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EX-31.1 - Empire Post Media, Inc.v228719_ex31-1.htm
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EX-32.1 - Empire Post Media, Inc.v228719_ex32-1.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 May 31, 2011

¨
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
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
 
280 South Beverly Drive, Suite 205, Beverly Hills, California,
 
90212
(Address of principal executive offices)
 
(Zip Code)

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 July 7, there were 192,837,336 shares of $0.001 par value common stock issued and outstanding.

 
 

 

FORM 10-Q
EMPIRE POST MEDIA, INC.
INDEX

     
Page
PART I. Financial Information  
3
       
 
Item 1. Financial Statements ( Unaudited)
 
3
       
 
Item 2.  Management’s Discussion and Analysis of Financial Condition or Plan of Operation
 
12
       
 
Item 3.  Quantitative and Qualitative Disclosures about Market Risk
 
15
       
 
Item 4.  Controls and Procedures
 
15
       
PART II. Other Information  
16
       
 
Item 1. Legal Proceedings
 
16
       
 
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
 
16
       
 
Item 3.  Defaults Upon Senior Securities
 
16
       
 
Item 4.  Submission of Matters to a Vote of Security Holders.
 
16
       
 
Item 5.  Other Information
 
16
       
 
Item 6.  Exhibits
 
16
       
 
Signatures
 
16
 
 
2

 
 
PART I - FINANCIAL INFORMATION
 
Item 1. Financial Statements (Unaudited)

EMPIRE POST MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
MAY 31, 2011 AND NOVEMBER 30, 2010

   
May 31,
2011 
(Unaudited)
   
November 30,
2010
(Audited)
 
ASSETS
           
CURRENT ASSETS
           
Cash and cash equivalents
  $ 5,241     $ 908  
Accounts receivable
    15,500       -  
                 
TOTAL CURRENT ASSETS
    20,741       908  
                 
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $0 and $5,713, respectively
    -       9,695  
                 
TOTAL ASSETS
  $ 20,741     $ 10,603  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
               
                 
CURRENT LIABILITIES
               
Accounts payable
  $ 20,389     $ 7,487  
Accounts payable to shareholders
    6,500       16,200  
Accrued interest
    4,449       2,659  
Note payable to shareholder
    47,973       44,208  
                 
TOTAL CURRENT LIABILITIES
  $ 79,311     $ 70,554  
                 
COMMITMENTS AND CONTINGENCIES, note 4
               
                 
SHAREHOLDERS' EQUITY (DEFICIT):
               
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 share issued and outstanding
  $ -     $ -  
Common stock, $0.001 par value, 400,000,000 shares authorized, 192,837,336 and 192,000,000 shares issued and outstanding, respectively.
    24,105       24,000  
Additional paid-in capital
    15,595       -  
(Deficit) accumulated during the development stage
    (98,270 )     (83,951 )
                 
TOTAL SHAREHOLDERS' (DEFICIT)
  $ (58,570 )   $ (59,951 )
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
  $ 20,741     $ 10,603  

See Notes to Condensed Financial Statements

 
3

 

EMPIRE POST MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED MAY 31, 2011 AND 2010
AND CUMULATIVE FROM OCTOBER 13, 2009 (INCEPTION)
THROUGH MAY 31, 2011
(UNAUDITED)

   
Three Months Ended
May 31,
   
Six Months Ended
May 31,
   
Cumulative
From
 
    
2011
   
2010
   
2011
   
2010
   
Inception
 
REVENUE
  $ 27,397     $ -     $ 71,103     $ -     $ 71,103  
                                         
COST OF REVENUE
    31,112       -       56,353       -       56,353  
                                         
 GROSS PROFIT
    (3,715 )     -       14,750       -       14,750  
                                         
EXPENSES:
                                       
General and Administrative
    22,723       25,183       33,942       39,369       117,893  
                                         
Loss from Operations
    (26,438 )     (25,183 )     (19,192 )     (39,369 )     (103,143 )
                                         
Other Income (Expense)
    4,873       -       4,873       -       4,873  
                                         
NET INCOME (LOSS)
  $ (21,565 )   $ (25,183 )   $ (14,319 )   $ (39,369 )   $ (98,270 )
                                         
Basic and diluted loss per share
  $ -     $ -     $ -     $ -          
Weighted average shares outstanding
    192,837,336       192,000,000       192,437,089       192,000,000          

The weighted average number of shares outstanding printed above have been retroactively restated to consider an 8 for 1 stock split effective July 7, 2011.

