##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  þ
    
    Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
 for
the Quarter ended September 30, 2007
 OR
 o
    
    Transition report pursuant to section 13 or 15 (d) of the Securities Exchange Act of 1934
 Commission file number 000-52696
 EMPIRE MINERALS CORP.
 
 Delaware
(State or other jurisdiction 
of incorporation or organization)
    
    22-3091075
(I.R.S. Employer Identification No.)
 th
 
 
 þ o
 o þ
  þ o




---



##### 



PART I  FINANCIAL INFORMATION
    
    
    2ITEM 1. FINANCIAL STATEMENTS
    
    
    2ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    22ITEM 3A(T). CONTROLS AND PROCEDURES
    
    
    52PART II. OTHER INFORMATION
    
    
    53Item 1. Legal Proceedings
    
    
    53Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 
    
    
    53Item 3. Defaults upon Senior Securities
    
    
    55Item 4. Submission of Matters to a Vote of Security Holders
    
    
    55Item 5. Other Information
    
    
    55Item 6. Exhibits
    
    
    55SIGNATURES
    
    
    56EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 SEPTEMBER 302007UNAUDITEDASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    2,091,228Notes receivable
    
    
    80,000Prepaid expense
    
    
    94,521Total current assets
    
    
    2,265,749EQUIPMENT, net
    
    
    41,467OTHER ASSETS:Notes issuance cost
    
    
    29,916Long term investment
    
    
    2,210,855Total other assets
    
    
    2,240,771Total assets
    
    $
    4,547,987LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accrued liabilities
    
    $
    153,840Convertible note payable, net of discount $14,970
    
    
    585,110Total current liabilities
    
    
    738,950COMMITMENTS AND CONTINGENCIES
    
    
    SHAREHOLDERS EQUITY:Preferred stock, Voting Series I, $0.0001 par value; 5,000,000 shares authorized; 0
shares issued and outstanding
    
    
    Common stock, $0.0001 par value; 700,000,000 shares authorized
41,556,696 issued and outstanding as of September 30, 2007
    
    
    4,156Escrowed common stock
    
    
    (267
    )Additional paid-in capital
    
    
    9,755,829Stock subscription receivable
    
    
    (1,560
    )Deficit accumulated during the development stage
    
    
    5,954,570Accumulated other comprehensive income
    
    
    5,449Total shareholders equity
    
    
    3,809,037Total liabilities and shareholders equity
    
    $
    4,547,987
  2




---



##### Table of Contents



Nine months
    
    
    From inception
    
    
    From inceptionThree months ended
    
    
    ended
    
    
    (March 1, 2006)
    
    
    (March 1, 2006)September 30,
    
    
    September 30,
    
    
    to September 30,
    
    
    to September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007REVENUE
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    COST OF SALES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GROSS PROFIT
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    RESEARCH AND DEVELOPMENT COSTS
    
    
    48,140
    
    
    
    155,163
    
    
    
    323,875
    
    
    
    200,000
    
    
    
    722,565GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    903,525
    
    
    
    386,599
    
    
    
    3,448,936
    
    
    
    864,312
    
    
    
    5,180,502LOSS FROM OPERATIONS
    
    
    (951,665
    )
    
    
    (541,762
    )
    
    
    (3,772,811
    )
    
    
    (1,064,312
    )
    
    
    (5,903,067
    )OTHER EXPENSE
    
    
    (72,558
    )
    
    
    
    
    
    
    (58,087
    )
    
    
    
    
    
    
    (51,503
    )LOSS BEFORE PROVISION FOR INCOME TAXES
    
    
    (1,024,223
    )
    
    
    (541,762
    )
    
    
    (3,830,898
    )
    
    
    (1,064,312
    )
    
    
    (5,954,570
    )PROVISION FOR INCOME TAXES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    
    (1,024,223
    )
    
    
    (541,762
    )
    
    
    (3,830,898
    )
    
    
    (1,064,312
    )
    
    
    (5,954,570
    )OTHER COMPREHENSIVE INCOMEForeign currency translation adjustment
    
    
    2,687
    
    
    
    
    
    
    
    8,100
    
    
    
    
    
    
    
    5,449COMPREHENSIVE LOSS
    
    $
    (1,021,536
    )
    
    $
    (541,762
    )
    
    $
    (3,822,798
    )
    
    $
    (1,064,312
    )
    
    $
    (5,949,121
    )LOSS PER SHAREBasic and diluted loss per share
    
    $
    (0.03
    )
    
    $
    (0.03
    )
    
    $
    (0.11
    )
    
    $
    (0.07
    )Basic and diluted weighted average number
of common shares
    
    
    40,029,773
    
    
    
    18,168,352
    
    
    
    33,478,825
    
    
    
    15,979,566
  3




---



##### Table of Contents



ACCUMULATEDADDITIONAL
    
    
    STOCK
    
    
    
    
    
    
    OTHER
    
    
    TOTALPREFERRED STOCK
    
    
    COMMON STOCK
    
    
    SHARES IN ESCROW
    
    
    PAID-IN
    
    
    SUBSCRIPTION
    
    
    ACCUMULATED
    
    
    COMPREHENSIVE
    
    
    SHAREHOLDERS'SHARES
    
    
    PAR
    
    
    SHARES
    
    
    PAR
    
    
    SHARES
    
    
    PAR
    
    
    CAPITAL
    
    
    RECEIVABLE
    
    
    DEFICIT
    
    
    GAIN (LOSS)
    
    
    EQUITYBalance at inception, March 1, 2006
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Founders stock issued for cash, $0.001 per share
    
    
    
    
    
    
    
    
    
    
    6,460,000
    
    
    
    646
    
    
    
    
    
    
    
    
    
    
    
    5,814
    
    
    
    (6,460
    )
    
    
    
    
    
    
    
    
    
    
    Shares issued March 29, 2006 for $80,500 in services
and $4,500 cash, at $0.01 per share
    
    
    
    
    
    
    
    
    
    
    8,500,000
    
    
    
    850
    
    
    
    
    
    
    
    
    
    
    
    84,150
    
    
    
    (8,500
    )
    
    
    
    
    
    
    
    
    
    
    76,500Stock sold through subscription agreements
through September 30, 2006 at $0.50 per share
    
    
    
    
    
    
    
    
    
    
    3,695,000
    
    
    
    369
    
    
    
    
    
    
    
    
    
    
    
    1,847,131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,847,500Stock warrants issued to employees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    474
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    474Stock warrants issued to consultants for advisory services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    829
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    829Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,064,312
    )
    
    
    
    
    
    
    (1,064,312
    )Balance as of September 30, 2006 (Unaudited)
    
    
    
    
    
    $
    
    
    
    
    18,655,000
    
    
    $
    1,865
    
    
    
    
    
    
    $
    
    
    
    $
    1,938,398
    
    
    $
    (14,960
    )
    
    $
    (1,064,312
    )
    
    $
    
    
    
    $
    860,991Proceeds on subscription receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,900
    
    
    
    
    
    
    
    
    
    
    
    11,900Shares issued$0.50 per share, for cash
    
    
    
    
    
    
    
    
    
    
    1,810,000
    
    
    
    182
    
    
    
    
    
    
    
    
    
    
    
    904,818
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    905,000$0.10 per share, conversion of warrants, for cash
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    1,998
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000Warrants issued for consulting services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196,284
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196,284Foreign currency translation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,651
    )
    
    
    (2,651
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,059,360
    )
    
    
    
    
    
    
    (1,059,360
    )Balance, December 31, 2006
    
    
    
    
    
    $
    
    
    
    
    20,485,000
    
    
    $
    2,049
    
    
    
    
    
    
    $
    
    
    
    $
    3,041,498
    
    
    $
    (3,060
    )
    
    $
    (2,123,672
    )
    
    $
    (2,651
    )
    
    $
    914,164Proceeds on subscription receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,500
    
    
    
    
    
    
    
    
    
    
    
    1,500Shares assumed pursuant to reverse merger
    
    
    100
    
    
    
    10,000
    
    
    
    232,696
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    (145,230
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (135,207
    )Repurchase preferred stock
    
    
    (100
    )
    
    
    (10,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,000
    )Stock issued$0.10 per share, conversion of warrants for cash
    
    
    
    
    
    
    
    
    
    
    450,000
    
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    44,955
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,000$0.10 per share, cashless conversion of warrants
    
    
    
    
    
    
    
    
    
    
    1,600,000
    
    
    
    160
    
    
    
    
    
    
    
    
    
    
    
    (160
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $0.013 per share, for conversion of Xacord note
    
    
    
    
    
    
    
    
    
    
    7,925,000
    
    
    
    793
    
    
    
    
    
    
    
    
    
    
    
    105,278
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106,071$0.50 per share, CEO for compensation
    
    
    
