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EX-32 - CERTIFICATION OF CEO AND CFO - SECTION 906 - Newgioco Group, Inc.section906-ceocfo.txt
EX-31 - CERTIFICATION OF CEO AND CFO - SECTION 302 - Newgioco Group, Inc.section302-ceocfo.txt

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
                 Quarterly Report under Section 13 or 15 (d) of
                         Securities Exchange Act of 1934

                For the quarterly period ended September 30, 2009

                         Commission File Number 000-50045

                                EMPIRE GLOBAL CORP.
                  (Name of small business issuer in its charter)

          Delaware                                             33-0823179
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                           Identification Number)

                        648 Finch Ave. East, Suite 2
                              Toronto, Ontario, M2K 2E6
                               (647) 229-0136
        (Address and telephone number of principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.                                Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company.

Large accelerated filer [ ]                                Accelerated Filer [ ]

Non-accelerated filer   [ ]                        Smaller reporting company [X]
(Do not check if Smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).                                  Yes [ ] No [X]

There were 18,675,800 shares of Common Stock outstanding as of September 30,
2009.

















ITEM 1. FINANCIAL STATEMENTS The un-audited quarterly financial statements for the period ended September 30, 2009, prepared by the company, immediately follow. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1. Financial Statements F-1 - F-13 Item 2. Management's Discussion and Analysis or Plan of Operation 16 Item 3. Quantitative and Qualitative Disclosures About Market Risk 20 Item 4. Controls and Procedures 20 PART II - OTHER INFORMATION Item 1. Legal Proceedings 21 Item 1A. Risk Factors 22 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22 Item 3. Defaults Upon Senior Securities 22 Item 4. Submission of Matters to a Vote of Security Holders 22 Item 5. Other Information 22 Item 6. Exhibits 22 SIGNATURES 2
ITEM 1. FINANCIAL STATEMENTS EMPIRE GLOBAL CORP. (FORMERLY TRADESTREAM GLOBAL CORP.) INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTH and NINE MONTH PERIODS ENDED SEPTEMBER 30, 2009 and 2008 CONTENTS Consolidated Balance Sheets F - 2 Consolidated Statements of Operations and Comprehensive Loss F - 3 Consolidated Statements of Cash Flows F - 4 Notes to Consolidated Financial Statements F - 5 - F - 13 - F1 -
EMPIRE GLOBAL CORP. (FORMERLY TRADESTREAM GLOBAL CORP.) Consolidated Balance Sheets September 30, December 31, 2009 2008 US$ US$ --------- ----------- (Unaudited) (Audited) ASSETS Current Assets Pre-paid and sundry assets - 20,000 ------- ------- Total Current Assets - 20,000 Property and equipment, net 3,893 4,581 Investment in Armistice Resources Corp, net of impairment 202,483 177,985 Organization Cost 1,599 1,406 ------- ------- 207,975 203,973 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued liabilities 104,168 25,122 Advances from related party 128,500 77,500 ------- ------- Total Current Liabilities 232,668 102,622 Commitments and Contingencies - - Stockholder's Equity Preferred Stock, $0.0001 par value, 20,000,000 shares authorized, none issued and outstanding. - - Common Stock, $0.0001 par value,80,000,000 shares authorized, shares issued and outstanding, 18,675,800 for both periods 1,868 1,868 Additional - paid in capital 4,902,455 4,902,455 Accumulated other comprehensive loss (11,657) (36,347) Deficit (4,917,359) (4,766,625) ------- ------- Total Stockholders' Equity (24,693) 101,351 ------- ------- 207,975 203,973 ======= ======= See notes to consolidated financial statements - F2 -
EMPIRE GLOBAL CORP. (FORMERLY TRADESTREAM GLOBAL CORP.) Consolidated Statements of Operations and Comprehensive Loss (Unaudited) Three months ended September 30, Nine months ended September 30, 2009 2008 2009 2008 US$ US$ US$ US$ --------- ----------- --------- ----------- Revenue - - - - --------- ----------- --------- ----------- General and administrative expenses 46,459 26,611 150,734 83,038 Operating loss (46,459) (26,611) (150,734) (83,038) --------- ----------- --------- ----------- Loss from operations before income taxes (46,459) (26,611) (150,734) (83,038) Income taxes - - - - --------- ----------- --------- ----------- Net Loss (46,459) (26,611) (150,734) (83,038) ========= =========== ========= =========== Foreign currency translation adjustment 16,213 (40,167) 24,691 (67,697) --------- ----------- --------- ----------- Comprehensive Loss (30,246) (66,778) (126,043) (150,735) ========= =========== ========= =========== Basic and fully diluted loss per common share (0.001) (0.002) (0.01) (0.005) ========= =========== ========= =========== Basic and fully diluted weighted average number of shares outstanding 18,675,800 18,675,800 18,675,800 17,307,187 ========== =========== ========= =========== See notes to consolidated financial statements - F3 -
EMPIRE GLOBAL CORP. (FORMERLY TRADESTREAM GLOBAL CORP.) Consolidated Statements of Cash Flows (Unaudited) Nine months September 30, 2009 2008 US$ US$ ------- -------- Cash Flows - Operating Activities Net loss (150,734) (83,038) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 688 861 Accounts payable and accrued expenses 79,046 79,829 Prepaid expenses 20,000 - Amortization of prepaid expenses - 2,348 ------- -------- Net cash used in operating activities (51,000) - ------- -------- Cash Flows - Financing Activities Advance from related party 51,000 - ------- -------- Net cash used in financing activities 51,000 - ------- -------- Net increase in cash and cash equivalents - - Cash and cash equivalents - beginning of period - - ------- -------- Cash and cash equivalents - end of period - - ======= ======== Supplemental disclosure of cash flow information: Cash paid during the year for: Interest - - ======= ======== Income taxes - - ======= ======== See notes to consolidated financial statements - F4 -