See Notes to Condensed Financial Statements

 
4

 

EMPIRE POST MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD FROM OCTOBER 13, 2009 (INCEPTION)
THROUGH MAY 31, 2011
(UNAUDITED)
 
   
 
   
Additional
   
  
       
    
Common Stock
   
Paid in
   
Accumulated
       
    
Shares
   
Amount
   
Capital
   
(Deficit)
   
Total
 
   
 
         
 
   
 
       
BALANCE, October 13, 2009 (Date of Inception)
    -     $ -     $ -     $ -     $ -  
                                         
Issuance of shares for cash in October 2009 ($0.000125 per share)
    24,000,000       3,000       -       -       3,000  
                                         
Issuance of shares for services in October 2009($0.000125 per share)
    168,000,000       21,000       -       -       21,000  
                                         
Net (Loss)
    -       -       -       (22,297 )     (22,297 )
                                         
BALANCE, November  30, 2009
    192,000,000       24,000       -       (22,297 )     1,703  
                                         
Net (Loss)
    -       -       -       (61,654 )     (61,654 )
                                         
BALANCE, November 30, 2010
    192,000,000       24,000       -       (83,951 )     (59,951 )
                                         
Issuance of shares for accrued salaries in February 2011 ($0.01875 per share)
    837,336       105       15,595       -       15,700  
                                         
Net (Loss)
    -       -       -       (14,319 )     (14,319 )
                                         
BALANCE, May 31, 2011
    192,837,336     $ 24,105     $ 15,595     $ (98,270 )   $ (58,570 )
 
The weighted average number of shares outstanding printed above have been retroactively restated to consider an 8 for 1 stock split effective July 7, 2011.

See Notes to Condensed Financial Statements.

 
5

 

EMPIRE POST MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31, 2011 AND 2010,
AND CUMULATIVE FROM OCTOBER 13, 2009 (INCEPTION)
TRHOUGH MAY 31, 2011
(UNAUDITED)

   
Six Months Ended
   
Cumulative
from
Inception to
 
    
May 31,
   
May 31,
 
    
2011
   
2010
   
2011
 
CASH FLOW FROM OPERATING ACTIVITIES
                 
Net income (loss)
  $ (14,319 )   $ (39,369 )   $ (98,270 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:
                       
Gain on  sale of property and equipment
    (4,873 )     -       (4,873 )
Common stock issued for services
    -       -       21,000  
Depreciation expense
    2,568       2,568       8,281  
Increase/Decrease  in:
                       
Accounts receivable
    (15,500 )     -       (15,500 )
Accounts payable
    12,902       6,648       20,389  
Accounts payable to shareholders
    6,000       8,100       22,200  
Accrued interest
    1,790       822       4,449  
NET CASH PROVIDED (USED) IN OPERATING ACTIVITIES
    (11,432 )     (21,231 )     (42,324 )
                         
CASH FLOW FROM FINANCING ACTIVITIES
                       
Proceeds from shareholder loan
    18,725       18,800       47,525  
Payments on shareholder loan
    (2,960 )     -       (2,960 )
Proceeds from sale of common stock
    -       -       3,000  
                         
NET CASH PROVIDED BY FINANCING ACTIVITIES
    15,765       18,800       47,565  
                         
NET INCREASE (DECREASE) IN CASH
    4,333       (2,431 )     5,241  
                         
CASH AT BEGINNING OF PERIODS
    908       3,000       -  
                         
CASH AT END OF PERIODS
  $ 5,241     $ 569     $ 5,241  
                         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
                       
Income taxes paid in cash
  $ -     $ -     $ -  
Interest expense paid in cash
  $ -     $ -     $ -  
                         
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING ACTIVITIES:
                       
Acquisition of computer equipment through assumption of a note payable to shareholder
  $ -     $ -     $ 15,408  
Distribution of computer equipment as settlement of note payable to shareholder
  $ 12,000     $ -     $ 12,000  
 
See Notes to Condensed Financial Statements.

 
6

 

EMPIRE POST MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MAY 31, 2011
(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 financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the period presented.

The unaudited condensed financial statements of the Company been prepared in accordance with the Securities and Exchange Commission (SEC) rules for interim financial information. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. However, the information included in these interim financial statements reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations.  Results shown for interim periods are not necessarily indicative of the results to be obtained for a full year.  The balance sheet information as of November 30, 2010 was derived from the audited financial statements included in Form 10-K filed February 28, 2011. These interim financial statements should be read in conjunction with that report
 
Development Stage Activities

Since inception the Company has only limited revenue-producing business operations.  All of the operating results and cash flows reported in the accompanying condensed financial statements from October 13, 2009 through May 31, 2011 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 only limited revenues and has generated a net operating loss since its inception.  The Company also has a negative working capital and accumulated deficit at May 31, 2011.  These factors among others raise substantial doubt about going concern. The accompanying condensed 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 condensed financial statements do not include any adjustments relating to the recoverability of the carrying amount of the recorded assets or the amount of liabilities that might result from the outcome of this uncertainty.  The accompanying condensed 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.

