Attached files
PITAGORA
Revisione
Corso Matteotti, 21 - 10121 Torino
Tel. +39 011 51.78.602 ra. - Fax+39 011 51.89.491
Email: pitagorarev@pitagora.org
Via Pagano, 56 - 20145 Milano
Tel. +39 02 439.11.617 - Fax +39 02 439.16.332
Email: pitagorarev@pitagora.org
To the Board of Directors and Stockholders of
Multigioco S.r.l.
Grottaferrata, Italy
We have audited the accompanying balance sheets of Multigioco Srl., expressed in
euros as of December 31, 2012 and 2013 and the related statements of operations,
changes in stockholders' equity, and cash flows for the years ended December 31,
2012 and 2013. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
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 misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit 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 of 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 provide a
reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all
material respects, the financial position of Multigioco Srl as of December 31,
2012 and 2013 and the results of its operations and its cash flows for the years
ended December 31, 2012 and 2013 in conformity with accounting principles
generally accepted in the United States of America.
Pitagora Revisione S.r.1.
Turin, Italy
August 1, 2014
/s/ Roberto Seymandi
Roberto Seymandi
Partner
Member of JEFFREYS HENRY INTERNATIONAL
PITAGORA REVISIONE S.r.l - Societa di Revisiori Contabili
Sede Legale: 10121 Torino - C.so Matteotti, 21
Cap. Soc. EUR 30.000.00 i.v. P.I. 07786350012 Reg. Imp. Torino n. 05235621009
MULTIGIOCO S.R.L.
BALANCE SHEETS
December 31, December 31,
2013 2012
Audited Audited
------------ ------------
EUR EUR
Assets
Current assets:
Cash and cash equivalents - 24,937
Gaming account debits 216,493 70,375
AAMS tax credit 274 13,609
Short term investments - 6,900
Other current assets 14,521 19,276
Total current assets 231,288 135,097
------------ ------------
Property, plant and equipment 14,881 4,031
Intangible assets 273,218 312,623
Investments 350,000 320,000
------------ ------------
Total assets 869,387 771,751
============ ============
Liabilities and stockholders' equity
Current liabilities:
Bank overdrafts 1,164 -
Accounts payable and accrued liabilities 285,608 76,361
Short term portion of debt 133,447 125,916
Gaming account credits 282,357 256,223
Taxes payable 108,044 99,903
Advances from stockholders 37,877 357,385
Other current liabilities 19,263 10,530
Total current liabilities 867,761 926,319
------------ ------------
Long term loans and capital leases 72,742 184,363
Total Liabilities 940,504 1,110,682
============ ============
Stockholders' equity
Common stocks 10,000 10,000
Additional paid in capital 274,718 18,108
Accumulated deficit (355,835) (367,040)
------------ ------------
Total stockholders' equity (71,117) (338,932)
------------ ------------
Total liabilities and stockholders' equity 869,387 771,751
============ ============
(See notes to financial statements)
F-1
MULTIGIOCO S.R.L.
STATEMENTS OF OPERATIONS
December 31, December 31,
2013 2012
Audited Audited
------------ ------------
EUR EUR
Revenue
Net gaming revenue 3,503,893 1,428,666
Rebate of bank and credit card fees 15,984 7,265
Other income 7,510 46,520
Gross revenue 3,527,386 1,482,451
------------ ------------
Expenses
Direct operating costs 2,805,432 1,397,631
Selling, general and administrative costs 668,310 356,763
Amortization and depreciation 41,558 40,028
Total expenses 3,515,299 1,794,422
------------ ------------
Operating income / (loss) 12,087 (311,971)
============ ============
Other income or expenses
Interest expenses (16,042) (22,877)
Interest income 1,065 75
Other income 8,684 108
Gains on bond investments 11,620 10,840
Loss on investments (3,620) (43,215)
Income / (loss) from operations, before income taxes 13,795 (367,040)
------------ ------------
Income taxes 2,590 -
Net income / (loss) from operations 11,205 (367,040)
============ ============
Other comprehensive income
Foreign currency translation differences - -
Total comprehensive income (loss) for the period 11,205 (367,040)
Gain / (loss) per share of common stock
Gain / (loss) from operations 5,603 (183,520)
============ ============
Weighted average shares outstanding common stock
Basic and diluted 2 2
============ ============
(See notes to financial statements)
F-2
MULTIGIOCO S.R.L.
