Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark one)
[X] Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
1934. For the fiscal year ended December 31, 2010.
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934. For the transition period from ______ to ______
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
(Address of principal executive offices) (Zip Code)
(647) 229-0136
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (par value $0.0001)
Check whether the issuer is a well-known seasoned issuer, as defined in Rule 405
of the Securities Act. Yes [ ] No [X]
Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this form 10-K or any
amendment to this form 10-K. [X]
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" in Rule 12b-2 of the Exchange Act.
Larger accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a 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 [ ]
The issuer had $0 in revenues for its most recent fiscal year.
The number of shares outstanding of the issuer's single class of common stock,
as of the close on December 31, 2010 is 18,675,800 shares with an aggregate
market value of $373,516 based on the average closing bid and asked prices for
the Common Stock on January 27, 2010 of $0.01 per share.
TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS...............................................3
ITEM 2. DESCRIPTION OF PROPERTY...............................................5
ITEM 3. LEGAL PROCEEDINGS.....................................................5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................5
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............. 5
ITEM 6. SELECTED FINANCIAL DATA..............................................10
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS.................................11
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...........18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA...........................19
(Financial Statements - pages numbered as F1 to F15)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE..................................35
ITEM 9A. CONTROLS AND PROCEDURES..............................................35
ITEM 9B. OTHER INFORMATION....................................................35
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.........36
ITEM 11. EXECUTIVE COMPENSATION...............................................39
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS...........................40
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................41
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES...............................42
ITEM 15. EXHIBITS.............................................................42
SIGNATURES....................................................................43
2
PART I.
FORWARD-LOOKING STATEMENTS
The matters discussed in this Annual Report on form 10-K contain forward-looking
statements that involve risks and uncertainties, including primarily our ability
to fund future operations and investment opportunities until such time that our
cash flows from operations are sufficient for these purposes, changing market
conditions and the other risks and uncertainties described throughout this
Annual Report on form 10-K. Actual results may differ materially from those
projected. These forward-looking statements represent our judgment as of the
date of the filing of this Annual Report on form 10-K. We disclaim any intent or
obligation to update these forward-looking statements.
Item 1. Description of business
A. GENERAL BUSINESS DEVELOPMENT
The issuer, Empire Global Corp. ("the Company", "Empire") was organized as
Pender International, Inc. ("Pender") under the laws of the state of Delaware on
August 26, 1998.
We are authorized to issue an aggregate amount of eighty million (80,000,000)
shares of common stock with a $0.0001 par value, and twenty million (20,000,000)
shares of preferred stock with a no par value. Each shareholder of the common
stock shall be entitled to one vote for each share of common stock held. As of
February 21, 2012 there were 18,675,800 shares of common stock outstanding and
no preferred shares of stock outstanding.
Since inception, the Company has explored a number of business ventures and in
conjunction with the various business opportunities has changed its name.
Contemporaneously with a plan of reorganization aimed at pursuing business
opportunities in Canada and China the Company changed its name to Empire Global
Corp. in September 2005. These business ventures proved to be difficult and
unsustainable, therefore where abandoned.
Since the ventures were abandoned, until the present, the Company has been
inactive and could be deemed to be a so-called "shell" company. Our sole
purpose as a "shell" company, at this time, except for filing required
periodic reports with the U.S. Securities and Exchange Commission (the "SEC")
pursuant to the Securities Exchange Act of 1934 (the "Exchange Act") and the
rules and regulations promulgated thereunder and making other related corporate
filings, is to locate and consummate a merger or acquisition with a private
entity. As of the date hereof, the Company can be defined as a "shell" company,
an entity which is generally described as having no or nominal operations and
with no or nominal assets or assets consisting solely of cash and cash
equivalents.
Management does not intend to undertake any efforts to cause a market to develop
in our securities, either debt or equity, until we have successfully concluded a
business combination. We intend to comply with the periodic reporting
requirements of the Exchange Act for so long as we are subject to those
requirements.
As reported in footnote 9 Subsequent Events, on December 9, 2011, the Company
entered into a Stock Purchase and Share Exchange Agreement (the "Agreement")
with Avontrust Global Pte. Ltd. a Singapore company ("AVT") with its head
office and operations in Singapore. When the transaction is closed, AVT will
become a wholly-owned subsidiary of Empire Global Corp.
3
B. BUSINESS DESCRIPTION
PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS
During the period covered by this report the Company together with its
subsidiaries was a diversified holding company seeking to acquire and operate
income producing businesses that have a good prospect for growth.
On July 9, 2004, the Company acquired 100% of the stock of IMM Investments Inc.,
an Ontario corporation ("IMM"), thus making IMM a wholly owned subsidiary of
Empire. IMM owns 5 million (20 million pre-reverse split) shares of Armistice
Resources Corp. a Canadian exploration company developing a gold mining interest
in Northern Ontario. On January 4, 2010, the Company disposed of IMM.
The Company previously reported that Montebello Developments Inc. ("Montebello")
was a subsidiary of the Company. Montebello was a dormant private Ontario
Corporation owned by our former Chairman, Kalson Jang with no assets, no
liabilities and no business. Although the Company considered a business venture
with Montebello, an Agreement was never completed and therefore the Company has
no interest in Montebello. The Company did not record any carrying or disposal
costs for Montebello and will no longer report Montebello as a subsidiary.
As of December 31, 2010, the Company did not have interests in any business,
however subsequent to the period covered by this report as a result of the
Agreement to purchase AVT on December 9, 2011, upon closing of the Agreement the
Company will have an interest in a social media applications producer and
publisher. Refer to footnote 9 Subsequent Events for additional details.
DISTRIBUTION METHODS FOR PRODUCTS OR SERVICES
As of the fiscal year ended December 31, 2010 the Company has no products or
services available.
Subsequent to the period covered by this report, as a result of the Agreement to
purchase AVT as described elsewhere, upon closing of the Agreement the Company
will offer a suite of social media applications available over the internet.
STATUS OF PUBLICLY ANNOUNCED NEW PRODUCTS OR SERVICES
As of the fiscal year ended December 31, 2010 the Company has no current
business operations.
As described elsewhere, subsequent to the period covered by this report, on
December 9, 2011 the Company entered into an Agreement to acquire AVT.
COMPETITIVE BUSINESS CONDITIONS, COMPETITIVE POSITION IN THE INDUSTRY AND
METHODS OF COMPETITION
Due to the Agreement to acquire AVT the Company will offer a suite of online
social media applications. There are numerous other competitors in the social
media applications market, therefore competition is extensive. The competitive
conditions in such areas could have a material adverse effect on the Company's
(i) future operations, and (ii) development and acquisition opportunities. The
Company will compete for acquisitions with others who may have greater
resources.
SOURCES AND AVAILABILITY OF SUPPLIES
In addition to the acquisition of AVT, the Company has taken a broad view to
delineate additional opportunities in international markets where the supply of
target businesses are abundant.
For Empire to operate, our needs or inputs would simply be legal counsel,
accounting and auditor functions. Suppliers for these office and management
functions are deemed to be ubiquitous.
During the period covered by this report we did not retain legal counsel, and
our Independent Registered Public Accounting Firm is Bernstein & Pinchuk LLP.
4
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
As of the end of the period covered by this report Empire does not have any
active business interests.
The Company will continue to seek new potential acquisition targets to develop
a portfolio of assets in conjunction with our plan to acquire AVT as described
elsewhere.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR
LABOR CONTRACTS
Empire Global Corp. does not have any patents, trademarks, licenses, franchises,
concessions, royalty agreements or labor contracts.
NEED FOR GOVERNMENT APPROVAL FOR ITS PRODUCTS OR SERVICES
There is no current need for Government Approval for its products or services.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS
There is no current effect on us of existing or probable governmental
regulations on the business.
RESEARCH AND DEVELOPMENT COSTS
The Company had no research and development costs during the year ended December
31, 2010.
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS
Empire is not directly affected by any environmental laws, but may indirectly be
affected if a subsidiary company project or property falls under the scope of
any Federal, State and Local environmental laws.
NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL TIME EMPLOYEES
Empire currently has no employees and one active independent contractor.
Management expects to use consultants, attorneys and accountants as necessary,
and does not anticipate a need to engage any full-time employees so long as it
is seeking and evaluating business opportunities. The need for employees and
their availability will be addressed in connection with the decision whether or
not to acquire or participate in specific business opportunities.
C. 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. Description of Property.
Empire currently does not maintain a principal executive office. Empire's
mailing address is 648 Finch Ave. East. Suite 2, Toronto, Ontario, M2K 2E6,
Canada. Other than this mailing address, Empire does not currently maintain any
other office facilities, and does not anticipate the need for maintaining office
facilities at any time in the foreseeable future. Empire pays no rent or other
fees for the use of the mailing address.
It is likely that Empire will not establish an office until it has completed a
business acquisition transaction, but it is not possible to predict what
arrangements will actually be made with respect to future office facilities.
5
Note: Mining Operations
Although Empire does not engage in mining operations, our wholly owned
subsidiary IMM which we disposed of on January 4, 2010 had made an investment in
Armistice Resources Corp. which does. However, our investment in Armistice did
not deem us a controlling entity. Armistice Resources Corp. is a reporting
Canadian company and information about its business can be found on the System
for Electronic Document Analysis and Retrieval (SEDAR) developed in Canada for
the Canadian Securities Administrators (www.sedar.com). As a result of our
disposal of IMM, the Company no longer has an interest in Armistice.
Item 3. 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. We are
not aware of any legal proceeding or any action being contemplated by a
governmental authority.
Item 4. Reserved
Not applicable.
PART II
Item 5. Market for common equity and related stockholder matters
MARKET INFORMATION
Our common stock is quoted on the Over the Counter Pink Sheet Quotation System
(OTC-PK), which is a network of security dealers who buy and sell stock. The
OTC-PK is an unorganized, inter-dealer, over-the-counter market that provides
significantly less liquidity than other markets. Purchasers of our common stock
may therefore have difficulty selling their shares should they wish to do so.
The stock market in general and the stock prices of Empire's common stock in
particular, have experienced extreme volatility that often has been unrelated to
the operating performance of any specific public company. The market price of
Empire's common stock has fluctuated in the past and is likely to fluctuate in
the future as well, especially if Empire's common stock continues to be thinly
traded. Factors that may have a significant impact on the market price of
Empire's common stock include:
a. announcements concerning Empire or its competitors, including the negotiation
for or acquisition of a target business;
b. announcements regarding financial developments;
c. government regulations, including stock option accounting and tax
regulations;
d. acts of terrorism and war; or
e. rumors or allegations regarding Empire's financial disclosures or practices.