    
    
    
    
    
    
    
    1,500,000
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    749,850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    750,000$0.50 per share, for cash
    
    
    
    
    
    
    
    
    
    
    3,264,000
    
    
    
    326
    
    
    
    
    
    
    
    
    
    
    
    1,631,674
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,632,000$0.50 per share, for consulting services
    
    
    
    
    
    
    
    
    
    
    1,900,000
    
    
    
    190
    
    
    
    
    
    
    
    
    
    
    
    949,810
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    950,000$0.50 per share, for investment in Cuprum
    
    
    
    
    
    
    
    
    
    
    4,000,000
    
    
    
    400
    
    
    
    (2,666,667
    )
    
    
    (267
    )
    
    
    666,533
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    666,666$0.50 per share, for loan issuance cost
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    99,980
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000Warrants issued with convertible note
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,641
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,641Special warrants issuedIssued for cah
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,080,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,080,000Issued with convertible promissory note
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500,000Foreign currency translation gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,100
    
    
    
    8,100Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,830,898
    )
    
    
    
    
    
    
    (3,830,898
    )Balance, September 30, 2007 (Unaudited)
    
    
    
    
    
    $
    
    
    
    
    41,556,696
    
    
    $
    4,156
    
    
    
    (2,666,667
    )
    
    $
    (267
    )
    
    $
    9,755,829
    
    
    $
    (1,560
    )
    
    $
    (5,954,570
    )
    
    $
    5,449
    
    
    $
    3,809,037
  4




---



##### Table of Contents



Nine months
    
    
    From inception
    
    
    From inceptionended
    
    
    (March 1, 2006)
    
    
    (March 1, 2006)Septermber 30,
    
    
    to September 30,
    
    
    to September 30,2007
    
    
    2006
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (3,830,898
    )
    
    $
    (1,064,312
    )
    
    $
    (5,951,750
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation
    
    
    7,488
    
    
    
    
    
    
    
    7,488Warrants issued for services
    
    
    
    
    
    
    1,303
    
    
    
    197,587Amortization of debt discount
    
    
    16,671
    
    
    
    
    
    
    
    93,171Amortization of loan issuance cost
    
    
    144,083
    
    
    
    
    
    
    
    144,083Common stock issued for advisory services
    
    
    1,605,479
    
    
    
    76,500
    
    
    
    1,605,479Loss on currency exchange
    
    
    11,080
    
    
    
    
    
    
    
    11,080Change in operating liabilities:Accrued liabilities
    
    
    (35,550
    )
    
    
    75,632
    
    
    
    153,840Net cash used in operating activities
    
    
    (2,081,647
    )
    
    
    (910,877
    )
    
    
    (3,741,842
    )CASH FLOWS FROM INVESTING ACTIVITIES:Capital contribution
    
    
    
    
    
    
    (138,000
    )
    
    
    Equipment Purchases
    
    
    (4,166
    )
    
    
    
    
    
    
    (46,471
    )Long term investment
    
    
    (1,544,189
    )
    
    
    
    
    
    
    (1,544,189
    )Notes receivable
    
    
    (80,000
    )
    
    
    
    
    
    
    (80,000
    )Net cash used in investing activites
    
    
    (1,628,355
    )
    
    
    (138,000
    )
    
    
    (1,670,660
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from sale of common stock
    
    
    1,632,000
    
    
    
    1,847,500
    
    
    
    4,396,400Proceeds from special warrants
    
    
    2,068,920
    
    
    
    
    
    
    
    2,068,920Proceeds from exercise of warrants
    
    
    45,000
    
    
    
    
    
    
    
    47,000Payment on note issuance cost
    
    
    (74,000
    )
    
    
    
    
    
    
    (74,000
    )Payment on notes payables
    
    
    (25,000
    )
    
    
    
    
    
    
    (25,000
    )Proceeds from notes payable
    
    
    1,105,000
    
    
    
    
    
    
    
    1,105,000Proceeds from subscription receivable
    
    
    1,500
    
    
    
    
    
    
    
    1,500Payment repurchase preferred stock
    
    
    (10,000
    )
    
    
    
    
    
    
    (10,000
    )Net cash provided by financing activities:
    
    
    4,743,420
    
    
    
    1,847,500
    
    
    
    7,509,820EFFECT OF EXCHANGE RATE CHANGES ON CASH
    
    
    9,933
    
    
    
    
    
    
    
    (6,090
    )NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    1,043,351
    
    
    
    798,623
    
    
    
    2,091,228CASH AND CASH EQUIVALENTS, beginning of the period
    
    
    1,047,877
    
    
    
    
    
    
    
    CASH AND CASH EQUIVALENTS, end of period
    
    $
    2,091,228
    
    
    $
    798,623
    
    
    $
    2,091,228SUPPLEMENTAL DISCLOSURES:Interest paid
    
    $
    66,024
    
    
    $
    
    
    
    $
    66,024Income taxes paid
    
    $
    
    
    
    $
    
    
    
    $
    Conversion of notes and interest for common stock
    
    $
    106,071
    
    
    $
    
    
    
    $
    106,071Issuance of founders stock for subscription receivable
    
    $
    
    
    
    $
    14,960
    
    
    $
    14,960Shares issued for exploration and development of investment
    
    $
    666,666
    
    
    $
    
    
    
    $
    666,666Warrants issued for debt issuance costs
    
    $
    31,641
    
    
    $
    
    
    
    $
    31,641Net liabitlities assumed in reverse acquisition
    
    $
    135,207
    
    
    $
    
    
    
    $
    135,207Warrants issued for repayment of notes
    
    $
    500,000
    
    
    $
    
    
    
    $
    500,000Common stock issued for loan issuance cost
    
    $
    100,000
    
    
    $
    
    
    
    $
    100,000
  5




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 1.
    
    Nature of Business and Significant Accounting Policies
 a.
    
    Nature of Business  Empire Minerals Corp. (Company) (formerly known as
Xacord Corp.) was incorporated January 4, 1996 under the laws of Delaware. The Company is
engaged in the exploration of precious and base metals including gold and copper. All
potential properties currently under exploration are located in the Peoples Republic of
China and Panama.From September 2005 to January 2007, the Company changed its name 3 times to reflect the
changing business plans. The original name of the Company was Objectsoft Corporation. In
June 2005, the name was changed to Nanergy, Inc. In, June 2006, the name was changed to
Xacord Corp and in January 2007, the name was changed to its current name, Empire Minerals
Corp.On February 20, 2007, the Company completed a triangular reverse merger with Empire
Minerals Corp., a Nevada Corporation (formerly known as Empire Gold Corp.) (Subsidiary)
and Xacord Acquisition Sub Corp, then the Companys subsidiary (Xacord). All 26,504,000
shares in the Subsidiary were exchanged one for one for 26,504,000 shares in the Company.
Additionally, 5,950,000 warrants in the Subsidiary were exchanged one for one for 5,950,000
warrants in the Company. The Subsidiary was the accounting acquirer and the Company was the
legal acquirer. The transaction was accounted for as a reverse merger and recapitalization.
As such, the accompanying financial statements reflect the historical operations of the
Subsidiary in the capital structure of the Company at the beginning of the first period
presented herein.b.
    
    Basis of Presentation  The accompanying consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the
United States of America. The consolidated financial statements include the financial
statements of the Company, its wholly owned subsidiaries Empire Minerals Corp., a Nevada
corporation (formerly known as Empire Gold Corp.), 50% owned Zhaoyuan Dongxing Gold Mining
Co., Ltd. (Dongxing), and 70% owned Empire (Tianjin) Resources Co., Ltd. (Tianjin)
(Subsidiaries). All significant inter-company transactions and balances between the
Company and its subsidiaries are eliminated upon consolidation. Minority interest has not
been presented on the consolidated balance sheet because accumulated losses have exceeded
the minority shareholders equity. In accordance with APB No. 18, the minority interest
has been written down to zero on the accompanying balance sheet.The Company is currently in an exploration stage, which is characterized by significant
expenditures for the examination and development of exploration opportunities by its
Subsidiaries. The Subsidiaries focus for the foreseeable future will continue to be on
securing joint venture agreements within the Peoples Republic of China and Panama to begin
conducting mining operations.c.
    
    Use of Estimates  The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect certain reported amounts and
disclosures, such as the fair value of warrants and stock issued for services as well as
various
 6




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 accruals, for example, we must calculate the fair value of options granted based
on various assumptions. Accordingly, the actual results could differ from those
estimates.d.
    
    Fair value of financial instruments- The Company believes the carrying value
of its financial instruments, including convertible notes, approximate fair value due to
their short maturities.e.
    
    Cash and Cash Equivalents  For purposes of the statements of cash flows, the
Company defines cash equivalents as all highly liquid debt instruments purchased with an
original maturity of three months or less.f.
    