 
7

 

EMPIRE POST MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MAY 31, 2011
(UNAUDITED)

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

For the quarters ended May 31, 2011 and 2010, depreciation expenses totaled $1,284, $1,284, respectively.  For the six months ended May 31, 2011 and 2010, and for the period from October 13, 2009 (inception) through May 31, 2011, depreciation expenses totaled $2,568, $2,568, and $8,281, respectively.

On May 21, 2011, the Company sold all of its property and equipment for $12,000, which reduced the officer/shareholder loan.  Empire recorded $4,873  as gain for the quarter ended May 31, 2011 from the sale of its property and 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.

Fair Value of Financial Instruments

The carrying amount of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and notes payable, approximates fair value due to the relatively short maturity of such instruments.

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 is 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 are 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.   For the quarters ended May 31, 2011 and 2010, consulting fees totaled $3,000 and $4,600, respectively.  For the six months ended May 31, 2011 and 2010, and for the period from October 13, 2009 (inception) through May 31, 2011, consulting fees totaled $6,000, $10,600 and $45,700, respectively.  The Company has incurred no losses as a result of any credit risk exposure.  (See Note 6 - Related Party Transactions)

 
8

 

EMPIRE POST MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MAY 31, 2011
(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.

The Company’s policy is to include interest and penalties related to unrecognized tax benefits in income tax expense.  Interest and penalties totaled $0 for the six months ended May 31, 2011.  The company files income tax returns with the Internal Revenue Service (“IRS”) and various state jurisdictions.  For jurisdictions in which tax filings are prepared, the Company is subject to income tax examinations by state tax authorities and the IRS for tax years through 2010.

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.  The weighted average number of shares outstanding have been retroactively restated to consider an 8 for 1 stock split effective July 7, 2011.

 3.      NOTE PAYABLE TO SHAREHOLDER

At May 31, 2011 and November 30, 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 $47,973 and $44,208, respectively.  Interest accrued on this note totaled $4,449 since inception.  For the six months ended May 31, 2011 and 2010, an officer/shareholder advanced the Company $18,725 and $18,800, respectively.    For the six months ended May 31, 2011 and 2010, the Company repaid $2,960 and $0, respectively.  On May 21, 2011, the Company sold property and equipment for $12,000, which reduced the officer/shareholder loan.  Accrued interest for the six months ended May 31, 2011 and 2010 totaled $1,790 and $822, respectively.

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

As November 30, 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.  If not utilize, the net operating loss carryover is due to start expiring in 2029.

 
9

 

EMPIRE POST MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MAY 31, 2011
(UNAUDITED)

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.

On February 25, 2011, the Company converted $15,700 of accrued compensations of one current officer and one former officer into shares of the Company’s common stock at price of $.01875 per share for the total of 837,336 shares.

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.

On May 21, 2011, the Company sold all of its property and equipment for $12,000, which reduced the officer/shareholder loan.  Empire recorded $4,873 as gain for the quarter ended May 31, 2011 from the sale of its property and equipment.

7.      SUBSEQUENT EVENTS

In June of 2011, the Company's Board of Directors authorized an eight-for-one share split, to take effect on July 7, 2011.  Each shareholder of record on July 7, 2011 will receive seven additional shares for each share held on that date.  As required by accounting guidance, authorized shares, issued and outstanding shares and per share amounts have been retroactively restated throughout these condensed financial statements and the accompanying notes to reflect Empire's change in capital structure.

Subsequent to the reporting period, the Company entered in an agreement with SLC Air, Inc to issue an additional 6,800,000 pre-split common shares (an equivalent of 54,400,000 post-split shares) at the average price of $.05 per share, resulting in the probable receipts, net of transaction fees, of approximately $340,000.   Management intends to use the proceeds to fund new developing projects as well as to pay for operating expenses.

On June 6, 2011, the Company entered into an Investment Agreement with an independent, non-affiliated investor (the “Investor”), whereby the Investor has deposited $1.5 million into an escrow account to be used by the Company to develop, produce and market television programs and television series (the “Program(s)”) in return for an interest in each television program produced.  The Company is currently in the process of assessing the commercial viability of several different development projects.  If the Programs do not go forward the funds in the escrow account may have to be returned to the Investor.  There is no assurance that any Programs will be funded and if funded, whether they will be profitable.