A small number of Empire's stockholders own a substantial amount of Empire's
common stock, and if such stockholders were to sell those shares in the public
market within a short period of time, the price of Empire's common stock could
drop significantly. A large number of shares of outstanding common stock are
restricted and are not freely-trading. An established public trading market for
our common stock may never develop or, and if developed, it may not be
sustained.
6
PENNY STOCK RULES
Our common stock may be deemed a "penny stock." Penny stocks generally are
equity securities with a price of less than $5.00 per share, other than
securities registered on certain national securities exchanges. Trading in
Empire's securities is subject to certain regulations adopted by the SEC
commonly known as the "penny stock" rules. These rules govern how broker-dealers
can deal with their clients and "penny stocks". The additional burdens imposed
upon broker-dealers by the "penny stock" rules may discourage broker-dealers
from effecting transactions in Empire's securities, which could severely limit
the market price and liquidity of our common stock.
We were listed and became eligible for trading on the OTCBB on March 4, 2004 and
the first electronic trade of our stock occurred on October 14, 2004. We now
trade under the symbol, EMGL.PK (formerly EMGL.OB, TGLC.OB, VGTL.OB, and
PNDR.OB).
Trading in our common stock in the over-the-counter market has been limited and
sporadic and the quotations set forth below are not necessarily indicative of
actual market conditions. Further, these quotations reflect inter-dealer prices
without retail mark-up, mark-down, or commission, and may not necessarily
reflect actual transactions. Such quotes are not necessarily representative of
actual transactions or of the value of our common stock, and are in all
likelihood not based upon any recognized criteria of securities valuation as
used in the investment banking community.
The following tables set forth the high and low sale prices for our common stock
as reported on the Pink Sheets LLC for the periods covered by this report as
indicated.
2009 BID PRICES
PERIOD HIGH LOW
January 1 - March 31 $ 0.07 $ 0.06
April 1 - June 30 0.14 0.06
July 1 - September 30 0.06 0.025
October 1 - December 31 0.025 0.02
2010
PERIOD
January 1 - March 31 $ 0.015 $ 0.02
April 1 - June 30 0.015 0.015
July 1 - September 30 0.015 0.005
October 1 - December 31 0.01 0.001
SHAREHOLDERS
As of December 31, 2010, there were an estimated 400 holders of record of our
common stock. Certain of the shares of common stock are held in street name or
are listed as undisclosed and may, therefore, be held by several beneficial
owners.
DIVIDENDS
On July 26, 2004, shareholders of record on that date became entitled to receive
a stock dividend of six new shares of common stock of the Company for each one
share held pursuant to a forward split approved by the Board of Directors of the
Company on July 12, 2004.
We have never paid a cash dividend on our common stock since inception. The
payment of dividends may be made at the discretion of our Board of Directors,
and will depend upon, among other things, our operations, capital requirements,
and overall financial condition.
7
DESCRIPTION OF SECURITIES
As of December 31, 2010, there were 18,675,800 shares of common stock, of 0.0001
par value, issued and outstanding and at least 17,969,300 shares are restricted
securities of Empire within the meaning of Rule 144(a)(3) promulgated under the
Securities Act of 1933, as amended. These are restricted because such shares
were issued and sold by us in private transactions not involving a public
offering or issued as consideration for payments of fees and services provided
to the Company.
The restricted securities may only be sold pursuant to a registration statement
or pursuant to Rule 144. In general, under Rule 144, as currently in effect,
subject to the satisfaction of certain other conditions, a person, including an
affiliate of ours (in general, a person who has a control relationship with us)
who has owned restricted securities of common stock beneficially for at least
six months is entitled to sell, within any three-month period, that number of
shares of a class of securities that does not exceed the greater of (i) one
percent (1%) of the shares of that class then outstanding or, if the common
stock is quoted on NASDAQ, (ii) the average weekly trading volume of that
class during the four calendar weeks preceding such sale. A person who has not
been an affiliate of ours for at least the three months immediately preceding
the sale and has beneficially owned shares of common stock for at least one year
is entitled to sell such shares under Rule 144 without regard to any of the
limitations described above.
No prediction can be made as to the effect, if any, that future sales of
shares of common stock or the availability of common stock for future sale will
have on the market price of the common stock prevailing from time-to-time. Sales
of substantial amounts of common stock on the public market could adversely
affect the prevailing market price of the common stock.
Pursuant to the Agreement to acquire AVT, the Company will purchase 150,000
shares of AVT representing 100% of the issued and outstanding shares of AVT in
exchange for 169,995,000 restricted common shares of the Company, or a ratio of
approximately 1,133.3 shares of the Company for each share of AVT. After closing
the Company will have a total of 188,670,800 shares of common stock issued and
outstanding all of the same class.
In each of the foregoing described stock splits we filed a notice under rule
10b-17 with NASD of our intention to effect the stock split and reflected the
approval of our Board of Directors and written consent of a majority
shareholders. All fractional shares are rounded up to the nearest whole shares.
1 for 10 Reverse Split
On September 30, 2005, we completed a 1 for 10 reverse split of our common
stock.
1 for 10 Reverse Split
Effective June 30, 2005, we completed a 1 for 10 reverse split of our common
stock.
7 for 1 Forward Split
On July 23, 2004, the Board of Directors approved a 7 for 1 forward split of our
common stock. The common stock dividend payment date was July 26, 2004 to
stockholders of record as at July 23, 2004.
Each of the foregoing change in authorized shares was approved by the Board of
Directors and the holders of a majority of the issued and outstanding shares of
common stock and a Certificate of Amendment filed with the State of Delaware.
On September 21, 2004, the Company amended its Certificate of Incorporation to
increase the number of authorized common shares from 80,000,000 to 400,000,000.
On December 28, 2006, the Company amended its Certificate of Incorporation to
decrease the number of authorized common shares from 400,000,000 to 80,000,000.
8
Preferred Stock
The Company has authorized 20,000,000 preferred shares of which none have been
issued.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The purpose of the 2005 Incentive Stock Option Plan (the "Stock Plan") is to
secure long-term relationships for the Company and its stockholders, from the
benefits arising from capital stock ownership by the Company's Officers,
Directors, Employees, Consultants and Advisors, who can help in the Company's
growth and success and to provide an effective means of compensation for such
persons and entities providing services to the Company in lieu of cash payments
therefore. The Stock Plan became effective as of the 1st day of July, 2005, and
shall expire on the 30th day of June, 2015, unless further extended by
appropriate action of the Board of Directors. The Board of Directors of the
Company may at any time, by appropriate action, suspend or terminate the Stock
Plan, or amend the terms and conditions of the Stock Plan.
Pursuant to the stock plan, 1,000,000 shares of common stock, par value $0.0001
per share, of Empire Global Corp., may be issued upon the exercise of stock
options or stock grants. Consultants, Advisors, Employees and Directors, to the
Company, or any of its subsidiary corporations, shall be eligible for
participation in the Stock Plan. Each person or entity acquiring shares of
Common Stock pursuant to the Stock Plan shall be acquiring such shares for
investment purposes only, and in lieu of cash compensation for services rendered
to the Company. A Compensation Committee appointed by the Board of Directors
shall determine the manner in which each option or stock grant shall be
exercisable and the timing and form of the purchase price to be paid by a
grantee upon the exercise of an option or stock grant under the Stock Plan. To
the extent provided in the option agreement, payment of the purchase price may
be in cash, part in cash, part by personal promissory note or in lieu of payment
for services performed. There are no restrictions on the resale of securities
purchased under the Stock Plan. The Stock Plan is not qualified under Section
401(a) of the Internal Revenue Code.
On July 26, 2005, options to purchase up to a total of 1,000,000 shares of
common stock were granted at an exercise price of $0.50 per share to two
consultants pursuant to Consulting Services Agreements entered into with the
Company to perform research and analysis work with respect to business planning
in the potential acquisition of technology based companies. The shares were
issued in lieu of payment for services performed or to be performed. The Company
relied on the exemption from the registration requirements of the Securities Act
provided by Rule 701 under the Securities Act. More details of the Stock Plan
and the shares issued pursuant to these consultant agreements can be found on
form S-8 filed on July 27, 2005.
RECENT SALES OF UNREGISTERED SECURITIES
There are no recent sales of unregistered securities by the Company during the
period covered by this report, which have not been previously disclosed in form
10-Q filings or form 8-K filings.
Share exchange - IMM Investments Inc.
On July 9, 2004, the Company acquired 100% of IMM Investments Inc., thus making
IMM a wholly owned subsidiary of the Company. The Company acquired IMM from KJ
Holding Inc. an Ontario Corporation owned by Kalano Jang father of our former
Chairman Kalson Jang, by issuing KJ Holding Inc. 3,000,000 (21,000,000
post-forward split) restricted shares of the Company in exchange for 100% of the
issued and outstanding stock in IMM. Details of this transaction are available
on the form 8-K filed on July 14, 2004 to announce the acquisition of IMM
Investments Inc. and the form 8-K/A filed on December 3, 2004 to amend 8-K filed
on July 14, 2004. Items 2.01 and 9.01 were amended on this report.
9
Sale of Shares - Private Placements - Cancellation of Debt
On June 27, 2005 the Company completed a private placement by issuing a total of
2,088,720 pre-split (20,888 post-split) shares of its common stock with a total
value of $208,872 to an accredited investor in exchange for the cancellation of
debt owed by the Company respectively to the investor.
On July 27, 2005 the Company completed a private placement by issuing a total of
500,000 pre-split (50,000 post-split) shares of its common stock with a total
value of $150,000 to an accredited investor in exchange for the cancellation of
debt owed by the Company to the investor.
On October 12, 2005 the Company completed a private placement by issuing a total
of 814,100 shares of its common stock with a total value of $472,178 to a group
of accredited investors in exchange for the cancellation of debt owed by the
Company respectively to each investor.
On August 21, 2006, the Company completed a private placement by issuing a total
of 7,236,300 shares of its common stock with a total value of $922,595 to a
group of accredited investors in exchange for the cancellation of debt owed by
the Company respectively to each investor.
On November 26, 2006, the Company completed a private placement by issuing a
total of 1,000,000 shares of its common stock with a total value of $127,495 to
First Federal Group in exchange for the cancellation of debt and rent for use of
office space in New York.
On November 5, 2007, the Company completed a private placement by issuing a
total of 3,378,900 shares of its common stock with a total value of $405,468 to
a group of accredited investors in exchange for the cancellation of debt owed by
the Company respectively to each investor.
On May 5, 2008, Empire completed a private placement of 5,500,000 shares of its
common stock. The Company issued 3,000,000 shares of common stock with a total
value of $200,000, as well as 2,500,000 shares of common stock with a total
value of $175,000 to a group of accredited investors in exchange for the
cancellation of debt owed by the Company to each investor.