EMPIRE GLOBAL CORP. (FORMERLY TRADESTREAM GLOBAL CORP.) Notes to Consolidated Financial Statements (Unaudited) 1. Nature of Business and Operations Empire Global Corp. ("Empire" or "the Company") was incorporated in the state of Delaware on August 26, 1998 as Pender International Inc. The Company changed its name to Vianet Technologies Group Ltd. followed by Tradestream Global Corp. and subsequently to Empire Global Corp. The Company has an interest in Armistice Resources Corp. and is actively seeking new business opportunities. The Company's principal executive offices are headquartered in Canada. 2. Going Concern These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. During the quarter ended September 31, 2009, we had a loss of $46,459. The Company has incurred losses amounting to $4,917,359 since inception. Continuation as a going concern is uncertain and dependant upon obtaining additional sources of financing to sustain its existence and achieving future profitable operations, the outcome of which cannot be predicted at this time. In the event the Company cannot obtain the necessary funds, it will be unlikely that the Company will be able to continue as a going concern. Management plans to mitigate its losses in future years by significantly reducing its operating expenses and seeking out new business opportunities. However, there is no assurance that the Company will be able to obtain additional financing, reduce their operating expenses or be successful in locating or acquiring a viable business. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. 3. Summary of Significant Accounting Policies The Company's significant accounting policies and recent accounting pronouncements are included in the Company's form 10-K dated and filed on December 8, 2009 for the fiscal year ended December 31, 2008. A summary of critical accounting policies are described below. a) Basis of Financial Statement Presentation The accompanying consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the requirements of Regulation S-X of the Securities and Exchange Commission (the "SEC"). Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the SEC. The consolidated interim financial statements reflect all adjustments (consisting only of normal recurring adjustments), which, in the opinion of management, are necessary for a fair presentation of the results for the periods presented. Except for the adoption of new accounting policies as disclosed in note 3, there have been no significant changes of accounting policies since December 31, 2008. The results from operations for the periods are not indicative of the results expected for the full fiscal year or any future period. These consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements and notes for the year ended December 31, 2008. The functional currency used by the Company is the US dollar. - F5 -
b) Principles of consolidation These consolidated financial statements include the accounts of the Company and an inactive wholly owned subsidiary, Montebello Developments Corp., as well as IMM Investments Inc. a wholly owned subsidiary. c) Reclassifications Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform to the current period's presentation. These reclassifications had no effect on the consolidated results of operations or financial position for any period presented. d) Use of Estimates In preparing the Company's financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates made by management are, among others, realizability of long-lived assets, and deferred taxes. Management reviews its estimates on a quarterly basis and, where necessary, makes adjustments prospectively. e) Income Taxes Income taxes are provided in accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. f) Equipment and Depreciation Revenue producing real estate and equipment are stated at cost less accumulated depreciation. Depreciation, based on the estimated useful lives of the assets, is provided as follows: Equipment 20% Declining Balance g) Organization Costs Organization costs are recorded at cost and is not amortized as its life is deemed to be indefinite. The cost is tested annually for impairment in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets". The impairment test consists of comparing the fair value of the incorporation cost with its carrying amount. If the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to the excess. As of December 31, 2008 and September 30, 2009, no impairment losses have been identified. - F6 -
