EMPIRE GLOBAL GAMING, INC. The following discussion of our financial condition and results of operations should be read together with the consolidated financial statements and the related notes included in this report. This discussion contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below as well as those discussed elsewhere in this report. We disclaim any obligation to update information contained in any forward-looking statement.
General
We presently sell our ancillary gaming products inthe United States but contemplate selling and leasing our products worldwide, in the future. Although the Company has obtained the license for the manufacturing, sale, marketing and licensing of the four roulette patents, the Company has not developed or manufactured any products for license, lease or sale to casinos yet. Although the Company is licensed to manufacturer patented roulette wheels and tables, it has no intention of doing so now or in the foreseeable future. The licensed games will not be available for sale on our website until approved by the applicableGaming Control Board .
The Company has not, as of yet, arranged for any lines of credit, and we have no commitments, written or oral, from officers, directors or shareholders to provide the Company with advances, loans or other funding for our operations.
Critical Accounting Estimates
The preparation of financial statements in conformity with accounting principles generally accepted inthe United States of America required management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates, based on historical experience, and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
Recent Accounting Pronouncements
From time to time new accounting pronouncements are issued by theFinancial Accounting Standards Board or other standard setting bodies that may have an impact on the Company's accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.
Results of Operations
Year ended
Revenues
The Company generated revenues of
General and Administrative Expenses
During the year endedDecember 31, 2021 , general and administrative expenses were$38,265 , consisting primarily of professional fees and stock compensation expense, as compared to$70,208 for year endedDecember 31, 2020 . The decrease of$31,943 was primarily due to a decrease in professional fees and stock compensation expense. 3 Interest Expense During the year endedDecember 31, 2021 , interest expense was$126,199 as compared to$19,088 for year endedDecember 31, 2020 . The increase of$107,111 was primarily due to an increase in accrued interest due to additional proceeds from third parties and amortization of debt discount.
Net Loss
Our net loss was$164,432 for the year endedDecember 31, 2021 as compared to a loss of$81,174 for the year endedDecember 31, 2020 . The increase is primarily due to the reasons referred to above.
Liquidity and Capital Resources
As ofDecember 31, 2021 , we had a stockholders' deficit of$274,689 and negative working capital of$299,648 compared to stockholders' deficit of$144,757 and negative working capital of$144,757 atDecember 31, 2020 . Cash was$1,207 as ofDecember 31, 2021 , as compared to$65,176 atDecember 31, 2020 . This decrease in our working capital was primarily attributable to the decrease of cash of$63,969 , the increase in accrued interest due of$15,257 , the decrease in accounts payable and accrued expenses of$3,736 , and an increase in convertible notes of$72,705 . The net loss for the year ended 2021 was primarily due to amortization of debt discount of$99,205 . Net cash used in operations during 2021 was$41,969 compared with$23,937 used in operations during 2020. Cash used in operations during 2021 was primarily due to the net loss in the period, amortization of debt discount and changes in accrued interest.
Net cash provided by investing activities was
Net cash provided by financing activities was
Going Concern The Company generated minimal revenues, has experienced recurring net operating losses since inception and had negative working capital of$299,648 and stockholders' deficit of$274,689 atDecember 31, 2021 . Because of these factors, among others, it raises substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. We will need to raise funds or implement our business plan to continue operations. The Company's present plans, the realization of which cannot be assured, to overcome these difficulties include, but are not limited to, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. Through capital influx from third party investors, the Company plans to spend on marketing for all current products to generate revenues, enter into license and royalty agreements with its patented products, as well as seek acquisitions that generate cash flows. However management cannot provide any assurances that the Company will be successful in accomplishing any of its
plans. Commitment and Contingencies None.
Off-Balance Sheet Arrangements
None.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 8. Financial Statements and Supplementary Data.
The following financial statements are included on the following pages:
Report of Independent Registered Public Accounting Firm (PCAOB ID 237) F-1 Balance Sheets as ofDecember 31, 2021 and 2020 F-2 Statements of Operations for the Years EndedDecember 31, 2021 and 2020 F-3 Statements of Stockholders' Deficit for the Years EndedDecember 31, 2021 F-4
and 2020
Statements of Cash Flows for the Years EndedDecember 31, 2021 and 2020 F-5 Notes to Financial Statements F-6 4 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders ofEmpire Global Gaming, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets ofEmpire Global Gaming, Inc. (the Company) as ofDecember 31, 2021 and 2020, and the related statements of operations, stockholders' deficit, and cash flows for year then ended, and the related notes and schedules (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2021 and 2020 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted inthe United States of America . Emphasis of a Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the financial statements, the Company has generated minimal revenue since inception, has experienced recurring operating losses since inception and negative working capital of$299,648 and stockholders' deficit of$274,689 atDecember 31, 2021 . These factors, among others, raise substantial doubt regarding the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2 to the accompanying financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with thePublic Company Accounting Oversight Board (United States ) (PCAOB) and are required to be independent with respect to the Company in accordance with theU.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters. /s/ Prager MetisCPA's, LLC
We have served as the Company's auditor since 2018.
