company uses the offices of a company affiliated with its president, as its
principal executive offices. The space occupied by Empire Post Media,
Inc. is de minimus.
For the
quarter ended May 31, 2010, the Company paid $2,500 to Mr. Allen Dunn for his
services. Mr. A. Dunn is the son of the Company’s majority
shareholder, Peter Dunn. Mr. A. Dunn is the Company’s Assistant
Corporate Secretary.
10
General
Overview
Empire
was incorporated under the laws of the State of Nevada on October 13, 2009, with
a business plan for providing and financing post-production services to the
movie and television industry. Empire is in the development stage and has not
generated any revenues as of the date of this Report.
On April
5, 2010, the United States Securities and Exchange Commission (the “SEC”)
declared effective our registration on Form S-1 (the “Registration
Statement”). The Registration statement is for the sale of up to
12,000,000 registered shares of our common stock (the “Shares”) owned
by Mr. Peter Dunn, our founder and CEO ( the “Selling Shareholder”) at a
price of $.005 per share. We will not receive any of the proceeds
from the sale of the shares.
We are
paying the expenses of the offering because we wanted to (i) become a reporting
company with the Commission under the Securities Exchange Act of 1934 (the "1934
Act"); and (ii) enable our common stock to be traded on the OTC Bulletin Board.
We believe that the registration of the sale of shares on behalf of our largest
existing security holder may facilitate the development of a public market in
our common stock if our common stock is approved for trading on the OTC Bulletin
Board. There is no assurance that such approval will be
given.
Financial
Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical
Accounting Policies” (“FRR60”) issued by the SEC, suggests companies provide
additional disclosure and commentary on those accounting policies considered
most critical. FRR 60 considers an accounting policy to be critical if it is
important to Empire’s financial condition and results of operations, and
requires significant judgment and estimates on the part of management in its
application. For a summary of our significant accounting policies, including the
critical accounting policies discussed below, see the accompanying notes to the
consolidated financial statements.
The
preparation of our financial statements in conformity with accounting principles
generally accepted in the United States of America (“GAAP”) requires management
to make estimates, judgments and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of expenses during the
reporting period. On an ongoing basis, Empire evaluates its estimates, which are
based on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances. The result of these
evaluations forms the basis for making judgments about the carrying values of
assets and liabilities and the reported amount of expenses that are not readily
apparent from other sources. Actual results may differ from these estimates
under different assumptions.
Empire
bases its estimates on management historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
There is no assurance that actual results will not differ from these
estimates.
See
footnotes in the accompanying financial statements regarding recent financial
accounting developments.
Income
Taxes
Results of
Operation
Empire is
a development stage company that has a limited history of operations. Since our
inception on October 13, 2009 to August 31, 2010, we have generated no
revenues. As of August 31, 2010, we had $440 in current
assets. We presently do not have the capital to commence the
operations outlined above.
For the
quarter ended August 31, 2010, we incurred a net loss of $9,629, and a net loss
of $71,296 from inception on October 13, 2009 to the period ended August 31,
2010. Empire has had no revenues over the same period and has
incurred expenses of $71,296, during the same period relating to the initial
formation of Empire, the offering expenses and other initial operating
costs.
11
Plan of
Operation
We will
not receive any proceeds from the sale of shares under Registration
Statement. Our continued existence is dependent upon our ability to
obtain additional financing and to generate revenue. We estimate that
our capital requirements for the next 6 months will be in the range of $30,000
to $60,000.
In August
2010, the Company entered into agreement with Brain/Storm Pictures and 33 Ocean
Ave Films to provide post production services for the total contract price of
$170,000 and $1,690,000 to be commenced on October 4, 2010 and January 17, 2011,
respectively.
The
motion picture industry is intensely competitive. While the Company
intended to growth its business during the next twelve (12) months, volatile
market conditions and the ongoing uncertainty of the global economic outlook
could stymie that growth at any time.
Based on
our current operating plan, we may not generate revenue that is sufficient to
cover our expenses for the next six months, and we will need to obtain
additional financing to operate our business for the next six
months. Our “burn rate” is approximately $10,000 per month. Most of
our expenses are anticipated to be outside services, consulting, legal,
accounting, transfer agent, and other costs associated with being a public
company. Since we intend to utilize our officers and directors, who
currently are part time and whose salaries are being accrued, to sell our
services, our marketing costs should be minimal, if any. Additional
financing, whether through public or private equity or debt financing,
arrangements with the security holder or other sources to fund operations, may
not be available, or if available, may be on terms unacceptable to
us. Our ability to maintain sufficient liquidity is dependent on our ability to
generate revenue and to raise additional capital.