h) Impairment of Long Lived Assets In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long Lived Assets", long lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company evaluates at each balance sheet date whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Long lived assets to be disposed of are reported at the lower of carrying amount or fair value of asset less cost to sell. i) Fair Value of Financial Instruments The carrying value of the Company's short term investments, prepaid and sundry assets, accounts payable and accrued charges, and advances from shareholder approximate fair value because of the short term maturity of these financial instruments. j) Foreign Currency Translation The Company accounts for foreign currency translation pursuant to SFAS No. 52, "Foreign Currency Translation". The Company's functional currency was the Canadian dollar. Assets and liabilities are translated into United States dollars using the current exchange rate, while revenues and expenses are translated using the average exchange rates prevailing throughout the year. Translation adjustments are included in other comprehensive income for the period. The items which are subject to translation adjustments were the investment in Armistice Resources Corp. and organization cost. The operational currency of our wholly owned subsidiary IMM Investments Inc. (IMM) (an Ontario corporation) is the Canadian Dollar. Although IMM has no operations, it owns shares of Armistice Resources Corp. a Canadian mining. The purchase price and shares of Armistice are valued in Canadian dollars. All remaining expenses where incurred in US Dollars. k) Comprehensive Income The Company adopted SFAS No. 130, "Reporting Comprehensive Income.", SFAS No. 130 establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income is presented in the statements of operations, and consists of net income and unrealized gains (losses) on available for sale marketable securities; foreign currency translation adjustments and changes in market value of future contracts that qualify as a hedge; and negative equity adjustments recognized in accordance with SFAS 87. SFAS No. 130 requires only additional disclosures in the financial statements and does not affect the Company's financial position or results of operations. l) Concentration of Credit Risk SFAS No. 105, "Disclosure of Information About Financial Instruments with Off Balance Sheet Risk and Financial Instruments with Concentration of Credit Risk", requires disclosure of any significant off balance sheet risk and credit risk concentration. The Company does not have significant off balance sheet risk or credit concentration. - F7 -
m) Recent Accounting Pronouncements In June 2009, the FASB issued Accounting Standards Update No. 2009-01, "Generally Accepted Accounting Principles" (ASC Topic 105) which established the FASB Accounting Standards Codification ("the Codification" or "ASC") as the official single source of authoritative U.S. generally accepted accounting principles ("GAAP"). All existing accounting standards are superseded. All other accounting guidance not included in the Codification will be considered non-authoritative. The Codification also includes all relevant Securities and Exchange Commission ("SEC") guidance organized using the same topical structure in separate sections within the Codification. Following the Codification, the Board will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates ("ASU") which will serve to update the Codification, provide background information about guidance and provide the basis for conclusions to the Codification. The Codification, which became effective July 1, 2009, changes the referencing and organization of accounting guidance and is effective for interim and annual periods ending after September 15, 2009. The Company adopted the Codification on July 1, 2009 which provides for changes in references to technical accounting literature (if used) in the Quarterly Report on form 10-Q and subsequent reports, but did not have a material impact on the Company's financial position, results of operations, or cash flows. Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 820, Fair Value Measurements and Disclosures ("ASC 820" and formerly referred to as FAS-157), establishes a framework for measuring fair value in GAAP, clarifies the definition of fair value within that framework, and expands disclosures about the use of fair value measurements. ASC 820 is effective for fiscal years beginning after November 15, 2007. ASC 820-10-65, Transition and Open Effective Date Information, deferred the effective date of ASC 820, for non-financial assets and liabilities that are not on a recurring basis recognized or disclosed at fair value in the financial statements, to fiscal years, and interim periods, beginning after November 15, 2008. The Company has adopted the guidance within ASC 820 for non-financial assets and liabilities measured at fair value on a nonrecurring basis at January 1, 2009 and will continue to apply its provisions prospectively from January 1, 2009. The application of ASC 820 for non-financial assets and liabilities did not have a significant impact on earnings nor the financial position for the periods presented. FASB ASC 805, Business Combinations ("ASC 805" and formerly referred to as FAS-141(R)) requires the acquisition method to be applied to all transactions and other events in which an entity obtains control over one or more other businesses, requires the acquirer to recognize the fair value of all assets and liabilities acquired, even if less than one hundred percent ownership is acquired, and establishes the acquisition date fair value as measurement date for all assets and liabilities assumed. The guidance within ASC 805 is effective prospectively for any acquisitions made after fiscal years beginning after December 15, 2008. FASB ASC 810, Consolidation ("ASC 810"), ASC 810-10-65, Transition and Open Effective Date Information ("ASC 810-10-65" and formerly referred to as FAS-160) establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated financial statements. ASC 810-10-65 is effective for fiscal years beginning after December 15, 2008. The application of ASC 810-10-65 did not have a significant impact on earnings nor the financial position. - F8 -