Hackensack, NJ April 14, 2022 F-1 Empire Global Gaming, Inc. BALANCE SHEETS December 31, 2021 2020 ASSETS CURRENT ASSETS: Cash$ 1,207 $ 65,176 Total Current Assets 1,207 65,176
Intangible assets, net of amortization of$5,041 24,959 - TOTAL ASSETS$ 26,166
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES: Accounts payable and accrued expenses$ 165 $ 3,901 Accrued interest 16,493 1,236 Accrued interest - related parties 38,364
31,668
Convertible notes payable, net of debt discount of
78,440 5,735
Notes payable - related parties 167,393
167,393
Total Current Liabilities 300,855 209,933
TOTAL LIABILITIES 300,855 209,933
Commitments and contingencies (Note 8)
STOCKHOLDERS' DEFICIT:
Common stock:
270,001 257,301
Common shares to be issued 14,000 200
Additional paid-in capital 846,372 838,372
Accumulated deficit (1,405,062 ) (1,240,630 )
TOTAL STOCKHOLDERS' DEFICIT (274,689 ) (144,757 )TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT$ 26,166
$ 65,176 The accompanying notes are an integral part of these consolidated financial statements F-2 Empire Global Gaming, Inc. STATEMENTS OF OPERATIONS Years Ended December 31, 2021 2020 REVENUES $ 32 $ - OPERATING EXPENSES: General and administrative expenses 38,265 70,208 TOTAL OPERATING EXPENSES 38,265 70,208 LOSS FROM OPERATIONS (38,233 ) (70,208 ) OTHER (EXPENSE) INCOME: Interest expense (15,257 ) (6,657 ) Interest expense - related parties (6,696 ) (6,696 ) Amortization of debt discount (99,205 ) (5,735 ) Amortization of intangible assets (5,041 ) - Other income - 8,122 TOTAL OTHER (EXPENSE) INCOME (126,199 ) (10,966 ) NET LOSS$ (164,432 ) $ (81,174 ) NET LOSS PER COMMON SHARE: Basic and diluted$ (0.00 ) $ (0.00 ) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic and diluted 267,108,671 257,301,000 The accompanying notes are an integral part of these consolidated financial statements F-3 Empire Global Gaming, Inc. STATEMENTS OF STOCKHOLDERS' DEFICIT Additional Common Stock Common Shares to be Issued Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balances, December 31, 2019 257,301,000$ 257,301 - $ -$ 664,099 $ (1,159,456 ) $ (238,056 ) Finance cost for issuance of common shares for note modification - - 200,000 200 11,800 - 12,000 Beneficial conversion feature related to convertible notes - - - - 162,473 - 162,473 Net loss - - - - - (81,174 ) (81,174 ) Balances, December 31, 2020 257,301,000$ 257,301 200,000$ 200 $ 838,372 $ (1,240,630 ) $ (144,757 ) Conversion of convertible note payable to common stock 12,500,000 12,500 - - - - 12,500 Stock payable issued 200,000 200 (200,000 ) (200 ) - - - Conversion of convertible note payable to common stock - - 14,000,000 14,000 - - 14,000 Beneficial conversion feature related to convertible notes - - - - 8,000 - 8,000 Net loss - - - - - (164,432 ) (164,432 ) Balances, December 31, 2021 270,001,000$ 270,001 14,000,000$ 14,000 $ 846,372 $ (1,405,062 ) $ (274,689 ) The accompanying notes are an integral part of these consolidated financial statements F-4 Empire Global Gaming, Inc. STATEMENTS OF CASH FLOWS Years Ended December 31, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss$ (164,432 ) $ (81,174 ) Adjustment to reconcile change in net loss to net cash used in operating activities: Forgiveness of debt - (8,122 ) Amortization of debt discount 99,205 5,735 Amortization of intangible assets 5,041 - Note payable issued for services rendered - 32,500 Finance cost for issuance of note modification - 12,000 Changes in operating assets and liabilities: Accounts payable and accrued expenses (3,736 ) 1,771 Accrued interest 15,257 6,657 Accrued interest - related parties
6,696 6,696
NET CASH USED IN OPERATING ACTIVITIES
(41,969 ) (23,937 )
CASH FLOWS FROM INVESTING ACTIVITIES: Payments towards intellectual property (30,000 ) - NET CASH USED IN INVESTING ACTIVITIES (30,000 ) - CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from convertible notes 8,000 69,000 Proceeds from notes payable - other
- 17,000
NET CASH PROVIDED BY FINANCING ACTIVITIES
8,000 86,000
Net (decrease) increase in cash (63,969 ) 62,063 Cash, beginning of year 65,176 3,113 Cash, end of year$ 1,207 $ 65,176 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ - $ - Cash paid for taxes $ - $ - NON-CASH ACTIVITIES:
Modification of notes payable to convertible notes payable $ -$ 93,473 Debt discount on convertible notes payable $
8,000
The accompanying notes are an integral part of these consolidated financial
