SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2007
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(D) OF THE EXCHANGE ACT OF 1934
From the transition period from ___________ to ____________.
Commission File Number 333-138111
EMAZING INTERACTIVE, INC.
-------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 20-4672080
------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
101 C North Greenville, Suite 255, Allen, Texas 75002
-----------------------------------------------------
(Address of principal executive offices)
(972) 894-8796
(Issuer's telephone number)
N/A
---
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days:. Yes [ X ] No [ ].
Indicate by a check mark whether the company is a shell company (as defined by
Rule 12b-2 of the Exchange Act: Yes [ ] No [ X ].
As of June 30, 2007, there were 5,583,500 shares of Common Stock of the issuer
outstanding.
TABLE OF CONTENTS
PART I FINANCIAL STATEMENTS
Item 1 Financial Statements 2
Item 2 Management's Discussion and Analysis or Plan of Operation 10
PART II OTHER INFORMATION
Item 1 Legal Proceedings 17
Item 2 Changes in Securities 17
Item 3 Default upon Senior Securities 17
Item 4 Submission of Matters to a Vote of Security Holders 17
Item 5 Other Information 17
Item 6 Exhibits and Reports on Form 8-K 17
EMAZING INTERACTIVE, INC.
BALANCE SHEET
JUNE 30, 2007
(UNAUDITED)
ASSETS
Current assets
Cash $ 32,370
Prepaid expenses 14,103
---------
Total current assets 46,473
Fixed assets
Computer equipment 19,950
Gaming software 48,488
Less: Accumulated depreciation (22,894)
---------
Total fixed assets 45,544
---------
TOTAL ASSETS $ 92,017
=========
LIABILITIES AND STOCKHOLDERS'EQUITY
Current liabilities
Accounts payable and accrued expenses $ 43,068
Other current liabilities 13,619
---------
Total liabilities 56,687
---------
Stockholders' deficit:
Common stock, $.001 par value, 50,000,000 shares
authorized, 5,583,500 shares issued and outstanding 5,584
Additional paid in capital 153,017
Accumulated deficit (123,271)
---------
Total Stockholders' Equity 35,330
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 92,017
=========
See Accompanying Notes to Financial Statements
2
EMAZING INTERACTIVE, INC.
STATEMENT OF OPERATIONS
THREE AND SIX MONTHS ENDED
JUNE 30, 2007 AND THE PERIOD APRIL 11 (INCEPTION)
TO JUNE 30, 2006
(UNAUDITED)
Three Months Three Months Six Months
Ended Ended Ended Period Ended
June 30, June 30, June 30, June 30,
----------- ----------- ----------- -----------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Revenue $ 8,452 $ 4,301 $ 9,889 $ 4,301
Operating expenses:
Depreciation 4,506 4,507 9,012 4,507
General and administrative:
Accounting and professional 10,926 20,240 14,586 20,240
Computer expenses 1,564 20,019 1,854 20,019
Licenses and fees 733 3,126 745 3,126
Marketing 2,767 0 2,767 0
Office and other expenses 3,582 2,480 4,703 2,480
Telephone 5,844 8,263 10,953 8,263
Travel expense 8,399 1,758 7,937 1,758
----------- ----------- ----------- -----------
Total operating expenses 38,321 60,393 52,557 60,393
(Loss) from operations (29,869) (56,092) (42,668) (56,092)
Other(expense):
Interest income 423 0 786 0
----------- ----------- ----------- -----------
Net(loss) $ (29,446) $ (56,092) $ (41,882) $ (56,092)
=========== =========== =========== ===========
Net loss per share:
Basic and diluted $ (0.01) $ (0.01) $ (0.01) $ (0.01)
=========== =========== =========== ===========
Weighted average shares outstanding:
Basic and diluted 5,520,043 5,209,375 5,520,043 5,209,375
=========== =========== =========== ===========
See Accompanying Notes to Financial Statements
3
EMAZING INTERACTIVE, INC.
