Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report under Section 13 or 15 (d) of
Securities Exchange Act of 1934
For the quarterly period ended March 31, 2012
Commission File Number 000-50045
EMPIRE GLOBAL CORP.
(Name of small business issuer in its charter)
Delaware 33-0823179
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
671 Westburne Dr.
Concord, Ontario, L4K 4Z1
(647) 229-0136
(Address and telephone number of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company.
Large accelerated filer [ ] Accelerated Filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if Smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
There were 18,675,800 shares of Common Stock outstanding as of October 24, 2012.
ITEM 1. FINANCIAL STATEMENTS
The unaudited quarterly financial statements for the period ended March 31,
2012, prepared by the company, immediately follow.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements F-1 - F-6
Item 2. Management's Discussion and Analysis or Plan of Operation 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
Item 4. Controls and Procedures 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 1A. Risk Factors 15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits 15
SIGNATURES
- 2 -
ITEM 1. FINANCIAL STATEMENTS
EMPIRE GLOBAL CORP.
UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 2012 and 2011
CONTENTS
Balance Sheets F1
Statements of Operations F2
Statements of Cash Flows F3
Notes to Financial Statements F-4 - F-6
- 3 -
EMPIRE GLOBAL CORP.
Balance Sheets
March 31, December 31,
2012 2011
US$ US$
(Unaudited)
--------- -----------
ASSETS
Current Assets - -
------- -------
Total Assets - -
- -
======= =======
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities
Accounts expenses 1,500 -
Advances from stockholders 150,378 150,000
------- -------
Total Current Liabilities 151,878 150,000
Commitments and Contingencies
Stockholders Deficiency
Preferred Stock, $0.0001 par value,
20,000,000 shares authorized, none issued. - -
Capital Stock, $0.0001 par value, 80,000,000 shares authorized;
18,675,800 shares issued and outstanding, 1,868 1,868
Additional paid-in capital 4,910,879 4,909,002
Deficit accumulated during the development stage (106,345) (102,590)
Accumulated Deficit (4,958,280) (4,958,280)
----------- -----------
Total Liabilities and Stockholders' Deficiency (151,878) (150.000)
---------- ---------
- -
======= =======
See notes to financial statements
- F1 -
EMPIRE GLOBAL CORP.
Statements of Operations
(Unaudited)
From inception
Three Months Ended (January 5, 2010)
March 31, to March 31,
2012 2011 2012
-------- -------- ------------
US$ US$ US$
Revenue - - -
General and administrative expenses 1,878 427 97,921
Interest expense - stockholders 1,877 - 8,424
--------- --------- -----------
Loss from continuing operations (3,755) (427) (106,345)
Discontinued operation
Loss on disposal of discontinued operations - - (6,458)
--------- --------- -----------
Net Loss (3,755) (427) (112,803)
========= ========= ===========
Basic and fully diluted loss per share
(0.00) (0.00)
========= ===========
Basic and fully diluted weighted
average number of shares 18,675,800 18,675,800
========== ===========
See notes to financial statements
- F2 -
EMPIRE GLOBAL CORP.
Statements of Cash Flows
(Unaudited)
From inception
Three Months Ended (January 5, 2010)
March 31, to March 31,
2012 2011 2012
-------- -------- ------------
US$ US$ US$
Cash Flows from Operating Activities
Net loss from continuing operations (3,755) (427) (106,345)
Net loss from discontinued operations - - (6,458)
--------- --------- -----------
Net loss (3,755) (427) (112,803)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation - 147 879
Accrued expenses 1,500 - 1,500
Imputed interest 1,877 - 8,424
Disposal of equipment - - 2,785
Loss on disposal of discontinued operations - - 6,458
Changes in operating assets and liabilities
--------- --------- -----------
Net cash used in operating activities (378) (280) (92,757)
--------- --------- -----------
Cash Flows from Financing Activities
Advances from stockholders 378 280 92,757
--------- --------- -----------
Net cash provided by financing activities 378 280 92,757
--------- --------- -----------
Net (decrease) increase in cash - - -
Cash - beginning of period - - -
--------- --------- -----------
Cash - end of period - -
========= ========= ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest - - -
========= ========= ===========
Income taxes - - -
========= ========= ===========
See notes to financial statements
- F3 -
EMPIRE GLOBAL CORP.