statements
F-5
EMPIRE GLOBAL GAMING, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Business Description
Empire Global Gaming, Inc. (the "Company") was incorporated in theState of Nevada onMay 11, 2010 in order to actively engage in the gaming business worldwide. The Company is developing a complete line of public and casino grade gaming products for roulette, blackjack, craps, baccarat, mini baccarat, pinwheels, Sic Bo, slot machines, poker tables and bingo games. The Company also provides advice to consumers on several different lottery type games. OnMarch 3, 2021 the Company created two new subsidiaries,Empire Mobile Apps, Inc. andEmpire IP, Inc (collectively with EGG, the "Company"). The Company plans to use these subsidiaries for services with mobile applications. As ofDecember 31, 2021 , these subsidiaries had no activity.
Summary of Significant Accounting Policies
Cash
The Company considers highly liquid investments with original maturities of three months or less when purchased as cash equivalents. The Company had no cash equivalents as ofDecember 31, 2021 and 2020. At times throughout the year, the Company might maintain bank balances that may exceedFederal Deposit Insurance Corporation insured limits. Periodically, the Company evaluates the credit worthiness of the financial institutions, and has not experienced any losses in such accounts. AtDecember 31, 2021 and 2020, the Company had$0 over the insurable limit.
Basis of Presentation
The Company's financial statements are presented in accordance with accounting
principles generally accepted in
Consolidation
The consolidated financial statements include the accounts ofEmpire Global Gaming, Inc. , and its wholly owned subsidiariesEmpire Mobile Apps, Inc. andEmpire IP, Inc. All significant intercompany accounts and transactions have
been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted inthe United States requires management to make estimates and assumptions which affect the reporting of assets and liabilities as of the dates of the financial statements and revenues and expenses during the reporting period. These estimates primarily relate to the sales recognition, allowance for doubtful accounts, inventory obsolescence and asset valuations. Actual results could differ from these estimates. Management's estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the unaudited condensed financial statements in the periods they are determined to be necessary.
Fair Value of Financial Instruments
Generally Accepted Accounting Principles ("GAAP") requires certain disclosures
regarding the fair value of financial instruments. The fair value of financial
instruments is made as of a specific point in time, based on relevant
information about financial markets and specific financial instruments. As these
estimates are subjective in nature, involving uncertainties and matters of
significant judgment, they cannot be determined with precision. Changes in
assumptions can significantly affect estimated fair values.
GAAP defines fair value as the price that would be received from selling an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value
measurements for assets and liabilities required or permitted to be recorded at
fair value, the Company considers the principal, or most advantageous market in
which it would transact, and it considers assumptions that market participants
would use when pricing the asset or liability.
F-6
GAAP establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the degree of subjectivity that is necessary to estimate the fair value of a financial instrument. GAAP establishes three levels of inputs that may be used to measure fair value:
Level 1 - Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 - Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 - Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The estimated fair value of certain financial instruments, including cash, accrued expenses, notes payable and convertible notes payable are carried at historical cost basis, which approximates fair values because of the short-term maturing of these instruments. We have no financial assets or liabilities measured at fair value on a recurring basis.
Revenue Recognition
The Company recognizes revenue underFinancial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"). The core principle of this standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.