Statement of Changes in Stockholders' Equity
June 30, 2007
Common Stock Paid-in Retained
Shares Amount Capital Earnings (Deficit) Totals
--------- --------- --------- ------------------ ---------
Beginning Stockholder's Equity 0 $ 0 $ 0 $ 0 $ 0
Issuance of Common Stock for:
Assets 5,000,000 5,000 25,600 30,600
Services 250,000 250 1,000 1,250
Cash 100,000 100 9,900 10,000
Net (Loss) 0 0 0 (81,389) (81,389)
--------- --------- --------- ------------------ ---------
Ending Stockholder's Equity
at Dec 31, 2006 5,350,000 $ 5,350 $ 36,500 $ (81,389) (39,539)
Issuance of Common Stock for:
Cash 227,500 228 113,523 0 113,751
Conversion of debt
for stock 6,000 6 2,994 3,000
Net(Loss) 0 0 0 (41,882) (41,882)
--------- --------- --------- ------------------ ---------
Ending Stockholders' Equity
at June 30, 2007 5,583,500 5,584 $ 153,017 $ (123,271) $ 35,330
--------- --------- --------- ------------------ ---------
See Accompanying Notes to Financial Statements
4
EMAZING INTERACTIVE, INC.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2007 AND THE PERIOD APRIL 11 (INCEPTION) TO JUNE
30,2006
(UNAUDITED)
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (41,882) $ (56,092)
Adjustments to reconcile net deficit to cash used
by operating activities:
Depreciation and amortization 9,012 4,507
Change in assets and liabilities:
Other assets (14,103) 0
Accounts payable-related party (10,329) 18,307
Accounts payable and accrued expenses (17,150) 46,728
--------- ---------
CASH FLOWS USED IN OPERATING ACTIVITIES (74,452) 13,450
--------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES
Software upgrade (10,000) (38,488)
Computer equipment 0 (15,600)
--------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES (10,000) (54,088)
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock for cash 113,751 10,000
Conversion of debt to stock 3,000 0
Issuance of stock for assets 0 30,600
Issuance of stock for services 0 1,250
--------- ---------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 116,751 41,850
NET INCREASE (Decrease) IN CASH 32,299 1,212
Cash, beg. of period 71 0
--------- ---------
Cash, end of period $ 32,370 $ 1,212
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ -- $ --
Income taxes paid $ -- $ --
See Accompany Notes to Financial Statements
5
EMAZING INTERACTIVE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Activities, History and Organization:
-----------------------------------------------
Emazing Interactive, Inc. (The "Company") operates as an online gaming
facilitator through its subsidiary Emazing Gaming, LLC. The Company is
located in Allen, Texas and was incorporated on April 11, 2006 under
the laws of the State of Texas. On October 2, 2006, the Company
converted its corporate charter to domicile in Nevada.
Significant Accounting Policies:
--------------------------------
The Company's management selects accounting principles generally
accepted in the United States of America and adopts methods for their
application. The application of accounting principles requires the
estimating, matching and timing of revenue and expense. Below is a
summary of certain significant accounting policies selected by
management.
Basis of Presentation:
----------------------
The Company prepares its financial statements on the accrual
basis of accounting.
Cash and Cash Equivalents:
--------------------------
All highly liquid investments with original maturities of
three months or less are stated at cost which approximates
market value.
Fixed Assets:
-------------
Fixed assets are depreciated over their useful lives of three
years. Repairs and maintenance is charged to expense as
incurred.
Principles of Consolidation:
----------------------------
The financial statements include the accounts of Emazing
Gaming, LLC, an operating subsidiary. All significant
intercompany transactions and balances have been eliminated.
Earnings (Loss) per Share:
--------------------------
Earnings (loss) per share (basic) is calculated by dividing
the net income (loss) by the weighted average number of common
shares outstanding for the period covered. As the Company has
no potentially dilutive securities, fully diluted earnings
(loss) per share is identical to earnings (loss) per share
(basic).
6
NOTE 1 - CONTINUED
Website Software Development Costs:
-----------------------------------
The Company adopted EITF 00-02, "Accounting for website
developments costs". In accordance with EITF 00-02, the costs
incurred for the (i) website application and infrastructure
development; (ii) graphics development; and (iii) content
development, which took the website to a functional stage
where it could receive server and gaming orders, were
capitalized and are being amortized over three years.