Notes to Financial Statements
(Unaudited)
1. Nature of Business and Basis of Presentation
The accompanying unaudited interim financial statements of the Company have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and the requirements
of Regulation S-X of the Securities and Exchange Commission (the "SEC"). Certain
information and disclosures normally included in financial statements prepared
in accordance with accounting principles generally accepted in the United States
of America have been condensed or omitted pursuant to the rules and regulations
of the SEC. The unaudited interim financial statements reflect all adjustments
(consisting only of normal recurring adjustments), which, in the opinion of
management, are necessary for a fair presentation of the financial position and
results of operations for the periods presented. There have been no significant
changes in accounting policies since December 31, 2011. The results of
operations for the periods are not indicative of the results expected for the
full fiscal year or any future period. These unaudited financial statements
should be read in conjunction with the annual consolidated financial statements
and notes for the year ended December 31, 2011. The functional currency used by
the Company is the US dollar.
Empire Global Corp. ("Empire" or "the Company") was incorporated in the state of
Delaware on August 26, 1998 as Pender International Inc. and maintains its
principal executive office headquartered in Canada. On September 30, 2005
contemporaneously with a change in management and business plan changed its name
to Empire Global Corp.
2. Going Concern
These unaudited financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP") with the assumption that the Company will be able to realize its assets
and discharge its liabilities in the normal course of business.
The Company generated no revenue and has incurred losses since inception.
Continuation as a going concern is uncertain and dependant upon obtaining
additional sources of financing to sustain its existence and achieving future
profitable operations, the outcome of which cannot be predicted at this time. In
the event the Company cannot obtain the necessary funds, it will be unlikely
that it will be able to continue as a going concern. Management plans to
mitigate its losses in future years by significantly reducing its operating
expenses and seeking out new business opportunities. However, there is no
assurance that the Company will be able to obtain additional financing, reduce
their operating expenses or be successful in locating or acquiring a viable
business.
The accompanying unaudited financial statements do not include any adjustments
that might become necessary should the Company be unable to continue as a going
concern.
- F4 -
3. Summary of Significant Accounting Policies
The Company's significant accounting policies and recent accounting
pronouncements are included in the Company's form 10-K dated and filed on
October 10, 2012 for the fiscal year ended December 31, 2011. A summary of
critical accounting policies are described below.
a) Use of Estimates
In preparing the Company's financial statements in conformity with accounting
principles generally accepted in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosures of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of revenue and
expenses during the reporting periods. Actual results could differ from those
estimates.
Significant estimates made by management are, among others, realizability of
long-lived assets, and deferred taxes. Management reviews its estimates on a
quarterly basis and, where necessary, makes adjustments prospectively.
b) Income Taxes
The Company accounts for income taxes pursuant to the provisions of ASC 740-10
"Accounting for Income Taxes," which requires, among other things, an asset and
liability approach to calculating deferred income taxes. The asset and liability
approach requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. A valuation allowance is
provided to offset any net deferred tax assets for which management believes it
is more likely than not that the net deferred asset will not be realized.
c) Fair Value of Financial Instruments
The carrying value of the Company's accounts payable and accrued charges, and
advances from shareholder approximate fair value because of the short term
maturity of these financial instruments.
d) Earnings Per Share
FASB ASC 260, "Earnings Per Share" provides for calculation of "basic" and
"diluted" earnings per share. Basic earnings per share includes no dilution and
is computed by dividing net income (loss) available to common shareholders by
the weighted average common shares outstanding for the period. Diluted earnings
per share reflect the potential dilution of securities that could share in the
earnings of an entity similar to fully diluted earnings per share. Basic and
diluted loss per share were the same, at the reporting dates, as there were no
common stock equivalents outstanding.
e) Recent Accounting Pronouncements
In the quarter ending March 31, 2012, there were no new accounting
pronouncements issued by the Financial Accounting Standards Board ("FASB") that
are expected to have a material impact on the consolidated financial statements
upon adoption.
- F5 -
4. Advances from stockholders
Advances from stockholders are non-interest bearing and are due on demand.