STATEMENTS OF CASH FLOWS
December 31,
2013
Audited
------------
EUR
Cash flows from operating activities
Net operating income 11,205
Add: non cash items
Amortization 41,558
------------
52,763
Changes in operating assets and liabilities
Accounts payable 209,247
Prepaid expenses (AAMS tax) 13,335
Gaming account debits (146,118)
Gaming account credits 26,134
Other current liabilities 24,404
Other receivable 4,755
Net cash provided by operating activities 184,520
------------
Cash flows from investing activities
Acquisition of property and equipment (13,003)
Short term assets (23,100)
Net cash (used) in investing activities (36,103)
------------
Cash flows from financing activities
Cash from bank overdraft 1,164
Proceeds from long-term debt (111,621)
Utilization of financial reserves 256,609
Advances from (to) stockholders (319,508)
Net cash (used) in financing activities (173,355)
------------
Net (decrease) in cash and cash equivalents (24,937)
Cash and cash equivalents at beginning of the year 24,937
------------
Cash and cash equivalents at end of the year -
============
Supplemental disclosure of cash flow information:
Cash paid during the years for:
Interest -
============
Income taxes -
============
(See notes to financial statements)
F-3
MULTIGIOCO S.R.L.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Common Common Additional Total
Stock Stock Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Equity
-----------------------------------------------------------------------
EUR EUR EUR EUR
Balance at January 1, 2012 2 10,000 - - 10,000
Reserves - 18,108 - 18,108
Net loss - - (367,040) (367,040)
------------------------------------------------------------------------
Balance at December 31, 2012 2 10,000 18,108 (367,040) (338,932)
Reserves - 256,609 - 256,609
Net loss - - 11,205 11,205
------------------------------------------------------------------------
Balance at December 31, 2012 2 10,000 274,718 (355,835) (71,117)
=========================================================================
See notes to financial statements
F-4
MULTIGIOCO S.R.L.
Notes to the Financial Statements
As of December 31, 2013 and 2012
(In euro, unless otherwise indicated)
Note 1 - Organization and Business
Multigioco Srl ("Multigioco" or the "Company") was organized under the laws of
the Republic of Italy on November 4, 2010. It was previously a division of
Newgioco Srl (a company incorporated in Italy). Operations are carried out under
gaming licences obtained from the Amministrazione Autonoma Monopoli di Stato
("AAMS") on July 4, 2012 and its subsidiary companies, and mainly consist of
online wagering as well as gaming in a number of land based shops and parlors
situated throughout Italy. For the year ended December 31, 2013, the Company had
over 750 shops under its licence.
The Company has no subsidiaries.
On December 31, 2013, the Company has 2 common shares issued and outstanding.
Note 2 -Summary of Significant Accounting Policies
Basis of presentation
The accompanying financial statements of Multigioco Srl have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("US GAAP") and are expressed in euro which is the functional currency
of the Company.
The Company's fiscal year end is December 31.
Liquidity
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern, which contemplates realization of assets and
the satisfaction of liabilities in the normal course of business.
The Company's net gaming revenues, when expressed in euro, increased by 145.3%
for the year ended December 31, 2013 from the year ended December 31, 2012. Net
gaming revenues increased as a result of an increase in wagers with a moderate
decrease in pay-outs. This increase, together with our cost reduction measures,
resulted in net income of EUR 11,205.
There are no assurances that management will be successful in achieving
sufficient cash flows to fund the Company's working capital needs, or whether
the Company will be able to refinance or renegotiate its obligations when they
become due or raise additional capital through future debt or equity. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. No adjustments have been made to the carrying value of assets or
liabilities as a result of this uncertainty.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Critical estimates include the assumptions
used in calculating share-based compensation expense, the useful lives of fixed
assets, the fair value of financial instruments, calculation of penalties and
interest on past due obligations, and the calculation of tax provision and the
F-5
Note 2 - Summary of Significant Accounting Policies (Continued)
valuation allowance for deferred tax assets. Actual results could differ from
those estimates.