Maintenance expenses or costs that do not result in new
revenue producing features or functions, such as updating
information and products or maintenance of the website or
promotion of the website using search engines, are expensed as
incurred. Prior to this development, Emazing had no website.
For the period ended June 30, 2007, $290 has been expensed and
$48,488 capitalized.
Use of Estimates:
-----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could
differ from those estimates.
NOTE 2 - FIXED ASSETS
Fixed assets at June 30, 2007 are as follows:
Computer equipment $ 19,950
Gaming software 48,488
Less: Accumulated Depreciation (22,894)
---------
Total Fixed Assets $ 45,544
=========
Depreciation expense was $4,506 for the three months ended June 30,
2007 and $4,507 for the three months ended June 30, 2006. Depreciation
expense was $9,012 for the six months ended June 30, 2007 and $4,507
for the period ended June 30, 2006.
7
NOTE 3 - COMMON STOCK
The Company is authorized to issue 50,000,000 common shares at a par
value of $0.001 per share. These shares have full voting rights. At
June 30, 2007, there were 5,583,500 shares outstanding.
NOTE 4 - INCOME TAXES
The Company has adopted Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes (SFAS No. 109), which requires the use
of the liability method in the computation of income tax expense and
the current and deferred income taxes payable. Under SFAS No. 109,
income tax expense consists of taxes payable for the year and the
changes during the year in deferred assets and liabilities. Deferred
income taxes are recognized for the tax consequences in future years of
differences between the tax bases and financial reporting bases of
assets and liabilities. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be
realized.
Since the realization of any deferred tax benefits is contingent upon
future earnings, no deferred tax asset has been accrued since the
likelihood of future earnings has not been demonstrated.
The Company had net losses for the six months ended June 30, 2007 and
the year ended December 31, 2006, and therefore incurred no tax
liabilities. The net operating losses and their expiration dates are as
follows:
Expiration
Period Ended Net (Loss) Date
-------------------------------------------------------------
June 30, 2007 ($41,882) 2027
December 31, 2006 ($81,389) 2026
8
NOTE 5 - FINANCIAL CONDITION AND GOING CONCERN
Emazing has an accumulated deficit through June 30, 2007 totaling
$123,271 and had working capital of ($10,214). Because of this
accumulated loss, Emazing will require additional working capital to
develop its business operations. Emazing intends to raise additional
working capital either through private placements, public offerings
and/or bank financing. See liquidity and capital resource discussion
per Item 2 below. There are no assurances that Emazing 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 placement, public offerings and/or bank financing
necessary to support Emazing's working capital requirements. To the
extent that funds generated from any private placements, public
offerings and/or bank financing are insufficient, Emazing 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 Emazing. If adequate working capital is not
available Emazing may not continue its operations.
Emazing faces many factors in its ability to continue as a going
concern, including but not limited to, the promotion of its gaming
website, competition from larger and better capitalized companies, and
its ability to create traffic to its website and virtual store. To
date, much of Emazing's activities have been focused on advertising and
promotion to create its identity in the community, and its continued
existence is dependent upon the gaming public purchasing more time on
its gaming servers.
Should the above concerns materialize, it is conceivable that Emazing
would have to suspend or discontinue operations. Management believes
that the efforts it has made to promote its site will continue for the
foreseeable future. These conditions raise substantial doubt about
Emazing's ability to continue as a going concern. The financial
statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the
amount and classification of liabilities that might be necessary should
Emazing be unable to continue as a going concern.
NOTE 6 - RELATED PARTY TRANSACTIONS
Amounts due related parties were $13,619 at June 30, 2007.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
THIS REPORT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1933, AS AMENDED AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE SET FORTH ON THE FORWARD LOOKING STATEMENTS AS A RESULT OF
THE RISKS SET FORTH IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION, GENERAL ECONOMIC CONDITIONS, AND CHANGES IN THE ASSUMPTIONS USED IN
MAKING SUCH FORWARD LOOKING STATEMENTS.
General
We are a gaming organization that is working with prominent marketing services
connected to the gaming scene. We specialize in providing marketing awareness of
products and services of our customers to millions of on-line gaming players and
enthusiasts.
