See accompanying note
s
F-3
EMPIRICAL VENTURES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the nine months ended March 31, 2010 and 2009 and the period of
April 14, 2004 (inception) through March 31, 2010
(Unaudited)
NOTE 1 - NATURE OF OPERATIONS
Organization
Empirical Ventures, Inc. (the “Company”) was incorporated in Nevada on April 14, 2004. The Company is a development stage company. The Company’s plan is to commercialize an enterprise and related software applications. The Company is in the early stages of the software application and infrastructure build out, and has not as yet engaged in revenue producing activities. The Company will provide products and services to enable the travel and tourism industries to more effectively manage all travel and tourism related services. The Company’s objective is to complete development and pre-marketing activities and to actively market and support a commercial product and to earn revenues from the travel and tourism industries or other related organizations worldwide via the Internet from the Company’s website.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying consolidated financial statements, the Company has no sales and has incurred a net loss of $9,159 for the nine months ended March 31, 2010; and has a deficit accumulated during the development stage of $156,455 for the period from April 14, 2004 (inception) through March 31, 2010. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of an online office service. Management has plans to seek additional capital through a private placement and public offering of its common stock. These conditions raise substantial doubt the Company’s ability to continue as a going concern.
Management's plans for the continuation of the Company as a going concern include financing the Company's operations through issuance of its common stock. If the Company is unable to complete its financing requirements or achieve revenue as projected, it will then modify its expenditures and plan of operations to coincide with the actual financing completed and actual operating revenues. There are no assurances, however, with respect to the future success of these plans. Unless otherwise indicated, amounts provided in these notes to consolidated financial statements pertain to continuing operations. The Company is not currently earning any revenues.
F-4
EMPIRICAL VENTURES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the nine months ended March 31, 2010 and 2009 and the period of
April 14, 2004 (inception) through March 31, 2010
(Unaudited)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows:
Interim Review Reporting
The accompanying unaudited financial statements of Empirical Ventures, Inc. (the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC). Certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such SEC rules and regulations. Nevertheless, the Company believes that the disclosures are adequate to make the information presented not misleading. These interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's 2009 Annual Report as filed on Form 10K.
In the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly the financial position of the Company with respect to the interim financial statements and the results of its operations for the interim period ended March 31, 2010, have been included. The results of operations for interim periods are not necessarily indicative of the results for a full year.
Basis of Presentation
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in United States (US) dollars. The Company has not produced any revenue from its principal business and is a development stage company as defined by FASB ASC 915 “Development Stage Entities”.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary Empirical Ventures Ltd., (EVL), a Company incorporated under the
Company’s Act of British Columbia on May 13, 2004. All inter-company transactions have been eliminated.
F-5
EMPIRICAL VENTURES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the nine months ended March 31, 2010 and 2009 and the period of
April 14, 2004 (inception) through March 31, 2010
(Unaudited)
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 these financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid investments with original maturities of three months or less.
Start-up Expenses
The Company has adopted FASB ASC Topic 720, "Start-up Activities," which requires that costs associated with start-up activities be expensed as incurred. Accordingly, start-up costs associated with the Company's formation have been included in the Company's general and administrative expenses for the period from inception on April 14, 2004 to March 31, 2010.
Foreign Currency Translation
The Company’s functional currency is the Canadian dollar as substantially all of the Company’s operations are in Canada. The Company used the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission and in accordance with the ASC 830 “Foreign Currency Translation”.
Assets and liabilities that are denominated in a foreign currency are translated at the exchange rate in effect at the year end and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments from the use of different exchange rates from period to period are included in the Comprehensive Income statement account in Consolidated Stockholder’s Equity, if applicable. There were no translation adjustments as of March 31, 2010.
F-6
EMPIRICAL VENTURES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the nine months ended March 31, 2010 and 2009 and the period of
April 14, 2004 (inception) through March 31, 2010
(Unaudited)
Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. If applicable, exchange gains and losses are included in other items on the Consolidated Statements of Operations. There were no exchange gains or losses as of March 31, 2010.