Cash and equivalents
The Company considers all highly liquid debt instruments with maturities of
three months or less at the time acquired to be cash equivalents. Cash
equivalents represent short-term investments consisting of investment-grade
corporate and government obligations, carried at cost, which approximates market
value. The Company had no cash or cash equivalents on December 31, 2013 and
EUR 24,937 in cash equivalents on December 31, 2012.
Credit Risk
Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist principally of cash. The Company primarily places its
cash with high-credit quality financial institutions. The Company's cash
deposits, of up to EUR 350,000 as at December 31, 2013 are insured by the
Italian Government. From time-to-time the Company has deposits in excess of the
insured amounts.
Accounts receivable & Allowance for doubtful accounts
Accounts receivable represents trade obligations from customers that are subject
to normal trade collection terms, without discounts. The Company periodically
evaluates the collectability of its accounts receivable and considers the need
to record or adjust an allowance for doubtful accounts based upon historical
collection experience and specific customer information. Actual amounts could
vary from the recorded estimates. The Company has determined that no allowance
for doubtful accounts is needed for the accounts receivable balances as of
December 31, 2013 and December 31, 2012, those being EUR14,521 and EUR 19,276
respectively. The Company does not require collateral to support customer
receivables.
Property, plant and equipment
Property, plant and equipment are stated at acquisition cost less accumulated
depreciation and adjustments for impairment losses.
Expenditures are capitalized only when they increase the future economic
benefits embodied in an item of property, plant and equipment. All other
expenditures are recognized as expenses in the statement of income as incurred.
Amortization is charged on a straight-line basis over the estimated remaining
useful lives of the individual assets. Amortization commences from the time an
asset is put into operation. The range of the estimated useful lives is as
follows:
Incorporation costs 20.00% per year
Office equipment 20.00% per year
Office furniture 12.00% per year
Signs and displays 20.00% per year
Intangible Assets
Intangible assets are made up of licences and rights (i.e. AAMS Licences), and
incorporation costs, and amortized over a useful life of 10 years. We evaluate
Intangible Assets for impairment on an annual basis, and do so during the last
F-6
Note 2 - Summary of Significant Accounting Policies (Continued)
month of each year using balances as of the end of December and at an interim
date if indications of impairment exist. Intangible Asset impairment is
determined by comparing the fair value of the asset to its carrying amount with
an impairment being recognized only where the fair value is less than carrying
value.
We perform the allocation based on our knowledge of the reporting unit, the
market in which they operate, and our overall knowledge of the gaming industry.
Long-Lived Assets
We evaluate the carrying value of our long-lived assets for impairment by
comparing the expected undiscounted future cash flows of the assets to the net
book value of the assets when events or circumstances indicate that the carrying
amount of a long-lived asset may not be recoverable. If the expected
undiscounted future cash flows are less than the net book value of the assets,
the excess of the net book value over the estimated fair value will be charged
to earnings.
Fair value is based upon discounted cash flows of the assets at a rate deemed
reasonable for the type of asset and prevailing market conditions, appraisals,
and, if appropriate, current estimated net sales proceeds from pending offers.
We evaluate the carrying value of our long-lived assets based on our plans, at
the time, for such assets and such qualitative factors as future development in
the surrounding area and status of expected local competition. If impairment is
indicated, the asset is written down to its estimated fair value. There were no
such impairments for the years ended December 31, 2013 and 2012.
Fair Value of Financial Instruments
At December 31, 2013 and 2012, the carrying value of the Company's financial
instruments such as prepaid expenses and payables approximated their fair values
based on the short-term maturities of these instruments. The carrying value of
other long-term liabilities approximated their fair values because the
underlying interest rates approximate market rates at the balance sheet dates.
Financial Accounting Standard Board ("FASB") ASC Topic 820 established a
hierarchical disclosure framework associated with the level of pricing
observability utilized in measuring fair value. This framework defined three
levels of inputs to the fair value measurement process and requires that each
fair value measurement be assigned to a level corresponding to the lowest level
input that is significant to the fair value measurement in its entirety. The
three broad levels of inputs defined by FASB ASC Topic 820 hierarchy are as
follows:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or
liabilities that the reporting entity has the ability to access at the
measurement date;
Level 2 - inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
If the asset or liability has a specified (contractual) term, a
Level 2 input must be observable for substantially the full term of
the asset or liability; and
F-7
Note 2 - Summary of Significant Accounting Policies (Continued)
Level 3 - unobservable inputs for the asset or liability. These unobservable
inputs reflect the entity's own assumptions about the assumptions that
market participants would use in pricing the asset or liability and
are developed based on the best information available in the
circumstances (which might include the reporting entity's own data).