    Concentration of riskFinancial instruments, which potentially subject the Company to concentrations of credit
risk, consist of cash and cash equivalents. The Company places its cash with high quality
financial institutions and at times may exceed the FDIC $100,000 insurance limit. The
Company has limited experience as it is an exploration stage company but does not
anticipate incurring any losses related to this credit risk. As of September 30, 2007, the
Company had amounts in bank accounts in excess of FDIC insurance of $1,877,963.The Company has gold mining activities in Peoples Repbulic of China (PRC). Accordingly,
the Companys mining business, financial condition and results of operations may be
influenced by the political, economic and legal environments in the PRC, and by the general
state of the PRCs economy. The Companys operations in the PRC are subject to specific
considerations and significant risks not typically associated with companies in the North
America and Western Europe. These include risks associated with, among others, the
political, economic and legal environments and foreign currency exchange. The Companys
results may be adversely affected by changes in governmental policies with respect to laws
and regulations, anti-inflationary measures, currency conversion and remittance abroad, and
rates and methods of taxation, among other things.g.
    
    Net Loss Per Share  In accordance with Statement of Financial Accounting
Standard (SFAS) No. 128, Earnings Per Share,an basic earnings/loss per common share (EPS)
is computed by dividing net loss for the period by the weighted
average number of common shares outstanding during the period. Under SFAS 128, diluted earnings/loss per share is
computed similar to basic loss per share except that the denominator is increased to
include the number of additional common shares that would have been outstanding if the
potential common shares had been issued and dilutive. Net loss used in determining basic
EPS was $3,830,898, $1,064,312 and $5,954,570 for the nine months ended September 30,
2007, the period from inception (March 1, 2006) through September 30, 2006, and the period
from inception (March 1, 2006) through September 30, 2007, respectively. The weighted
average number of shares of common stock used in determining basic EPS was 33,478,825 and
15,979,566 for the nine months ended September 30, 2007 and the period from inception
(March 1, 2006) through September 30, 2006, respectively.
 7




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 h.
    
    Income Taxes  The Company provides for income taxes under SFAS 109,
Accounting for Income Taxes,which requires the recognition of deferred tax liabilities
and assets for the expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities using the enacted income tax
rate expected to apply to taxable income in the period in which the deferred tax liability
or assets is expected to be settled or realized. SFAS 109 requires that a valuation
allowance be established if necessary, to reduce the deferred tax assets to the amount
that management believes is more likely than not to be realized. The provision for
federal income tax differs from that computed amount by applying federal statutory rates
to income before federal income tax expense mainly due to expenses that are not deductible
and income that is not taxable for federal income taxes, including permanent differences
such as non-deductible meals and entertainment.i.
    
    Stock based compensation For stock, options and warrants issued to service
providers, employees and founders, the Company follows SFAS No. 123(R), Share-Based
Payment,and EITF 96-18, Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services,which requires
recording the options and warrants at the fair value of the service provided and expensing
over the related service period.j.
    
    Recently issued accounting pronouncementsIn September 2006, the FASB issued SFAS No. 157, Fair Value Measurements.This statement
clarifies the definition of fair value, establishes a framework for measuring fair value
and expands the disclosures on fair value measurements. SFAS No. 157 is effective for
fiscal years beginning after November 15, 2006. Management has not determined the effect,
if any; the adoption of this statement will have on the financial statements.In November 2006, Emerging Issues Task Force (EITF) issued 96-19 Debtors Accounting for
a Modification or Exchange of Debt Instruments. EITF 96-19 provides a test to determine
whether a transaction should be accounted for as an extinguishment (with gain or loss
recognition) or as a modification (with no gain or loss recognition). If the change in
the fair value of the embedded conversion option is at least 10 percent of the carrying
amount of the original debt instrument immediately prior to the modification or exchange,
the transaction should be accounted for as an extinguishment. EITF 96-19 also provides
that when a convertible debt instrument is modified or exchanged in a transaction that is
not accounted for as an extinguishment, an increase in the fair value of the embedded
conversion option should be reduce the carrying amount of the debt instrument with a
corresponding increase in additional paid-in capital. However, a decrease in the fair value
of an embedded conversion option resulting from a modification or an exchange should not be
recognized. The Company adopted EITF 96-19.k.
    
    Equipment  Equipment is stated at cost and is depreciated using the
straight-line method over their estimated useful lives of five years. Expenditures for
maintenance and repairs are charged to operations as incurred. The estimated service
lives of equipment and vehicles are as follows:
 8




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 
 Depreciable lifeExploration equipment
    
    5 yearsOffice equipment
    
    5 yearsVehicles
    
    5 years
 l.
    
    Political and economic risks The Company entered into joint venture
contracts to establish businesses in China and Panama. Accordingly, the Companys
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in these countries.The Companys operations in these countries are subject to specific considerations and
significant risks not typically associated with companies in the North America and Western
Europe. These include risks associated with, among others, the political, economic and
legal environments and foreign currency exchange. The Companys results may be adversely
affected by changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion and remittance abroad, and rates and
methods of taxation, among other things.m.
    
    Impairment for long live assets  SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets requires that long-lived assets to be
disposed of by sale, including those of discontinued operations, be measured at the lower
of carrying amount or fair value less cost to sell, whether reported in continuing
operations or in discontinued operations. SFAS No. 144 broadens the reporting of
discontinued operations to include all components of an entity with operations that can be
distinguished from the rest of the entity and that will be eliminated from the ongoing
operations of the entity in a disposal transaction. SFAS No. 144 also establishes a
primary-asset approach to determine the cash flow estimation period for a group of
assets and liabilities that represents the unit of accounting for a long-lived asset to be
held and used. The Company has no impairment issues to disclose.n.
    
    Foreign currency translation  The reporting currency of the Company is US
dollar. Dongxing and Tianjin use their local currency RMB, as their functional currency.
Results of operations and cash flows are translated at average exchange rates during the
period, assets and liabilities are translated at the unified exchange rate as quoted by
the Peoples Bank of China at the end of the period, and equity is translated at
historical exchange rates.Translation adjustments amounted to $5,449 gain as of September 30, 2007. Asset and
liability accounts at September 30, 2007 were translated at 7.50 RMB to $1.00. Equity
accounts were stated at their historical rate. The average translation rates applied to
income statement accounts and cash flows for the period ended September 30, 2007, from
inception (March 1, 2006) to September 30, 2006, and from inception (March 1, 2006) to
September 30, 2007 were 7.65 RMB, 7.99 RMB and 7.81 RMB, respectively. In accordance with
Statement of Financial Accounting Standards No. 95, Statement of Cash Flows, cash flows
from the Companys operations is calculated based upon the
 9




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 local currencies using the
average translation rate. Because cash flows are also translated at average translation
rates for the period, amounts reported on the statement of cash flows will not necessarily
agree with changes in the corresponding balances on the balance sheet.Transaction gains and losses that arise from exchange rate fluctuations on transactions
denominated in a currency other than the functional currency are included in the results of
operations as incurred. For the nine months ended September 30, 2007, from inception (March
1, 2006) to September 30, 2006, and from inception (March 1, 2006) to September 30, 2007,
total transaction gain (loss) amounted to $11,080, $0, and $11,080 respectively.
 2.
    
    Going ConcernThe Company is an exploration stage company and therefore has had no revenues or cash flows
from operations. The Company has insufficient sources of cash flows raising substantial doubt
about its ability to continue as a going concern. In response to these conditions, management
is continuing to look for financing from various sources, although there are no guarantees that
they will be successful in their endeavors. In addition, the Company is in the process of
finding more companies in China and Panama to form joint ventures agreements with in order to
begin mining operations. No adjustment has been made to the accompanying financial statements
as a result of this uncertainty.3.
    
    Note receivableOn August 9, 2007, the Company entered into a loan agreement with Silver Global S.A., a
corporation organized and operating under the laws of the Republic of Panama (the debtor) for
the amount of $80,000, payable on demand. The debtor pays the Company interest on the
principal at 5% per annum.4.
    
    EquipmentEquipment consists of the following:
 September 30, 2007(Unaudited)Exploration equipment
    
    $
    16,411Office equipment
    
    
    5,445Vehicles
    
    
    27,194Total
    
    
    49,050Less: accumulated depreciation
    
    
    7,583Equipment, net
    
    $
    41,467
 10




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 Equipment is stated at cost less accumulated depreciation. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets. Depreciation expense
amounted to $7,488, $0 and $7,488 for the nine months ended September 30, 2007, the period from
inception (March 1, 2006) through September 30, 2006 and the period from inception (March 1,
2006) through September 30, 2007, respectively. Accumulated depreciation for the equipment
amounted to $7,583 as of September 30, 2007.5.
    