The shares issued in each private placement are exempt from the registration
requirements of the Securities Act of 1933 (the "Act") pursuant to Section 4(2)
of the Act and Rule 506 promulgated thereunder. Each investor is an "accredited
investor" under the Act, and no form of general solicitation or general
advertising was conducted in connection with the private placements.
Each of the certificates representing shares of the Company's common stock
issued in each private placement contain restrictive legends preventing the
sale, transfer or other disposition of such shares, unless registered under the
Securities Act.
REGISTRATION STATEMENTS
On July 27, 2005 Empire issued 500,000 shares each by way of S-8 registration to
two consulting firms for an aggregate total of 1,000,000 pre-split (100,000
post-split) shares of its common stock. The consulting firms were engaged to
assess and make recommendations with respect to the Company's plans to enter
into a merger and reorganization with Vianet Direct, Inc. and subsequently
Tradestream Global, AG.
PURCHASES OF EQUITY SECURITIES BY THE REGISTRANT
No stock repurchases were made by Empire or affiliated purchasers in a month
within the fourth quarter of the fiscal year covered by this report.
Item 6. Selected Financial Data
Not Applicable.
10
Item 7. Management's discussion and analysis
FORWARD-LOOKING STATEMENTS
This management discussion and analysis of financial condition and results of
operations ("MD&A") on form 10-K includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. All statements
other than statements of historical fact, including statements regarding
guidance, industry prospects or future results of operations or financial
position, made in this MD&A on form 10-K are forward-looking. We use words such
as anticipate, believe, expect, future, intend, plan, aim, project, estimate,
will, should, could and similar expressions to identify forward-looking
statements. Forward-looking statements reflect management's current expectations
and are inherently uncertain. Factors that could cause our future results to
differ from these expectations include general economic conditions, particularly
as they affect our ability to acquire a target business and raise sufficient
working capital and the impact of foreign exchange fluctuations, changes in
global economic conditions and consumer spending. As a result, the
identification and interpretation of data and other information and their use in
developing and selecting assumptions from and among reasonable alternatives
requires the exercise of judgment. To the extent that the assumed events do not
occur, our outcome may vary substantially from our anticipated or projected
results, and accordingly, we express no opinion on the outcome of those
forward-looking statements and give no assurance that any of the assumptions
relating to the forward-looking statements are accurate. These risks and
uncertainties, as well as other risks and uncertainties that could cause our
actual results to differ significantly from management's expectations describes
some, but not all, of the possible risk factors whether known or unknown to
management on the date of this filing.
ABILITY TO CONTINUE AS A GOING CONCERN
The Company's auditors have issued an opinion on our ability to continue as a
going concern. This means that its auditors believe there is doubt that the
Company can continue as an on-going business for the next twelve months unless
it obtains additional capital to pay its obligations. This is because the
Company has not generated any revenues and no revenues are anticipated until it
begins operations from a new business plan.
We have suffered recurring losses from operations and are in serious need of
additional financing. These factors among others indicate that we may be unable
to continue as a going concern, particularly in the event that we cannot obtain
additional financing or, in the alternative, complete a merger or acquisition.
Our continuation as a going concern depends upon our ability to generate
sufficient cash flow to conduct our operations and our ability to obtain
additional sources of capital and financing. There is no assurance that we will
be able to accomplish all or any of these items. In the event that these events
do not take place, we will in all probability not be able to continue as a going
concern.
The following discussion and analysis should be read in conjunction with the
financial statements of the Company and the accompanying notes appearing under
the caption "Financial Statements and Supplementary Data."
11
GENERAL
Empire was incorporated in the state of Delaware on August 26, 1998. Our
principal executive office is located in Toronto, Canada.
On July 9, 2004 we acquired 100% of the shares of IMM Investments Inc. ("IMM"),
an Ontario Corporation. On January 4, 2010 the Company disposed of IMM.
As of December 31, 2010, the Company has no business operations and has been
seeking new business opportunities during the period covered by this report.
However, subsequent to the period covered by this report as a result of the
Agreement to purchase AVT on December 9, 2011, upon closing of the Agreement the
Company will have an interest in a social media applications producer and
publisher.
AVT develops and has acquired a series of social networking entertainment
applications on Facebook with approximately 7 million installed users as of the
end of November 2011. According to Google Analytics, AVT applications are
accessed by users represented in over 200 countries in approximately 134
languages and in more than 13,598 different cities from November 30, 2009 to
December 1, 2011. AVT's Facebook application portfolio of products ranges from
games, quizzes and social commerce storefronts.
PLAN OF OPERATION
At December 31, 2010 we had no cash and $2,932 in assets and 127,735 in current
liabilities. Our cash flow requirement for the twelve-month period from
January 2011 to December 2011 is estimated to be $179,735. Anticipated cash
outflows are as follows:
ANTICIPATED CASH OUTFLOWS: Amount (USD)
------------
General and administrative expenses:
Consulting and Wages $ 25,000
Accounting 15,000
Legal 10,000
Office and General 2,000
------------
Total General and Administrative $ 52,000
Accounts payable due 127,735
============
Total 179,735
============
Empire Consolidated General and Administrative Expenses:
The general and administrative expenses projection of $52,000 is based on the
actual expenses incurred during the two most recent years. Future general and
administrative expenses are anticipated to be similar to those incurred during
these most recent years.
Empire Consolidated Current Accruals Due:
The balance of the current accounts payable at December 31, 2010 due to various
parties for services rendered was approximately $127,735. Terms on these
accruals vary but they are all currently due on demand.
12
Empire Additional Working Capital:
Empire has a working capital deficit as of December 31, 2010 of $127,735.
Additional working capital is not currently assessable since the Company is
seeking business opportunities.
Subsequent to the period covered by this report, the Company entered into an
Agreement to acquire AVT. Therefore, the amount of working capital required
cannot be determined, if any, at this time.
The company plans to fund the above operations, with loans and advances from our
current management and to execute private placements with related and other
parties over the next twelve months.
CASH INFLOWS
Research and Development:
During the period covered this report and the subsequent twelve months the
Company's plan of operation is actively seeking an acquisition or new business
opportunity, finding a business partner, or locating a qualified company as a
candidate for a business combination. We are authorized to enter into a
definitive agreement with a wide variety of businesses without limitation as to
their industry or revenues. It is not possible at this time to predict with
which company, if any, we will enter into a definitive agreement or what will be
the industry, operating history, revenues, future prospects or other
characteristics of that company.
Subsequent to the period covered by this report, the Company entered into an
Agreement to acquire AVT. It is impossible at this time to determine the result
of our business development as a result of the Agreement. Therefore, the Company
will continue to seek additional opportunities and potential acquisition targets
to develop a portfolio of assets in conjunction with our plan to acquire AVT.
We may seek a business opportunity with entities which have recently commenced
operations, or that may wish to utilize the public marketplace in order to raise
additional capital to expand their business, to develop a new product or
service, or for other corporate purposes. We may acquire assets and establish
wholly-owned subsidiaries in various businesses or acquire existing businesses
as subsidiaries.
We are not limiting our search for business opportunities to any particular
industry; therefore, our management may not be experienced in matters relating
to the business of any such target and will rely upon its own reasonable efforts
in accomplishing our business purposes. The Company may employ outside
consultants or advisors to assist in the search for qualified target companies
in which case any outside consultants or advisors fees will need to be assumed
by the target business, as we have no cash assets with which to pay such
obligation.
In analyzing prospective business opportunities, management may consider factors
such as:
a. financial strength and quality of managerial resources;
b. history of operations, if any;
c. the available empirical and technical data;
d. the availability of audited financial statements;
e. the nature of its present business and future prospects;
f. specific risk factors associated with the proposed activities;
g. the potential for profit, growth or expansion;
h. the perceived public recognition or acceptance of products, services, or
trades;
i. public identity; and other relevant factors.
13
Our Management does not have the capacity to conduct exhaustive due diligence of
a target business as might be undertaken by a venture capital fund or similar
institution. As a result, management may elect to merge with a target business
which has one or more undiscovered shortcomings and may, if given the choice to
select among target businesses, fail to enter into an agreement with the most
investment-worthy target business.
Following a business combination we may benefit from the services of others in
regard to accounting, legal services, underwritings and corporate public
relations. If requested by a target business, management may recommend one or
more underwriters, financial advisors, accountants, public relations firms or
other consultants to provide such services.
A potential target business may have an agreement with a consultant or advisor,
providing that services of the consultant or advisor be continued after any
business combination. Additionally, a target business may be presented to us
only on the condition that the services of a consultant or advisor are continued
after a merger or acquisition. Such pre-existing agreements of target businesses
for the continuation of the services of attorneys, accountants, advisors or
consultants could be a factor in the selection of a target business.
In implementing a structure for a particular business acquisition, we may become
a party to a merger, consolidation, reorganization, joint venture, or licensing
agreement with another corporation or entity. We may also acquire stock or
assets of an existing business. On the consummation of a transaction, our
present management and stockholders may no longer control the Company. In
addition, it is likely that our officers and directors will, as part of the
terms of the acquisition transaction, appoint one or more new officers and
directors.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon an exemption from registration under applicable federal
and state securities laws. In some circumstances however, as a negotiated
element of a transaction, we 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, of which there can be no
assurance, it will be undertaken by the surviving entity after we have entered
into an agreement for a business combination or have consummated a business
combination. Although there can be no assurance that a market for our common
stock will develop or be sustained, the issuance of additional securities and
their potential sale into any trading market may depress the market value of our
securities in the future.
While the terms of a business transaction to which we may be a party cannot be
predicted, it is expected that the parties to the business transaction will
desire to avoid the creation of a taxable event and thereby structure the
acquisition in a tax-free reorganization under Sections 351 or 368 of the
Internal Revenue Code of 1986, as amended.
With respect to any merger or acquisition negotiations with a target business,
management expects to give specific attention to the overall dilutive effect
such a transaction would have on existing shareholders in exchange for the
target business. Any merger or acquisition effected by us may have a dilutive
effect on the percentage of shares held by our stockholders at such time,
therefore, depending upon, among other things, the target business's assets and
liabilities, our stockholders will in all likelihood hold a lesser percentage
ownership interest in Empire.
No assurances can be given that we will be able to enter into or complete a
business combination, as to the terms of a business combination, or as to the
nature of the target business.