The Company's financial assets reported at fair value in the accompanying
balance sheets, as of December 31, 2013 and 2012 were immaterial.
Investment in equity securities and available-for-sale securities
The Company's investments in equity securities, which are classified as
available-for-sale, are carried at fair value for publically traded investments
or historical cost basis for privately held investments. Unrealized gains and
losses, net of tax, are reported in other comprehensive income. Gains and losses
are reported in the financial statements of operations when realized, determined
based on the disposition of specifically identified investments, using the
first-in, first-out method.
Investments identified by the Company as being potentially impaired are subject
to further analysis to determine if the impairment is other than temporary.
Other than temporary declines in market value from original cost are charged to
investment and other income, net, in the period in which the loss occurs. In
determining whether investment holdings are other than temporarily impaired, the
Company considers the nature, cause, severity and duration of the impairment.
Leasing
All lease agreements of the Company as lessees are accounted for as operating
leases.
Advances from stockholders
Advances from stockholders to the Group are all non-interest bearing. Italian
law provides that the advances from stockholders to a corporation ("Srl") are
not preferred and their repayment is subordinated to other categories of debt.
As a result all advances from stockholders are classified as current
liabilities.
Revenue Recognition
Revenues from Sports Betting; Casino, Cash and Skill Games; Slots, Lotteries,
Bingo and Horse Race wagers represent the gross pay-ins from customers less
gaming taxes and payouts to customers. Revenues are recorded when cash is
received net of payouts and AAMS taxes from wagers by customers.
Income Taxes
The Company records a tax provision for the anticipated tax consequences of its
reported results of operations. The provision for income taxes is computed using
the asset and liability method, under which deferred tax assets and liabilities
are recognized for the expected future tax consequences of temporary differences
between the financial reporting and tax bases of assets and liabilities, and for
operating losses and income tax credit carry forwards. Deferred tax assets and
liabilities are measured using the currently enacted tax rates that apply to
taxable income in effect for the years in which those tax assets are expected to
be realized or settled. The Company records a valuation allowance to reduce
deferred tax assets to the amount that is more likely than not to be realized.
F-8
Note 2 - Summary of Significant Accounting Policies (Continued)
As of December 31, 2013 and 2012, the earnings of the Company have yielded
cumulative losses.
The Company has adopted ASC Topic 740, which clarifies the accounting for
uncertainty in income taxes recognized in an enterprise's financial statements.
ASC Topic 740 prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return, and also provides guidance on
derecognition of tax benefits, classification on the balance sheet, interest and
penalties, accounting in interim periods, disclosure and transition. The Company
has determined that the adoption did not result in the recognition of any
liability for unrecognized tax benefits and that there are no unrecognized tax
benefits that would, if recognized, affect the Company's effective tax rate.
Based on the Company's review of its tax positions as of December 31, 2013 and
2012, no uncertain tax positions have been identified.
The Company has elected to include interest and penalties related to uncertain
tax positions, if determined, as a component of income tax expense. To date, no
penalties or interest has been accrued.
In Italy, tax years beginning 2009 forward are open and subject to examination.
The Company is not currently under examination and it has not been notified of a
pending examination.
Stockholder's equity
On December 31, 2013 the Company had 2 common shares issued and outstanding,
that being 1 (one) common share representing a 34% ownership percentage held by
Doriana Gianfelici, the Company's CFO (an Italian citizen), and 1 (one) common
share representing a 66% ownership percentage held by Newgioco Srl, a
corporation organized under the laws of Italy, which is owned 50% by Beniamino
Gianfelici (an Italian citizen), the Company's CEO, and 50% by Laura Tabacco
(an Italian citizen). In accordance with Italian law, the shares are registered
with the Register of Companies at the Italian Chamber of Commerce.
Promotion, Marketing, and Advertising Costs
The costs of promotion, marketing, and advertising are charged to expense as
incurred.