    Long term investmentCuprum Resources Corp. (Cuprum)  In March 2007, the Company, Bellhaven Copper & Gold, Inc.
(Bellhaven) and Cuprum entered into an Exploration Development Agreement (Agreement). The
Agreement grants the Company an option to acquire up to 75% of the authorized and outstanding
stock of Cuprum, the holder of a Mineral Concession from the Republic of Panama on a copper
prospect located in the Republic of Panama. The Agreement calls for the Company to pay Cuprum
or Bellhaven $2,000,000 in annual installments of $500,000 each beginning in March 2007, issue
Bellhaven shares of the Companys common stock as valued under an escrow agreement with a total
value of $4,000,000 and further investments totaling $15,000,000 to be used in exploration and
development work on the copper prospect underlying Cuprums Mineral Concession. Currently, the
Company owns less than 20% of Cuprum and therefore, has recorded this investment under the cost
method of accounting for investments. At September 30, 2007, the Company made its first cash
installment payment of $500,000, invested another $1,044,189 which was used for exploration and
development work, issued 1,333,334 shares of common at $0.50 per share or $666,666.
Accordingly, the Company recorded $2,210,855 as investments in the accompanying balance sheet
which includes the $1,044,189 incurred in exploration and development work. The exploration and
development work is made up of the project costs for the period. The project costs include
drilling, general geology, camp, mobilization, geophysics, land administration, assays and
shipping, helicopter, office and management expenses. The costs have been capitalized by the
Company as part of the Companys acquisition of the 75% stake in Cuprum, as per the Exploration
and Development Agreement. Another 2,666,667 shares of common stock has been placed into escrow
and is recorded as an offset to equity until such time as the shares are released at which time
the Company will reflect an increase to both the investment and equity. Subsequent to September
30, 2007, the Company invested an additional $354,422 to be used in exploration and development
work.Zhaoyuan Dongxing Gold Mining Co., Ltd. (Zhaoyuan Dongxing)  The Company entered into a
joint venture agreement with Zhaoyuan Dongxing Gold Minerals Co., Ltd. (Dongxing) to conduct
gold mining activities in the PRC. The agreement calls for a total capital contribution of
$500,000 from the Company. Dongxing will contribute various mining licenses and other assets
such as instruments and equipment. The Company will receive a 50% equity stake in the joint
venture in exchange for its $500,000 contribution. Dongxing will receive the remaining 50%
stake in the joint venture in exchange for its contribution of mining licenses and other
assets. The amount was due and payable when Dongxing acquired the required business license
approvals in the Peoples Republic of China. On December 20, 2006, the joint venture company,
Zhaoyuan Dongxing was approved by the Chinese government and the business license was granted
on December 21, 2006. The Company has contributed the full $500,000 capital contribution as
per the joint venture agreement. The
 11




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 Company consolidates the financial statements of Zhaoyuan
Dongxing into its financial statements because the Company exercises control over the Zhaoyuan
Dongxing through its 50% ownership; additionally, the Company has the right to appoint three of
the five board of director members and has control over the selection of key management
personnel.Empire (Tianjin) Resources Co., Ltd. (Tianjin)  In November 2006, the Company and Tianjin
Institute of Geology and Mineral Resources (TIGMR) signed a cooperative joint venture
agreement to form Tianjin. The purpose of the joint venture is to engage in the exploration and
development of gold and other mineral products in the Peoples Republic of China. The agreement
calls for a $1,000,000 total capital contribution. The Company obtained a 70% equity stake in
the joint venture in exchange for $1,000,000. The $1,000,000 contribution is required to be
paid in installments after the approval by the Chinese government. The approval and the
business license were received on April 12, 2007. The
Companys made the first two installment payments of $200,000 on July 5, 2007 and $300,000 on
September 5, 2007, and will make a third installment payment of $500,000 on or before February
28, 2008. TIGMR will contribute mining licenses and mineral data to the joint venture for the
remaining 30% interest. As of September 30, 2007, TIGMR has not contributed mining licenses and
mineral data to the joint venture. As per Amendment Number 2 entered into by the Company and
TIGMR, the transfer of the licenses is required to be made on or before February 28, 2008. The
term of the joint venture is 30 years beginning on April 12, 2007, the date the business
license was issued. The Company has consolidated the financial statements of the joint venture
into the its financial statements as the Company exercise control over the joint venture by its
70% of ownership.6.
    
    Convertible Note Payable
 a.
    
    In February 2001, the Company executed a Promissory Note (Note) in the amount of
$100,000 to Jay N. Goldberg (Holder). The Note accrues 12% interest per annum and in the
event of a default begins to accrue interest at 20% annum. The principal plus all accrued
and unpaid interest is payable in cash or at the option of the
Holder, is convertible into shares of common stock of the Company (conversion) on the Maturity Date. The original
Maturity Date of the Note was March 16, 2001. The Note also called for the issuance of a
warrant to purchase 50,000 shares of the Companys common stock at $0.25 for a term of 5
years. In May 2001, the Company and the Holder executed an Allonge and Amendment to
Promissory Note, amending the Maturity Date to December 31, 2001. In November 2004, the
Holder executed an Assignment and Endorsement of Note and assigned all of the Holders
right, title and interest in and to the Note, to Securities Acquisition New York, LLC
(SANY). From October 2004 to June 2006, SANY converted $32,300 of principal to 323,000,000
pre-split shares of common stock. On October 26, 2006, SANY executed an Agreement of
Assignment of Note and assigned all of the Holders right, title and interest in and to the
Note to West Greenwood Foundation (WGF). On the date of assignment, the principal balance
was $67,700 and the amount of accrued interest was $28,170. For the nine months ended
September 30, 2007, the Company recorded interest expense in the amount of $3,385 in the
accompanying statement of operations. On April 1, 2007, WGF and various entities and
individuals, which simultaneously purchased an interest in the total note from WGF,
converted the total balance of $106,071 ($67,700 principle and $38,371 interest) to
 12




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 7,925,000 shares, representing a conversion rate of approximately $0.013 per share, and the
Note was canceled. There was no relationship between SANY, WGF and the Company prior to the
note assignments.b.
    
    On June 25, 2007, the Company executed a Convertible Promissory Note (Note) in the
amount of $300,000. The Note was payable in 90 days, bearing a total of $26,000 interest
during the term of the Note. The Company also incurred additional fees associated with the
Note in the amount of $34,000 and warrants to purchase 300,000 shares of the Companys
common stock at an exercise price of $1.00 for a two-year term. The Note is secured by
600,000 shares of the Companys common stock, and the Companys interest in income generated
from the operations and sales of certain identified exploration / mining leases in Panama
and China. The Holder of the Note may at any time convert the principal amount for shares of
the Companys common stock at a rate of $1.00 per share. On September 19, 2007, the Company
and the Holder executed an Amendment to the Note. Pursuant to the amended agreement, the
maturity date was extended to December 15, 2007. In addition, the warrant granted to the
holder to purchase 300,000 shares of
common stock at $1.00 for a two-year term was canceled and new warrant was granted to the
holder to purchase 300,000 shares of common stock at $0.65 for a two-year term.c.
    
    On June 26, 2007, the Company executed a Convertible Promissory Note (Note) in the
amount of $300,000. The Company received $150,000 which represents the first half of the
proceeds on the same date, and the remaining $150,000 in July, 2007. The Note is payable in
120 days and bears a total of $15,000 interest during the term of the Note. The Company
also incurred additional fees associated with the Note in the amount of $15,000 and 100,000
shares of the Companys common stock. The Note is secured by 600,000 shares of the Companys
common stock, and the Companys interest in income generated from the operations and sales
of certain identified exploration / mining leases in Panama and China. The Holder of the
Note may at any time convert the principal amount for shares of the Companys Common Stock
at a rate of $1.00 per share. On October 29, 2007, the Company repaid the entire principal
in cash to the Note Holder. On October 30, 2007, the Company paid the Note Holder $15,000,
which represented the additional fees incurred in connection with the Note.d.
    
    On July 2, 2007, the Company executed a Convertible Promissory Note (Note) in the
amount of $500,000. The Note is payable in 90 days and bears a total of $25,000 interest
during the term of the Note. The Company also incurred additional fees associated with the
Note in the amount of $25,000 and 100,000 shares of the Companys common stock. The holder
of the Note may at any time convert the principal amount for shares of the Companys common
stock at a rate of $1.00 per share. On July 5, 2007, the Company paid the interest and
additional fees and issued 100,000 shares of common stock to the holder pursuant to the
Note. On September 19, 2007, the Company repaid the entire principal by issuing 1,000,000
Special Warrants to the Note Holder.
 7.
    
    Related Party Transactions
 a.
    