To date, our business development activities have primarily been concentrated in
web server access and company branding in hosting web based e-games. This
activity is structured whereby our partners and sponsors are provided premium
web site exposure identifying their company, name, and product offerings.
We generate revenues through our partnerships and sponsors. Sponsoring EMG
GAMING will bring a product and/or brand name into the spotlight of gamers
worldwide. Our customer's brand will be synonymous with the youthful intelligent
image that pro-gaming has. Our customers have prime advertising space on our
website, IRC channel every hour 24/7 and clothes, which we will wear at
competitive events all year round. It is primarily through our fee structure for
web server access that we generate revenue. Although our web site creates
product awareness for our sponsors and partners, our revenue is generated by
fees which our partners and sponsors remit to us for that exposure. In the
E-Gaming industry, partners and sponsors will pay top dollar for a popular
gaming web site as they can maximize their product and name exposure.
We also generate revenue through EMazing Servers, a "Game Server" rental company
whereby we rent game servers for players to play a computer game of their
choice. We rent game servers for over 32 different games, the most popular being
Half Life's Counter Strike and variations of this game. We rent by the hour, day
or month. This rental program is unique for our type of service as most
companies choose to rent by the month. We feel this gives us a competitive
advantage over our competition.
We have three standard packages designed for our prospective partners. Our
"Gold" package is aimed to give maximum publicity to our prospective partners,
forcing their product into the world of pro-Gaming and showing everybody that
their company really cares about the gamers. The Silver" package is aimed at
companies with a lower budget that are looking to get their product noticed. The
"Bronze" package is for companies with limited budgets but still want
involvement in the eSports industry. Following is a chart outlining the benefits
of our partnerships/sponsors at the Gold, Silver and Bronze levels.
10
------------------------------------- ----------------------------------- -----------------------------------
GOLD PARTNER FEATURES SILVER PARTNER FEATURES BRONZE PARTNER FEATURES
------------------------------------- ----------------------------------- -----------------------------------
1. High priority branding on 1. Branding on our website 1. Branding on IRC for a
our website, clothing, and IRC limited time
computer cases and IRC channel
2. High priority advertising on 2. Limited advertising on 2. Listed as a supporter for
television, radio, eSports television, radio, eSports a limited time
websites and magazine interviews and magazine special features
3. Main sponsor image, banner 3. Listed as an official 3. Special features negotiable
description of company supporter on our website
on our website with a rotational banner and
a small logo
4. Special features on your 4. Special features on your
products: e.g. news and products: e.g. news and
reviews reviews
5. Product/brand endorsement 5. Product endorsement on on our
on our website and at events website and limited
endorsement at events
6. Availability for press
attendances and media
events. Product testing and
feedback
Price: $5,000.00 per month Price: $2,500.00 per month Price: One time payment of
$1,500.00+
------------------------------------- ----------------------------------- -----------------------------------
During 2006, we filed and had approved form SB-1 to raise funds. A portion of
the proceeds of the offering are being used to further develop E-Gaming software
and lease server capacity and access through server lease agreements. The
development of software is the key aspect of our business model in that it is
through the game itself that a company such as ours achieves notoriety and
industry following thereby affording us the opportunity to promote our sponsors
and partners on a fee structured basis. This software development is the game
itself and as it achieves acceptance and favorability (more players playing it)
the more our company positions it self as a provider of leading edge E-Gaming
programs. Part and parcel to this is providing access to the game itself on the
World Wide Web. To achieve this, we lease servers or portals, web based access
points to allow E-Game players to access our web site and therefore our on-line
games. These servers are a major source of revenue for us as we charge access
fees to these servers.
BUSINESS OPERATIONS:
GOVERNMENT REGULATION:
At the present time, there are no Federal Government regulations on computer
games over the internet or on dedicated servers.
OUR QUALIFICATIONS
Our qualifications are our reputation and experience in the industry. G. Edward
Hancock, President, and our contract workers and volunteers have over 50 years
combined experience in the E-Gaming industry.