14
We anticipate that the selection of a business opportunity in which to
participate will be complex and without certainty of success. Management
believes (but has not conducted any research to confirm) as previously described
in this report that there are numerous firms in various industries seeking the
perceived benefits of a publicly registered corporation. Such perceived benefits
may include facilitating or improving the terms on which additional equity
financing may be sought, providing liquidity for incentive stock options or
similar benefits to key employees, increasing the opportunity to use securities
for acquisitions, and providing liquidity for our stockholders and other
factors. Business opportunities may be available in many different industries
and at various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities extremely
difficult and complex. We can provide no assurance that we will be able to
locate compatible business opportunities.
On December 12, 2011 the Company filed a form 8-K report with the Securities and
Exchange Commission containing material facts that management has entered into
an agreement to acquire AVT as described elsewhere. Readers of this Annual
Report are encouraged to consult our filings with the SEC to read the report and
also to determine if we have subsequently filed additional information.
OPERATIONS REVIEW
We have no cash to satisfy our working capital needs for the next year,
therefore, over the subsequent twelve months we plan to continue to seek
additional business opportunities. We anticipate funding our working capital
needs through the issuance of common stock to independent contractors, the
equity capital markets, private advances and loans. Although the foregoing
actions are expected to cover our anticipated cash needs for working capital
and capital expenditures for at least the subsequent twelve months, no assurance
can be given that we will be able to raise sufficient funds to meet our cash
requirements.
During the period covered by this report we have been seeking a business
opportunity. Subsequent to the period covered by this report we entered into an
Agreement to acquire a new business opportunity, as a result we may be required
to hire additional employees, independent contractors as well as purchase or
lease additional equipment.
As described elsewhere, pursuant to the Agreement to acquire AVT, the Company
will purchase 150,000 shares of AVT representing 100% of the issued and
outstanding shares of AVT in exchange for 169,995,000 restricted common shares
of the Company, or a ratio of approximately 1,133.3 shares of the Company for
each share of AVT. There can be no assurance that the Agreement to acquire AVT
will be closed, however, should the closing take place as anticipated on the
closing date or as soon as practicable therafter, the Company will have a total
of 188,670,800 shares of common stock issued and outstanding all of the same
class. The issuance of these new shares will result in dilution to our existing
shareholders and a change in control of the Company to the shareholders of AVT.
We anticipate continuing to rely on equity sales of common shares or the
issuance of convertible debt to fund our operations and to seek out or enter
into new business opportunities.
RELATED PARTY TRANSACTIONS
The amount due to related parties at December 31, 2010, is $5,964. The amounts
due to related parties are due on demand, bear no interest, have no fixed terms
of repayment and are not secured. On January 4, 2010 the Company agreed to sell
IMM Investments Inc. to a related party in exchange for the elimination of debts
due in addition to $75,000 of accruals due at December 31, 2009 as a result of a
repayment demand of amounts due to them.
15
COMPARISONS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
Overall Results of Operations
The historical financial information about the Company upon which to base an
evaluation of our performance has been interrupted by a number of failed
business ventures. Accordingly, comparisons with prior periods are generally
not meaningful. As described in Note 3(o) to the Consolidated Financial
Statements presentation of certain prior period amounts have been reclassified
to segregate assets disposed of on January 4, 2010.
The Company is subject to risks inherent in the establishment of a new business
enterprise, including limited capital resources, possible delays in the decision
and implementation of a new business plan.
Revenues
The Company has no revenues for the period covered by this report. We do not
expect to generate any revenue, unless we are able to merge with a revenue
producing business.
Expenses
General and administrative expenses representing the bulk of our net operating
results increased from $34,865 in 2009 to $70,846 in 2010. The increase was a
result of additional costs incurred as a result of the disposal of IMM and the
reclassification of fees incurred to complete and file our outstanding
regulatory reports for discontinued operations.
In 2010 we financed our capital needs with advances from a related party. In the
subsequent twelve month period our operating costs are expected to decrease due
to the limited scope of work and expenses anticipated to be incurred for filing
our regulatory requirements and actively pursuing a new business venture.
Net Income/Loss
For the year ended December 31, 2010, we had a net loss from operations of
$85,136 or $0.005 net loss per share which was a decrease of $92,229 in net
loss from our net loss of $177,365 or $0.01 net loss per share for the year
ended December 31, 2009. During 2009 our losses included $142,500, in general
and administrative expenses associated with our discontinued operations of IMM.
Assets and Liabilities
Assets
At December 31, 2010 we had no cash and our total assets were $2,932 compared
to no cash and total assets of $211,570 at December 31, 2009.
Liabilities
Our current liabilities at December 31, 2010 were $127,735 versus $259,069 in
2009. The decrease is a result of the disposal of IMM to pay debts due to a
related party.
Liquidity and capital resources
The Company had no cash balance at December 31, 2010 or 2009. The notes to our
consolidated financial statements as of December 31, 2010, contain footnote
disclosure regarding our uncertain ability to continue as a going concern. We
have no revenues to cover our expenses, and we have an accumulated deficit of
$5,029,126. As of December 31, 2010, we had $127,735 in current liabilities,
when this is offset against our current assets we are left with a working
capital deficit of $127,735 and as such we cannot assure that we will succeed in
achieving a profitable level of operations sufficient to meet our ongoing cash
needs or in locating a viable business opportunity.
16
We have not generated revenues from operations, consequently, we have been
dependent upon cash advances from related or other parties and private investors
as well as the issuance of our common stock to fund our cash requirements.
Specifically, we engage an independent contractor when required to provide
services for us. The contractor submits invoices for time and out of pocket
expenses.
No trends have been identified which would materially increase or decrease our
results of operations or liquidity. We will need to raise significant additional
operating capital to finance our operations and to acquire sources of operating
revenues. Due to our poor financial condition, raising capital will be very
difficult and expensive. The Company will seek funds from possible strategic and
joint venture partners and financing to cover any short term operating deficits
and provide for long term working capital. No assurances can be given that the
Company will successfully engage strategic or joint venture partners or
otherwise obtain sufficient financing through the sale of equity.
Below is a discussion of our sources and uses of funds for the year ended
December 31, 2010.
CASH FLOWS
Net Cash Used In Operating Activities
Our net cash used in operating activities decreased to $12,347 during the year
ended December 31, 2010 versus $29,963 in 2009. The decrease was primarily due
to a decrease in accounts payable resulting from reclassification of assets to
discontinued operations.
Net Cash Used In Investing Activities
There were no investing activities in 2010 or 2009.
Net Cash Provided By Financing Activities
Our cash from financing activities in 2010 were limited to an advance from a
related party of $4,516 versus $1,448 during the year ended December 31, 2009.
OFF BALANCE-SHEET ARRANGEMENTS
We have no off-balance sheet arrangements and no non-consolidated,
special-purpose entities.
INCOME TAXES
Note 7 of the financial statements included in this report sets out our deferred
tax assets as of December 31, 2010 and 2009. We have established a 100%
valuation allowance, as we believe it is more likely than not that the deferred
tax assets will not be realized.
We based the establishment of a 100% valuation allowance against our deferred
tax assets on our current operating results. If our operating results improve
significantly, we may have to record our deferred taxes in our consolidated
financial statements, which could have a material impact on our financial
results.
17
CONTINGENCIES AND COMMITMENTS
See Note 8 of Notes to Consolidated Financial Statements for a detailed
explanation of our contingencies. We had no long-term commitments at December
31, 2010.
CONTRACTUAL OBLIGATIONS
We had no contractual obligations at December 31, 2010.
INTERNAL AND EXTERNAL SOURCES OF LIQUIDITY
We have funded our operations primarily through cash injections from related and
other parties.
IMPACT OF INFLATION
We do not believe that general price inflation will have a material effect on
the Company's business in the near future.
FOREIGN EXCHANGE
Transactions involving the Company are generally denominated in U.S. dollars.
For additional details see also Note 3(k) of Notes to Consolidated Financial
Statements.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
See Note 3(n) "Recently Accounting Pronouncements" of Notes to Consolidated
Financial Statements.
EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
See Note 9 "Subsequent Events" of Notes to Consolidated Financial Statements.
Item 7A. 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.
18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
EMPIRE GLOBAL CORP.
(FORMERLY TRADESTREAM GLOBAL CORP.)
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2010 and 2009
CONTENTS
Report of Independent Registered Public Accounting Firm F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Operations and Comprehensive Loss F-3
Consolidated Statements of Changes in Stockholders' Equity (Deficiency) F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6 - F-15
19
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Empire Global Corp
Toronto, Ontario, Canada
We have audited the accompanying consolidated balance sheets of Empire Global
Corp., ("the Company"), and subsidiary as of December 31, 2010 and 2009 and the
related statements of operations and comprehensive loss, changes in
stockholder's equity (deficiency), and cash flows for each of the years in the
two-year period ended December 31, 2010. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 2010 and 2009 and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2, the
Company has incurred significant losses from operations since its inception and
has incurred a net loss, which substantially exceeds its working capital and has
not yet established any source of revenues. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Bernstein & Pinchuk LLP
New York, NY
February 21, 2012
- F1 -
EMPIRE GLOBAL CORP.
(FORMERLY TRADESTREAM GLOBAL CORP.)
Consolidated Balance Sheets
December 31,
2010 2009
------------ ------------
US$ US$
ASSETS
Current Assets
Pre-paid and other assets - -
------------ ------------
Total Current Assets - -
Property and equipment, net 2,932 3,664
Assets held for sale - 207,906
------------ ------------
2,932 211,570
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities
Accounts payable and accrued liabilities 121,771 57,621
Advances from related parties 5,964 1,448
Liabilities held for sale - 200,000
------------ ------------
Total Current Liabilities 127,735 259,069
Commitments and Contingencies - -
Stockholders' Equity (Deficiency)
Preferred Stock, $0.0001 par value, 20,000,000
shares authorized, none issued and outstanding - -
Capital Stock, $0.0001 par value, 80,000,000
shares authorized, shares issued and outstanding
18,675,800 for both years 1,868 1,868
Additional - paid in capital 4,902,455 4,902,455
Accumulated other comprehensive income - (7,832)
Deficit (5,029,126) (4,943,990)
------------ ------------
Total Stockholders' Equity (Deficiency) (124,803) (47,499)
------------ ------------
2,932 211,570
============ ============
See notes to consolidated financial statements
- F2 -
EMPIRE GLOBAL CORP.
(FORMERLY TRADESTREAM GLOBAL CORP.)