m) Recent Accounting Pronouncements (cont'd) FASB ASC 815, Derivatives and Hedging ("ASC 815"), ASC 815-10-65, Transition and Open Effective Date Information ("ASC 815-10-65" and formerly referred to as FAS-161) includes a requirement for enhanced disclosures about an entity's derivative and hedging activities and thereby improves the transparency of financial reporting. ASC 815 is effective prospectively for fiscal years beginning after November 15, 2008. The application of ASC 815 expanded the required disclosures in regards to the Company's derivative and hedging activities. FASB ASC 350, Intangibles - Goodwill and Other, ASC 350-30-65, Transition and Open Effective Date Information ("ASC 350-30-65" and formerly referred to as FSP FAS 142-3) amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible. ASC 350-30-65 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The guidance in this ASC 350-30-65 for determining the useful life of a recognized intangible shall be applied prospectively to intangible assets acquired after the effective date. The disclosure requirements of ASC 350-30-65, however, shall be applied prospectively to all intangible assets recognized in the Company's financial statements as of the effective date. The application of ASC 350-30-65 is not expected to have a material impact on earnings nor the financial position. FASB ASC 715, Compensation - Retirement Benefits, ASC 715-20-65, Transition and Open Effective Date Information ("ASC 715-20-65" and formerly referred to as FSP FAS-132(R)-1) provides guidance on an employer's disclosures about plan assets of a defined benefit pension or other postretirement plans. ASC 715-20-65 is effective prospectively for fiscal years ending after December 15, 2009. The application of ASC 715-20-65 will expand the Company's disclosures regarding pension plan assets. FASB ASC 825 Financial Instruments, ASC 825-10-65, Transition and Open Effective Date Information ("ASC 825-10-65" and formerly referred to as FSP FAS 107-1 and APB 28-1) requires disclosures about fair value of financial instruments for interim reporting periods as well as in annual financial statements. This guidance also requires those disclosures in summarized financial information at interim reporting periods. ASC 825-10-65 is effective prospectively for interim reporting periods ending after June 15, 2009. The application of ASC 825-10-65 expanded the Company's disclosures regarding the use of fair value in interim periods. FASB ASC 855, Subsequent Events ("ASC 855" and formerly referred to as FAS-165), modified the subsequent event guidance. The three modifications to the subsequent events guidance are: 1) To name the two types of subsequent events either as recognized or non-recognized subsequent events, 2) To modify the definition of subsequent events to refer to events or transactions that occur after the balance sheet date, but before the financial statement is issued or available to be issued and 3) To require entities to disclose the date through which an entity has evaluated subsequent events and the basis for that date, i.e. whether that date represents the date the financial statements were issued or were available to be issued. This guidance is effective for interim or annual financial periods ending after June 15, 2009, and has been applied prospectively. - F9 -
n) Investment in Armistice Resources Corp. The investment in Armistice Resources Corp. consists of 5,000,000 shares of that Company and was stated at cost at December 31, 2006. These shares are currently in escrow and accordingly are considered neither trading nor available for sale. The terms of escrow contain an undertaking with respect to respondents named in allegations of the Ontario Securities Commission (Commission) action described in Note 11 (2) found elsewhere in this report as follows: that (a) none of the respondents will be appointed an officer or director of Armistice (Corporation); (b) until the Commission's investigations relating to the allegations against the Respondents is complete IMM will not nominate any individual to the board of directors without the consent of the TSX; (c) IMM will execute an amendment to an escrow agreement providing that its securities being held in escrow cannot be voted without the consent of the TSX (which amendment was executed by IMM on June 5, 2006); (d) none of the respondents will participate in future financings of the Corporation until the Commission has completed its investigation; and (e) until the Commission's investigation is complete, if any derogatory information is found on any officer or director of the Corporation, the TSX may require the resignation of any of these individuals if deemed unacceptable to the TSX. Through September 30, 2009, our investment in Armistice was considered neither trading nor available for sale and was recorded at cost and included in long term assets, with unrealized gains and losses recognized as accumulated other comprehensive income (loss). The effect of fluctuation in the value of the Canadian dollar versus the United States dollar was an increase of $24,691 for the nine month period ended September 30, 2009 and is reflected in the cost value of our investment in Armistice on September 30, 2009. On September 30, 2009 shares in Armistice had a quoted market value of $0.14 Canadian per share. As explained in Note 4 below due to risks inherent with the terms of the aforementioned escrow the company believes that our ability to realize these assets are impaired. 