Net Income (Loss) per Share
Basic net income (loss) per share is calculated based on the net income (loss)
attributable to common shareholders divided by the weighted average number of
shares outstanding for the period excluding any dilutive effects of options,
warrants, unvested share awards and convertible securities. Diluted net income
(loss) per common share assumes the conversion of all dilutive securities using
the if-converted method, and assumes the exercise or vesting of other dilutive
securities, such as options, warrants and restricted stock using the treasury
stock method. For the years ended December 31, 2013 and 2012 the Company did not
have dilutive securities.
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources, including foreign currency translation adjustments and
unrealized gains and losses on marketable securities.
F-9
Note 2 - Summary of Significant Accounting Policies (Continued)
Reclassification
Certain 2012 amounts have been reclassified, so the balance would be comparable
with corresponding 2013 balances.
Recently Issued Accounting Pronouncements Not Yet Adopted
We have reviewed the FASB issued Accounting Standards Update ("ASU") accounting
pronouncements and interpretations thereof that have effectiveness dates during
the periods reported and in future periods. The Company has carefully considered
the new pronouncements that alter previous generally accepted accounting
principles and does not believe that any new or modified principles will have a
material impact on the corporation's reported financial position or operations
in the near term. The applicability of any standard is subject to the formal
review of our financial management and certain standards are under
consideration. Reference is made to these recent accounting pronouncements as if
they are set forth therein in their entirety.
Note 3 - Investments
Investments are made up of the following amounts:
December 31, December 31,
2013 2012
------------ ------------
EUR EUR
Secured deposits 320,000 320,000
Investment in Veneto Banca 30,000 -
------------ ------------
Total investments 350,000 320,000
------------ ------------
The secured deposits are held with the Veneto Banca Societa Cooperativa Per
Azioni and are made up as follows:
December 31, December 31,
2013 2012
------------ ------------
EUR EUR
Secured Deposits:
Certificate IT0004716202 200,000 200,000
Certificate IT0004699994 120,000 120,000
------------ ------------
Total Secured Deposits 320,000 320,000
------------ ------------
F-10
Note 4 - Property, plant and equipment and Intangible Assets
The Company's property, plant, and equipment and intangible assets are comprised
of the following items:
Property, Plant and Equipment:
December 31, December 31,
2013 2012
------------ ------------
EUR EUR
Asset
Office equipment 10,825 4,654
Office furniture 6,831 -
Signs and Displays 270 270
Less Accumulated Depreciation (3,045) (893)
------------ ------------
Total Equipment 14,881 4,031
------------ ------------
Intangible Assets:
December 31, December 31,
2013 2012
------------ ------------
EUR EUR
Incorporation costs 2,600 2,600
Licences and rights 350,000 350,000
Less Accumulated Depreciation (79,382) (39,977)
------------ ------------
Total Intangible Assets 273,218 312,623
------------ ------------
Note 5 - Bank overdrafts and Long term debt
As of December 31, 2013 the Company reported EUR1,164 in bank overdraft.
The long term debt amount represents a bank loan held with Veneto Banca. The
loan amount of EUR 500,000 originated March, 2011 with a 49 monthly repayment
term ending on May, 2015. The interest rate on the loan is 5.041% plus euro
Inter Bank Offered Rate ("EURIBOR"). The loan balance outstanding as of Dec 31,
2013 is EUR179,341 and as at Dec 31, 2012 was EUR 305,617.
Debt repayments over the next five years are made up as follows:
Short-term portion of debt:
December 31, December 31,
2013 2012
------------ ------------
EUR EUR
Due in 2013 - 125,916
Due in 2014 133,447 -
------------ ------------
Total Short-term portion of debt 133,447 125,916
------------ ------------
F-11
Long-term portion of debt:
December 31, December 31,
2013 2012
------------ ------------
EUR EUR
Due in 2014 - 133,447
Due in 2015 45,893 46,253
Italian Employee Severance
- TFR (Trattamento di Fine Rapporto) 26,849 4,663
------------ ------------
Total Long-term portion of debt 72,742 184,363
------------ ------------
Note 6 - Advances from stockholders
Advances from stockholders represent non-interest bearing loans that are due on
demand. The balances are made up as follows:
December 31, December 31,
2013 2012
------------ ------------
EUR EUR
Newgioco Srl - 172,148
Dorianna Gianfelici 37,877 185,237
------------ ------------
Total Advances from stockholders 37,877 357,385
------------ ------------
Note 7 - Contingencies and Commitments
There are no legal actions, lawsuits or disputes related to Company as of the
date of the financial statements.