Loss per Share
The Company computed basic and diluted loss per share amounts for March 31, 2010 pursuant to the ASC 260 “Earnings per Share.” There are no potentially dilutive shares outstanding and, accordingly, dilutive per share amounts have not been presented in the accompanying consolidated statements of operations.
Income Taxes
Income taxes are recognized in accordance with ASC 740 "Accounting for Income Taxes", whereby deferred income tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.
Recent Accounting Pronouncements
Recent accounting pronouncements that the Company has adopted or will be required to adopt in the future are summarized below.
In May 2009, the FASB issued ASC 855,
Subsequent Events,
which provides guidance on events that occur after the balance sheet date but prior to the issuance of the financial statements. ASC 855 distinguishes events requiring recognition in the financial statements and those that may require disclosure in the financial statements. Furthermore, ASC 855 requires disclosure of the date through which subsequent events were evaluated. These requirements are effective for interim and annual periods after June 15, 2009. We adopted these requirements for the year ended December 31, 2009, and have evaluated subsequent events through February 9, 2010.
In February 2010, the FASB issued ASU 2010-09 which requires that an SEC filer, as defined, evaluate subsequent events through the date that the financial statements are issued. The update also removed the requirement for an SEC filer to disclose the date through which subsequent
F-7
EMPIRICAL VENTURES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the nine months ended March 31, 2010 and 2009 and the period of
April 14, 2004 (inception) through March 31, 2010
(Unaudited)
events have been evaluated in originally issued and revised financial statements. The adoption of this guidance on January 1, 2010 did not have a material effect on the Company’s consolidated financial statements.
In August 2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10, “Fair Value Measurements and Disclosures—Overall”. The update provides clarification that in circumstances, in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update. The amendments in this ASU clarify that a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability and also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance provided in this ASU is effective for the first reporting period, including interim periods, beginning after issuance. The adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations.
In September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10, “Fair Value Measurements and Disclosures – Overall”, to permit a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent). This ASU also requires new disclosures, by major category of investments including the attributes of investments within the scope of this amendment to the Codification. The guidance in this Update is effective for interim and annual periods ending after December 15, 2009. Early application is permitted. The adoption of this standard did not have an impact on the Company’s consolidated financial position and results of operations.
In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06 which is intended to improve disclosures about fair value measurements. The guidance requires entities to disclose significant transfers in and out of fair value hierarchy levels, the reasons for the transfers and to present information about purchases, sales, issuances and settlements separately in the reconciliation of fair value measurements using significant unobservable inputs (Level 3). Additionally, the guidance clarifies that a reporting entity should provide fair value measurements for each class of assets and liabilities and disclose the inputs and valuation
F-8
EMPIRICAL VENTURES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the nine months ended March 31, 2010 and 2009 and the period of
April 14, 2004 (inception) through March 31, 2010
(Unaudited)
techniques used for fair value measurements using significant other observable inputs (Level 2) and significant unobservable inputs (Level 3). The Company has applied the new disclosure requirements as of January 1, 2010, except for the disclosures about purchases, sales, issuances and settlements in the Level 3 reconciliation, which will be effective for interim and annual periods beginning after December 15, 2010. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
In February 2010, the FASB issued ASU 2010-09 which requires that an SEC filer, as defined, evaluate subsequent events through the date that the financial statements are issued. The update also removed the requirement for an SEC filer to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. The adoption of this guidance on January 1, 2010 did not have a material effect on the Company’s consolidated financial statements.
NOTE 3 – TECHNOLOGY PURCHASE AGREEMENT PAYABLE
By an agreement dated May 18, 2004 the Company purchased software, known as “Darrwin” in consideration of payment to the Vendor of $5,000 and 100,000 common shares of the Company. In addition, the Company will grant the vendor a 2% royalty on net sales of any product that uses any portion of the technology. The agreement was subsequently amended and calls for the cancellation of the 100,000 common shares, the sum of $3,000 payable upon execution of the agreement, and a non-refundable sum of $10,000 paid on August 22, 2006. As of March 31, 2010, there is no balance due.