Consolidated Statements of Operations and Comprehensive Loss
Years ended December 31,
2010 2009
------------ ------------
US$ US$
Revenue - -
General and administrative expenses 70,846 34,865
Loss from continuing operations
before income tax expenses (70,846) (34,865)
------------ ------------
Other Income (expense)
Loss on sale of IMM Investments Inc. - discontinued
operations (15,738) (142,500)
Gain from Loan Forgiveness 1,448 -
------------ ------------
Total Other expense (14,290) (142,500)
Loss before income taxes (85,136) (177,365)
Income tax expense - -
------------ ------------
Net Loss (85,136) (177,365)
Other comprehensive income (loss)
Foreign currency translation adjustment - 28,515
------------ ------------
Comprehensive Loss (85,136) (148,850)
============ ============
Basic and fully diluted loss per share - continuing
operations (0.004) (0.002)
============ ============
Basic and fully diluted loss per share - discontinued
operations (0.001) (0.008)
============ ============
Basic and fully diluted loss per common share (0.005) (0.010)
============ ============
Basic and fully diluted weighted average number of
shares outstanding 18,675,800 18,675,800
============ ============
See notes to consolidated financial statements
- F3 -
EMPIRE GLOBAL CORP.
(FORMERLY TRADESTREAM GLOBAL CORP.)
Consolidated Statements of Changes in Stockholders' Equity (Deficiency)
Accumulated
Common Additional Other Total
Stock Paid-In Comprehensive Accumulated Stockholders'
Shares Par Value Capital Income Deficit Equity
-------------------------------------------------------------------------------------
US$ US$ US$ US$ US$ US$
Balance at January 1, 2009 18,675,800 1,868 4,902,455 (36,347) (4,766,625) 101,351
Foreign currency
translation adjustment - - 28,515 - 28,515
Net loss - - - (177,365) (177,365)
-------------------------------------------------------------------------------------
Balance
December 31, 2009 18,675,800 1,868 4,902,455 (7,832) (4,943,990) (47,499)
Foreign currency
translation adjustment - - 7,832 - 7,832
Net loss - - - (85,136) (85,136)
-------------------------------------------------------------------------------------
Balance
December 31, 2010 18,675,800 1,868 4,902,455 - (5,029,126) (124,803)
=====================================================================================
See notes to consolidated financial statements
- F4 -
EMPIRE GLOBAL CORP.
(FORMERLY TRADESTREAM GLOBAL CORP.)
Consolidated Statements of Cash Flows
Years ended December 31,
2010 2009
------------ ------------
US$ US$
Cash Flows from Operating Activities
Net loss from continuing operations (70,846) (34,865)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 732 917
Loss on discontinued operations (14,290) (142,500)
Changes in operating assets and liabilities
- continuing operations
Accounts payable and accrued liabilities 64,150 32,500
Prepaid and sundry assets - 20,000
------------ ------------
Changes in operating assets and liabilities
- discontinued operations
Assets held for sale 207,906 (28,515)
Liabilities held for sale (200,000) 122,500
------------ ------------
Net cash used in operating activities (12,348) (29,963)
------------ ------------
Net cash used in discontinued operations - -
------------ ------------
Cash Flows from Financing Activities
Advances from related parties 4,516 1,448
------------ ------------
Net cash provided by financing activities 4,516 1,448
------------ ------------
Effect of foreign exchange fluctuation in cash 7,832 28,515
Net increase(decrease) in cash and cash equivalents - -
Cash and cash equivalents - beginning of year - -
------------ ------------
Cash and cash equivalents - end of year - -
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest - -
============ ============
Income taxes - -
============ ============
Supplemental items not affecting cash:
Common Stock issued for debt - -
------------ ------------
See notes to consolidated financial statements
- F5 -
EMPIRE GLOBAL CORP.
(FORMERLY TRADESTREAM GLOBAL CORP.)
Notes to Consolidated Financial Statements
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. On September 30, 2005
contemporaneously with a change in management and business plan changed its name
to Empire Global Corp. The Company's principal executive offices are
headquartered in Toronto, Canada.
In June 2004, the Company acquired IMM Investments Inc. an Ontario Corporation
in exchange for 210,000 (21 million pre-reverse stock splits) shares of the
Company paid to the former shareholder of IMM thereby making IMM a wholly owned
subsidiary. On January 4, 2010 the Company disposed of IMM and is actively
seeking new business opportunities.
The Company previously reported that Montebello Developments Inc. ("Montebello")
was a subsidiary of the Company. Montebello was a dormant private Ontario
Corporation owned by our former Chairman, Kalson Jang with no assets, no
liabilities and no business. Although the Company considered a business venture
with Montebello, an Agreement was never completed and therefore the Company has
no interest in Montebello. The Company did not record any carrying or disposal
costs for Montebello therefore as of the fiscal year ended December 31, 2010
will no longer report Montebello as a subsidiary.
As reported in footnote 9 Subsequent Events, on December 9, 2011, the Company
entered into a Stock Purchase and Share Exchange Agreement (the "Agreement")
with Avontrust Global Pte. Ltd. a Singapore company ("AVT") with its head
office and operations in Singapore. When the transaction is closed, AVT will
become a wholly-owned subsidiary of Empire Global Corp.
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.
The Company has incurred losses amounting to $5,029,126 since inception. We have
no cash and we anticipate cash outflows of $179,735 during the year ended
December 31, 2011. Continuation as a going concern is uncertain and depends 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.
- F6 -
3. Summary of Significant Accounting Policies
a) Basis of Financial Statement Presentation
These consolidated financial statements include the accounts of the Company and
IMM Investments Inc. a wholly owned subsidiary which was disposed of on
January 4, 2010.
b) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and cash deposited with
financial institutions, including money market accounts, and commercial paper
purchased with an original maturity of three months or less.
c) Use of Estimates
In preparing the Company's financial statements, 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.
d) Equipment and Depreciation
Equipment is stated at cost less accumulated depreciation. Depreciation, based
on the estimated useful lives of the assets, is provided annually as follows:
Equipment 20% Declining Balance
e) Organization Costs
Organization costs are tested annually for impairment in accordance with
FASB ASC 350-30-65, "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, 2010 and 2009,
no impairment losses related to these items have been identified.
f) Impairment of Long Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of
FASB ASC 350-30, General Intangibles Other than Goodwill, formerly SFAS No. 142,
"Accounting for the Impairment or Disposal of Long-Lived Assets". This statement
requires that long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future undiscounted net cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell.
g) Loss Per Share
Net loss per common share is computed pursuant to FASB ASC 260-10-45. Basic net
loss per common share is computed by dividing net loss by the weighted average
number of shares of common stock outstanding during the period. Diluted net loss
per common share is computed by dividing net loss by the weighted average number
of shares of common stock and potentially outstanding shares of common stock
during each period.
There were no potentially dilutive shares outstanding as of December 31, 2010 or
2009.
- F7 -
h) 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.
The Company adopted the provisions of ASC 740-10, Accounting for Uncertain
Income Tax Positions. When tax returns are filed, it is highly certain that some
positions taken would be sustained upon examination by the taxing authorities,
while others are subject to uncertainty about the merits of the position taken
or the amount of the position that would be ultimately sustained. In accordance
with the guidance of ASC 740-10, the benefit of a tax position is recognized in
the financial statements in the period during which, based on all available
evidence, management believes it is more likely than not that the position will
be sustained upon examination, including the resolution of appeals or litigation
processes, if any. Tax positions taken are not offset or aggregated with other
positions. Tax positions that meet the more-likely-than-not recognition
threshold are measured as the largest amount of tax benefit that is more than 50
percent likely of being realized upon settlement with the applicable taxing
authority. The portion of the benefits associated with tax positions taken that
exceeds the amount measured as described above should be reflected as a
liability for unrecognized tax benefits in the accompanying balance sheet along
with any associated interest and penalties that would be payable to the taxing
authorities upon examination. The Company believes its tax positions are all
highly certain of being upheld upon examination. As such, the Company has not
recorded a liability for unrecognized tax benefits.
Additionally, the Company adopted ASC 740-10 which provided guidance on how an
entity should determine whether a tax position is effectively settled for the
purpose of recognizing previously unrecognized tax benefits. The term
"effectively settled" replaces the term "ultimately settled" when used to
describe recognition, and the terms "settlement" or "settled" replace the terms
"ultimate settlement" or "ultimately settled" when used to describe measurement
of a tax position and clarifies that a tax position can be effectively settled
upon the completion of an examination by a taxing authority without being
legally extinguished. For tax positions considered effectively settled, an
entity would recognize the full amount of tax benefit, even if the tax position
is not considered more likely than not to be sustained based solely on the basis
of its technical merits and the statute of limitations remains open. This
adoption did not have an impact on the accompanying consolidated financial
statements.
i) Comprehensive Income
The Company adopted FASB ASC 220-10-45, "Reporting Comprehensive Income.",
ASC 220-10-45 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.
At December 31, 2010 and 2009 the Company recorded $7,832 and $28,515
respectively in accumulated other comprehensive income from its foreign currency
translation.
- F8 -
j) Fair Value of Financial Instruments
We measure our financial assets and liabilities in accordance with accounting
principles generally accepted in the United States of America. 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.
The Company adopted accounting guidance for financial assets and liabilities
(ASC 820). The adoption did not have a material impact on our results of
operations, financial position or liquidity. This standard defines fair value,
provides guidance for measuring fair value and requires certain disclosures.
This standard does not require any new fair value measurements, but rather
applies to all other accounting pronouncements that require or permit fair value
measurements. This guidance does not apply to measurements related to
share-based payments. This guidance discusses valuation techniques, such as the
market approach (comparable market prices), the income approach (present value
of future income or cash flow), and the cost approach (cost to replace the
service capacity of an asset or replacement cost). The guidance utilizes a fair
value hierarchy that prioritizes the inputs to valuation techniques used to
measure fair value into three broad levels. The following is a brief description
of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable, either directly
or indirectly. These include quoted prices for similar assets or
liabilities in active markets and quoted prices for identical or
similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists,
therefore developed using estimates and assumptions developed by us,
which reflect those that a market participant would use.
The Company adopted a newly issued accounting standard for fair value
measurements of all non-financial assets and liabilities not recognized or
disclosed at fair value in the consolidated financial statements on a recurring
basis.
k) Foreign Currency Translation
The Company accounts for foreign currency translation pursuant to FASB ASC
830-20 "Foreign Currency Translation". The functional and reporting currency of
the Company is the U.S. dollar ("US$"), while the functional and reporting
currency for IMM Investments Inc., a wholly-owned Canadian subsidiary, which was
disposed of on January 4, 2010, is the Canadian dollar. Although IMM had no
operations, it owns shares of Armistice Resources Corp. a Canadian mining
company. The purchase price and shares of Armistice are valued in Canadian
dollars. Accordingly, the Company is exposed to foreign currency translation
gains or losses as the relationship between the Canadian dollar and United
States dollar fluctuates. Increases in the value of the Canadian dollar against
the U.S. dollar will result in foreign exchange transaction gains and decreases
in the value of the Canadian dollar will result in foreign exchange transaction
losses. The items which are subject to translation adjustments were the
investment in Armistice Resources Corp. and organization cost.
