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, 2015 and 2014, 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. During the year ended December 31, 2014, the Company wrote down its inventory by $19,067.
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, 2015 and 2014.
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, 2015 and 2014, 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, 2015 and 2014.
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.
NOTE
2. GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. To date,
the Company generated minimal revenues, has experienced recurring net operating losses and had an accumulated deficit of $835,231
as of December 31, 2015 and had negative working capital of $24,011 at December 31, 2015. 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.
EMPIRE
GLOBAL GAMING, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
3. INCOME TAXES
The
components of the Company’s deferred tax asset are as follows:
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
Net operating loss carry forward at 35%
|
|
$
|
292,331
|
|
|
$
|
281,248
|
|
Valuation allowance
|
|
|
-292,331
|
|
|
|
-281,248
|
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The
Company had a net operating loss carryforward of approximately $835,000 and $804,000 for the years ended December 31, 2015 and
2014, which expires between 2031 and 2035.
The
reconciliation of income tax expense at the U.S. statutory rate of 35% for the years ended December 31, 2015 and 2014 is as follows:
|
|
2015
|
|
|
2014
|
|
US Statutory rate
|
|
|
35
|
%
|
|
|
35
|
%
|
Valuation allowance
|
|
|
-35
|
%
|
|
|
-35
|
%
|
Income tax provision
|
|
|
-
|
|
|
|
-
|
|
The
Company had no gross unrecognized tax benefits that, if recognized, would affect the effective income tax rate in future periods.
At December 31, 2015, the amount of gross unrecognized tax benefits before valuation allowances and the amount that would favorably
affect the effective income tax rate in future periods after valuation allowances were $0. The Company has not accrued any additional
interest or penalties.
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, 2015 in 2016. Once filed, the 2015 U.S. federal return and those for 2014 and 2013 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.
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 are due on December 31, 2018. The notes payable had unpaid balance of $90,620 and $64,720 as of December 31,
2015 and 2014, respectively.
The
Company borrowed $25,900 and $25,500 from stockholders during the year ended December 31, 2015 and 2014.
The
Company recorded interest expense of $3,201 and $2,028 for these notes payable for the year ended December 31, 2015 and 2014,
respectively and the balances of accrued interest were $5,602 and $2,401 as of December 31, 2015 and 2014, respectively.
EMPIRE
GLOBAL GAMING, INC.
NOTES
TO FINANCIAL STATEMENTS
NOTE
5. SUBSEQUENT EVENTS
The
Company has evaluated all activity of the Company after December 31, 2015 through the issue date of the financial statement and
determined that there was no subsequent events that would require disclosure in the financial statements.