NOTES
TO FINANCIAL STATEMENTS
NOTE
1. BASIS OF PRESENTATION AND ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Business
Description
Empire
Global Gaming, Inc. (the “Company”) was incorporated in the State of Nevada on May 11, 2010 in order to acquire certain
U.S Patent license agreements pertaining to roulette and actively engage in the gaming business worldwide and commenced operations
in June, 2010. Empire Global Gaming, Inc. was founded to develop, manufacture and sell Class II & Class III Casino
electronic and table games for the general public and casinos worldwide. The Company owns exclusive rights through license agreements
to four U.S. Patents consisting of 14 roulette games patents. EGGI also sells 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.
These patents are certified by Gaming Laboratories International to minimize any unfairness in the multi-number bets in roulette
(American double 0 & European single 0) to both players and casinos. One of the patents controlled by the Company is for a
“new number pattern and board layout” that will insure, the various gaming control boards and commissions in the United
States and eventually worldwide, that the highest standards of security and integrity are met.
The
Company developed a website (www.lottopick3.com) which provides analytical data to consumers on several different lottery type
games. This program is not a gambling/consulting program. It is strictly an analysis program. The website does not offer any advice
one way or the other. It offers an in depth breakdown of all the previous numbers that have been drawn in all states that have
the pick 3 games. The software breaks things down into all the possible categories and shows any types of trends that may occur.
Summary
of Significant Accounting Policies
Cash
The
Company considers all highly liquid investments with an original maturity of year end or less to be cash equivalents. Cash equivalents
include cash on hand and cash in the bank
.
Advertising
The
Company expenses advertising when incurred. The Company has incurred no advertising expenses for the years ended December
31, 2016 and 2015, respectively.
Basis
of Presentation
The
Company’s financial statements are presented in accordance with accounting principles generally accepted (GAAP) in the United
States. Effective December 31, 2014, the Company elected to early adopt Accounting Standards Update No. 2014-10, Development Stage
Entities (Topic 915): Elimination of Certain financial Reporting Requirements. The adoption of this ASU allows the Company to
remove the inception to date information and all references to development stage.
EMPIRE
GLOBAL GAMING, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
1. BASIS OF PRESENTATION AND ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United
States requires 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. Actual results could differ from those estimates.
Fair
value of financial instruments
As
required by the Fair Value Measurements and Disclosures Topic 820 of the Financial Accounting Standards Board Accounting
Standards Codification (“FASB ASC”), fair value is measured based on a three-tier fair value hierarchy, which prioritizes
the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level
2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable
inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The
carrying amounts for the Company’s accounts payable and accrued liabilities approximate fair value due to the short-term
maturity of these instruments.
The
three levels of the fair value hierarchy are described below:
Level
1
|
Unadjusted
quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
Level
2
|
Quoted
prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the
full term of the asset or liability;
|
Level
3
|
Prices
or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported
by little or no market activity).
|
The
Company does not have any assets or liabilities required to be measured at fair value on a recurring basis.
Revenue
Recognition
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.
Inventory
Inventory
consists of finished gaming products that were contributed by a shareholder of the Company and are valued at lower of market or
acquisition cost.
Property
and equipment
Property
and equipment are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the
useful lives of the assets. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed
as incurred.
EMPIRE
GLOBAL GAMING, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
1. BASIS OF PRESENTATION AND ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impairment
of long lived assets
Long-lived
assets are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. For assets
that are to be held and used, impairment is recognized when the estimated undiscounted cash flows associated with the asset or
group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its
fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based
on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are
carried at the lower of carrying value or estimated net realizable value.
Income
Taxes
The
Company utilizes the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“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.
Financial
and Concentrations Risk
The
Company does not have any concentration or related financial credit risk as of December 31, 2016 and 2015.
We
maintain cash balances at highly-rated financial institutions in various states. Accounts at each institution are insured by the
Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December 31, 2016 and 2015, we had no account balances
over federally insured limits.
Stock
Based Compensation
Stock
based compensation is accounted for using the Equity-Based Payments to Non-Employee Topic of the FASB ASC, which establishes standards
for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses
transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s
equity instruments or that may be settled by the issuance of those equity instruments. We determine the value of stock issued
at the date of grant. We also determine at the date of grant the value of stock at fair market value or the value of services
rendered (based on contract or otherwise) whichever is more readily determinable.
Stock
based compensation for employees is accounted for using the Stock Based Compensation Topic of the FASB ASC. We use the fair
value method for equity instruments granted to employees and will use the Black Scholes model for measuring the fair value of
options, if issued. The stock based fair value compensation is determined as of the date of the grant or the date at which the
performance of the services is completed (measurement date) and is recognized over the vesting periods.
EMPIRE
GLOBAL GAMING, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
1. BASIS OF PRESENTATION AND ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net
Loss Per Common Share
Earnings
per share are calculated in accordance with the Earnings per Share Topic of the FASB ASC. The weighted-average number of common
shares outstanding during each period is used to compute basic earnings (loss) per share. Diluted earnings per share
is computed using the weighted average number of shares plus dilutive potential common shares outstanding. Potentially dilutive
common shares consist of employee stock options, warrants, and other convertible securities, and are excluded from the diluted
earnings per share computation in periods where the Company has incurred net loss. There were no potentially dilutive common shares
for the year ended December 31, 2016 and 2015.
Recent
Accounting Pronouncements
From
time to time new accounting pronouncements are issued by the Financial 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.
In
August 2014, the FASB issued Accounting Standard Update No. 2014-15,
Presentation of Financial Statements – Going
Concern
(Subtopic 205-40), (ASU No. 2014-15), which requires management to assess an entity’s ability to continue
as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards.
Specifically, ASU 2014-15 provides a definition of the term substantial doubt and requires an assessment for a period of one
year after the date that the financial statements are issued (or available to be issued). It also requires certain
disclosures when substantial doubt is alleviated as a result of consideration of management’s plans and requires an
express statement and other disclosures when substantial doubt is not alleviated. ASU No. 2014-15 is effective for fiscal
years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted.
In
May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU introduced a comprehensive,
principles-based framework for recognizing revenue, and, when effective, will supersede the revenue recognition requirements in
FASB ASC 605, Revenue Recognition, and virtually all industry-specific revenue recognition guidance in the FASB ASC. The ASU is
intended to improve GAAP by providing a framework to address revenue recognition issues, creating more consistency and comparability
of revenue recognition practices across entities and industries, and improving the usefulness of information provided to financial
statement users through more robust disclosure requirements. Subsequent to the issuance of ASU 2014-09, the FASB issued a number
of ASUs clarifying certain matters in ASU 2014-09. Those subsequent ASUs have the same effective dates as ASU 2014-09 (see discussion
in the following paragraph).
In
August 2015, the original effective dates of ASU 2014-09 were deferred by one year through the issuance of ASU 2015-14, Revenue
from Contracts with Customers (Topic 606): Deferral of the Effective Date. ASU 2014-09 (as revised) is effective for annual reporting
periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December
15, 2019. Early application is allowed, but no earlier than annual reporting periods beginning after December 15, 2016, including
interim reporting periods within that period. Alternatively, the ASU can be applied to annual reporting periods beginning after
December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the year of initial
adoption.
In
January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement
of Financial Assets and Financial Liabilities, which makes targeted improvements in the recognition, measurement, presentation,
and disclosure of financial instruments. ASU-2016-01 is effective for fiscal years beginning after December 15, 2018, and interim
periods within fiscal years beginning after December 15, 2019. Generally, entities may adopt the provisions of the ASU earlier
as of fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. However, the ASU allows
entities the option to (1) adopt the presentation guidance in FASB ASC 825-10-45-5 through 45-7 regarding financial liabilities
for which the fair value option is elected and (2) not disclose the information regarding the fair value of financial instruments
set forth in FASB ASC 825-10-50 in financial statements of fiscal years or interim periods that have not yet been made available
for issuance.
In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which, among other things, requires the recognition of lease assets
and lease liabilities on the balance sheet of lessees, along with the disclosure of key information about leasing arrangements.
When effective, the ASU will supersede FASB ASC 840, Leases, and add Topic 842, Leases, to the FASB ASC. The ASU is effective
for entities for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December
15, 2020. Early adoption is permitted. In addition to replacing FASB ASC 840 with FASB ASC 842, the ASU amends and supersedes
a number of other Topics throughout the FASB ASC.
EMPIRE
GLOBAL GAMING, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
2. GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company
generated minimal revenues, has experienced recurring operating losses since inception and had negative working capital of $18,138
and stockholders’ deficit of $148,958 at December 31, 2016. These factors, among others, raise 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. The Company will need to raise funds or implement its business plan to continue operations.
In
order to continue as a going concern, the Company will need, 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. However management cannot provide any assurances
that the Company will be successful in accomplishing any of its plans.
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. INCOME TAXES
The
components of the Company’s deferred tax asset are as follows:
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
Net operating loss carry forward at 35%
|
|
$
|
304,625
|
|
|
$
|
292,331
|
|
Valuation allowance
|
|
|
-304,625
|
|
|
|
-292,331
|
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The
Company had a net operating loss carryforward of approximately $870,000 and $835,000 for the years ended December 31, 2016 and
2015, which expires between 2031 and 2036.
The
reconciliation of income tax rate at the U.S. statutory rate of 35% to the Company’s effective tax rate is as follows:
|
|
2016
|
|
|
2015
|
|
US Statutory rate
|
|
|
35
|
%
|
|
|
35
|
%
|
Valuation allowance
|
|
|
-35
|
%
|
|
|
-35
|
%
|
Income tax provision
|
|
|
-
|
|
|
|
-
|
|
The
Company files income tax returns in the United States. The Company will file its U.S. federal return for the year ended
December 31, 2016 in 2017. Once filed, the 2016 U.S. federal return and those for 2015 and 2014 will be considered as open tax
years. 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.
EMPIRE
GLOBAL GAMING, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
3. INCOME TAXES (CONTINUED)
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
4. RELATED PARTY TRANSACTIONS
The
Company had notes payable to directors who are our chief executive officer and chief financial officer. The notes bear interest
at 4% per annum and are due on December 31, 2018. The notes payable had unpaid balance of $130,820 and $90,620 as of December
31, 2016 and 2015, respectively.
The
Company borrowed $40,200 and $25,900 from directors during the years ended December 31, 2016 and 2015, respectively.
The
Company recorded interest expense of $4,661 and $3,201 for these notes payable for the year ended December 31, 2016 and 2015,
respectively and the balances of accrued interest were $10,263 and $5,602 as of December 31, 2016 and 2015, respectively.
NOTE
5. SUBSEQUENT EVENTS
The
Company has evaluated all activity of the Company after December 31, 2016 through the issue date of the financial statement and
determined that there was no subsequent events that would require disclosure in the financial statements.