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.
All remaining expenses were incurred in US Dollars.
- F9 -
l) Stock Based Payments
The Company adopted ASC 718-20-10; Share Based Payments (formerly SFAS No. 123R)
which establishes the financial accounting and reporting standards for
stock-based compensation. As required by ASC 718-20-10, we recognize the cost
resulting from all stock-based payment transactions as an expense. Stock based
compensation is measured at fair value at the time of the grant.
The Company had no outstanding options or warrants at December 31, 2010 and
2009.
m) Subsequent events
The Company follows the guidance in FASB ASC 855-10-50 for the disclosure of
subsequent events. The Company evaluates subsequent events through the date when
the financial statements were issued. Pursuant to ASU 2010-09 of the FASB
Accounting Standards Codification, the Company as an SEC filer considers its
financial statements issued when they are widely distributed to users, such as
through filing them on EDGAR.
Refer to Note 9 Subsequent Events for additional details.
n) Recent Accounting Pronouncements
In June 2009, the FASB issued guidance now codified as ASC 105, Generally
Accepted Accounting Principles as the single source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with U.S. GAAP, aside from
those issued by the SEC. ASC 105 does not change current U.S. GAAP, but is
intended to simplify user access to all authoritative U.S. GAAP by providing all
authoritative literature related to a particular topic in one place.
The adoption of ASC 105 did not have a material impact on the Company's
financial statements, but did eliminate references to pre-codification
standards.
In February 2010, the FASB issued ASU 2010-09, "Subsequent Events (Topic 855):
Amendments to Certain Recognition and Disclosure Requirements". This update
addresses both the interaction of the requirements of Topic 855, "Subsequent
Events", with the SEC's reporting requirements and the intended breadth of the
reissuance disclosures provision related to subsequent events
(paragraph 855-10-50-4). The amendments in this update have the potential to
change reporting by both private and public entities, however, the nature of the
change may vary depending on facts and circumstances. The adoption of ASU
2010-09 did not have a material impact on the Company's consolidated results of
operations or financial condition.
In December 2010, the Financial Accounting Standards Board (FASB) issued ASC
Topic No. 2010-29 Business Combinations (ASC Topic 805) - Disclosure of
Supplementary Pro Forma Information for Business Combinations which amended
ASC Topic 805 "Business Combinations" to specify that if a public entity
presents comparative financial statements, the entity should disclose revenue
and earnings of the combined entity as though the business combination that
occurred during the year had occurred as of the beginning of the comparable
prior annual reporting period only. The ASC also expands the supplemental pro
forma disclosures under ASC Topic 805 to include a description of the nature
and the amount of material, nonrecurring pro forma adjustments directly
attributable to the business combination included in the reported pro forma
revenue and earnings. The ASC is effective prospectively for business
combinations for which the acquisition date is on or after the beginning of
the first annual reporting period beginning on or after December 15, 2010
(October 1, 2011 for the Company). Early adoption is permitted. The Company
does not expect the adoption of this ASC to have a material impact on the
Company's consolidated financial statements.
- F10 -
n) Recent Accounting Pronouncements (cont'd)
In May 2011, FASB issued ASU No. 2011-04, Fair Value Measurement
(ASC Topic 820), Amendments to Achieve Common Fair Value Measurement and
Disclosure Requirement in U.S. GAAP and IFRS's. This update provides amendments
to ASC Topic 820 so that fair value has the same meaning in U.S. GAAP and in
IFRSs and that their respective fair value measurement and disclosure
requirements are the same. The adoption of this update did not have a material
effect on the financial position, results of operations or cash flows of the
Company.
In June 2011, FASB issued ASU No. 2011-05, Comprehensive Income (ASC Topic 220),
Presentation of Comprehensive Income. This update provides amendments to ASC 220
to increase the prominence of items reported in other comprehensive income and
to facilitate convergence of U.S. generally accepted accounting principles
(GAAP) and International Financial Reporting Standards (IFRS). Most notably,
the update eliminates the option to present components of other comprehensive
income (loss) as part of the statement of changes in stockholders' equity
(deficit). The amendment is effective for public entities for fiscal years, and
interim periods within those years, beginning after December 15, 2011. The
Company currently displays comprehensive income (loss) in its statement of
operations and accordingly, doesn't anticipate the adoption of this update
having a material effect on the financial position, results of operations or
cash flows of the Company.
In December 2010, the FASB issued the FASB Accounting Standards Update No.
2010-28 "Intangibles-Goodwill and Other (Topic 350): When to Perform Step 2 of
the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying
Amounts" ("ASU 2010-28").Under ASU 2010-28, if the carrying amount of a
reporting unit is zero or negative, an entity must assess whether it is more
likely than not that goodwill impairment exists. To make that determination, an
entity should consider whether there are adverse qualitative factors that could
impact the amount of goodwill, including those listed in ASC 350-20-35-30. As a
result of the new guidance, an entity can no longer assert that a reporting unit
is not required to perform the second step of the goodwill impairment test
because the carrying amount of the reporting unit is zero or negative, despite
the existence of qualitative factors that indicate goodwill is more likely than
not impaired. ASU 2010-28 is effective for public entities for fiscal years, and
for interim periods within those years, beginning after December 15, 2010, with
early adoption prohibited.
In September 2011, the FASB issued ASU No. 2011-08, Intangibles-Goodwill and
Other (Topic 350) - Testing Goodwill for Impairment, which is intended to
simplify how entities test for goodwill impairment by permitting an entity the
option of performing a qualitative assessment to determine whether further
impairment testing is necessary. The standard will be effective for annual and
interim goodwill impairments tests for fiscal years beginning after December 15,
2011. We are currently evaluating the impact of our pending adoption of
ASU 2011-08 on our financial statements.
There were various other accounting standards and interpretations issued
recently, none of which are expected to have a material impact on our
consolidated financial position, operations or cash flows.
o) Reclassification
The organizational costs of our wholly owned subsidiary and our investment in
Armistice Resources Corp. have been reclassified for each period as Assets Held
for Sale.
- F11 -
4. Discontinued Operations - Impairment of Investment in Armistice Resources
Corp. and Sale of IMM
On January 4, 2010 we disposed of our wholly owned subsidiary IMM Investments
Inc. (IMM) which owned 5,000,000 shares of Armistice Resources Corp.
(Armistice).
The investment in Armistice consisted of 5,000,000 shares of that company that
were held in escrow. The terms of escrow contained 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.
During the fourth quarter of 2008, we determined that due to the terms of escrow
agreement, the risks and estimated legal costs to recover the shares of
Armistice as well as selling costs, it was more likely than not that the assets
of IMM would be disposed of significantly before our previous estimates of its
useful life. Therefore, at December 31, 2008 the Company performed an impairment
test resulting in an impairment of $624,939 in the value of our investment in
Armistice. As a result, our investment in Armistice as of December 31, 2008 was
$177,985.
Through December 31, 2009, our investment in Armistice was recorded at cost net
of impairment and included in long term assets, with unrealized gains and losses
recognized as accumulated other comprehensive income (loss). On December 31,
2009, shares in Armistice had a quoted market value of $0.22 Canadian per share.
Our assets held for sale of $207,906 on December 31, 2009 included our
investment in Armistice as well as foreign currency translation of $28,291 and
organizational costs of IMM of $1,629. On January 4, 2010 the Company entered
into an Agreement of Purchase and Sale with Braydon Capital Corp. to dispose of
IMM in exchange for elimination of debt in the amount of $200,000.
As a result of the sale, we disposed of advances from related parties in the
amount of $128,500 as well as $71,500 in accounts payable. In addition, Braydon
agreed to forgive $1,448 in fees paid to our Transfer Agent which were also
recorded as advances from a related party. The details of the sale of IMM are as
follows:
Assets held for Sale at December 31, 2009
Investment in Armistice net of impairment $ 206,277
Organization Costs 1,629
----------
Total Value of Assets held for Sale 207,906
----------
Liabilities held for Sale
Accounts payable 71,500
Advances from related parties 128,500
----------
200,000
----------
Loss on sale of IMM, excluding foreign currency translation gain $ 7,906
Foreign currency translation 7,832
(Gain) on forgiveness of Advance from realted party ( 1,448)
----------
Net loss on sale $ 14,290
===========
- F12 -
5. Equipment
Equipment at December 31, 2010 and 2009 consists of the following:
2010 2009
---------- ----------
Telephone system $ 11,192 $ 11,192
Less accumulated depreciation 8,260 7,528
---------- ----------
$ 2,932 3,664
========== ==========
6. Advances from Related Party
As a result of the sale of IMM Investments Inc. on January 4, 2010, $128,500 of
Advances from Related Parties was eliminated and were reclassified as
Liabilities held for sale as follows:
2010 2009
---------- ----------
Prosper Consulting $ - $ 40,000
Gold Street Capital - 17,500
Braydon Capital Corp. - 71,000
---------- ----------
Advances from related parties (Liabilities held for sale): $ - 128,500
========== ==========
Advances due from related parties are non-interest bearing and are due on
demand. Advances from related parties as of December 31, 2010 and 2009 are as
follows:
2010 2009
---------- ----------
Braydon Capital Corp. 5,964 1,448
---------- ----------
Total advances from related parties: $ 5,964 $ 1,448
========== ==========
Also, as a result of the sale of IMM Investments Inc. on January 4, 2010,
Advances from Related Parties of $1,448 was forgiven. (See Note 4)
- F13 -
7. Income Taxes
Income taxes are recognized for the following: a) amount of tax payable for the
current year, and b) deferred tax liabilities and assets for future tax
consequences of events that have been recognized differently in the financial
statements than for tax purposes.
For 2010 the deferred tax of approximately $29,000 compared to $62,000 for 2009,
(35% of net loss from operations excluding impairment loss) was offset by a
valuation allowance of $29,000 and $62,000 resulting in a net income tax of zero
for 2010 and 2009 respectively.
The Company has tax losses available to be applied against future years income
taxable in the United States of America. Due to the losses incurred in the
current year and expected future operating results, management determined that
it is more likely than not that the deferred tax asset resulting from the tax
losses available for carryforward will not be realized through the reduction of
future income tax payments. Accordingly a 100% valuation allowance has been
recorded for deferred income tax assets as follows:
At December 31, 2010 the Company had deferred tax assets of approximately
$85,000 and $177,000 for 2009 due to net operating loss carryforwards available
to reduce future Federal income taxes earned in the United States. A 100%
valuation allowance of approximately $85,000 and $177,000 for 2010 and 2009
respectively has been established since management believes it is
more likely than not that the deferred tax assets will not be realized.