Interest was imputed at 5% per annum. The Company recorded an interest expense
of $6,547 for the year ended December 31, 2011 and $1,877 for the three months
ending March 31, 2012. Advances from stockholders as of March 31, 2012 and
December 31, 2011 are as follows:
March 31, December 31,
2012 2011
-------- -----------
Braydon Capital Corp. $ 31,314 $ 31,314
Gold Street Capital 119,064 118,686
-------- ---------
Total advances from related parties: $ 150,378 $ 150,000
======== =========
5. Commitments and Contingencies
The Company may be subject to claims arising in the ordinary course of business.
The Company was subject to indirect proceedings involving our current Chairman
and Principal Executive Officer which were concluded in May 2011. As a result of
the conclusion of these matters, the Company and our Chairman and Executive
Officer are no longer subject to legal proceedings.
6. Subsequent Events
The Company has evaluated subsequent events through the filing date of this
quarterly report on form 10-Q for the period ended March 31, and has disclosed
such items in this note as follows.
On December 9, 2011, the Company entered into a Stock Purchase and Share
Exchange Agreement (the "Agreement") to acquire Avontrust Global Pte. Ltd.
("AVT"), a Singapore company with its head office and operations in Singapore.
On July 2, 2012, prior to the closing of the agreement, the Company and AVT
determined that the Agreement was no longer in the best interests of their
respective shareholders and therefore entered into a Mutual Termination
Agreement as report on Form 8-K filed July 10, 2012.
- F6 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain information included in this form 10-Q and other materials filed or to
be filed by us with the Securities and Exchange Commission (as well as
information included in oral or written statements made by us or on our behalf),
may contain forward-looking statements about our current and expected
performance trends, growth plans, business goals and other matters. These
statements may be contained in our filings with the Securities and Exchange
Commission, in our press releases, in other written communications, and in oral
statements made by or with the approval of one of our authorized officers. Words
or phrases such as "believe," "plan," "will likely result," "expect," "intend,"
"will continue," "is anticipated," "estimate," "project," "may," "could,"
"would," "should," and similar expressions are intended to identify
forward-looking statements. These statements, and any other statements that are
not historical facts, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, as codified in Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, as amended from time to time (the "Act").
In connection with the "safe harbor" provisions of the Act, we have identified
and filed important factors, risks and uncertainties that could cause our actual
results to differ materially from those projected in forward-looking statements
made by us, or on our behalf (see Part I, Item 1, "Risk Factors" included in our
form 10-K for the fiscal year ended December 31, 2011). These cautionary
statements are to be used as a reference in connection with any forward-looking
statements. The factors, risks and uncertainties identified in these cautionary
statements are in addition to those contained in any other cautionary
statements, written or oral, which may be made or otherwise addressed in
connection with a forward-looking statement or contained in any of our
subsequent filings with the Securities and Exchange Commission. Because of these
factors, risks and uncertainties, we caution against placing undue reliance on
forward-looking statements. Although we believe that the assumptions underlying
forward-looking statements are reasonable, any of the assumptions could be
incorrect, and there can be no assurance that forward-looking statements will
prove to be accurate. Forward-looking statements speak only as of the date on
which they are made. We do not undertake any obligation to modify or revise any
forward-looking statement to take into account or otherwise reflect subsequent
events or circumstances arising after the date that the forward-looking
statement was made.
General
This discussion and analysis should be read in conjunction with our interim
unaudited financial statements and related notes on this form 10-Q and the
audited consolidated financial statements and related notes thereto included in
our Annual Report on form 10-K for the fiscal year ended December 31, 2011. The
inclusion of supplementary analytical and related information herein may require
us to make appropriate estimates and assumptions to enable us to fairly present,
in all material respects, our analysis of trends and expectations with respect
to our results of operations and financial position taken as a whole.
Hereinafter, Empire Global Corp. ("Empire") will be referred to as the Company
throughout the balance of this document.
- 10 -
Our Objectives and Areas of Focus
Empire was organized under the laws of the State of Delaware on August 26, 1998.