    Saddle River Associates  The Company entered into three agreements with Saddle River
Associates (SRA), a shareholder in the Company. The first transaction dated March 26,
 13




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 2006
relates to a one year Advisory Agreement in which SRA will provide consulting services
related to locating and evaluating financing alternatives, corporate structuring and other
business issues for $15,000 per month. The agreement automatically renews annually, unless
either party gives 90 days notice to terminate. The Company paid SRA $135,000 for the
period from inception (March 1, 2006) through December 31, 2006 and $135,000 for the nine
months ended September 30, 2007, under the terms of this agreement.The second agreement, an Acquisition Services Agreement, dated April 9, 2006
amended December 15, 2006 and June 1, 2007 relates to additional consulting services
whereby SRA will identify and introduce prospective merger entities and will assist
the Company with the business aspects of the transaction. Pursuant to this agreement,
SRA introduced the Company to Xacord; SRA had no relationship to Xacord prior to
identifying and introducing them to the Company as a potential merger partner. The
Company paid SRA $250,000 upon signing the agreement and a total of $550,000 which
represents payment in full for the services as per the agreement. The related expense
is included in the accompanying statement of operations. The Company was also required
to issue 500,000 warrants when and if the Company obtained at least $3,000,000 in
financing and for each $1,000,000 in financing received over $3 million, the Company
was to issue an additional 100,000 warrants up to a total of 1,000,000 warrants. The
warrants were to have a 5 year
life, would vest upon grant and would be exercisable at $0.50 per share. The warrants were
canceled pursuant to Amendment Number 2, executed on June 1, 2007.Additionally, the Company entered into a third agreement with SRA in October 2006. The
agreement called for consulting services to the Company on a month to month basis, for
$5,000 per month, prior to the merger between the Company and its subsidiary. This
agreement was terminated on the date of the merger, February 21, 2007. The accompanying
consolidated balance sheet includes the accrued consulting fees to SRA for the period,
October 1, 2006 to February 21, 2007 totaling $23,750.b.
    
    Chief Financial Officer  The Companys Chief Financial Officer (CFO) provided
consulting services to the Company prior to the merger to assist in merger preparations at
$5,000 per month on a month to month basis beginning in November 2006 through February 21,
2007. As of April 1, 2007, the CFO has resumed providing consulting services to the
Company at $6,000 per month on a month to month basis. The services provided include the
day to day financial management of the company and any related functions related to the
financial operations of the Company.On June 18, 2007, the Company and the CFO entered into a Stock Repurchase Agreement in
which the company repurchased from the CFO, 100 shares of the Companys outstanding Series
I Preferred Stock (Preferred Shares) held by the CFO for $10,000.c.
    
    On July 15, 2007, the Company and Euro Centro Consulting Corp (Euro), a shareholder
of the Company entered into a consulting agreement. Pursuant to the agreement, the Company
received a one-time referral services from Euro in exchange for a cash fee of $50,000 and
100,000 shares of common stock. The shares were valued at
 14




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 $0.50 per share, for a total
amount of $50,000, which was expensed as of September 30, 2007.
 8.
    
    Shareholders equityThe Company is authorized to issue 705,000,000 shares: 700,000,000 shares of $0.0001 par value
common stock and 5,000,000 shares of $0.0001 par value preferred stock. As of September 30,
2007, the Company has 41,556,696 of Common Stock outstanding, including 2,666,667 shares held
in escrow.
 a.
    
    Effective August 11, 2006, the Company amended the Articles of Incorporation as
follows: Each twenty (20) shares of Common Stock then issued was automatically combined
into one share of Common Stock of the Company (20-1 reverse split). No fractional shares
or scrip representing fractions of a share were issued, but in lieu thereof, each fraction
of a share that any stockholder would otherwise be entitled to receive was rounded up to
the nearest whole share. As a result of the 20 to 1 reverse split,
the issued number of shares of Common Stock was reduced by 88,377,055, from 93,028,479 shares of Common Stock
issued prior to the 20-1 reverse split to 4,651,424 shares of Common Stock issued
subsequent to the 20-1 reverse split. The rounding of fractional shares to the nearest
whole share resulted in an additional 661 shares being issued to stockholders who would
have been entitled to receive a fraction of a share. The total number of shares of Common
Stock issued after the issuance of the rounding of fractional shares was 4,652,085.b.
    
    Effective January 22, 2007, the Company amended the Articles of Incorporation as
follows: Each twenty (20) shares of Common Stock then issued was automatically combined
into one share of Common Stock of the Company (20-1 reverse split). No fractional shares
or scrip representing fractions of a share were issued, but in lieu thereof, each fraction
of a share that any stockholder would otherwise be entitled to receive was rounded up to
the nearest whole share. As a result of the 20 to 1 reverse split,
the issued number of shares of Common Stock was reduced by 4,419,481, from 4,652,085 to 232,604 shares of Common
Stock. The rounding of fractional shares to the nearest whole share resulted in an
additional 248 shares being issued to stockholders who would have been entitled to receive
a fraction of a share. The total number of shares of Common Stock issued after the
issuance of the rounding of fractional shares was 232,852.c.
    
    On February 20, 2007, the Company issued 26,504,000 shares of its common stock for
26,504,000 shares of common stock, representing all of the outstanding stock of its
subsidiary pursuant to the triangular merger accounted for as a reverse merger and
recapitalization. Additionally, all warrants issued by the subsidiary and outstanding at
the date of the mere were exchanged for warrants in the Company. Prior to the merger, the
Subsidiary had entered into several agreements which accounted for the shares of common
stock outstanding:
 (1)
    
    Upon the formation of the Subsidiary, the founding shareholders received
6,460,000 shares of common stock for $6,460. As of September 30, 2007, the Company
received $4,900 as payment for the shares. Therefore, the Company recorded
 15




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 subscription receivable for the amount of $1,560 at September 30, 2007 for the
remaining balance.(2)
    
    On March 29, 2006, the Subsidiary issued managements and key consultants
8,500,000 shares for services valued at $76,500 and cash $8,500, totaling $0.01 per
share. As of March 31, 2007, the Subsidiary received $8,500 in cash for payment. The
Subsidiary recorded $76,500 of consulting expense during the year ended December 31,
2006. Additionally, the Subsidiary issued warrants to purchase up to a total of
5,970,000 to management and consultants. The warrants were vested upon grant, have a 3
year life, and are exercisable at $0.10 per share. Warrants to purchase up to
3,500,000 shares of common stock issued to management contained a cashless exercise
provision. The eight warrants were valued at $197,587 using the Black-Scholes Option
Pricing Model, using a volatility rate of 62% based on the volatility of a publicly
traded exploration stage company in a similar stage of development, and a risk free
rate of 4.79%. The Subsidiary recognized $197,587 of compensation expense during the
year ending December 31, 2006. At September 30, 2007, four warrants with options to
purchase a total of 470,000 were exercised for cash. The Subsidiary received $47,000
in cash for the exercise of the four warrants. Two warrants with options to purchase
a total of up to 2,000,000 were exercised utilizing the cashless exercise provision. A
total of 1,600,000 shares of common stock were issued to management in the
transaction. Two warrants to purchase a total of up to 3,500,000 shares of common
stock, were canceled pursuant to an Agreement for Cancellation of Warrants entered
into by and between the parties. As of September 30, 2007, 300,000 warrants to
purchase shares of common stock remained outstanding.(3)
    
    During the period from April 2006 through February 19, 2007, the Subsidiary
sold 7,499,000 shares of common stock at a price of $0.50 per share for cash totaling
$3,749,500.(4)
    
    During the period from January 2007 to February 2007, the Subsidiary issued
475,000 shares of its common stock to various individuals and entities in exchange for
consulting services to the Subsidiary. The Company recorded consulting expenses in the
amount of $237,500 in the accompanying statement of operations.(5)
    
    On February 19, 2007, the Subsidiary issued to its President and Chief
Executive Officer, 1,500,000 shares of common stock as a bonus for his services to the
Subsidiary and as incentive compensation for future services. The Company recorded
consulting expenses in the amount of $750,000 in the accompanying statement of
operations.
 d.
    
    On March 1, 2007, the Company issued 1,000,000 shares of its common stock to Silver
Global, SA, a Panamanian corporation (Silver) pursuant to an agreement between the
parties. The agreement provides that Silver will perform consulting services for the
Company related to the identification, location, definition of mineral business
opportunities in Panama and introductions to persons or entities holding potential
acquisition properties involving Panama Mineral Concessions and related services. The
 16




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 Company recorded $500,000 in consulting fees in the accompanying statement of operations.e.
    