If we
issue additional equity securities to raise funds, the ownership percentage of
our existing security holder would be reduced. New investors may
demand rights, preferences or privileges senior to those of existing holders of
our common stock. Debt incurred by us would be senior to equity in
the ability of debt holders to make claims on our assets. The terms of any debt
issued could impose restrictions on our operations. If adequate funds are not
available to satisfy either short or long-term capital requirements, our
operations and liquidity could be materially adversely affected and we could be
forced to cease operations.
Our lack
of revenues and dependence on our ability to raise additional capital to
continue our existence, raise substantial doubt about our ability to continue as
a going concern. Our financial statements and their explanatory notes included
as part of this Report do not include any adjustments that might result from the
outcome of this uncertainty. If we fail to obtain additional financing, either
through an offering of our securities or by obtaining loans, we may be forced to
cease our business.
We are
bearing all costs relating to the registration of the common stock, which are
estimated at approximately $25,000. The selling security holder,
however, will pay any distribution costs and commissions or other fees payable
to brokers or dealers in connection with any sale of the common stock. If we
issue additional equity securities to raise funds, the ownership percentage of
our existing security holder would be reduced. New investors may demand rights,
preferences or privileges senior to those of the current existing shareholder of
our common stock. Debt incurred by us would be senior to equity in the ability
of debt holders to make claims on our assets. The terms of any debt issued could
impose restrictions on our operations. If adequate funds are not available to
satisfy either short or long-term capital requirements, our operations and
liquidity could be materially adversely affected and we could be forced to cease
operations.
Liquidity
Since our
inception on October 13, 2009 to August 31, 2010, we have incurred a loss of
$71,296. Our cash and cash equivalent balances were $440 as of August 31,
2010. At August 31, 2010, we had a shareholders’ deficit of $47,296
and our total current liabilities due to accounts payable and amounts due to
related parties were $58,714.
On
October 15, 2009, Empire issued 24,000,000 shares of its common stock, at $0.001
per share, for an aggregate value of $24,000.
Based on
our current operating plan, we do not expect to generate revenue that is
sufficient to cover our expenses for at least the next year. In
addition, we do not have sufficient cash and cash equivalents to execute our
operations for at least the next year. We will need to obtain additional
financing to conduct our day-to-day operations, and to fully execute our
business plan. We anticipate raising the capital necessary to fund our business
through a subsequent offering of equity securities. Additional
financing, whether through public or private equity or debt financing,
arrangements with security holder or other sources to fund operations, may not
be available, or if available, may be on terms unacceptable to us.
12
We
estimate that our “burn rate” is approximately $10,000 per
month. Management has estimated the cost over the next six months to
be (a) between $6,000 and $15,000 to continue to marketing and financing of
post-production services to the entertainment industry, and (b) $10,000 to
maintain our reporting status. Therefore our current cash on hand will not
satisfy our cash requirements for the next six months and as such our CEO and
director, Mr. Dunn, will need to arrange additional financial commitments to our
company, which is not guaranteed. On January 25, 2010, Mr. Dunn
agreed to loan us up to $25,000 pursuant to an Agreement to Advance Funds
between Empire and Mr. Dunn. We will use these funds for use towards fees and
expenses related to this offering and to sustain our business over the next six
month period, as the expenses are incurred, in the form of a non-secured
loan. Although Mr. Dunn may be willing to make some personal
additional financial commitments, the total additional amount that he is willing
to invest has not yet been determined.
We plan
to satisfy our future cash requirements - primarily for working capital required
for the marketing of our services and to offset legal and accounting fees -
through revenue generating activities as well as financing activities. Our
financing activities will likely be in the form of future debt or equity
financing.
Management
believes that if we obtain sufficient funds to operate our business through
future debt or equity financing, we may generate sales revenue within the
following twelve months thereof. However, additional debt or equity financing
may not be available to us on acceptable terms or at all, and thus we could fail
to satisfy our future cash requirements.
If we are
unsuccessful in raising the additional proceeds through future equity financing
we will then have to seek additional funds through debt financing, which would
be highly difficult for a new development stage company to secure. Therefore, we
are highly dependent upon the future equity financing and/or support from our
existing shareholders. However, if such debt financing were available, because
we are a development stage company with no operations to date, we would likely
have to pay additional costs associated with high risk loans and be subject to
an above market interest rate. At such time these funds are required, management
would evaluate the terms of such debt financing and determine whether the
business could sustain operations and growth and manage the debt load. If we
cannot raise additional proceeds via future debt or equity financing we would be
required to cease business operations. As a result, investors in our common
stock would lose all of their investment. Also management believes
that if we cannot raise sufficient revenues or maintain our reporting
status with the SEC we will have to cease all efforts directed towards our
business. As such, any investment previously made would be lost in its
entirety.