.8.      NEW ACCOUNTING PRONOUNCEMENTS
 
Recently Adopted Accounting Guidance

In January 2010, the FASB issued Accounting Standards Update ASU No. 2010-06, “Fair Value Measurements and Disclosures (Topic 820) – Improving Disclosures about Fair Value Measurements”. This guidance requires new disclosures related to recurring and nonrecurring fair value measurements. The guidance requires disclosure of transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy, including the reasons and the timing of the transfers and information on purchases, sales, issuance, and settlements on a gross basis in the reconciliation of the assets and liabilities measured under Level 3 of the fair value measurement hierarchy. The adoption of this guidance is effective for interim and annual reporting periods beginning after December 15, 2009. We have adopted this guidance in the financial statements presented herein, which did not have a material impact on our consolidated financial position or results of operations.

 
10

 

EMPIRE POST MEDIA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MAY 31, 2011
(UNAUDITED)

.8.      NEW ACCOUNTING PRONOUNCEMENTS (cont.)
 
Recently Adopted Accounting Guidance (cont.)

In October 2009, the FASB issued guidance under the Multiple Element Revenue Arrangements topic of the Codification which requires separation of the consideration received in such arrangements by establishing a selling price hierarchy for determining the selling price of a deliverable, which will be based on available information in the following order: vendor-specific objective evidence, third-party evidence, or estimated selling price. It also eliminates the residual method of allocation, requires that the consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the arrangement to each deliverable on the basis of each deliverable’s selling price, and requires that a vendor determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. These changes became effective for us on January 1, 2011, but did not have a material impact on our financial position or results of operations.

Recent Accounting Guidance Not Yet Adopted

In January 2010, the FASB issued guidance to amend the disclosure requirements related to fair value measurements. The guidance requires the disclosure of roll forward activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance will become effective for us with the reporting period beginning January 1, 2012. Other than requiring additional disclosures, the adoption of this new guidance will not have a material impact on our financial statements.

In June 2011, the FASB issued Accounting Standards Update No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” (“ASU 2011-05”). ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in equity. ASU 2011-05 requires that all nonowner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. This new guidance is to be applied retrospectively. We are required to adopt this standard as of the beginning of 2013. The adoption of this standard will only impact the presentation of our financial statements.

 
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Item 2.  Management’s Discussion and Analysis or Plan of Operation

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 generated $71,103 of revenues since inception.

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 was for the sale of up to 96,000,000 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.  The Company did not receive any of the proceeds from the sale of the shares. The Company paid all of the expenses of the offering because it wanted to (i) become a reporting company with the Commission under the Securities Exchange Act of 1934 (the "1934 Act"); and (ii) enable its 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 on the OTC Bulletin Board.  We recently received approval from FINRA to begin trading on the OTC Bulletin Board and we intend to commence such trading within the next thirty days. There is no assurance that there will be any active trading in our common stock.
 
 Critical Accounting Policies and Estimates
 
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 condensed financial statements regarding recent financial accounting developments.
 
Income Taxes
 
We make estimates to determine our current provision for income taxes, as well as our income taxes payable. Our estimates with respect to the current provision for income taxes take into account current tax laws and our interpretation of current tax laws, as well as possible outcomes of any future tax audits. Changes in tax laws or our interpretation of tax laws and the resolution of any future tax audits could significantly impact the amounts provided for income taxes in our financial statements.
  
Results of Operation
  
Empire is a development stage company that has a limited history of operations. Since our inception on October 13, 2009 to May 31, 2011, we have generated limited revenues.  As of May 31, 2011, we had $20,741 in current assets.  We presently may not have the capital to continue our operations.
  
For the quarter ended May 31, 2011, we had net loss of $21,564, compared to a net loss of $25,183 for the quarter ended May 31, 2010.  For the quarter ended May 31, 2011 and 2010, Empire had revenues of $27,397 and $0, respectively, and has incurred expenses of  $53,835 and $25,183, respectively, during the same periods.  For the six months ended May 31, 2011 and 2010,  Empire had revenues of $71,103 and $0, respectively, and has incurred expenses of $90,296 and $39,369, respectively, during the same periods.  All of the expenses for the quarter ended May 31, 2010, were relating to the initial formation of Empire, the offering expenses and other initial operating costs.

 
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Plan of Operation
  
We did 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.