NOTE 4 – STOCKHOLDERS’ EQUITY
On May 7, 2004, the Company issued 5,000,000 of its common shares to its founder for cash of $5,000.
On June 30, 2004, the Company issued 3,820,000 of its common shares for cash of $57,300.
On June 30, 2004, the Company issued 100,000 of its common stock in conjunction with a Technology Purchase Agreement. Per the agreement, these shares were issued at $.015. In accordance with an amendment to the original agreement, these shares were subsequently cancelled during the year ended June 30, 2005.
F-9
EMPIRICAL VENTURES, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the nine months ended March 31, 2010 and 2009 and the period of
April 14, 2004 (inception) through March 31, 2010
(Unaudited)
On July 23, 2004, the Company issued 766,662 of its common shares for cash of $11,000.
On December 30, 2008, the Company issued a total of 500,000 subscripted common shares to two individuals at $0.05 per share the net proceeds received by the company was $25,000.
On November 6, 2009, the Company converted $10,000 of debt owed to a shareholder into 1,000,000 shares of restricted common stock valued at $0.01 per share.
There were no issuances of stock during the third quarter ended March 31, 2010.
Common stockholders are entitled to 1 vote per common share held. There are no special rights or privileges afforded to common share holders.
NOTE 5– RELATED PARTY LOAN
On November 6, 2009, Mr. Derek Ward Converted $10,000 of debt owed to him by the Company into 1,000,000 shares of restricted common stock at $0.01 per share.
On February 25, 2010, the company received $5,000 cash from a shareholder loan to continue its operations. The loan is non interest bearing, unsecured, due on demand and does not follow any specific repayment.
As of March 31, 2010 and June 30, 2009, the Company had a total of $31,529 and $36,529, respectively, recorded as related party loans. None of the loans owed to related parties has been paid in part or in whole, and are non interest bearing, unsecured, due on demand, and does not follow any specific repayment.
NOTE 6 – SUBSEQUENT EVENTS
Management evaluated all activities of the company through the issuance date of the Company’s consolidated financial statements and concluded that no subsequent events have occurred that would require adjustments or disclosures into the consolidated financial statements.
F-10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this Quarterly Report constitute "forward-looking statements". These statements, identified by words such as “plan”, "anticipate," "believe," "estimate," "should," "expect" and similar expressions, include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under this caption "Management's Discussion and Analysis or Plan of Operation" and elsewhere in this Quarterly Report. We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”).
As used in this Quarterly Report, the terms "we", "us", "our", “the Company” and “Empirical” mean Empirical Ventures, Inc. unless otherwise indicated. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.
Introduction
The following discussion and analysis summarizes our plan of operation for the next twelve months, and our results of operations for the nine month period, and three-month period ended March 31, 2010. This discussion should be read in conjunction with the Management’s Discussion and Analysis or Plan of Operation.
Empirical Ventures, Inc. is a corporation formed under the laws of the State of Nevada on, April 14, 2004 whose principal executive offices are located in Edmonton Alberta, Canada. Our principal business is the development, marketing and of a software product called Darrwin.
About Our Business
We are a development stage company. We have produced no revenues to date, and have not begun revenue producing activities. We have had extremely limited operations and have relied on the sale of our securities and loans or capital infusions from our officers and directors to fund our operations to date. Our auditors have included in their report covering our financial statements for the period from incorporation to June 30, 2009, that there is substantial doubt about our ability to continue as a going concern. Our business plan is to further develop and commercialize the Darrwin Software Program. The Darrwin Software Program, which provides reservation and support services to the hospitality and tourism industries via the internet. We intend to become an Application Service Provider, hosting the program on our servers, and providing access and data storage from our facilities to hotels and motels, as well as civic and regional tourism bureaus in the U.S. and Canada. At the time of the acquisition, our program was operational on Windows NT and Windows 2000, and was capable of a full array of tourism based services, including reservation services, lodges, and ticketing local sporting events and activities. To date we have spent a total of $12,840 on software development, $1950 website development and other related costs. We anticipate spending approximately $235,000 in the next five months for similar purposes that are contingent on the receipt of additional funding.