The Company has accumulated a net operating loss carryforward of approximately
$5,029,126 as of December 31, 2010. This loss carryforward may be offset against
future taxable income through the year 2030. The use of these losses to reduce
future income taxes will depend on the generation of sufficient taxable income
prior to the expiration of the net operating loss carryforwards. In the event of
certain changes in control, there will be an annual limitation on the amount of
net operating loss carryforwards that can be used. No tax benefit has been
reported in the financial statements for the year ended December 31, 2010
because it has been fully offset by a valuation reserve. The use of future tax
benefit is undeterminable because we presently have no operations.
NOL's incurred are subject to limitation due to any ownership change (as defined
under Section 382 of the Internal Revenue Code of 1986) which resulted in a
change in business direction. Unused limitations may be carried over to future
years until the net operating losses expire. Utilization of net operating losses
may also be limited in any one year by alternative minimum tax rules.
8. Commitments and Contingencies
The Company may be subject to claims arising in the ordinary course of business.
The Company was subject to direct legal proceedings which were concluded in
June 2010 as well as indirect proceedings involving our current Chairman and
Principal Executive Officer which were concluded in May 2011 subsequent to the
period covered by this report. As a result of the conclusion of these
matters, the Company and our Chairman and Executive Officer are no longer
subject to legal proceedings.
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"). In June 2010, the matter was mutually settled between the
parties. As a result of the mutual settlement the claim against the Company
was discontinued with no loss to the Company.
- F14 -
8. Commitments and Contingencies (Cont'd)
2. On December 10, 2004, the Ontario Securities Commission ("OSC") served upon
the former President and C.E.O. of the Company ("executive officer"), and
companies controlled by our executive officer, as well as a shareholder of
the Company related to the father of our former Chairman Kalson Jang and an
unrelated party hired by Kalson Jang's father, collectively the "respondents"
an order to cease trading in shares of Pender International Inc. ("Pender")
an Ontario corporation owned by our former Chairman Kalson Jang and his
father Kalano Jang a former shareholder of the Company. 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
executive officer.
As a result of the court proceedings, it was learned that the individual
co-accused with our executive officer, while employed by a company associated
with Kalano Jang, was a rogue RCMP agent and acted to defraud our executive
officer, it was also discovered that senior RCMP officers had tampered with
evidence allegedly to cover-up certain improper RCMP procedures and actions
leading to the fraud perpetrated against our executive officer and admitted
to a violation of his Canadian Charter Rights. On May 17, 2011 our executive
officer entered into a settlement agreement offered by the OSC whereby the
OSC agreed that our executive officer had no involvement in the fraud
perpetrated against him by the co-accused RCMP agent and our executive
officer agreed that he failed to properly monitor his trading accounts
leading to the fraud committed against him by the former RCMP agent. Our
executive officer agreed not to act in the capacity of an officer or director
of any Canadian issuer for a period of five years.
Criminal charges and proceedings against our executive Officer were
susbequently stayed on May 18, 2011.
9. Subsequent Events
The Company has evaluated subsequent events through the date of this Annual
Report on this form 10-K for the year ended December 31, 2010, and has disclosed
such items in this note as follows:
On December 9, 2011, Empire Global Corp. (the "Company") entered into a
Stock Purchase and Share Exchange Agreement (the "Agreement") with Avontrust
Global Pte. Ltd. a Singapore company ("AVT") with its head office and operations
in Singapore. When the transaction is closed, AVT will become a wholly-owned
subsidiary of Empire Global Corp.
Pursuant to the Agreement the Company will purchase 150,000 shares of AVT
representing 100% of the issued and outstanding shares of AVT in exchange for
169,995,000 shares of the Company, or a ratio of approximately 1,133.3 shares of
the Company for each share of AVT. There can be no assurance that the Agreement
to acquire AVT will be closed, however, should the closing take place as
anticipated on the closing date or as soon as practicable therafter, the
issuance of these new shares will result in a change in control of the Company
to the shareholders of AVT.
AVT develops and has acquired a series of social networking entertainment
Applications on Facebook with approximately 7 million installed users as of the
end of Nov 2011. According to Google Analytics, AVT applications are employed by
users represented in over 200 countries in approximately 100 languages and in
more than 11,000 different cities from Jan 2010 to Dec 2011. AVT's Facebook
application portfolio of products ranges from games, quizzes and social commerce
storefronts. AVT aims to tap this user base to virally promote innovative new
applications it will be producing internally and with its business partners.
At the closing of this agreement, the Company will also transform itself into
the world's first public quoted company that is managed principally using the
Facebook Application Platform.
The Share Exchange Agreement is subject to, among other things, (i) completion
of due diligence by the parties to the Agreement; (ii) approval of the
respective board of directors of each party and (iii) there being no material
adverse change in the financial condition, business or prospects of the Company
or AVT prior to closing. The closing date of the Agreement has been extended
until March 6, 2012 or as soon as practicable therafter.
- F15 -
Item 9. Changes in and disagreements with accountants on accounting and
financial disclosure
None.
Item 9a. Controls and procedures
Annual Evaluation of Discloure Controls
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer),
who are the same person, to allow for timely decisions regarding required
disclosure.
As required by SEC Rule 15d-15(b), our Chief Executive Officer and Chief
Financial Officer carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 15d-14 as of the end of the period covered by this report. Based on the
foregoing evaluation, our CEO and CFO concluded that our disclosure controls and
procedures are effective in providing material information required to be
included in our periodic SEC filings on a timely basis and to ensure that
information required to be disclosed in our periodic SEC filings is accumulated
and communicated to our management, including our CEO and CFO, to allow timely
decisions regarding required disclosure about our internal control over
financial reporting discussed below.
Management's Annual Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for our company. Our internal control system
was designed to, in general, provide reasonable assurance to our management and
board regarding the preparation and fair presentation of published financial
statements, but because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2010. The framework used by management in making
that assessment was the criteria set forth in the document entitled "Internal
Control - Integrated Framework" issued by the Committee of Sponsoring
Organizations (COSO) of the Treadway Commission. Based on that assessment, our
management has determined that as of December 31, 2010, our internal control
over financial reporting was not effective due to material weaknesses resulting
from our limited resources.
This annual report does not include an attestation report of the Company's
registered accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission.
Changes in Internal Control, Over Financial Reporting
There was no change in our internal control over financial reporting that
occurred during the fiscal years ended December 31, 2010 and 2009 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
Item 9b. Other information
None.
35
PART III
Item 10. Directors and executive officers, promoters and control persons
On December 31, 2010, Empire had two directors and two executive officers, all
of which do not have any other directorships with any other reporting company.
All directors of our company hold office until the next annual meeting of the
stockholders or until their successors have been elected and qualified or have
resigned. The officers of our company are appointed by our board of directors
and hold office until their death, resignation or removal from office.
Subsequent to the period covered by this report, on June 6, 2011, Mr. Dominelli
resigned as Chairman of the Board and as Interim Chief Executive Officer and
Chief Financial Officer but remained as a director. On the same day Mr. Michael
Ciavarella was appointed as Chairman of the Board and as President, Chief
Operating Officer and Chief Financial Officer, while Mr. Merchant was appointed
to Chief Executive Officer. Also, on October 27, 2011, Mr. Merchant resigned as
Chief Executive Officer and director of the Company and on the same day
Mr. Ciavarella resigned as president and was appointed Chief Executive Officer.
Our directors, executive officers and significant employees, their ages,
positions held, and duration as such, as of the date of this report is as
follows:
Name Age Position Date First Elected Term Expiry
Michael Ciavarella 49 Chairman, Director June 6, 2011 None
Chief Executive Officer,
Chief Financial Officer,
Chief Operating Officer
Vic Dominelli 47 Director January 6, 2005 None
Secretary
Identity of Significant Employees
There are no employees or personnel that are expected to make a significant
contribution to the business.
Family Relationships
There are no family relationships among the current directors, executive
officers, or persons nominated or chosen by the Company to become directors or
executive officers.
36
Resumes
Michael Ciavarella, B.Sc. - Chairman of the Board, CEO, COO, CFO
2005 - 2011 Director of Operations, Empire Global Corp.
2004 President and CEO, Empire Global Corp (formerly Pender)
1990 - 2007 Independent Investment Advisor, Limited Market Dealer
1986 - 1990 Teacher - Cree School Board
Mr. Ciavarella is 49 years old and is our former president, and chief executive
officer. Mr. Ciavarella graduated from Laurentian University with a Bachelor of
Science degree in science with studies in mining engineering. From 2002 to 2004
Mr. Ciavarella has served as a senior executive, financial planner and life
insurance underwriter with Dagmar Insurance Services and financial advisor with
Manulife Financial.
In 2004, Mr. Ciavarella was instrumental in financing Armistice Resources Corp.
a distressed gold mining venture situated in Northern Ontario, Canada. As a
result of Mr. Ciavarella's investment and the efforts invested by Armistice's
current management and staff, Armistice has completed its initial exploration
and development and is planning to commence mining operations and gold
production.
Since 2005, Mr. Ciavarella has been engaged as our Director of Operations and
assisted in a number of acquisition endevours explored by the Company during the
period. In 2011, Mr. Ciavarella was appointed as chairman and executive officer.
Vic Dominelli - Director, Secretary
2002 - Current Construction Supervisor
1985 - 2002 Senior Human Resources Manager Bombardier Aircraft Canada Inc.
37
Involvement in Certain Legal Proceedings
1. No bankruptcy petition has been filed by or against any business of which any
director was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time.
2. No current director has been convicted in a criminal proceeding and is not
subject to a pending criminal proceeding (excluding traffic violations and
other minor offences).
3. No current director has been subject to any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or
banking activities with the exception of the specific temporary restrictions
limited to Canada mutually agreed to between Mr. Michael Ciavarella and the
Ontario Securities Commission.
4. No director has been found by a court of competent jurisdiction (in a civil
action), the Securities Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or commodities law,
that has not been reversed, suspended, or vacated.
Compliance with Section 16(a) of the Exchange Act
Based solely on a review of forms 4 and 5 furnished to the Company and filed
with the Securities and Exchange Commission under Rule 16a-3(e) promulgated
under the Securities Exchange Act of 1934, which the exception of Braydon
Capital Corp., and Gold Street Capital Corp. the Company believes that all
directors, officers and beneficial owners of more than 10% of any class of
equity securities filed on a timely basis the reports required by Section 16(a)
of the Exchange Act during the most recent fiscal year.
