Notes
to Condensed Financial Statements
NOTE
1 – ORGANIZATION
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. The Company 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. We 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.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS
OF PRESENTATION
The
accompanying unaudited 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 nine months ended September 30, 2020 are not
necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any other period. For further
information, refer to the financial statements and footnotes thereto, included in the Company’s Annual Report on Form 10K
for the year ending December 31, 2019.
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.
EMPIRE
GLOBAL GAMING, INC.
Notes
to Condensed Financial Statements
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
Company has no assets or liabilities valued at fair value on a recurring basis.
NEW
ACCOUNTING PRONOUNCEMENTS
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 September 30, 2020 and December 31, 2019. 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 September 30, 2020
and December 31, 2019, 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 Financial 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 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 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 financial statements, as the Company did not have income through September 30, 2020. There were no uncertain
tax positions that would require recognition in the unaudited condensed financial statements through September 30, 2020.
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, 2019.
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.
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:
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I.
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Identify
the contract with the customer.
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II.
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Identify
the contractual performance obligations.
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III.
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Determine
the amount of consideration/price for the transaction.
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IV.
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Allocate
the determined amount of consideration/price to the contractual obligations.
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V.
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Recognize
revenue when or as the performing party satisfies performance obligations.
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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 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).
EMPIRE
GLOBAL GAMING, INC.
Notes
to Condensed Financial Statements
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 nine months ended September 30, 2020 and 2019, the Company had no stock based compensation.
NOTE
3 – GOING CONCERN
The
Company’s unaudited condensed 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 $58,860 during the nine months ended September 30, 2020.
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 September 30, 2020, the Company had a working capital deficit
of $296,916. In order to continue as a going concern, the Company will need, among other things, additional capital resources.
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. 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.
In
December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China, and has since spread to a number
of other countries, including the United States. On March 11, 2020, the World Health Organization characterized COVID-19 as a
pandemic. In addition, as of the time of the filing of this Quarterly Report on Form 10-Q, several states in the United States
and elsewhere have declared states of emergency, and several countries around the world, including the United States, have taken
steps to restrict travel. While the Company presently has no ongoing operations or employees, this situation could limit the market
for a merger partner for a strategic business combination. Any of these uncertainties could have a material adverse effect on
the business, financial condition or results of operations. In addition, a catastrophic event that results in the destruction
or disruption of the Company’s data centers or its critical business or information technology systems would severely affect
the ability to conduct normal business operations and, as a result, the operating results would be adversely affected.
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
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 September 30, 2020 as it is anti-dilutive. For the nine months ended September 30, 2020 and
2019, the Company had no dilutive securities.
EMPIRE
GLOBAL GAMING, INC.
Notes
to Condensed Financial Statements
NOTE
5 – NOTES PAYABLE – RELATED PARTIES
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. One of these notes was paid in full in June 2019 (see below), and the other
note was extended to December 31, 2020. The notes payable had an unpaid balance of $167,393 as of September 30, 2020 and December
31, 2019.
The
Company borrowed $0 and $4,200 from stockholders during the nine months ended September 30, 2020 and 2019, respectively.
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 was added to his note balance.
The
Company recorded interest expense of $5,008 and $4,859 for the nine months ended September 30, 2020 and 2019, respectively, for
these notes payable. Accrued interest related to these notes payable were $29,980 and $24,972 as of September 30, 2020 and December
31, 2019, respectively.
NOTE
6 – NOTES PAYABLE - OTHER
On
December 1, 2018 the Company issued a grid note payable to a third party for $13,500 which were used for audit and legal fees.
The note bears interest at 10% per annum and is due on December 31, 2019. This note has been extended to December 31, 2020. During
the nine months ended September 30, 2020, the Company borrowed an additional $17,000 relating to this note payable. The note payable
had an unpaid principal balance of $50,755 and $33,755, and accrued interest of $5,225 and $2,115 as of September 30, 2020 and
December 31, 2019, respectively.
On
June 1, 2019, the Company issued a grid note payable to a third party for $10,118 which were used for audit and filing fees. The
note bears interest at 10% per annum and is due on December 31, 2019. This note has been extended to December 31, 2020. During
the nine months ended September 30, 2020, the Company borrowed an additional $32,500 relating to this note payable. The note payable
had an unpaid principal balance of $42,718 and $10,218, and accrued interest of $1,617 and $586 as of September 30, 2020 and December
31, 2019, respectively.
NOTE
7 – EQUITY
Common
Stock
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.
As
of September 30, 2020 and December 31, 2019, the Company has 980,000,000 authorized shares of common stock, par value $0.001,
of which 257,301,000 and 257,301,000 shares are issued and outstanding, respectively.
NOTE
8 – SUBSEQUENT EVENTS
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.