Note 8 - Gaming Revenues
The Company derives revenues from the wagers on Sports Bets; Casino and Card
Games; Slots and other gaming entertainment. The Company is subject to licensing
requirements established by the Amministrazione Autonoma dei Monopoli di Stato
("AAMS"). The following table sets forth the breakdown of gaming revenues (total
wagers less customer payouts), for the period:
December 31, % December 31, %
2013 2012
------------------- -------------------
EUR EUR
Total Turnover 71,785,888 100.00% 34,158,290 100.00%
Less: Winnings/payouts 67,518,299 94.06% 32,297,159 94.55%
------------------- -------------------
Gross Gaming Revenues 4,267,589 5.94% 1,861,131 5.45%
Less: AAMS Gaming Taxes 763,696 17.90% 432,465 1.27%
------------------- -------------------
Net Gaming Revenues 3,503,893 4.88% 1,428,666 4.18%
------------------- -------------------
F-12
Note 9 - General and administrative expenses
The Company incurred general and administrative costs as follows:
December 31, December 31,
2013 2012
------------ ------------
EUR EUR
Wages and Salaries 213,059 84,929
Office Expenses:
Office Rent, Expenses and Utilities 18,261 7,500
Telephone and Internet expenses 11,691 5,402
Office and Miscellaneous expenses 13,993 29,746
Vehicle and equipment leasing 16,868 7,779
Vehicle Maintenance (Other) 13,787 4,030
Travel expenses 9,059 8,087
Total office expenses 83,659 62,544
------------ ------------
Advertising and marketing expenses 130,918 -
Professional Services 22,054 85,689
Bank and credit card charges 107,208 49,741
Other taxes 111,412 73,860
Total selling, general and administrative expenses 668,310 356,763
------------ ------------
Note 10 - Income taxes
Tax losses carry forwards
Under Italian tax law the operating loss carry forwards available for offset
against future profits can be used indefinitely. Operating loss carry forwards
are only available for offset against national income tax, in the limit of 80%
of taxable annual income.
The Company's operating losses carried forward and available for offset against
future profits at December 31, 2013 is EUR 279,837 and as at Dec 31, 2012 is
EUR 293,632, respectively.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
Components of the Company's deferred tax asset are as follows as of December 31,
2013 and December 31 2012:
December 31, December 31,
2013 2012
------------ ------------
EUR EUR
Deferred tax asset - net operating loss 76,955 80,749
Less: Valuation allowance (76,955) (80,749)
------------ ------------
Net deferred tax asset - -
------------ ------------
F-13
Note 10 - Income taxes (continued)
The Company periodically evaluates whether it is more likely than not that it
will generate sufficient taxable income to realize the deferred income tax
asset. The ultimate realization of this asset is dependent upon the generation
of future taxable income sufficient to offset the related deductions. At the
present time, management cannot presently determine when the Company will be
able to generate sufficient taxable income to realize the deferred tax asset;
accordingly, a valuation allowance has been established to offset the asset.
The reconciliation of income tax benefit attributable to continuing operations
computed at the Italian statutory tax rates to the income tax benefit recorded
is as follows:
December 31, December 31,
2013 2012
------------ ------------
EUR EUR
Income tax at Italian statutory - IRES (27.5%) 2,590 -
Increase in valuation allowance (2,590) -
------------ ------------
Income Tax Benefit - -
------------ ------------
Note 11 - Subsequent events
The Company has evaluated subsequent events through the date of this report for
the year ended December 31, 2013 and has disclosed such items in this note as
follows.
On August 15, 2014 the Company consummated a Share Purchase Agreement with
Empire Global Corp. The Share Purchase is being accounted for as a business
combination using the acquisition method. Our financial statements after
completion of the Share Purchase will include the assets and liabilities of both
companies, our historical operations and the operations of Multigioco Srl from
August 15, 2014 the date of the Share Purchase Agreement.
F-14