The Company went through various name changes prior to September 2005 when the
name was changed to Empire Global Corp. We are presently seeking new business
opportunities and currently intend to purchase, merge with or acquire any
business or assets which management believes has potential for being profitable.
Challenges and Risks
As of the three months ended March 31, 2012, we had not generated revenues and
had no income or cash flows from operations since inception. There is no
assurance that the Company will identify an acquisition candidate, generate
revenues or become profitable.
We have total accumulated deficit of $5,064,625 as of March 31, 2012 and will
require additional debt or equity financing to continue operations and to seek
out new business opportunities. We plan to mitigate our losses in future years
through maintaining minimal operational costs and locating a viable business.
In analyzing viable business opportunities, management may consider factors
such as available technical, financial and managerial resources; working capital
and other financial requirements; history of operations, if any; prospects for
the future; nature of present and expected competition; the quality experience
and depth of management; the potential for further research, development, or
exploration; specific risk factors not now foreseeable but which may be
anticipated; the potential for growth or expansion; the potential for profit;
the perceived public recognition or acceptance of products, services, or trades;
name identification; and other relevant factors. This discussion of the proposed
criteria is not meant to be restrictive of the virtually unlimited discretion of
the Company to search for and enter into potential business opportunities.
The search for a target company will not be restricted to any specific kind of
business entities, but may acquire a venture which is in its preliminary or
development stage, which is already in operation, or in essentially any stage of
its business life. It is impossible to predict at this time the status of any
business in which the Company may become engaged, whether such business may need
to seek additional capital, may desire to have its shares publicly traded, or
may seek other perceived advantages which the Company may offer.
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture,
licensing agreement or other arrangement with another corporation or entity. On
the consummation of a transaction, it is likely that the present management and
stockholder of the Company will no longer be in control of the Company. In
addition, it is likely that the officer and director of the Company will, as
part of the terms of the business combination, resign and be replaced by one or
more new officers and directors.
It is anticipated that any securities issued in any such business combination
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, it will be undertaken
by the surviving entity after the Company has entered into an agreement for a
business combination or has consummated a business combination. The issuance of
additional securities and their potential sale into any trading market which may
develop in the Company's securities may depress the market value of the
- 11 -
Company's securities in the future if such a market develops, of which there is
no assurance.
The Company will participate in a business combination only after the
negotiation and execution of appropriate agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require certain
representations and warranties of the parties thereto, will specify certain
events of default, will detail the terms of closing and the conditions which
must be satisfied by the parties prior to and after such closing and will
include miscellaneous other terms.
There is no assurance that we will be able to obtain additional financing, be
successful in seeking new business opportunities, or that we will be able to
reduce operating expenses. Our unaudited financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
Critical Accounting Policies
A summary of critical accounting policies and recent accounting pronouncements
is included in Note 3 of this form 10-Q.
Overall Results of Operations
As a result of our limited business operations, we had minimal changes in our
overall results.
We have no cash as of the date of this filing and therefore are not able to
satisfy our working capital needs for the next year. We anticipate funding our
working capital needs for the next twelve months through private advances and
loans from our management and key shareholders, or if available, equity capital
markets. Although the foregoing actions are expected to cover our anticipated
cash needs for working capital and capital expenditures for at least the next
twelve months, no assurance can be given that we will be able obtain financing
or raise sufficient cash to meet our cash requirements.
As described in note 6 to the financial statements, subsequent to the period
covered by this report, the Company reported that on July 2, 2012 it had
terminated the Agreement to acquire Avontrust Global Pte. Ltd. Over the next
twelve months we plan to continue seek out additional new business
opportunities. If we enter into a new business opportunity or close such a
venture, will need to raise additional working capital and we may be required to
hire additional employees, independent contractors as well as purchase or lease
additional equipment. We plan to raise this additional working capital through
the private placement of shares, private advances and loans.
We anticipate continuing to rely on equity sales of common stock to fund our
operations and to seek out or enter into new business opportunities. The
issuance of any additional shares will result in dilution to our existing
shareholders.
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011 AND FROM INCEPTION
(JANUARY 5, 2010) THROUGH MARCH 31, 2012
Revenues
We had no revenue from operations from inception and during the three months
ended March 31, 2012.