11
INDUSTRY & COMPETITION:
Market Analysis Summary:
Gamers are just as fanatical about pro-gaming teams as football fans are with
their NFL teams. They watch their matches, attend events, emulate what they
wear, buy the hardware they use, and follow the new trends players bring about.
Counter-Strike 1.6 is the world renowned FPS (First Person Shooter) game and is
the #1 online action game in the world. Counter-Strike 1.6 offers the most
competition and biggest prize pots in the gaming industry. With all the new
advancements within the eSports community it also brings about new games, such
as Counter-Strike Source. Source is the newest addition to the Counter-Strike
family bringing amazing graphics, new maps, and different techniques than
Counter-Strike 1.6. The graphics on this engine are amazing and offer high
quality details to this game as well. Bringing in this game offers computer
companies and hardware companies more sales due to gamers needing a better
computer to run the video game.
(Source:http://www.csnation.net/articles.php/cssguide_200/)
Online gaming has emerged as one of the biggest growing industries in the new
millennium. The Far East has played a significant role in paving the way for
recognition for online gamers. Multiplayer online games have generated over 1
billion dollars in revenue for the first time, in 2004. A large proportion of
this figure has come from player subscription games such as Everquest and Star
Wars Galaxies, but a significant amount has also come from the first person
shooter game sales. This figure does not include the emergence of sponsored
players and teams as has been seen in Asia over the last 18 months with many
players earning above $100,000 in sponsorship deals. These players have become
cult figures in their respective countries and "national heroes". The way it
stands now, is that this status will start migrating to the already maturing
gaming markets such as the US, where global events here now command higher
earnings for the winners. Typical earnings of a team range between $20k and $40k
for the larger events, though this is small compared to the events of Asia.
These events have caused an influx from many large companies wanting to gain
access to this emerging market. Names such as Nike, Pepsi, Red Bull, and Oakley
have begun their sponsorship programs globally with an emphasis on the US
Market. Gaming leagues and competitions such as WSVG, CPL, ESWC, WCG and WEG
have become very popular in the US and the world, culminating in the Asian model
for sponsored clans and players increasingly hugely as a result. News of these
events is starting to hit mainstream television and press with news of the
winning tournaments being broadcasted on channels such as:
1. BBC News Online
2. CNN 3. ABC
4. Fox News
5. MTV
6. Fuse Network 7. CBC Television in Canada
8. Many major online news services such as Yahoo, MSN, Reuters
12
As more mainstream media becomes involved in promoting gaming events, this
allows more companies outside the gaming community to get involved as named
above.
Besides these news sites and television, there are various ways to follow
events. These methods include online radio, such as TSN (www.tsncentral.com),
streaming video and in-game viewing tools such as HalfLife-TV. These programs
allow the viewer to watch the actual in game action from the point of view of
any player they like or if preferred a map overview. Over 30,000 people watched
the last CPL (www.thecpl.com) finals on HalfLife-TV alone.
(Source: http://www20.tomshardware.com/game/200408071/cyberathlete-14.html)
OUR BUSINESS STRATEGY
We are EMG (EMAZING GAMING), a gaming organization that is working with
prominent marketing services connected to the gaming scene. Currently, the
entire team consists of contract workers including management, sales, technical
development, press and our primary team / players department. We are comprised
of people who have specific gaming experience, a pre-requisite for employment
with our company is experience in the gaming world. Combined, our organization
holds well over 50 years of experience in management alone.
Management consists primarily of our President and CEO. As CEO, he is
responsible for coordinating and leading the entire organization to achieve
optimal results and goals. This includes directing contract consultants and
measuring results. He also manages the budget to satisfy needs for traveling and
accommodations to PR events and tournaments. Additionally, our CEO is
responsible for strategic thinking and placement within the E-Gaming industry,
constantly looking for new opportunities. As such, he is instrumental in
building and maintaining sponsor and partner relationships.
The sales department handles contacts to other companies and controls all
marketing possibilities. They make proper detailed statistics and documentation
on the amount of exposures that the partner in question receives. These workers
are on contract.
The technical development area works with the organizations' technical
structure, which includes the website, design material, marketing channels, and
technical equipment. Also provides technical solutions and services with the
integration of the partners' products and the popularity/demand of the latest
hardware. These workers are on contract.