    On March 9, 2007, the Company issued 4,000,000 shares of Common Stock to Bellhaven Gold
& Copper, Inc. (Bellhaven) as part of an Exploration Development Agreement entered into
by and between the Company, Bellhaven and its wholly owned subsidiary, Cuprum Resources
Corp (Cuprum) (agreement). The agreement grants the Company an option to acquire up to
75% of the authorized and outstanding stock of Cuprum, the holder of a Mineral Concession
from the Republic of Panama on a copper prospect located in the Republic of Panama. The
agreement calls for the Company to pay Cuprum or Bellhaven $2,000,000 in annual
installments of $500,000 each, issue Bellhaven shares of the Companys common stock as
valued under an escrow agreement with a total value of $4,000,000 and expend $15,000,000 in
exploration and development work on the copper prospect underlying Cuprums Mineral
Concession. As per the agreement, the Company has delivered a certificate in the amount of
1,333,334 shares of common stock to Bellhaven and deposited 2,666,667 shares of its common
stock into escrow. The Company has recorded $666,666 as investment on the accompanying
balance sheet.f.
    
    On April 1, 2007, the Company issued 7,925,000 shares of Common Stock to West Greenwood
Foundation (WGF) and various entities and individuals (designees), pursuant to the
conversion of the Convertible Promissory Note executed by the Company in February 2001
(Note). On the date of the conversion of the Note, the balance of the Note was $67,700
and $38,371 of principal and interest, respectively. In a simultaneous transaction, the
designees purchased an interest of the Note from WGF and converted
their interest in to shares of Common Stock of the Company based on the rate of conversion previously agreed to
between the Company and WGF. The conversion of the total balance of $106,071 to 7,925,000
shares of Common Stock, represented a conversion rate of approximately $0.013 per share.
See Note 6a.g.
    
    On May 4, 2007, the Company completed a Private Placement to sell 4,000,000 shares of
Common Stock at a price of $0.50 per share for cash totaling $2,000,000. The transaction
was completed in the form of a Restricted Equity Purchase Agreement and called for the
Company to deposit the Stock Certificate representing the sold shares with a Custodial Bank
selected by the purchaser. The closing date of the transaction was scheduled for 30 days
from the date of the deposit of the Stock Certificate with the Custodial Bank. The
agreement was initially amended to extend the closing date to August 31, 2007; the Company
is formalizing an extension to November 30, 2007. Proceeds from the sale of
the shares of Common Stock are due to the Company on the closing date.h.
    
    On June 18, 2007, the Company and the Chief Financial Officer (CFO) entered into a
Stock Repurchase Agreement in which the Company repurchased from the CFO, 100 shares of the
Companys outstanding Series I Preferred Stock (Preferred Shares) held by the CFO. The
Preferred Shares were repurchased by the Company from the CFO for $10,000. The Preferred
Shares repurchased represented the total amount of Preferred Stock issued and outstanding.
Subsequent to the repurchase of the Preferred Shares, the Company filed a Certificate of
Designation with the State of Delaware and canceled the Series I Preferred Stock.
 17




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 i.
    
    On June 26, 2007, the Company issued 100,000 shares of common stock as a form of
payment for additional fees directly related to a Convertible Promissory Note (see Note
6c).j.
    
    On July 2, 2007, the Company issued 100,000 shares of common stock as a form of payment
for additional fees directly related to a Convertible Promissory Note (see Note 6d).k.
    
    On July 15, 2007, the Company issued 100,000 shares of common stock to Euro Centro
Consulting Corp, a shareholder, as a form of payment for additional fees for consulting
service.l.
    
    On July 31, 2007, the Company completed a Private Placement to sell 1,000,000 shares of
Common Stock at a price of $0.50 per share for cash totaling $500,000. The transaction was
completed in the form of a Subscription Agreement and called for the Company to issue
warrants to purchase 1,000,000 shares of common stock at $1.00 per share for a 2 year term.m.
    
    On July 15, 2007, the Company and Netzach Group, LLC (Netzach) a shareholder of the
Company, entered into a consulting agreement. Pursuant to the agreement the Company
received referral services from Netzach in exchange for 125,000
shares of common stock. The shares were valued at $0.50 per share, for a total amount of $62,000, which was expensed as
of September 30, 2007.n.
    
    From August 2007 to September 2007, the Company sold a total of 270,000 shares of common
stock in the form of Subscription Agreements at $.50 per share. The total proceeds to the
Company for the sale of the shares were $135,000.o.
    
    On September 11, 2007, the Company and Openshore Holdings Limited (Openshore) entered
into a consulting agreement for one year service term. Pursuant to the agreement, the
Company received a one time consulting services from Openshore in exchange for
200,000 shares of common stock. The shares were valued at $0.50 per share, for a total
amount of $100,000. For the nine months ended September 30, 2007, $5,479 has been expensed
as consulting service fee.
  18




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 Expected
    
    Expected
    
    Dividend
    
    Risk Free
    
    Grant DateLife
    
    Volatility
    
    Yield
    
    Interest Rate
    
    Fair Value2 years
    
    48.69%
    
    
    
    4.78%
    
    $31,641
   Weighted-Number of
    
    Number of
    
    Average
    
    AverageWarrants
    
    Warrants
    
    Exercise
    
    RemainingOutstanding
    
    Exercisable
    
    Price
    
    Contratual LifeBalance at inception, March 1, 2006
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    Granted
    
    
    5,970,000
    
    
    
    5,970,000
    
    
    $
    0.16
    
    
    3 yearsForfeited
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    Exercised
    
    
    (20,000
    )
    
    
    (20,000
    )
    
    $
    0.10Balance at December 31, 2006
    
    
    5,950,000
    
    
    
    5,950,000
    
    
    $
    0.10
    
    
    2.75 yearsGranted, June 25, 2007
    
    
    300,000
    
    
    
    300,000
    
    
    $
    1.00
    
    
    2 yearsGranted, August through September, 2007
    
    
    5,160,000
    
    
    
    5,160,000
    
    
    $
    0.50
    
    
    2 yearsForfeited
    
    
    (5,500,000
    )
    
    
    (5,500,000
    )
    
    $
    
    
    
    
    Exercised
    
    
    (450,000
    )
    
    
    (450,000
    )
    
    $
    0.10Balance at September 30, 2007
    
    
    5,460,000
    
    
    
    5,460,000
    
    
    $
    1.00
    
    
    1.99 years
 9.
    
    Income TaxesDeferred income taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial statement purposes and the amounts used for
income tax purposes. Significant components of the Companys deferred tax assets and
liabilities at September 30, 2007 are as follows:
 19




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 
 Total net operating loss as of December 31, 2006
    
    $
    2,123,672Effective income tax rate
    
    
    40
    %Total deferred tax assets
    
    
    849,469Less: valuation allowance
    
    
    (849,469
    )Total deferred tax assets as of December 31, 2006
    
    $
    Net loss for the nine months ended September 30, 2007
    
    $
    3,922,599Effective income tax rate
    
    
    40
    %Total deferred tax assets
    
    
    1,532,359Less: valuation allowance
    
    
    (1,532,359
    )Total deferred tax assets as of September 30, 2007
    
    $
    
   Federal income tax rate
    
    
    34
    %State tax, net of federal benefit
    
    
    6
    %Increase in valuation allowance
    
    
    (40)
    %Effective income tax rate
    
    
    
    %
  10.
    
    Commitments  The Company and its Subsidiary entered into various agreements during
the period beginning March 2006 (Subsidiarys inception date) and ending September 30, 2007.
These include:
 a.
    
    Empire (Tianjin) Resources Co., Ltd.  The Company is to pay $500,000 on December 5,
2007 to Tianjin pursuant to the cooperative joint venture agreement. (See Note 5)b.
    
    Employment Agreements  On April 12, 2006, the Company entered into employment
agreements with its Chief Executive Officer and its Vice President of Exploration. The
agreements have a term of 2 years and are automatically renewed for 2 year terms unless
the Company or the employee gives 90 days prior written notice to terminate the agreement.c.
    
    Office Lease  The Company is subject to a two year lease agreement dated March 1,
2006 for office space requiring monthly payments of $800. The agreement expires February
2008 and has options for renewal, although the terms of the renewal are subject to
negotiations by both parties. Rent expense for the year total $12,485. In March 2007,
 20




---



##### Table of Contents



EMPIRE MINERALS CORP. AND SUBSIDIARIES
(FORMERLY KNOWN AS XACORD CORP.)
(AN EXPLORATION COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(UNAUDITED)
 the
Company leased additional space at the same location of its initial office lease. The
additional space is leased on a month to month basis at a rate of $495 per month.d.
    
    Cuprum Resources Corp.  In March 2007, the Company, Bellhaven Copper & Gold, Inc.
(Bellhaven) and Cuprum Resources Corp (Cuprum) entered into an Exploration Development
Agreement (agreement). The agreement requires the Company over the next three years to
issue 4 million shares of stock and cash $17,000,000. At September 30, 2007, the Company was
committed to release 2,666,667 shares of its common stock from escrow and $16 million in cash.
Subsequent to September 30, 2007, the Company invested an additional $354,422 which was used
in exploration and development work.
  Period ending September 30,2008
    
    $
    3,200,0002009
    
    
    7,555,0002010
    
    
    6,500,0002011 and thereafter
    
    
    
 11.
    