4. Impairment of Investment in Armistice Resources Corp. The Company tests its investment in Armistice for recoverability (FASB ASC 360-10-35-21, formerly SFAS 144, par. 8) if events or changes in, circumstances, such as the following, indicate that its carrying amount may not be fully recoverable: a. Significant decrease in the asset's market price b. Significant adverse change in the asset's use or in its physical condition c. Significant adverse changes in legal factors or business climate, including an adverse action or assessment by a regulator d. Costs to acquire or construct an asset that significantly exceed original expectations e. Current-period operations or cash flow loss combined with a history of operations or cash flow losses or a projection or forecast showing continuing losses associated with an asset f. A current expectation that it is more likely than not (greater than 50 percent likelihood) that a long-lived asset will be sold or disposed of significantly before the end of its previously estimated useful life. On July 9, 2004, the Company acquired IMM Investment Inc. an Ontario Corporation that owns 5,000,000 shares of Armistice Resources Corp. The carrying amount of IMM was based on the purchase price of $630,000 paid in stock of the Company in exchange for the net assets of IMM of $1,479,173 which included the fair value of the investment in Armistice and organization costs less liabilities resulting in negative goodwill of $849,173. The purchase price of the shares of Armistice was $0.40 Canadian per share. - F10 -
4. Impairment of Investment in Armistice Resources Corp. (cont'd) During the fourth quarter of 2008, we determined that due to the terms of escrow agreement described in 3(n) and the estimated legal costs to recover the shares of Armistice as well as selling costs, it is more likely than not that the assets of IMM would be disposed of significantly before its previously estimated useful life. As a result, at December 31, 2008 the Company performed an impairment test and determined that an impairment of the value of our investment in Armistice is reasonable as follows: Fair value of Armistice determined at the quoted market price of Armistice in Canadian dollars on the Toronto Stock Exchange: Market value of Armistice at purchase (5,00,000 shares at CDN $0.40/sh): $ 1,486,989 Market value of Armistice on December 31, 2008 (5,000,000 shares at CDN $0.06/sh): $ 203,050 Decrease in fair value of Armistice since purchase: ($ 1,283,495) Years ended December 31, Valuation decrease 2008 2007 Other Comprehensive Income ----------- ----------- ----------- Investment in Armistice at cost $802,924 $986,589 $183,665 --------- --------- --------- Decrease in value of Armistice at cost $183,665 --------- Impairment of Armistice $624,939 --------- Investment in Armistice net of impairment $177,985 ========= Other comprehensive loss for the year ended December 31, 2008 also included $322 from other sources. 5. Equipment Equipment of operations at September 30, 2009 consists of the following: Telephone system $ 11,192 Less accumulated depreciation 7,299 --------- $ 3,893 ========= 6. Advances from Related Party Advances due from related parties are non-interest bearing and are due on demand. Advances from related parties as of September 30, 2009 are as follows: Prosper consulting (Retainer for Chan action) $ 40,000 Gold Street Capital (Retainer for SF Group) 17,500 Braydon Capital Corp. 71,000 --------- $ 128,500 ========= - F11 -
7. Share based payments and Shareholder Equity On May 5, 2008 at a meeting of the Board of directors, the board resolved to issue 2,500,000 restricted shares of common stock for a value of $175,000 with an effective date of December 31, 2007 to independent contractors in exchange for cancellation of debt owed respectively to each contractor for services rendered to the Company for the period ended December 31, 2007. Also, on the same day the board resolved to issue 3,000,000 restricted shares of common stock to pay independent contractors for administrative services and work performed in preparing our financial reports, therefore, the 3,000,000 shares with a value of $200,000 were used to pay independent contractors in exchange for cancellation of debt owed respectively to each contractor for services rendered to the Company for the period ended December 31, 2008. During 2008, our director of operations provided in-kind contributions of $2,059 to pay for expenses related to general office expenses comprised of the following: Transfer agent fees $ 2,059 ======= 8. Commitments and Contingencies The Company is subject to claims arising in the ordinary course of business. The Company and Management believe that, after consultation with counsel, the allegations against the Company included in the claims described below are subject to substantial legal defences, and the Company is vigorously defending each of the allegations. At this time, it is not possible to estimate the ultimate loss or gain, if any, related to these claims, nor if any such loss will have a material adverse effect on the Company's results of operations or financial position. 1 On November 1, 2005, the Company was served with a Statement of Claim filed in the Ontario Superior Court of Justice by Advanced Refractive Technologies Inc. ("Advanced") claiming $6,000,000 in aggregate damages plus unspecified amounts against 16 co-respondents including the Company for unknown loses claimed by Advanced in its dealings with an unknown and unrelated entity or person (the "unrelated entity"). Advanced alleges that this unrelated entity, in a private transaction with Advanced, may have promised to exchange shares of the Company that the unrelated entity had claimed to have owned. The Company has never been a party to any dealings with Advanced and prior to receiving notice from Advanced had never heard of Advanced. The Company denies any wrongdoing and is vigorously defending this claim. Because of the uncertainties inherent in litigation, the company cannot predict whether the outcome which remains unresolved will have a material adverse affect. The Company is unrepresented by legal counsel in this matter. 