Team/Players: The current team of players are the backbone to the organization.
The team practices and competes in order to keep EMG ORGANIZATION as a world
leading organization. The team is the primary marketing channel for sponsors and
the organization. The team wears branded clothing and as they perform and
succeed spectators and other participants are drawn to play the same games.
These workers are on contract. Emazing Gaming currently sponsors eight teams of
which three require consistent financial support. These three teams travel
throughout the United States (1.6 Counter-Strike and DOD team) and the United
Kingdom (Counter Strike team).
Press department: This department works to provide the public with the latest
updates regarding the team and e-sports through our website and other means of
communication. The department also provides detailed coverage of the teams'
progress in tournaments and leagues. These workers are on contract.
13
EMG GAMING has three major financial objectives to reach its goal as the best
and highest-ranking Professional Counter-Strike team in the world:
1. Maintain Equipment on the Cutting Edge - It goes without saying that
when competing in the technologically advanced arena of professional
gaming, you want to remain on the leading edge of the technology
curve. Faster machines, graphics cards, and other equipment can mean
the difference between winning and losing at this level.
2. Ability to Travel to Tournaments - There is no use in being
professional if one can't afford to travel to the various events and
tournaments here at home and abroad. Travel and accommodations
represent a significant portion of our costs.
3. Ability to Train - Professional gamers train for up to 12 hours per
day, every day to stay at the top of their game. This does not allow
much time for work, and often professional gamers are forced to drop
out because they need financial stability to survive. A monthly living
allowance would not only allow us to focus on training, but it would
also bring greater stability to the team members.
EMazing utilizes their website, emazinggaming.com, as the portal to which
e-games are accessed on the World Wide Web. Through links on the website we are
able to better manage our visitors, game selection, and visitor profiles,
effectively providing us the ability to ultimately understand our customers and
their playing habits from which we can then develop more challenging and
exciting game content.
All games currently provided by EMazing are third party developed. Through the
proceeds of this offering, we will use a portion of the proceeds to develop our
own game portfolio. Game development is a capital and time intensive process,
usually taking 18-24 months to take a game from concept form to fee based web
play. It is our intent to be an industry leading game developer as well as
content provider through our interactive website.
The Company is in discussions with CAL, the Cyber Athletic League, which is the
largest cyber league in the world with over 550,000 registered participants, to
sponsor a new game, `Condition Zero'. Emazing would provide server space and CAL
the participants. The benefit to Emazing is the free advertising and marketing
that results from the relationship. This will provide us with significant
exposure that we expect will generate significant traffic on our web-site and
therefore increased revenue.
CAL provides the leagues and divisions of the most popular games. They are a
free-to-play league, and by playing through them, teams gain seating for the
CPL, Cyber Professional League, which is a branch of CAL that is a paid,
professional tournament league. The standings in CPL are used to seed teams in
events that CPL/CAL sponsor.
14
Industry and Competitors
The Industry:
The eSports industry is highly competitive. eSports is technologically based and
through the medium of the internet is readily accessible to most anyone with a
computer and a credit card. Barriers to entry are high due to server costs
(owned and/or leased), travel expenses, and general living expenses. The more
successful and enthusiastic eSport competitors are reliant on sponsors and
partners to generate funds to undergird living, travel and equipment maintenance
costs. Although highly competitive, it is also highly fragmented. eSports is
worldwide in scope and difficult to assess from a competitive standpoint as
games are often hot and therefore streaky in play before another company puts
out a more desirable game program. Even so, server capacity, speed and graphics
generally determine the amount of play a game will generate.
RESULTS FOR THE FISCAL QUARTER ENDED June 30, 2007
Our fiscal quarter ended on June 30, 2007. Any reference to the end of the
fiscal quarter refers to the end of the second fiscal quarter for the period
discussed herein. The Company began operations on April 11, 2006 so there is
only comparative data for the quarter ending June 30.