- 12 -
Expenses
Our total expenses increased by $3,328 from $427 for three months ended
March 31, 2011 to $3,755 for the three months ended March 31, 2012. This
increase was due to an imputed interest expense recorded for the advances from
stockholders and professional fees. Our expenses from continuing operations have
been $106,345 since inception.
We expect our operating costs to be approximately $192,000 over the next year,
unless we locate a new viable business.
Related-Party Transactions
Included in current liabilities at March 31, 2012 is $150,378 in advances from
stockholders. Stockholders advanced $378 and $280 during the three months ended
March 31, 2012 and 2011, respectively. Advances from stockholders are
non-interest bearing and are due on demand. Interest was imputed at 5% per
annum. The Company recorded an interest expense of 1,877 for the three months
ending March 31, 2012 and $8,424 since inception.
Liquidity and Capital Resources
The Company had no cash balance at March 31, 2012 or on December 31, 2011. The
notes to our unaudited financial statements as of March 31, 2012, contain a
disclosure regarding our uncertain ability to continue as a going concern. As of
March 31, 2012, we have not generated revenues to cover our expenses, and we
have total accumulated deficit of $5,064,625. We had $151,878 in current
liabilities and no current assets, as such we are left with a working capital
deficit of $151,878 and cannot assure that we will succeed in locating a viable
business opportunity or that we will be able to achieve a profitable level of
operations sufficient to meet our ongoing cash needs.
Our expenses are limited to transfer agent costs and professional fees incurred
for our public company filing obligations and an imputed interest charge for
advances from stockholders.
We had no cash flow for the periods ended March 31, 2012 and March 31, 2011.
Contingencies and Commitments
See Note 5 of Notes to Financial Statements for a detailed explanation of our
contingencies.
Contractual Obligations
None.
Inflation
We do not believe that inflation will have a material impact on our future
operations.
- 13 -
Off-Balance-Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenue or expenses, results of operations, liquidity, capital
expenditures or capital resources that we expect to be material to investors. We
do not have any non-consolidated, special-purpose entities.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Empire is a smaller reporting company as defined by Rule 12b-2 of the Exchange
Act and is not required to provide the information required under this item.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Pursuant to Rule 13a-15(e) under the Securities Exchange Act of 1934 ("Exchange
Act"), the Company carried out an evaluation, with the participation of the
Company's management, Director of Operations including the Company's Chief
Executive Officer ("CEO") and Chief Financial Officer (the Company's principal
financial officer), of the effectiveness of the Company's disclosure controls
and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of
the end of the period covered by this report. Based upon that evaluation and the
identification of material weaknesses in our internal control over financial
reporting, the Company's CEO and CFO concluded that the Company's disclosure
controls and procedures are not effective to ensure that information required to
be disclosed by the Company in the reports that the Company files or submits
under the Exchange Act, is recorded, processed, summarized and reported, within
the time periods specified in the SEC's rules and forms.
Changes in Internal Controls
There were no changes to our internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred
during the period covered by this report that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
Management's Report on Internal Controls over Financial Reporting
Empire is a smaller reporting company as defined by Rule 12b-2 of the Exchange
Act and is not required to provide the information required under this item.
- 14 -
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company may be subject to claims arising in the ordinary course of business.
We are not a party to, or the subject of, any pending legal proceeding.
Item 1A. Risk Factors.
Empire is a smaller reporting company as defined by Rule 12b-2 of the Exchange
Act and is not required to provide the information required under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. (Removed and Reserved)
Item 5. Other Information.
During the quarter of the fiscal year covered by this report, Empire reported
all information that was required to be disclosed in a report on form 8-K.
Item 6. Exhibits
(a) Index to and Description of Exhibits
All Exhibits required to be filed with the form 10-Q are included in this
quarterly filing or incorporated by reference to Empire's previous filings with
the SEC, which can be found in their entirety at the SEC website at www.sec.gov
under SEC File Number 000-50045.
31 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
- 15 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EMPIRE GLOBAL CORP.
By: /s/ Michael Ciavarella Date: October 26, 2012.
-------------------------
Michael Ciavarella
Chairman of the Board,
Chief Executive Officer and
Chief Financial Office