ASC 606 prescribes a five step process to achieve its core principle. The Company recognizes revenue from product sales as follows:
I. Identify the contract with the customer.
II. Identify the contractual performance obligations.
III. Determine the amount of consideration/price for the transaction.
IV. Allocate the determined amount of consideration/price to the contractual
obligations.
V. Recognize revenue when or as the performing party satisfies performance
obligations.
The consideration/price for the transaction (performance obligation(s)) is determined as per the invoice for the products.
When the Company begins to recognize significant revenues, we will recognize revenues from product sales only when there is persuasive evidence of an arrangement, delivery has occurred, the sale price is determinable and collectability is reasonably assured and from fees as paid for in an online transaction.
Impairment of long lived assets
The Company evaluates the carrying value and recoverability of its long-lived
assets when circumstances warrant such evaluation by applying the provisions of
FASB ASC 360-35, Property, Plant and Equipment, Subsequent Measurement ("ASC
360-35"). ASC 360-35 requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable through the estimated undiscounted cash flows
expected to result from the use and eventual disposition of the assets. Whenever
any such impairment exists, an impairment loss will be recognized for the amount
by which the carrying value exceeds the fair value. No impairment of long lived
assets was recognized for the years ended December 31, 2021 and 2020.
Income Taxes
The Company utilizes the FASB ASC 740, Income Tax ("ASC 740"). ASC 740 requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequence of events that have been include in the financial statements or
tax returns. Under this method, deferred tax assets and liabilities are
determined based on the differences between the financial statement carrying
amounts and the tax bases of assets and liabilities using enacting tax rates in
effect in the years in which the differences are expected to reverse. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized.
The Company has adopted the provision of FASB ASC 740-10-05, Accounting for
Uncertainties in Income Taxes. The ASC clarifies the accounting for uncertainty
in income taxes recognized in an enterprise's financial statements. The ASC
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. The ASC provides guidance on de-recognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition.
F-7
Financial and Concentrations Risk
The Company does not have any concentration or related financial credit risk as
of
Stock Based Compensation
The Company follows FASB ASC 718, Compensation - Stock Compensation, which prescribes accounting and reporting standards for all share-based payment transactions. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the unaudited condensed financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
For the year ended
For the year ended
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards forFinancial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 815, Derivatives and Hedging ("ASC 815"). Professional standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as "The Meaning of Conventional Convertible Debt Instrument". The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when "Accounting forConvertible Securities with Beneficial Conversion Features," as those professional standards pertain to "Certain Convertible Instruments." Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. ASC 815 provides that, among other things, generally, if an event is not within the entity's control could or require net cash settlement, then the contract shall be classified as an asset or a liability.
Recent Accounting Pronouncements
InAugust 2020 , theFinancial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40). This ASU simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. This will result in more convertible debt instruments being accounted for as a single liability instrument and more convertible preferred stock being accounted for as a single equity instrument with no separate accounting for embedded conversion features. The ASU also simplifies the diluted earnings per share calculation in certain areas. This standard was effective for the Company in the fiscal year beginningDecember 15, 2021 and will be implemented in 2022. From time to time new accounting pronouncements are issued by theFinancial Accounting Standards Board or other standard setting bodies that may have an impact on the Company's accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.
F-8
NOTE 2. GOING CONCERN
The Company's financial statements have been prepared using generally accepted
accounting principles in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has incurred a net
loss of $164,432 during the year ended December 31, 2021 . Cash on hand will not
be sufficient to cover debt repayments, operating expenses and capital
expenditure requirements for at least twelve months from the balance sheet date.
As of December 31, 2021 , the Company had a working capital deficit of $299,648
These factors, among others, raise substantial doubt about the ability of the
Company to continue as a going concern for a reasonable period of time. In order
to continue as a going concern, the Company will need, among other things,
additional capital resources. Management's plan is to seek equity and/or debt
financing. However, management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans.
There are no assurances that the Company will be able to either (1) achieve a
level of revenues adequate to generate sufficient cash flow from operations; or
(2) obtain additional financing through either private placements, public
offerings and/or bank financing necessary to support the Company's working
capital requirements. To the extent that funds generated from operations, any
private placements, public offerings and/or bank financing are insufficient, the
Company will have to raise additional working capital. No assurance can be given
that additional financing will be available, or if available, will be on terms
acceptable to the Company.
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
NOTE 3. LOSS PER SHARE
The Company utilizes the guidance per ASC 260, Earnings Per Share. Basic earnings per share is calculated on the weighted effect of all common shares issued and outstanding, and is calculated by dividing net income available to common stockholders by the weighted average shares outstanding during the period. Diluted earnings per share, which is calculated by dividing net income available to common stockholders by the weighted average number of common shares used in the basic earnings per share calculation, plus the number of common shares that would be issued assuming conversion of all potentially dilutive securities outstanding, is not presented separately as ofDecember 31, 2021 and 2020 as it is anti-dilutive. Such securities, shown below, presented on a common share equivalent basis and outstanding as of years endedDecember 31, 2021 and 2020 have been excluded from the per share computations: December 31, 2021 2020 Convertible notes payable 160,465,160 163,708,440 Total diluted shares 160,465,160 163,708,440 NOTE 4. INTANGIBLE ASSETS InJanuary 2021 , the Company invested$30,000 to develop a mobile gaming application Blackjack Plus, which is currently available on the Apple iStore, and is exclusively owned by the Company. The Company recorded this as an intangible asset on the accompanying condensed balance sheet and has determined a useful life of three years for this asset. This asset will be amortized over three years as follows: Year Amount 2021$ 5,041 2022 10,000 2023 10,000 2024 4,959 Total amortization$ 30,000 F-9 NOTE 5. INCOME TAXES
The components of the Company's deferred tax asset are as follows:
December 31, December 31,
2021 2020
Net operating loss carry forward $ 63,669 $ 29,138
Valuation allowance (63,669 ) (29,138 )
Net deferred tax asset $ - $ -
The Company had a net operating loss carryforward of approximately $1,164,420
and $999,988 for the years ended December 31, 2021 and 2020, of which $269,575
carryforward indefinitely and $894,845 carryforward 20 years. The net operating
losses may be subject to limitations under Internal Revenue Code Section 382
should there be a 50% ownership change as determined under regulations.
The reconciliation of income tax rate at the
2021 2020
US Statutory rate 21 % 21 %
Valuation allowance -21 % -21 %
Income tax provision - -
The Company files income tax returns inthe United States . The Company has not filed itsU.S. federal return for the year endedDecember 31, 2021 in 2022, and as a result theU.S. federal returns for 2021, 2020 and 2019 will be considered as open tax years subject to examination. No tax returns are currently under examination by any tax authorities. The Company has not accrued any additional interest or penalties for the delinquency of outstanding tax returns as the Company has incurred net losses in those periods still outstanding. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against the entire deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.
NOTE 6. CONVERTIBLE NOTES
OnDecember 1, 2018 , the Company issued a grid note payable to a third party for$13,500 . The note bears interest at 10% per annum and was due onDecember 31, 2019 . This note was extended toDecember 31, 2020 . ThroughDecember 31, 2020 , the Company borrowed an additional$102,255 relating to this note payable. OnNovember 20, 2020 the Company received a forbearance letter amending the terms of the grid promissory note by adding a conversion feature to the note, thereby making the note a convertible note. The amended note is due onDecember 31, 2022 , bearing interest at 10% per annum. The holder has the option to lend additional amounts to the borrower from time to time in the future, on the terms set forth in this agreement. This grid promissory note contains a provision for conversion at the holder's option of any outstanding principal balance including accrued interest, into the Company's common stock at a conversion price equal to par value,$0.001 per share. The Company analyzed if the changes to this note were considered a modification or an extinguishment of debt, and determined it was an extinguishment of debt. The Company recognized there was a beneficial conversion feature associated with this note, and recorded a debt discount of$115,755 , and for the years endedDecember 31, 2021 and 2020 amortization of debt discount associated with this note was$50,013 and$3,458 , respectively. For the years endedDecember 31, 2021 and 2020, debt discount for this note was$35,784 and$112,297 , respectively. OnMarch 24, 2021 the note holder converted$12,500 of principal from their convertible note into 12,500,000 shares of common stock at a rate of$0.001 per share in accordance with the terms of the convertible note. OnDecember 13, 2021 the note holder converted$14,000 of principal from their convertible note into 14,000,000 shares of common stock at a rate of$0.001 per share in accordance with the terms of the convertible note. These shares have been recorded as common shares to be issued on the consolidated financial statements. The principal amount of the note atDecember 31, 2021 and 2020 is$89,255 and$115,755 and the related accrued interest is$11,278 and$744 , respectively. OnJune 1, 2019 , the Company issued a grid note payable to a third party for$10,118 which was used for audit and filing fees. The note bears interest at 10% per annum and is due onDecember 31, 2019 . This note was extended toDecember 31, 2020 . ThroughDecember 31, 2020 , the Company borrowed an additional$32,600 relating to this note payable. OnNovember 20, 2020 the Company received a forbearance letter amending the terms of the grid promissory note by adding a conversion feature to the note, thereby making the note a convertible note. The amended note is due onDecember 31, 2022 , bearing interest at 10% per annum. The holder has the option to lend additional amounts to the borrower from time to time in the future, on the terms set forth in this agreement. This grid promissory note contains a provision for conversion at the holder's option of any outstanding principal balance including accrued interest, into the Company's common stock at a conversion price equal to par value,$0.001 per share. The Company analyzed if the changes to this note were considered a modification or an extinguishment of debt, and determined it was an extinguishment of debt. The Company recognized there was a beneficial conversion feature associated with this note, and recorded a debt discount of$46,718 , and for the years endedDecember 31, 2021 and 2020 amortization of debt discount associated with this note was$22,692 and$2,277 , respectively. For the years endedDecember 31, 2021 and 2020, debt discount for this note was$29,749 and$44,441 , respectively. F-10
The principal amount of the note at
NOTE 7. NOTES PAYABLE - RELATED PARTY
The Company had notes payable to stockholders who are our president and former chief financial officer. The notes bear interest at 4% per annum and were due onDecember 31, 2018 . One of these notes was paid in full inJune 2019 (see below), and the other note was extended toDecember 31, 2022 . The notes payable had an unpaid balance of$167,393 and$167,393 as ofDecember 31, 2021 and 2020, respectively. OnJune 6, 2019 , the president of the Company assumed the debt of the former chief financial officer's note totaling$29,273 , of which$25,100 was principal and$4,173 was accrued interest. The former chief financial officer's note was paid in full by the president and was added to his note balance. The Company recorded interest expense of$6,696 and$6,696 for the years endedDecember 31, 2021 and 2020, respectively, for these notes payable. Accrued interest related to these notes payable were$38,364 and$31,668 as ofDecember 31, 2021 and 2020, respectively.
NOTE 8. COMMITMENTS AND CONTINGENCIES
The Company evaluates contingencies on an ongoing basis and is not currently a party to any legal proceeding that management believes could have a material adverse effect on our results of operations.
NOTE 9. EQUITY
Common Stock
OnNovember 20, 2020 , in accordance with a notice of forbearance regarding a grid promissory note issued onDecember 1, 2018 , the Company granted 100,000 shares of common stock to a third party note holder as finance costs, valued at fair market value of$0.06 per share, or$6,000 . OnNovember 20, 2020 , in accordance with a notice of forbearance regarding a grid promissory note issued onJune 1, 2019 , the Company granted 100,000 shares of common stock to a third party note holder as finance costs, valued at fair market value of$0.06 per share, or$6,000 .
On
OnDecember 13, 2021 a note holder converted$14,000 of principal from their convertible note into 14,000,000 shares of common stock at a rate of$0.001 per share in accordance with the terms of their convertible note. These shares were issued in 2022. As ofDecember 31, 2021 and 2020, the Company has 980,000,000 authorized shares of common stock, par value$0.001 , of which 270,001,000 and 257,301,000 shares are issued and outstanding, respectively.
NOTE 10. SUBSEQUENT EVENTS
OnFebruary 15, 2022 Empire Mobile Apps ("EMA") entered into a merger agreement withHTech11, Inc. ("HTech") whereby EMA will receive 100% of the common stock of HTech in exchange for 1,000,000 shares of EMA's Series A Preferred Stock. Subsequent to the merger, the Series A shareholders have the right to require EMA be spun out of the Company into its own public company. Upon a spinout, the Company will retain 10% of the equity to be distributed to shareholders. Each share of Series A Preferred Stock (i) pays no dividends, but should the Company decide to pay dividends, the holders of the Series A Preferred Stock shall first receive dividends before all other classes of capital, (ii) is convertible into one share of the Company's common stock, (iii) has a liquidation preference of$0.01 per share plus accrued and unpaid dividends, (iv) may be redeemed by the Company only if a Deemed Liquidation Event occurs for$0.01 per share plus accrued and unpaid dividends, and (v) is equal to one common share of voting rights. The Company will file a certificate of amendment of their articles of incorporation withNevada for the Series A Preferred Stock in 2022.
On
Management has evaluated all transactions and events after the balance sheet
date through the date on which these financials were issued and has determined
that no additional disclosures are required.
F-11
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