2. On December 10, 2004, the Ontario Securities Commission ("OSC") served upon the former President and C.E.O. of the Company (the "former executive"), and companies controlled by the former executive, as well as a shareholder of the Company related to the father of our former Chairman Kalson Jang and an unrelated party collectively the "respondents" an order to cease trading in shares of the Company formerly known as Pender International, Inc. ("Pender"). The allegations stated among other things that Armistice was a worthless, flooded mine and that there was no basis for the increase in the share price of the Company. On September 26, 2006 the Royal Canadian Mounted Police ("RCMP") charged our former executive. Our former executive has denied the allegations and has consented to a committal to trial as described in Legal Matters found elsewhere in this report. Our former executive and the Company have been complying with orders imposed by the OSC and cooperating with informal inquiries made by the United States Securities and Exchange Commission ("SEC"). The date for trial had been set down to begin on September 8, 2009, however was adjourned until October 2010. Pre-trial motions proceeded in the Ontario Superior Court of Justice in Toronto during the month of November, 2009 and will continue in January, 2010. - F12 -
9. Subsequent Events The Company has evaluated subsequent events through December 11, 2009, the filing date of this quarterly report on form 10-Q for the period ended September 30, 2009 and there have been no subsequent events that warrant disclosure by the Company. - F13 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain information included in this form 10-Q and other materials filed or to be filed by us with the Securities and Exchange Commission (as well as information included in oral or written statements made by us or on our behalf), may contain forward-looking statements about our current and expected performance trends, growth plans, business goals and other matters. These statements may be contained in our filings with the Securities and Exchange Commission, in our press releases, in other written communications, and in oral statements made by or with the approval of one of our authorized officers. Words or phrases such as "believe," "plan," "will likely result," "expect," "intend," "will continue," "is anticipated," "estimate," "project," "may," "could," "would," "should," and similar expressions are intended to identify forward-looking statements. These statements, and any other statements that are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended from time to time (the "Act"). In connection with the "safe harbor" provisions of the Act, we have identified and filed important factors, risks and uncertainties that could cause our actual results to differ materially from those projected in forward-looking statements made by us, or on our behalf (see Part I, Item 1, "Risk Factors" included in our form 10-K for the fiscal year ended December 31, 2008). These cautionary statements are to be used as a reference in connection with any forward-looking statements. The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a forward-looking statement or contained in any of our subsequent filings with the Securities and Exchange Commission. Because of these factors, risks and uncertainties, we caution against placing undue reliance on forward-looking statements. Although we believe that the assumptions underlying forward-looking statements are reasonable, any of the assumptions could be incorrect, and there can be no assurance that forward-looking statements will prove to be accurate. Forward-looking statements speak only as of the date on which they are made. We do not undertake any obligation to modify or revise any forward-looking statement to take into account or otherwise reflect subsequent events or circumstances arising after the date that the forward-looking statement was made. General This discussion and analysis should be read in conjunction with our interim unaudited consolidated financial statements and related notes on this form 10-Q and the audited consolidated financial statements and related notes thereto included in our Annual Report on form 10-K for the fiscal year ended December 31, 2008. The inclusion of supplementary analytical and related information herein may require us to make appropriate estimates and assumptions to enable us to fairly present, in all material respects, our analysis of trends and expectations with respect to our results of operations and financial position taken as a whole. Empire Global Corp. (Empire) and its subsidiaries Montebello Development Corp. as well as IMM Investments Inc. (IMM) mean "we", "us" or "our" and will be referred to as such throughout the balance of this document. - 16 -
Our Objectives and Areas of Focus Empire was organized under the laws of the State of Delaware on August 26, 1998. The Company went through various name changes prior to September 2005 when the name was changed to Empire Global Corp. We currently intend to purchase, merge with or acquire any business or assets which management believes has potential for being profitable. During the three and nine months ended September 30, 2009, we had no revenue. Due to limited operations, we are presently seeking new business opportunities. Challenges and Risks We have accumulated a deficit of approximately $4,917,359 to September 30, 2009 and will require additional debt or equity financing to continue operations and to seek out new business opportunities. We plan to mitigate our losses in future years through maintaining minimal operational costs and locating a viable business. There is no assurance that we will be able to obtain additional financing, be successful in seeking new business opportunities, or that we will be able to reduce operating expenses. Our consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. Critical Accounting Policies Our significant accounting policies and recent accounting pronouncements described in Note 3 to our consolidated financial statements are included in the annual report for the year ended December 31, 2008 and a summary of critical accounting policies and recent accounting pronouncements is included in Note 1 of this form 10-Q. We prepare our financial statements in conformity with U.S. GAAP, which requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the financial reporting period. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application and as a result, such estimates may significantly impact our consolidated financial results. The precision of these estimates and the likelihood of future changes depend on a number of underlying variables and a range of possible outcomes. We have applied our critical accounting policies and estimation methods consistently. A comprehension of our critical accounting policies is necessary to understand our financial results as their application places the most significant demands on our management's judgment. - 17 -
Overall Results of Operations As a result of our limited business operations, we had minimal changes in our overall results. We have no cash as of the date of this filing and therefore are not able to satisfy our working capital needs for the next year. We anticipate funding our working capital needs for the next twelve months through private advances and loans from our management and key shareholders, or if available, equity capital markets. Although the foregoing actions are expected to cover our anticipated cash needs for working capital and capital expenditures for at least the next twelve months, no assurance can be given that we will be able obtain financing or raise sufficient cash to meet our cash requirements. Over the next twelve months we plan to seek out a viable new business opportunity. If we enter into a new business opportunity, will need to raise additional working capital and we may be required to hire additional employees, independent contractors as well as purchase or lease additional equipment. We plan to raise this additional working capital through the private placement of shares, private advances and loans. We anticipate continuing to rely on equity sales of common stock to fund our operations and to seek out or enter into new business opportunities. The issuance of any additional shares will result in dilution to our existing shareholders. Related-Party Transactions Included in the $232,668 of current liabilities at September 30, 2009 is $128,500 in advances from related parties. None of the amounts due to related parties bear interest, have any fixed terms of repayment or are secured. COMPARISON OF THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 Revenues We had no revenue during the three and nine months ended September 30, 2009 and 2008 from our operations. Operating Expenses Our operating expenses increased to $150,734 for nine months ended September 30, 2009 from $83,038 over the same period in the previous year and to $46,459 for the three month period ended September 30, 2009 from $26,611 over the same period in the 2008. This increase was largely a result of the costs associated with preparation of our financial reports and auditing fees. We expect our operating costs to be approximately $207,000 over the next year, unless we locate a new viable business. - 18 -
Liquidity and Capital Resources The Company had no cash balance at September 30, 2009 or on December 31, 2008. The notes to our unaudited consolidated financial statements as of September 30, 2009, contain footnote disclosure regarding our uncertain ability to continue as a going concern. We have not generated revenues to cover our expenses, and have accumulated a deficit of $4,917,359. As of September 30, 2009, we had $232,668 in current liabilities and no current assets, as such we are left with a working capital deficit of approximately $232,668 and cannot assure that we will succeed in locating a viable business opportunity or that we will be able to achieve a profitable level of operations sufficient to meet our ongoing cash needs. Below is a discussion of our sources and uses of funds for the three and nine months ended September 30, 2009. Net Cash Used In Operating Activities Net cash used in operating activities during the three and nine months ended September 30, 2009 was $20,000 and $51,000 respectively compared to no cash used during the same periods ended September 30, 2008. Net Cash Provided By Financing Activities Net cash provided by financing activities during the three and nine months ended September 30, 2009 was $20,000 and $51,000 respectively from advances from a related party compared to no cash provided during the same periods ended September 30, 2008. Net Cash Used In Investing Activities We did not have any investing activities during the three and nine months ended September 30, 2009 or September 30, 2008. Contingencies and Commitments We had no contingencies or long-term commitments at September 30, 2009. Contractual Obligations None. Inflation We do not believe that inflation will have a material impact on our future operations. - 19 -
Off-Balance-Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that we expect to be material to investors. We do not have any non-consolidated, special-purpose entities. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Empire is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item. Item 4. Controls and Procedures. Disclosure Controls and Procedures Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 ("Exchange Act"), the Company carried out an evaluation, with the participation of the Company's management, Director of Operations including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer (the Company's principal financial officer), of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation and the identification of material weaknesses in our internal control over financial reporting, the Company's CEO and CFO concluded that the Company's disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Changes in Internal Controls During the quarter of the fiscal year covered by this report, there were no changes in Empire's internal controls or, to Empire's knowledge, in other factors that have materially affected, or are reasonably likely to materially affect, these controls and procedures subsequent to the Evaluation Date. Management's Report on Internal Controls over Financial Reporting Empire is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item. - 20 -
PART II - OTHER INFORMATION Item 1. Legal Proceedings. The Company is subject to claims arising in the ordinary course of business. The Company and Management believe that, after consultation with counsel, the allegations against the Company included in the claims described below may be subject to substantial legal defences, and the Company is vigorously defending each of the allegations. At this time, it is not possible to estimate the ultimate loss or gain, if any, related to these claims, nor if any such loss will have a material adverse effect on the Company's results of operations or financial position. Pending Legal Matters Directly affecting the Company On November 1, 2005, the Company was served with a Statement of Claim filed in the Ontario Superior Court of Justice by Advanced Refractive Technologies Inc. ("Advanced") claiming $6,000,000 in aggregate damages plus unspecified amounts against 16 co-respondents including the Company for unknown loses claimed by Advanced in its dealings with an unknown and unrelated entity or person (the "unrelated entity"). Advanced alleges that this unrelated entity, in a private transaction with Advanced, may have promised to exchange shares of the Company that the unrelated entity had claimed to have owned. The Company has never been a party to any dealings with Advanced or the unrelated party and prior to receiving notice from Advanced had never heard of Advanced. The Company denies any wrongdoing and is vigorously defending this claim. Although the claim remains a live issue, Advanced has made no attempt to further its claim. Because of the uncertainties inherent in litigation, the company cannot predict whether the outcome, which remains unresolved, will have a material adverse affect. Indirectly affecting the Company On December 10, 2004, the Ontario Securities Commission ("OSC") served upon the former President and C.E.O. of the Company (the "former executive"), and companies controlled by the former executive, as well as a shareholder of the Company related to the father of our former Chairman Kalson Jang and an unrelated party collectively the "respondents" an order to cease trading in shares of the Company formerly known as Pender International, Inc. ("Pender") and subsequently issued a Statement of Allegations against the respondents on December 21, 2004. The Company is aware of the proceedings; however, is not a respondent to these proceedings. The order was purportedly issued to allow the OSC an opportunity to investigate trading in shares of Pender over the period between October 27, 2004 and November 19, 2004. The allegations stated among other things that Armistice was a worthless, flooded mine and that there was no basis for the increase in the share price of the Company. The Royal Canadian Mounted Police, and the Ontario Securities Commission (jointly IMET "Integrated Market Enforcement Team") conducted an investigation into the allegations and on September 26, 2006 the Royal Canadian Mounted Police ("RCMP") charged our former executive. Our former executive is vigorously denying the allegations and challenging the charges and consequently has consented to a committal to trial. Between February and March 2008 a preliminary inquiry was held in the Ontario Court of Justice in respect of this matter. On June 25, 2008 the Securities and Exchange Commission ("SEC") issued a notice to Michael Ciavarella, our former officer and director. The notice advised that the (SEC) investigation has been completed as to Mr. Ciavarella, against whom they do not intend to recommend enforcement by the commission. The date for trial had been set down to begin on September 8, 2009, however was adjourned until October 2010. Pre-trial motions proceeded in the Ontario Superior Court of Justice in Toronto during the month of November, 2009 and will continue in January, 2010. Our former executive and the Company have been complying with orders imposed by the OSC and cooperating with informal inquiries made by the United States Securities and Exchange Commission ("SEC"). - 21 -
Item 1A. Risk Factors. Empire is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. No matter was submitted to a vote of security holders through the solicitation of proxies or otherwise, during the quarter of the fiscal year covered by this report. Item 5. Other Information. During the quarter of the fiscal year covered by this report, Empire reported all information that was required to be disclosed in a report on form 8-K. Item 6. Exhibits (a) Index to and Description of Exhibits All Exhibits required to be filed with the form 10-Q are included in this quarterly filing or incorporated by reference to Empire's previous filings with the SEC, which can be found in their entirety at the SEC website at www.sec.gov under SEC File Number 000-50045. 31 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - 22 -
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EMPIRE GLOBAL CORP. By: /s/ Vic Dominelli Date: December 11, 2009. ------------------------- Vic Dominelli Chairman of the Board, Interim Chief Executive Officer and Principal Financial Office