Subsequent to the reporting period, Empire entered in an agreement with SLC Air, Inc to issue an additional 6,800,000 pre-split common shares (an equivalent of 54,400,000 post-split shares) at the average price of $.05 per share, resulting in the probable receipts, net of transaction fees, of approximately $340,000.   Management intends to use the proceeds to fund new developing projects as well as to pay for operating expenses.

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.   Management anticipates the completion of these projects around May of 2012.

On December 27, 2010 the Company entered into a post-production/consulting contract with  Tunnel,  Inc. for a minimum monthly retainer fee of $10,000 plus any extraordinarily out of pocket costs, such travel expenses, etc.   The contract was commenced on January 2011.  Empire will be consulting on certain special post-production situations in addition to providing post- production services.   

The motion picture industry is intensely competitive.  While the Company intends to grow 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 limited 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 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 paid for all costs relating to the registration of the common stock.  The selling security holder, however,  paid 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.

 
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Liquidity
 
Since our inception on October 13, 2009 to May 31, 2011, we have incurred a loss of $(98,270). Our cash and cash equivalent balances were $5,241.  At May 31, 2011, we had a shareholders’ deficit of $58,270 and our total current liabilities due to accounts payable and amounts due to related parties were $79,311.
 
On October 15, 2009, Empire issued 192,000,000 shares of its common stock, at $0.001 per share, for an aggregate value of $24,000.

On February 25, 2011, we issued an aggregate of 837,336 shares at a price of $.01875 per share in satisfaction of accrued compensations owed to one current and one previous officer.
 
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.
 
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 in the event that our revenues do not increase, our CEO and director, Mr. Dunn, will need to arrange additional financial commitments to our company, which is not guaranteed.  Between October 13, 2009 and May 31, 2011, Mr. Dunn loaned us up $62,933 pursuant to an Agreement to Advance Funds between Empire and Mr. Dunn. These funds were used for fees and expenses related to this offering and to sustain our business over the period. 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 will increase our sales revenue within the following twelve months.  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 10-K 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 generated only limited revenues to date. 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 May 31, 2011, we had a demand note payable to Mr. Dunn.  For the six months ended May 31, 2011, Empire repaid $2,960.

 
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Financing Activities
 
Financing activities resulted in a net cash inflow of $15,765 from October 13, 2009 (date of inception) to May 31, 2011.
 
Satisfaction of Our Cash Obligations for the Next Twelve Months
 
As of May 31, 2011, our cash balance was $5,241.  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 increased 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
 
On May 21, 2011, Empire sold all of its property and equipment for $12,000, which reduced the officer/shareholder loan.    Empire recorded $4,873  as gain for the quarter ended May 31, 2011 from the sale of its property and equipment.

 Additional Disclosure of Outstanding Share Data
 
As of May 31, 2011, we had 192,837,336 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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
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/ principal financial officer has 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/CFO, as appropriate to allow timely decisions regarding required disclosure. Our management, including the CEO/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/CFO has concluded that our Disclosure Controls are effective at a reasonable assurance level.

 
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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

On February 25, 2011, we issued 837,336 shares of common stock to one current and one former officer, at a price of $.01875 per share, in satisfaction of accrued compensations owed to such officers.  The shares were issued pursuant to Section 4(2) exemption under the Securities Act of 1933, as amended.
 
Subsequent to the reporting period, the Company entered in an agreement with SLC Air, Inc to issue an additional 6,800,000 pre-split common shares (an equivalent of 54,400,000 post-split shares) at the average price of $.05 per share, resulting in the probable receipts, net of transaction fees, of approximately $340,000.   Management intends to use the proceeds to fund new developing projects as well as to pay for operating expenses. The shares were issued without registration pursuant to an exemption under Section 4(2) of the Securities Act of 1933, as amended.

Item 3.  Defaults Upon Senior Securities

None
 
Item 4.  Submission of Matters to a Vote of Security Holders

None

Item 5.  Other Information

On June 6, 2011, the Company entered into an Investment Agreement with an independent, non-affiliated investor (the “Investor”), whereby the Investor has deposited $1.5 million into an escrow account to be used by the Company to develop, produce and market television programs and television series (the “Program(s)”) in return for an interest in each television program produced.  The Company is currently in the process of assessing the commercial viability of several different development projects.  If the Programs do not go forward the funds in the escrow account may have to be returned to the Investor.  There is no assurance that any Programs will be funded and if funded, whether they will be profitable.
 
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: July 15, 2011
   
 
/s/ Peter Dunn
 
 
Peter Dunn
 
Chief Executive Officer and Chief Financial Officer
 
 
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