    Subsequent Events
 a.
    
    The Company received $25,000 for the sale of 50,000 shares of common stock at $0.50
per share, subsequent to September 30, 2007.b.
    
    The company received $50,000 for the sale of 100,000 Special Warrants at $0.50 per
share, subsequent to September 30, 2007. The terms of the Special Warrants are identical
to the Special Warrants sold and disclosed in Note 8q.c.
    
    On October 26, 2007, the Company repaid the entire balance due on the Convertible
Promissory Note issued to Esther and Isaac Weiss, in the amount of $300,000.
 21




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
 General
     22




---



##### Table of Contents




    
    Supervising, and if necessary providing or procuring additional financing for,
the operations of the two Chinese Joint Ventures;
    
    Acquiring the majority interest in the Panamanian corporation holding the
mineral concession and providing financing for and supervising its operations;
    
    Exploring and evaluating additional mineral and natural resource acquisitions;
and
 23




---



##### Table of Contents




    
    Seeking the necessary additional capital to finance activities.
  History of the Company
     24




---



##### Table of Contents




    
    The Company acquired all of the outstanding stock of the Nevada Subsidiary;
    
    A Nevada corporation named Xacord Acquisitions Sub Corp. formed and wholly
owned by the Company to be used as a vehicle for the transaction was merged into
the Nevada Subsidiary;
    
    The outstanding shares of the common stock of the Nevada Subsidiary as of the
Effective Time of the merger were converted into shares of the common stock of the
Company on a share for share basis with a total of 26,504,000 shares of the
Companys stock issued in this conversion;
    
    The Company assumed four warrants issued by the Nevada Subsidiary to purchase up
to a total of 4,500,000 shares of the Companys Common Stock at $0.10 per share
during a three year term. These warrants were held as follows: (i) a warrant for
2,000,000 shares was held by Saddle River Associates, Inc., a financial and
business consultant to the Company; (ii) an additional warrant for 500,000 shares
was held by Saddle River Associates, Inc.; (iii) a warrant for 1,500,000 shares was
held by Pinchas Althaus, President and a director of the Company; and (iv) a
warrant for 50,000 shares was held by Chaya Schreiber, a former shareholder of the
Nevada Subsidiary. The warrant to purchase 50,000 shares was exercised on March 2,
2007. The remaining three warrants for 4,000,000 were canceled by mutual
agreement of the parties on June 1, 2007.
    
    The Company assumed a contingent obligation of the Nevada Subsidiary to issue
warrants to Saddle River Associates, Inc. to purchase up to 500,000 shares of the
Companys Common Stock at $0.50 per share during a five-year term from issuance, if
the Company obtains specified amounts of additional capital; and
    
    The Company acquired the rights of the Nevada Subsidiary under a Letter of
Intent to enter into the agreements relating to the acquisition of the majority
interest in the Panamanian corporation holding the concession to the copper
prospect.
    
    The management of the parties at the time of the business combination consisted
of: (i) Diego Roca was the sole officer and director of the Company and of Xacord
Acquisition Sub Corp.; and (ii) Pinchas Althaus, Diego Roca and Bruce Minsky were
the officers and directors of the Nevada subsidiary. Messrs. Althaus, Roca and
Minsky became the three directors and three of the officers of the Company and the
Nevada Subsidiary upon completion of the business combination.
 25




---



##### Table of Contents



Status Before Business Combination:
 
 Actions
in Business Combination:
 
 26




---



##### Table of Contents



Status After Business Combination:
 
 Present and Proposed Operations
 Dongxing Venture
  
    
    The formation of Zhaoyuan Co., in which the Nevada Subsidiary and Dongxing each
have a 50% equity interest;
 27




---



##### Table of Contents




    
    Dongxing contributed to Zhaoyuan Co. three Mining Licenses granted by the
Shandong Land and Resources Administration Bureau on mineral properties located in
the Shandong Province of China, along with certain mining equipment and
instruments;
    
    The Nevada Subsidiary contributed $500,000.00 (USD) to Zhaoyuan Co.;
    
    The Nevada Subsidiary has exercised its right to appoint three of the five
directors of Zhaoyuan Co. including the Chief Director and to appoint the General
Manager and Chief Financial Officer and Dongxing has exercised its right to appoint
the other two directors;
    
    The joint venture has a term of 15 years commencing in December of 2006;
    
    The Nevada Subsidiary has the right and option to contribute an additional
$500,000.00 (USD) to the equity capital of Zhaoyuan Co. as the mining activities
progress, in which case the Nevada Subsidiarys equity interest in Zhaoyuan Co.
would increase to 70% and Dongxings equity interest would decrease to 30%;
    
    If the Nevada Subsidiary has invested a total of $1,000,000 in Zhaoyuan Co.and
either Dongxing or the Nevada Subsidiary invest any additional capital in Zhaoyuan,
the investment would be in the form of non-interest bearing contributed capital
which the investing party would have the right to recover from Zhaoyuan Co.s tax
free profit before any sharing of profit would be allocated to the Nevada
Subsidiary or Dongxing;
    
    The arrangement defines an area of mutual interest including all potential
mineral properties in Zhaoyuan City in the Shandong Province other than the three
properties contributed to Zhaoyuan Co. by Dongxing and a specific property therein
on which an independent third party presently holds an Exploration License; and
    
    The Nevada Subsidiary has the final control over the selection of personnel and
operations, provided that Dongxing has a preferential right to provide exploration
services to Zhaoyuan Co. to the extent it can do so at comparable market rates.
  
    
    General clean-up of the property, de-watering the mine and installation of
underground electric and air systems;
    
    Renovation and upgrading of the concentration mill located on the property;
 28




---



##### Table of Contents




    
    Expansion of mine cross drifts at the 150 meter level; and
    
    Completion of safety upgrades to the property followed by the acquisition of
safety approvals from local authorities.
      Tianjin Empire Venture
  29




---



##### Table of Contents




    
    The execution of the contract on November 21, 2006 followed by the application
for the required business license for Tianjin Empire for its formation and
operation which license was granted in April of 2007;
    
    The Institute is to contribute capital to Tianjin Empire in the amount of
Renminbi (the main currency used in China) totaling approximately $300,000.00. It
is intended that the Institutes capital contribution will be made in the form of
the transfer to Tianjin Empire of mineral resources exploration licenses on
properties located in the Cooperation Area. Any properties transferred will be
valued for purposes of the Institutes capital contribution by mutual agreement of
the Institute and the Nevada Subsidiary. The Institute is obligated to transfer
the properties for its capital contribution to Tianjin Empire. The Institute has
not presented its valuation on the prospective properties for contribution
purposes. The Institute has not timely presented the mineral properties and their
valuations for transfer to Tianjin Empire under the terms of the agreement for this
venture. We have agreed with the Institute to extend the deadline for the
completion of the property transfers by the Institute for its capital contribution
and for the payment by the Nevada Subsidiary of the $500,000.00 balance to February
28, 2008.
    
    The Institute will contribute to Tianjin Empire the mineral information and data
held by Licenses on properties located in the Cooperation Area along with the
mineral data had by it on that region;
    
    The Nevada Subsidiary shall contribute a total of $1,000,000.00 (USD) to Tianjin
Empire as follows: (i) $200,000.00 paid on July 5, 2007; (ii) $300,000 paid on
September 5, 2007; and (iii) $500,000.00 to be paid on or before February 28, 2008;
    
    The Nevada Subsidiary shall own 70% of Tianjin Empire and the Institute shall
own 30%; subject to adjustment so that the respective ownership interests will be
equal to the respective capital contributions of the parties;
    
    Any additional increase in the capital of Tianjin Empire shall be under terms
decided by its Board of Directors subject to a first right of refusal by the party
agreeing to contribute to a proposed capital increase contribution share not made
by the non-contributing party and ownership interests of the parties shall be
adjusted to reflect the actual ratio of capital contributions of the parties;
    
    The Institute shall have a preferential right to provide exploration services to
Tianjin Empire at a fair market price;
 30




---



##### Table of Contents




    
    The Nevada Subsidiary and the Institute shall each have a pre-emptive right of
first refusal to purchase all or any part of the others interest in Tianjin Empire
except for transfer of an interest to an affiliate of the transferor;
    
    Tianjin Empire shall have a five member Board of Directors with the Nevada
Subsidiary having the right to appoint three members, including the Chairman, and
the Institute having the right to appoint two members, including the Vice-Chairman,
and these appointments have been made;
    
    Certain activities of Tianjin Empires Board of Directors require unanimous
assent of the directors, including: (i) amendment to its Articles of Association;
(ii) increase or reduction of its registered capital; (iii) its dissolution; (iv)
mortgage or pledge of its assets; or (iv) merger, division or change of form of
organization of Tianjin Empire;
    
    Subject to approval of the Board of Directors, the Nevada Subsidiary shall
nominate Tianjin Empires General Manager and Chief Financial Officer and the
Institute shall nominate its Deputy General Manager, which nominations have been
completed;
    
    The contract sets out provisions and guidelines for the operations of Tianjin
Empire; and
    
    The duration of Tianjin Empire shall be for a term of 30 years from the granting
of its original business licenses.
    31




---



##### Table of Contents



Chinese Regulations
    32




---



##### Table of Contents



33




---



##### Table of Contents



34




---



##### Table of Contents



35




---



##### Table of Contents




    
    Foreign Investment in China:
 (a)
    
    Catalogue of Industries for Guiding Foreign Investments;(b)
    
    Company Law;(c)
    
    Regulation on Company Registration and Administration; and(d)
    
    Laws of the Fhinese  Foreign Equity Joint Venture and its
Implementation Regulations.
 