Nomination Procedure for Directors
Empire has adopted a nominee committee charter however, due to our limited
operations does not have a standing nominating committee; recommendations for
candidates to stand for election as directors are made by the board of
directors.
Identification of Audit Committee
Our audit committee is comprised of Angela S. Chu, a Certified General
Accountant and David Ciavarella, a Chartered Accountant. The audit committee
reports to the board of directors when performing the required functions of the
audit committee.
Code of Ethics
On February 21, 2006, the Company's board of directors formally adopted a Code
of Business Conduct and Ethics effective December 31, 2005.
The Company filed the Code of Business Conduct and Ethics on April 17, 2006 with
the Securities and Exchange Commission as an Exhibit to the annual report on
form 10-KSB for the year ended December 31, 2005 and a copy is attached by
reference herein as an Exhibit to this annual report. The Company will provide a
copy of the Code of Business Conduct and Ethics to any person without charge,
upon request. Requests can be sent to: Empire Global Corp., Suite 2, 648 Finch
Ave. East, Toronto, Ontario, M2K 2E6 Attention: President and CEO.
38
Item 11. Executive compensation
The following table sets out compensation and awards paid to our officers and
directors during the period covered by this report.
SUMMARY COMPENSATION TABLE
-
Restricted Securities
Name and Stock Underlying LTIP All Other Total
principal Salary Bonus Award(s) Options Payouts Compensation Compensation
position Year ($) ($) ($) ($) SARs (#) ($) ($)
--------------------- ---- --------- ---------- ------------ ----------- ---------- ---------- ------------
Vic Dominelli,
I/CEO, CFO, Chairman 2010 0 0 0 0 0 0 0
2009 0 0 0 0 0 0 0
2008 0 0 0 0 0 0 0
2007 0 0 0 0 0 0 0
2006 0 0 0 0 0 0 0
2005 0 0 0 0 0 0 0
There are no current employment agreements between the Company and its executive
officers and directors. Our directors and officers submit invoices for services
provided to the Company for business development. The directors and officers
have agreed to receive shares of common stock in lieu of cash until such time as
the Company receives sufficient revenues necessary to provide proper salaries to
all officers and compensation for directors' participation. At this time,
management cannot accurately estimate when sufficient revenues will occur to
implement this compensation, or the exact amount of compensation.
There are no annuities, pensions or retirement benefits proposed to be paid to
officers, directors or employees of the corporation in the event of retirement
at a normal retirement date pursuant to any presently existing plan provided or
contributed to by the corporation.
Compensation of Directors
Currently, there are no arrangements between Empire and any of its directors or
between any of the subsidiaries and any of its directors whereby such directors
are compensated for any services provided as directors. No payments have been
made to our directors for their services as directors that have not been
previously reported by the Company.
39
Item 12. Security ownership of certain beneficial owners and management
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The tables below set forth, as of December 31, 2010 the beneficial ownership of
the Company's Common Stock (i) by any person or group known by the Company to
beneficially own more than 5% of the outstanding Common Stock, (ii) by each
Director and executive officer and (iii) by all Directors and executive
officers as a group. Unless otherwise indicated, the Company believes that the
beneficial owners of the shares have sole voting and investment power over such
shares. The address of all individuals for whom an address is not otherwise
indicated is 648 Finch Ave., East, Suite 2, Toronto, Ontario M2K 2E6.
Name and Address Percent
Title of Class of Beneficial Owner Amount of Class
---------------- -------------------------------- ------------ --------
Common Braydon Capital Corp. 4,568,700 24.5%
144-Restricted Shareholder
Common Prosper Consulting Corp. 4,559,200 24.4%
144-Restricted Shareholder
Common Gold Street Capital Corp. 2,676,500 14.3%
144-Restricted Shareholder
The above table is based upon information derived from our stock records. Unless
otherwise indicated in the footnotes to this table and subject to community
property laws where applicable, it believes that each of the shareholders named
in this table has sole or shared voting and investment power with respect to
the shares indicated as beneficially owned. Applicable percentages are based
upon 18,675,800 shares of common stock outstanding as of December 31, 2010.
SECURITY OWNERSHIP OF MANAGEMENT
Name and Address Percent
Title of Class of Beneficial Owner Amount of Class
---------------- -------------------------------- ------------ --------
Common Michael Ciavarella, Chairman 0 0%
CEO, COO, CFO
Common Vic Dominelli, Director 343,000 1.8%
144-Restricted and Director
Suite 2 - 648 Finch Ave. East
Toronto, Ontario, M2K 2E6
Common Total shares owned by officers 343,000 1.8%
144-Restricted and directors of the Company as
a group. All directors and
executive officers (2 persons)
CHANGES IN CONTROL
As described elsewhere in this report, upon closing of the Stock Purchase and
Share Exchange Agreement with Avontrust Global Pte. Ltd., control of the Company
shall change to the principal shareholders of Avontrust.
40
Item 13. Certain relationships and related party transactions
In the last 2 years, there have been no transactions or proposed transactions in
which Empire was or was to be a party where directors or executive officers,
nominees for election as a director and members of the immediate family of such
persons were involved.
Empire Global Corp. has no parent company and was not involved in any
transactions or agreements with any promoters in the last five years.
Transactions with Related Persons
No director, executive officer, security holder, or any immediate family of such
director, executive officer, or security holder has had any direct or indirect
material interest in any transaction or currently proposed transaction, which
the Company was or is to be a participant that exceeded the lesser of
(1) $120,000 or (2) one percent of the average of our total assets at year-end
for the last three completed fiscal years, except for the following:
Promoters and control persons
During the past six fiscal years, Vic Dominelli has been a promoter of Empire's
business, however Mr. Dominelli has not received anything of value from Empire
or its subsidiaries nor is any person entitled to receive anything of value from
Empire or its subsidiaries for services provided as a promoter of the business
of Empire and its subsidiaries.
Director independence
Pursuant to Item 407(a)(1)(ii) of Regulation S-B of the Securities Act, the
Company has adopted the definition of "independent director" as set forth in
Rule 4200(a)(15) of the NASDAQ Manual. In summary, an "independent director"
means a person other than an executive officer or employee of the Company or
its subsidiaries or any other individual having a relationship which, in the
opinion of our board of directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director, and
includes any director who accepted any compensation from the Company in excess
of $200,000 during any period of 12 consecutive months within the three past
fiscal years. Also, ownership of Empire's stock will not preclude a director
from being independent.
In applying this definition, our board of directors has determined that Vic
Dominelli qualifies as an "independent director" pursuant to Rule 4200(a)(15) of
the NASDAQ Manual
As of the date of the report, Empire did not maintain a separately designated
compensation or nominating committee, however, the company has also adopted this
definition for the independence of the members of its audit committee.
Mr. Dominelli does not serve on any committees of the board.
41
Item 14. Principal accountant fees and services
AUDIT FEES
Audit fees are for professional services for the audit of our annual financial
statements, and for the review of the financial statements included in our
filing on form 10-K and for services that are normally provided in connection
with statutory and regulatory filings or engagements. The Company paid audit
fees of approximately $20,000 in connection to audits for the periods ended
December 31, 2009 and 2010.
AUDIT RELATED FEES
Audit related fees are funds paid for the assurance and related services
reasonably related to the performance of the audit or the review of our
financial statements. We paid no audit related fees during 2010 and 2009.
TAX FEES
Tax fees are those funds paid for professional services with respect to tax
compliance, tax advice, and tax planning. We paid no professional tax fees
during 2010 and 2009 other than those previously disclosed.
ALL OTHER FEES
Fees paid for permissible work that does not fall within any of the three other
fees categories set forth above. No other fees were paid during 2010 and 2009.
PRE-APPROVED POLICY FOR AUDIT AND NON-AUDIT SERVICES
During the period covered by this report the Company had a standing audit
committee to perform all functions of an audit committee, including the
pre-approval of all audit and non-audit services prior to our engagement of an
accounting firm and report to the Board of Directors. All of the services
rendered for us by Bernstein and Pinchuk, LLP were pre-approved by our Board of
Directors.
Item 15. Exhibits
EXHIBITS
The exhibits required by Item 601 of Regulation S-B listed on the Exhibit Index
are included herein.
All Exhibits required to be filed with the form 10-K are included in this annual
report or incorporated by reference to our 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.
Exhibit Description Status
14.1 Code of Ethics filed as an exhibit to Empire's form 10-KSB Filed
filed on April 17, 2006, and incorporated herein by reference.
31 Certification of Principal Executive Officer and Principal Included
Financial Officer required under Rule 13a-14(a) or Rule
15d-14(a) of the Securities and Exchange Act of 1934, as amended.
32 Certification of Principal Executive Officer and Principal Included
Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
42
REPORTS ON FORM 8-K (SUBSEQUENT TO THE DATE OF THIS ANNUAL REPORT)
On June 13, 2011, the Company filed an 8-K to report the following:
That Mr. Ciavarella had entered into a settlement agreement with the Ontario
Securities Commission (OSC) whereby the OSC agreed that Mr. Ciavarella had no
involvement in an alleged fraud orchestrated by Michael Mitton a rogue agent of
the Royal Canadian Mounted Police (RCMP) and Mr. Ciavarella agreed that he
failed to properly monitor his securities account at HSBC Securities. In the
same report, the Company reported that criminal Proceedings were stayed against
Mr. Ciavarella on May 18, 2011.
On June 13, 2011, the Company filed an 8-K to report the following:
Mr. Dominelli tendered his resignation as Interim Chief Executive Officer and
Chief Financial Officer and Chairman but would remain a director. At the same
time, Mr. Ciavarella was appointed as Chairman, President, Chief Operating
Officer and Chief Financial Officer and Mr. Sam Merchant, our Director was
appointed as Chief Executive Officer.
On October 28, 2011, the Company filed an 8-K to report the following:
Mr. Merchant tendered his resignation as Chief Executive Officer and director.
At the same time, Mr. Ciavarella was stepped down as President and was appointed
as Chief Executive Officer.
On December 12, 2011, the Company filed an 8-K to report the following:
The Company entered into an Agreement to acquire Avontrust Global Pte. Ltd. with
a closing date of January 6, 2012.
On February 1, 2012, the Company filed an amendment to the form 8-K to report
the following:
The Company and Avontrust Global Pte. Ltd. mutually agreed to extend the closing
date of the Agreement to March 6, 2012 to provide additional time to file
required financial statements.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, 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: February 21, 2012.
Michael Ciavarella
Chairman of the Board
Chief Executive Officer
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Michael Ciavarella Date: February 21, 2012.
Michael Ciavarella
Chairman of the Board
Chief Executive Officer
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer