The accompanying notes are an integral part of these consolidated financial statements
The accompanying notes are an integral part of these consolidated financial statements
The accompanying notes are an integral part of
these consolidated financial statements
The accompanying notes are an integral part of
these consolidated financial statements
Notes
to Condensed Consolidated Financial Statements
NOTE
1 – ORGANIZATION
Empire Global Gaming, Inc. (“EGG”)
was incorporated in the State of Nevada on May 11, 2010 in order to actively engage in the gaming business worldwide. EGG 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. EGG also provides advice to consumers on several different lottery type games.
On March 3, 2021 the Company created two new subsidiaries,
Empire Mobile Apps, Inc. and Empire IP, Inc (collectively with EGG, the “Company”). The Company plans to use these subsidiaries
for services with mobile applications. As of March 31, 2021, these subsidiaries had no activity.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS
OF PRESENTATION
The
accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information and with Article 8 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by accounting principles generally accepted in the United States of
America for annual financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals
considered necessary for a fair presentation, have been included, operating results for the three months ended March 31, 2021 are
not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or any other period. For
further information, refer to the financial statements and footnotes thereto, included in the Company’s Annual Report on Form
10-K for the year ending December 31, 2020, filed with the SEC on April 14, 2021.
USE
OF ESTIMATES
The
preparation of financial statements in conformity with accounting principles generally accepted in the 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 consolidated 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.
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.
EMPIRE
GLOBAL GAMING, INC.
Notes
to Condensed Consolidated Financial Statements
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.
As
of March 31, 2021 and December 31, 2020, the Company did not have any Level 2 or Level 3 financial instruments.
NEW
ACCOUNTING PRONOUNCEMENTS
In August 2020, the Financial 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 will be effective for the Company in the fiscal
year beginning December 15, 2021. The Company is currently evaluating the effect the standard will have on its financial statements.
There
are various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific
industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash
flows.
CASH
AND CASH EQUIVALENTS
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 of March 31, 2021 and December 31, 2020. At times throughout the year, the Company might maintain
bank balances that may exceed Federal 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. At March 31, 2021 and December 31, 2020, the Company
had $0 over the insurable limit.
CONVERTIBLE
INSTRUMENTS
The
Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards
for 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 for Convertible 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.
EMPIRE
GLOBAL GAMING, INC.
Notes
to Condensed Consolidated Financial Statements
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.
INCOME
TAXES
The
Company is deemed a corporation and thus is a taxable entity. No provision for income taxes was reflected in the accompanying unaudited
condensed consolidated financial statements, as the Company did not have income through March 31, 2021. There were no uncertain tax positions
that would require recognition in the unaudited condensed consolidated financial statements through March 31, 2021.
Generally,
federal, state and local authorities may examine the Company’s tax returns for three years from the date of filing, and the current
and prior three years remain subject to examination as of December 31, 2020.
The
Company’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing
analyses of tax laws, regulations and interpretations thereof as well as other factors.
The
Company accounts for income taxes under ASC 740-10-30, Income Taxes. Deferred income tax assets and liabilities are determined
based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance
to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements
of operations in the period that includes the enactment date.
VALUATION
OF GOODWILL AND INTANGIBLE ASSETS
The
Company assesses goodwill and intangible assets for potential impairments at the end of each fiscal year, or during the year if an event
or other circumstance indicates that we may not be able to recover the carrying amount of the asset. In evaluating goodwill and intangible
assets for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not (that is, a likelihood
of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that it is
not more likely than not that the fair value of a reporting unit is less than its carrying value, then no further testing of the goodwill
and intangible assets assigned to the reporting unit is required. However, if the Company concludes that it is more likely than not that
the fair value of a reporting unit is less than its carrying value, then the Company will perform a two-step goodwill and intangible
assets impairment test to identify potential goodwill and intangible assets impairment and measure the amount of goodwill and intangible
assets impairment to be recognized, if any.
In
the first step of the review process, the Company compares the estimated fair value of the reporting unit with its carrying value. If
the estimated fair value of the reporting unit exceeds its carrying amount, no further analysis is needed. If the estimated fair value
of the reporting unit is less than its carrying amount, the Company proceeds to the second step of the review process to calculate the
implied fair value of the reporting unit goodwill and intangible assets in order to determine whether any impairment is required. The
Company calculates the implied fair value of the reporting unit goodwill and intangible assets by allocating the estimated fair value
of the reporting unit to all of the assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business
combination. If the carrying value of the reporting unit’s goodwill and intangible assets exceeds the implied fair value of the
intangible assets, the Company recognizes an impairment loss for that excess amount. In allocating the estimated fair value of the reporting
unit to all of the assets and liabilities of the reporting unit, the Company uses industry and market data, as well as knowledge of the
industry and the Company’s past experiences.
The
Company bases its calculation of the estimated fair value of a reporting unit on the income approach. For the income approach, the Company
uses internally developed discounted cash flow models that include, among others, the following assumptions: projections of revenues
and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new
units; and estimated discount rates. The Company bases these assumptions on its historical data and experience, third-party appraisals,
industry projections, micro and macro general economic condition projections, and its expectations.
The
Company had no goodwill and intangible assets impairment charges for the three months ended March 31, 2021, and as of the date of each
of the most recent detailed tests, the estimated fair value of each of its reporting units exceeded its’ respective carrying amount
by more than 100% based on its models and assumptions.
EMPIRE
GLOBAL GAMING, INC.
Notes
to Condensed Consolidated Financial Statements
RECOGNITION
OF REVENUE
The
Company recognizes revenue under 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.
The
Company derives its revenue from sale of gaming products and from fees earned for the use of its online lottery number selecting application.
The Company recognizes revenue 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.
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 and non-employees, including
grants of employee stock options, are recognized as compensation expense in the unaudited condensed consolidated financial statements
based on their fair values. That expense is recognized over the period during which an employee or non-employee is required to provide
services in exchange for the award, known as the requisite service period (usually the vesting period).
For
the three months ended March 31, 2021 and 2020, the Company had no stock based compensation.
NOTE
3 – GOING CONCERN
The
Company’s unaudited condensed consolidated 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 net losses of $50,305 during the three months ended March 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 unaudited condensed balance sheet date. As of March 31, 2021, the Company had an accumulated deficit of $1,290,935 and a working
capital deficit of $187,651. 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 consolidated
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
EMPIRE
GLOBAL GAMING, INC.
Notes
to Condensed Consolidated Financial Statements
NOTE
4 – 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 of March 31, 2021
as it is anti-dilutive. Such securities, shown below, presented on a common share equivalent basis and outstanding as of years ended
March 31, 2021 and 2020 have been excluded from the per share computations:
|
|
|
March 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Convertible notes payable
|
|
|
155,187,200
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total diluted shares
|
|
|
155,187,200
|
|
|
|
-
|
|
NOTE
5 – INTANGIBLE ASSETS
In
January 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.
As
of March 31, 2021, the Company determined that no impairment of intangible assets was deemed necessary.
NOTE
6 – CONVERTIBLE NOTES
On
December 1, 2018, the Company issued a grid note payable to a third party for $13,500 which was used for audit and legal fees. The note
bears interest at 10% per annum and is due on December 31, 2019. This note was extended to December 31, 2020. Through December 31, 2020,
the Company borrowed an additional $102,255 relating to this note payable. On November 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 on December 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 year ended December 31, 2020 amortization
of debt discount associated with this note was $3,458. For the three months ended March 31, 2021, debt discount for this note was $86,100
and the amortization of the debt discount associated with this note was $13,697.
On
March 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. The principal amount of the note at March 31, 2021 and
December 31, 2020 is $103,255 and $115,755 and the related accrued interest is $3,571 and $744, respectively.
EMPIRE
GLOBAL GAMING, INC.
Notes
to Condensed Consolidated Financial Statements
On
June 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 on December 31, 2019. This note was extended to December 31, 2020. Through December 31, 2020,
the Company borrowed an additional $32,600 relating to this note payable. On November 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 on December 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 year ended December 31, 2020 amortization
of debt discount associated with this note was $2,277. For the three months ended March 31, 2021, debt discount for this note was $38,961
and the amortization of the debt discount associated with this note was $5,480.
The
principal amount of the note at March 31, 2021 and December 31, 2020 is $46,718 and the related accrued interest is $1,643 and $492,
respectively.
NOTE
7 – NOTES PAYABLE – RELATED PARTIES
The
Company had notes payable to a stockholder who is our chief executive officer. The note bears interest at 4% per annum and is due on
December 31, 2018. This note was extended to December 31, 2021. The note payable had an unpaid balance of $167,393 as of March 31, 2021
and December 31, 2020.
The
Company recorded interest expense of $1,651 and $1,651 for the three months ended March 31, 2021 and 2021, respectively, for these notes
payable. Accrued interest related to the remaining note payable was $33,319 and $31,668 as of March 31, 2021 and December 31, 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
On
November 20, 2020, in accordance with a notice of forbearance regarding a grid promissory note issued on December 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. These share have not been issued as of March 31, 2021 and are included on the statement of stockholders equity as shares to
be issued.
On
November 20, 2020, in accordance with a notice of forbearance regarding a grid promissory note issued on June 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.
These share have not been issued as of March 31, 2021 and are included on the statement of stockholders equity as shares to be issued.
On
March 24, 2021 a 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 their convertible note.
As
of March 31, 2021 and December 31, 2020, the Company has 980,000,000 authorized shares of common stock, par value $0.001, of which 269,801,000
and 257,301,000 shares are issued and outstanding, respectively.
NOTE
10 – SUBSEQUENT EVENTS
Management has evaluated all transactions and events after the balance
sheet date through the date on which these financials were available to be issued, and except as already included in the notes to these
unaudited condensed consolidated financial statements, has determined that no additional disclosures are required.