REVENUE. Revenue for the three months ended June 30, 2007, was $8,452 compared
to $4,301 for the three months ended June 30, 2006. The increase in revenue is
attributed to the impact that the success of the `Teams' have had in the World
Cyber Games and other competitions, and the new server structure. During the
quarter, we rolled out the new server use structure to capitalize on the short
nature of time commitment in the industry vs. renting server space for a whole
month, week or day. This impact is also reflected in the expenses. Revenue for
the six months ended June 30, 2007 was $9,889. Sales were low in the first
quarter as we reprogrammed our servers for the aforementioned server structure.
EXPENSES. Total expenses for the three months ended June 30 2007, were $38,321
compared to expenses for the three months ended June 30, 2006 of $60,393.
Expenses were down versus 2006 as in 2006 we had initial audit fees ($8,000),
computer set-up expenses ($18,000) and filing fees ($2,600); these were
partially off-set by increases marketing expenses of $2,800 and travel of
$6,600. Total expenses for the six months ended June 30, 2007 were $52,557.
Accounting and professional fees of $14,500, server expenses of $8,000 and
travel expenses of $10,000 make up most of the expenses.
NET INCOME (LOSS). Net loss for the three months ended June 30, 2007 was $29,446
compared to the three months ended June 30, 2006 of $56,092. The decrease in
loss correlates to the decrease in expenses as discussed above. The net loss for
the six months ended June 30, 2007 was $41,882.
LIQUIDITY AND NET CAPITAL RESOURCES. Emazing filed on Form SB-1, a registration
statement with the U.S. Securities & Exchange Commission in order to raise funds
to develop their business. The registration statement became effective on
December 21, 2006 and Emazing has raised funds under that registration statement
at $0.50 per share. As of August 14, 2007, Emazing has raised $116,750 by
selling 233,500 shares.
15
Employees
June 30, 2007, the Company had one employee.
ITEM 3. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in company reports
filed or submitted under the Securities Exchange Act of 1934 (the "Exchange
Act") is recorded, processed, summarized and reported, within the time periods
specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in
company reports filed under the Exchange Act is accumulated and communicated to
management, including the Company's Chief Executive Officer and Chief Financial
Officer (the "Certifying Officers"), as appropriate to allow timely decisions
regarding required disclosure.
As required by Rules 13a-15(e) and 15d-15(e) under the Exchange Act, the
Certifying Officers carried out an evaluation of the effectiveness of the design
and operation of the Company's disclosure controls and procedures as of March 31
2007. Their evaluation was carried out with the participation of other members
of the Company's management. Based upon their evaluation, the Certifying
Officers concluded that the Company's disclosure controls and procedures were
effective.
The Company's internal control over financial reporting is a process designed
by, or under the supervision of, the Certifying Officers and effected by the
Company's Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of the Company's financial
reporting and the preparation of the Company's financial statements for external
purposes in accordance with generally accepted accounting principles. Internal
control over financial reporting includes policies and procedures that pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the Company's assets; provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of the Company's financial statements in accordance with generally
accepted accounting principles, and that the Company's receipts and expenditures
are being made only in accordance with the authorization of the Company's Board
of Directors and management; and provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Company's assets that could have a material effect on its financial
statements. There has been no change in the Company's internal control over
financial reporting that occurred in the quarter ended March 31 2007, that has
materially affected, or is reasonably likely to affect, the Company's internal
control over financial reporting.
16
PART II
Items No. 1, 2, 3, 4, 5 - Not Applicable.
Item No. 6 - Exhibits and Reports on Form 8-K
(a) Report on Form 8-A12G was filed on September 22, 2006 to register our
securities under Section 12(g) of the Act. No reports on Form 8-K were filed
during the three months ended September 30, 2006.
(b) Exhibits
Exhibit Number Name of Exhibit
31.1 Certification of Chief Executive Officer, pursuant to Rule 13a-14(a)
of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of
2002.
31.2 Certification of Chief Financial Officer, pursuant to Rule 13a-14(a)
of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of
2002.
32.1 Certification of Chief Executive Officer and Chief Financial Officer,
pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the
Sarbanes-Oxley Act of 2002.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EMAZING INTERACTIVE, INC.
By /s/ G. Edward Hancock
----------------------
G. Edward Hancock, President, CFO
Date: August 14, 2007