If we are
unable to complete any phase of our development or marketing efforts because we
don't have enough money, we will cease our development and/or or marketing
operations until we raise the necessary money. Attempting to raise capital after
failing in any phase of our development plan could be difficult. As such, if we
cannot secure additional proceeds we will have to cease operations and investors
would lose their entire investment.
Our
auditors have issued a "going concern" opinion, which is included in the
financial statements included in our recent Form S-1 filing. . This means that
there is substantial doubt that we can continue as an on-going business for the
next twelve months unless we obtain additional capital to pay our bills. This is
because we have not generated any revenues and no substantial revenues are
anticipated. Our only other source for cash at this time is investments by our
CEO and director. We must raise cash to implement our business strategy and stay
in business.
As of
August 31, 2010, we had a demand note payable to Mr. Dunn totaling $38,208. The
note represents the purchase by Empire of computer equipment and software
totaling $15,408 and an additional cash infusion of $22,800.
Financing
Activities
Financing
activities resulted in a net cash inflow of $25,800 from October 13, 2009 (date
of inception) to August 31, 2010.
Satisfaction of Our Cash
Obligations for the Next Twelve Months
As of
August 31, 2010, our cash balance was $440. Our plan for satisfying
our cash requirements for the next six months, estimated to be between $30,000
and $60,000, is through services-generated income, sale of shares of our common
stock, third party financing, and/or traditional bank financing. We anticipate
some services-generated income during that same period of time, but do not
anticipate generating sufficient amounts of revenues to meet our working capital
requirements. Consequently, we intend to make appropriate plans to insure
sources of additional capital in the future to fund growth and expansion through
additional equity or debt financing or credit facilities.
Expected Purchase or Sale of
Significant Equipment
We do not
anticipate the purchase or sale of any significant equipment; as such items are
not required by us at this time or in the next twelve months.
13
Additional Disclosure of
Outstanding Share Data
As of
August 31, 2010, we had 24,000,000 shares of common stock issued and
outstanding.
Off-Balance Sheet
Arrangements
We
currently have no off-balance sheet arrangements, including any outstanding
derivative financial statements, off-balance sheet guarantees, interest rate
swap transactions or foreign currency contracts. We do not engage in trading
activities involving non-exchange traded contracts.
There are
numerous factors that affect the Company's business and the results of its
operations. These factors include general economic and business conditions; our
ability to raise such funds as are necessary to maintain our operations; the
ability of management to execute its business plan.
Item
4. Controls and Procedures
Evaluation of our Disclosure
Controls
As of the
end of the period covered by this Quarterly Report on Form 10-Q, our principal
executive officer and principal financial officer have evaluated the
effectiveness of our “disclosure controls and procedures” (“Disclosure
Controls”). Disclosure Controls, as defined in Rule 13a-15(e) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), are procedures that are
designed with the objective of ensuring that information required to be
disclosed in our reports filed under the Exchange Act, such as this Quarterly
Report, is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission’s rules and forms.
Disclosure Controls are also designed with the objective of ensuring that such
information is accumulated and communicated to our management, including the CEO
and CFO, as appropriate to allow timely decisions regarding required disclosure.
Our management, including the CEO and CFO, does not expect that our Disclosure
Controls will prevent all error and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. The design of any
system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future
conditions.
Based
upon their controls evaluation, our CEO and CFO have concluded that our
Disclosure Controls are effective at a reasonable assurance level.
Changes in internal control
over financial reporting
There
have been no changes in our internal controls over financial reporting during
our first fiscal quarter that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.
PART
II - OTHER INFORMATION
Item 1. Legal
Proceedings
There is
no material legal proceeding pending against the Company.
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
None
Item
3. Defaults Upon Senior Securities
None
14
Item
4. Submission of Matters to a Vote of Security Holders
None
Item
5. Other Information
None
Item
6. Exhibits
Copies of
the following documents are included as exhibits to this report pursuant to Item
601 of Regulation S-K.
|
Exhibit No.
|
SEC Ref. No.
|
Title of Document
|
||
|
1
|
|
31.1
|
|
Certification
of the Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
2
|
|
31.2
|
|
Certification
of the Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
3
|
32.1
|
|
Certification
of the Principal Executive Officer and Chief Financial
Officer pursuant to U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002*
|
SIGNATURES
In
accordance with the Exchange Act, the registrant caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
|
EMPIRE
POST MEDIA, INC.
|
|
|
Date:
October 7, 2010
|
|
|
/s/
Peter Dunn
|
|
|
Peter
Dunn
|
|
|
Chief
Executive Officer and Chief Financial Officer
|
15