SEC Filing Summary: Emazing Interactive, Inc. (10-K)
Business Context and Reporting Period
Company: Emazing Interactive, Inc. (Ticker: EMZG)
Reporting Period: Fiscal year ended December 31, 2007
Business Model: An online gaming facilitator providing server rentals for games like Counter-Strike and marketing services (sponsorships) to connect brands with the e-gaming community. The company operates via a subsidiary, Emazing Gaming, LLC.
Corporate Status: Incorporated in Texas (2006), redomiciled to Nevada. Classified as a "Smaller Reporting Company."
Key Financial Metrics (Year Ended Dec 31, 2007)
| Metric | 2007 Value | 2006 Value (Inception to Dec 31) |
|---|---|---|
| Revenues | $35,089 | $11,963 |
| Total Operating Expenses | $161,299 | $93,352 |
| Net Loss | $(125,156) | $(81,389) |
| Cash and Cash Equivalents | $17,513 | $71 |
| Total Assets | $59,450 | N/A |
| Total Liabilities | $69,395 | N/A |
| Working Capital | $(51,882) | N/A |
| Accumulated Deficit | $(206,545) | $(81,389) |
Capital Structure: 5,659,500 shares of common stock outstanding. The President, G. Edward Hancock, owns 88.35% of the voting stock.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 193% year-over-year, driven by revamped gaming platforms and new competition opportunities.
- Expense Surge: Operating expenses increased 73% to $161,299. Significant increases were seen in "Server Hosting" ($36,399 vs. $1,800 in 2006) and "Travel Expense" ($19,930 vs. $5,399 in 2006).
- Loss Expansion: Net loss widened by approximately 54% due to the disproportionate rise in operating costs relative to revenue.
- Liquidity: Cash position improved significantly from $71 to $17,513, primarily due to financing activities (sale of common stock for $151,750).
Outlook, Risks, and Management Commentary
- Going Concern Warning: The independent auditor has issued a "substantial doubt" opinion regarding the company's ability to continue as a going concern. The company has an accumulated deficit of $206,545 and negative working capital.
- Capital Needs: Management states the company requires additional working capital to develop operations. Plans include private placements, public offerings, or bank financing. There is no assurance such funding will be available.
- Internal Control Weakness: Management identified a material weakness in internal controls due to a lack of segregation of duties. Financial reporting is performed by external accountants, and the President lacks accounting expertise. No audit committee exists.
- Subsequent Event: In March 2008, the company secured an increase in its line of credit from $20,000 to $40,000, secured by the President's stock. The company borrowed $20,000 in Q1 2008.
- Strategy: The company plans to transition from leasing servers to purchasing its own hardware to reduce overhead and intends to develop proprietary game software.
Investor Verification Checklist
- Capital Sufficiency: Verify if the company has secured the additional financing required to cover the negative working capital of $51,882 and fund future operations.
- Revenue Sustainability: Assess the stability of the $35,089 revenue stream, which relies heavily on server rentals and sponsorships in a highly competitive market.
- Related Party Transactions: Review the $27,178 in liabilities owed to related parties (Accounts Payable and Due to Related Parties) and the terms of the line of credit secured by the President's stock.
- Internal Controls: Confirm if the company has remediated the material weakness in financial reporting identified in the 10-K.
- Stock Liquidity: Note that the stock trades on the OTC Bulletin Board with limited trading history (High/Low data unavailable for most of 2006-2007).