2
Plan of Operation
Financial Plan
As of March 31, 2010, we had a cash balance $4,961 and have earned no revenue from operations. Since our inception on April 14, 2004 to March 31, 2010, we have raised $96,800 in equity financing via distributions of unregistered securities to Canadian investors using exemptions provided under Regulation S and under British Columbia, Alberta, and Saskatchewan Multilateral Instrument 45-103 Part 2 in Canada. During the next twelve months we will need additional funds and we are seeking these additional funds via, private placements or loans from our sole officer and director or current shareholders or potentially an initial public offering. No arrangements for additional funds have been completed.
Software Development Plan
We have commenced development work to upgrade the Darrwin software program. To date we accomplished the following tasks in preparation to migrate the existing code to the windows XP Professional format. To date we have: separated the original source code which was combined with other software and placed it on CD; organized and analyzed files and libraries flagging any corrupted files for repair or recovery of data; recovered or corrected any corrupted files and libraries; tested boot libraries and executable libraries in preparation for migration to XP Professional.
Originally 150 hours of programming time was budgeted for two computer scientists to complete the migration to Windows XP at a cost of $52,500. To date we have incurred approximately 214 hours of programming time by one programmer at a cost of $12,840 on the upgrade of the Darrwin software program. It is estimated we will need approximately 80 to 100 additional hours of development time at a cost of $60 per hour to complete our upgrade to Windows XP. We currently do not have enough cash on hand to complete this programming. We estimate that the migration to Widows XP will be completed by the end of 2010 and additional testing for system stability will carry on through the first quarter of 2011 and is contingent upon receipt of additional funding.
Additional upgrades include, upgrade Billing system; upgrade hotel booking system; upgrade hotel and event conformation system; upgrade airline interconnect; enhance system interface. We will explore these additional upgrades upon completion of our upgrade to XP Professional and is contingent upon receipt of additional funding. Without additional funding, would lengthen the time frame needed to complete our business plan.
Website Development Plan
Our preliminary Marketing website was posted online in May 2007 with all components of the website functioning properly. The cost associated with developing the website was approximately $1,950. Our Marketing web site incorporates information about ourselves and our product. We will continue researching possible locations for a suitable test site for our software program.
3
Our test site will allow potential customers the ability to tryout the features and usability of our software prior to purchasing. We have identified the environment and method for developing the software test, and have identified companies or individuals that have the ability to complete such a software test site. We have estimated the cost of our test site to be $5,000, bringing our total cost of website development to $6,950. Currently, this site is not functioning, due to upgrades to the Darrwin software progra
m.
Our website address on the Internet at www.darrwin-travel.com
Website Hosting Plan
Our website will be hosted by Network Solutions and will be charging us approximately $15 per month to host our website. Over the next twelve months the cost of hosting our website will be $180
Marketing Plan
We plan to undertake the development of a logo and other art and to develop a look and feel for our brochures and web site and that we will incorporate into an advertising and marketing campaign. We anticipate that initial marketing expenses, including travel for the first year will be approximately $50,000. We anticipate that the marketing materials and campaign would be designed by an outside marketing consulting firm.
Accounting and Audit Plan
We intend to continue to have our outside consultant assist in the preparation of our quarterly and annual financial statements and have these financial statements reviewed or audited by our independent auditor. Our outside consultant charges us $1,000 to assist in the preparation of our quarterly financial statements and $2,500 to assist in the preparation of our annual financial statements. Our independent auditor charges us approximately $2,000 to review our quarterly financial statements and approximately $7,500 to audit our annual financial statements. In the next twelve months, we anticipate spending approximately $18,500 to pay for our accounting and audit requirements.
SEC Filing Plan
We have become a reporting company in 2007. Our SB-2 was declared effective on August 13, 2007. This means that we will file documents with the US Securities and Exchange Commission on a quarterly basis. We expect to incur filing costs of approximately $650 per quarter to support our quarterly and annual filings. In the next twelve months, we anticipate spending approximately $5,000 for legal costs to pay for three quarterly filings, one annual filing.
Currently, we do not have any financing arrangements in place and there is no assurance that we will be able to achieve sufficient financing required to proceed with our plan of operation. If we do not obtain the necessary financing, then our plan of operation will be scaled back according to the amount of funds available. Our inability to raise the necessary financing may restrict our ability to complete product development and market our product.
4
RESULTS OF OPERATIONS
Second Quarter Summary
The increase in our working capital deficit at March 31, 2010 as compared to our fiscal year ended June 30, 2009 is primarily a result of the fact that we had no sources of revenue and limited sources of financing during the period. As a result, we were required to use existing cash reserves in order to meet our obligations during the period. As of March 31, 2010, the date of our most recently available financial statements, we had cash on hand of $4,961. Since our inception, we have used sales of our common stock and loans from our sole officer and director to raise money for our operations and for our acquisition. We have not attained profitable operations and are dependent upon obtaining financing to pursue our plan of operation.
We anticipate spending approximately $235,000 over the next twelve months in pursuing our plan of operation. This amount is in excess of our current working capital reserves and we have not earned any revenues to date and do not anticipate earning revenues until we have completed commercial development of our product. Accordingly, we will require additional financing in order to fund our plan of operation. We anticipate that any additional financing will likely be in the form of equity financing as substantial debt financing will not be as available at this stage of our business.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.
6
CRITICAL ACCOUNTING POLICIES
The financial statements presented with this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information.
These financial statements do not include all information and footnote disclosures required for an annual set of financial statements prepared under United States generally accepted accounting principles. In the opinion of our management, all adjustments (consisting solely of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows as at March 31, 2010 and for all periods presented in the attached financial statements, have been included. Interim results for the three-month period ended March 31, 2010 are not necessarily indicative of the results that may be expected for the fiscal year as a whole.
We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are disclosed in the notes to the consolidated financial statements included with this Quarterly Report on Form 10-Q.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Foreign Currency Translation
Transaction amounts denominated in foreign currencies are translated at exchange rates prevailing at transaction dates. Carrying values of monetary assets and liabilities are adjusted at each balance sheet date to reflect the exchange rate at that date. Non-monetary assets and liabilities are translated at the exchange rate on the original transaction date. Gains and losses from restatement of foreign currency monetary assets and liabilities are included in the statements of operations. Revenues and expenses are translated at the rates of exchange prevailing on the dates such items are recognized in the statement of operations.
Contributed Executive Services
Pursuant to SAB topic 1:B(1) and the last paragraph of SAB 5:T, we are required to report all costs of conducting our business. Accordingly, we record the fair value of contributed executive services provided to us at no cost as compensation expense, with a corresponding increase to additional paid-in capital, in the year which the services are provided.
7
RISK FACTORS
Need For Financing
We do not currently have the financial resources to complete our plan of operation for the next twelve months. We anticipate that we will require financing in the amount of $235,000 in order to fund our plan of operation over the next twelve months. We presently do not have any financing arrangements
in place and there is no assurance that we will be able to obtain sufficient financing on terms acceptable to us or at all. If further financing is not available or obtainable, our ability to meet our financial obligations and pursue our plan of operation will be substantially limited and investors may lose a substantial portion or all of their investment.
Limited Operating History, Risks Of A New Business Venture
We were incorporated on April 14, 2004 and, prior to our acquisition of Darrwin, we had been involved primarily in organizational activities and in seeking business opportunities and products. We have not earned any revenues to date.
Potential investors should be aware of the difficulties normally encountered by a new enterprise and the high rate of failure of such enterprises. The potential for future success must be considered in light of the problems, expenses, difficulties complications and delays encountered in connection with the development of a business in the area in which we intend to operate and in connection with the formation and commencement of operations of a new business in general. These include, but are not limited to, unanticipated problems relating to research and development programs, marketing, approvals by government agencies, competition and additional costs and expenses that may exceed current estimates. There is no history upon which to base any assumption as to the likelihood that our business will prove successful, and there can be no assurance that we will generate any operating revenues or ever achieve profitable operations.
Our Business Operations, Assets and Personnel Are Located Outside The United States
Although we are incorporated in the United States, all of our current operating activities are conducted in, and all of our assets and personnel are located in, Canada. As such, investors in our securities may experience difficulty in enforcing judgments or liabilities against the Company or our personnel under United States securities laws.
8
Our corporate headquarters are located in Edmonton Alberta, Canada As we are a Nevada corporation, we are required to maintain a resident agent in the State of Nevada for the purpose of receiving service of process. Under Section 78.090 of the Nevada Revised Statutes, all legal process and any demand or notice authorized by law to be served upon the Company may be served upon our resident agent in Nevada. Our resident agent for this purpose is Nevada Agency and Trust 50 West Liberty Street, Suite 880 Reno Nevada 89501.
As a Nevada corporation, we are subject to the laws of the United States, including the federal securities laws of the United States, and to the jurisdiction of United States courts. As such, investors may bring proceedings against us, and enforce judgments obtained against us, in United States courts.
Generally, original actions to enforce liabilities under United States federal securities laws may not be brought in a Canadian court. Such actions must be brought in a court in the United States with applicable jurisdiction. Persons obtaining judgments against us in United States courts, including judgments obtained under United States federal securities laws, will then be required to bring an application in a Canadian court to enforce such judgments in Canada.
Competition Is Intense And We May Be Unable To Achieve Market Acceptance
The business environment in which we intend to operate is highly competitive. Currently, there exists a number of software products similar to ours and we expect to experience competition from a number of established companies involved in the software development industry. Certain of our potential competitors will have greater technical, financial, marketing, sales and other resources than us.
In addition, while the software development industry is a mature one, we are unable to provide assurances that our target customers and markets will accept our technologies or will purchase our products and services in sufficient quantities to achieve profitability. If a significant market fails to develop or develops more slowly than we anticipate, we may be unable to recover the losses incurred to develop products and we may be unable to meet our operational expenses. Acceptance of our products by companies and other organizations will depend upon a number of factors, including the cost competitiveness of our products, customer reluctance to try new products or services, or the emergence of more competitive or effective products.
Rapid Technological Changes Could Make Our Product Obsolete
The software development industry is characterized by rapid technological change and intense competition. New technologies, products and industry standards will develop at a rapid pace which could make our planned products obsolete. Our future success will depend upon our ability to develop and introduce product enhancements to address the needs of customers. Material delays in introducing product enhancements may cause customers to forego purchases of our product and purchase those of competitors.
Dependence On Key Personnel
Our success will largely depend on the performance of our directors and officers and our key consultants. Our success will also depend on our ability to attract and retain highly skilled technical, research, management, regulatory compliance, sales and marketing personnel. Competition for such personnel is intense. The loss of the services of such personnel or the inability to attract and retain other key personnel could impair the development of our business, operating results and financial condition.
9
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC's rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), Mr. Ward our Chief Executive Officer and Principal Accounting Officer, carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation,
Mr. Ward has concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure as a result of the deficiency in our internal control over financial reporting discussed below.
ITEM 4T. CONTROLS AND PROCEDURES
Management’s Quarterly Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
(1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
(2)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
(3)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
10
Management's assessment of the effectiveness of the registrant's internal control over financial reporting is as of the three months ended February 28, 2010. We believe that internal control over financial reporting is ineffective, due to the fact that we have only one officer and director. In the future the company will endeavor to add another director with sufficient SEC and accounting related expertise, to provide adequate segregation of duties and financial accounting and reporting controls, which currently are significant deficiencies in our internal control.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
This quarterly report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2010, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
none.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
Other Events
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibit Number
Description of Exhibit
1.1
Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
0.1
Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
REPORTS ON FORM 8-K
The Company has not filed Current Reports on Form 8-K during the fiscal quarter ended March 31, 2010,
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EMPIRICAL VENTURES, INC.
Date: September 8, 2010 By:
/s/
Derek Ward
Derek ward
Chief Executive Officer, Chief Financial Officer
President, Director (Principal Executive Officer
and Principal Accounting Officer)