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.
Advertisin
g
The Company expenses advertising when incurred.
The Company has incurred no advertising expenses for the years ended December 31, 2017 and 2016, respectively.
Basis of Presentation
The Company’s financial statements
are presented in accordance with accounting principles generally accepted in the United States of America. Effective December 31,
2014, the Company elected to early adopt Accounting Standards Update (“ASU”) 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 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 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.
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.
Revenue Reco
g
nition
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.
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
The Company evaluates the carrying value
and recoverability of its long-lived assets when circumstances warrant such evaluation by applying the provisions of Financial
Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“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.
Income Taxes
The Company utilizes the 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, 2017 and 2016.
We maintain cash balances at highly-rated
financial institutions in various states. Accounts at each institution are insured by the Federal Deposit Insurance Corporation
up to $250,000. At December 31, 2017 and 2016, we had no account balances over federally insured limits.
Stock Based Compensation
The Company follows FASB ASC 718, Compensation
– Stock Compensation, which prescribes accounting and reporting standards for all share-based payment transactions in which
employee services are acquired. 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).
The Company accounts for stock-based compensation
issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity–based Payments to Non-Employees.
Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable:
(a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction
is determined at the earlier of performance commitment date or performance completion date.
For the years ended December 31, 2017 and
2016, the Company had no stock based compensation.
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
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 December 31, 2017
as it is anti-dilutive. There were no potentially dilutive common shares for the years ended December 31, 2017 and 2016.
Recent Accountin
g
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.
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 $168,481 and stockholders’ deficit of $168,481
at December 31, 2017. 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,
2017
|
|
|
December 31,
2016
|
|
Net operating loss carry forward at 35%
|
|
$
|
311,458
|
|
|
$
|
304,625
|
|
Valuation allowance
|
|
|
(311,458
|
)
|
|
|
(304,625
|
)
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company had a net operating loss carryforward
of approximately $890,000 and $870,000 for the years ended December 31, 2017 and 2016, which expires between 2032 and 2037.
The reconciliation of income tax rate at
the U.S. statutory rate of 35% to the Company’s effective tax rate is as follows:
|
|
2017
|
|
|
2016
|
|
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, 2017 in 2018. Once filed, the
2017 U.S. federal return and those for 2016 and 2015 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 stockholders
who are our chief executive officer and chief financial officer. The notes bear interest at 4% per annum and became due on December
31, 2018. The notes payable had unpaid balance of $153,920 and $130,820 as of December 31, 2017 and 2016, respectively.
The Company borrowed $23,100 and $40,200
from directors during the years ended December 31, 2017 and 2016, respectively.
The Company recorded interest expense of
$6,023 and $4,661 for these notes payable for the year ended December 31, 2017 and 2016, respectively and the balances of accrued
interest were $16,286 and $10,263 as of December 31, 2017 and 2016, respectively.
NOTE 5. EQUITY
Common Stock
As of December 31, 2017 and 2016, the Company has 980,000,000
authorized shares of common stock, par value $0.001, of which 57,301,000 and 57,301,000 shares are issued and outstanding, respectively.
NOTE 6. 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 financial statements, has determined that no additional disclosures are required.
On December 6, 2018, the Company approved
the issuance of 200,000,000 shares of its common stock, par value $0.001, for the appointment of the Company’s Chief Executive
Officer. The Company has recorded this transaction as Stock Compensation Expense at a value of $200,000, or $0.001 per share.
On June 6, 2019, the President of the Company
assumed the debt of a related party note totaling $29,273, of which $25,100 was principal and $4,173 was accrued interest. The
related party note was paid in full by the President and will be added to his note balance.