    
    Exploration/mining activities:
 (a)
    
    Mineral Resource Law;(b)
    
    Procedures for Administration of Registration of Mining of the
Mineral Resources;(c)
    
    Procedures for Administration of Registration of Exploring Area
of the Mineral Resources;(d)
    
    Administration Rules on the Transfer of Exploration Rights and
Mining Rights;(e)
    
    Safety Production Law;(f)
    
    Regulation of Safety Production License; and(g)
    
    Implementation Rules for the Safety Production License of
Non-coal Mines Enterprise.
 
    
    Environmental Issues:
 (a)
    
    Environmental Protection Law;(b)
    
    Law of the Prevention and Control of Environmental Pollution by
Solid Waste;(c)
    
    Law of the Prevention and Control of Water Pollution;(d)
    
    Law of Appraising of the Environmental Impacts;(e)
    
    Administration Regulation for Environmental Protection of
Construction Projects;
 36




---



##### Table of Contents



(f)
    
    Administrative Provisions for Environmental Protection of
Construction Projects; and(g)
    
    Administrative Provisions on the Completion-Based Check and
Acceptance of Construction Projects.
 Panamian Venture
   
    
    The Company is granted the option to acquire up to 75% of Cuprum outstanding
stock;
    
    To acquire 65% of Cuprums stock the Company must: (i) pay to Cuprum or
Bellhaven $2,000,000.00; (ii) issue to Bellhaven shares of the Company common stock
as valued under an escrow agreement with a total value of $4,000,000.00; and (iii)
expend $15,000.000.00 in exploration and development work on the copper prospect
underlying Cuprums prospect underlying Cuprums Mineral Concession;
    
    The first $500,000.00 was paid on March 30, 2007. The 4,000,000 shares of the
Companys common stock were deposited into escrow on May 14, 2007. The remaining
$1,500,000.00 is payable by the Company in three $500,000.00 annual installments
due on March 6, 2008, 2009 and 2010;
    
    The escrow agreement under which the 4,000,000 shares of the Companys common
stock issued to Bellhaven and deposited provides: (i) for the immediate release and
delivery to Bellhaven of one-third of the shares (1,333,334); (ii) the release and
delivery to Bellhaven of an additional one-third of the shares on each of March 6,
2008 and 2009; (iii) the adjustment of total shares to be issued to Bellhaven by
valuing the shares at the price received by the Company for the first $1,000,000
raised by the sale of the Companys common stock or securities convertible into the
common stock sold to non-affiliates of the Company after March 6, 2007, so that, if
that price is less than $1.00 the shares to Bellhaven would be increased and if
more than $1.00 the total shares to Bellhaven would be decreased; and (iv) the
Company has agreed to file a Registration Statement under the U.S. Securities Act
of 1933 for the shares of its common stock released to
 37




---



##### Table of Contents



Bellhaven by November 3, 2007 or to include these shares on a piggy-back in any
Registration Statement filed prior thereto by the Company During the period from
June 25 through July 2, 2007, the Company raised $1,100,000.00 through the sale of
notes convertible into shares of its common stock at $1.00 per share, thereby
setting the number of shares to be issued to Bellhaven at the total of the 4,000,000
shares already issued and deposited in escrow;
    
    The expenditure by the Company of the $15,000,000.00 for exploration and
development work shall be made: (i) $2,000,000.00 by March 5, 2008; of which
$1,044,189 has been expended by September 17, 2007; (ii) a total of $9,000,000.00
by March 5, 2009; and (iii) a total of $15,000,000.00 by March 5, 2010. The Company
may, at its discretion, pay any of the required amounts directly to Cuprum, in lieu
of funding exploration or development work;
    
    If the Company pays less than all of the $17,000,000 cash payments and funding
due under the agreement but at least 50% of it, the Company will earn an interest
in the Cuprum shares which will be proportionately reduced from the 65% total;
    
    If the Company has earned the full 65% of the Cuprum shares by paying or
expending the total $17,000,000.00, it shall have the option to earn an additional
10% of the outstanding stock of Cuprum by completing a Bankable Feasibility Study
for the subject property. If this study is not completed, the Company by March 5,
2010, the Company will have to expend an additional $1,000,000.00 for exploration
and development work for each successive six month period to keep the agreement in
force to enable it to earn the additional 10% interest in Cuprum;
    
    When the Company has made all of the required payments the operations of Cuprum
will continue under the terms of an operating agreement of the three parties;
    
    If the Company introduces a third party mining company, acceptable to Bellhaven
and Cuprum, which agrees to complete the Companys payment and expenditure
obligations under the agreement including the one to complete Bankable Feasibility
Study, the Company will earn its full 75% interest in Cuprum, Bellhavens interest
will reduce to 25% and the interests of the Company, Bellhaven in Cuprum will then
be proportionately reduced by the amount of the interest acquired by the third
party;
    
    If the price of copper on the London Metals Exchange falls below $1.25 for 20
consecutive trading days, all activities and funding under the agreement shall be
suspended for up to one year or until that price rises above $1.25 for 90 days,
whichever occurs first;
    
    Cuprum is the designated operator to manage and supervise the exploration and
development work under budgets and exploration plans jointly agreed upon prior to
any implementation of work on the property and Empire shall have sole final
 38




---



##### Table of Contents



approval of all exploration budgets and spending. Empire shall, at its sole
discretion, have the right to terminate Cuprum as operator at any time with or
without cause after it has acquired a 50% equity position in the property. Empire
shall give Cuprum 30 days notice of its intent to terminate Cuprum as operator; and
    
    The interest of all parties to the agreement are subject to a right of refusal
by the other parties to any sale or disposal of an interest in the agreement.
  
 39




---



##### Table of Contents



40




---



##### Table of Contents



Block
    
    Longitude
    
    
    
    Latitude
    
    
    
    Area (hectares)1
    
    82°
    
    40"
    
    8°
    
    08.61"
    
    10,302.9282°
    
    47"
    
    8°
    
    08.61"82°
    
    47"
    
    8°
    
    54.2"82°
    
    40"
    
    8°
    
    54.2"2
    
    82°
    
    47"
    
    8°
    
    03.5"
    
    2,250.9582°
    
    03.4"
    
    8°
    
    03.5"82°
    
    03A"
    
    8°
    
    37"82°
    
    47"
    
    8°
    
    37"3
    
    82°
    
    03.4"
    
    8°
    
    03.5"
    
    4,705.8782°
    
    21.4"
    
    8°
    
    03.5"82°
    
    21.4"
    
    8°
    
    54.2"82°
    
    03.4"
    
    8°
    
    54.2"4
    
    82°
    
    47"
    
    8°
    
    54.2"
    
    4,480.7782°
    
    21.4"
    
    8°
    
    54.2"82°
    
    21.4"
    
    8°
    
    27.7"82°
    
    47"
    
    8°
    
    27.7"5
    
    82°
    
    47
    
    8°
    
    37
    
    2,501.4082°
    
    0.34
    
    8°
    
    3782°
    
    0.34
    
    8°
    
    54.282°
    
    47
    
    8°
    
    54.2
     41




---



##### Table of Contents



42




---



##### Table of Contents



43




---



##### Table of Contents



44




---



##### Table of Contents



From/To
    
    Length
    
    
    Copper
    
    
    Gold
    
    
    Silver0 to 239.4 m
    
    239.4 meters
    
    
    1.20
    %
    
    
    0.23 g/t
    
    
    
    6.1 g/tincluding
0 to 114m
    
    114 meters
    
    
    2.01
    %
    
    
    0.43 g/t
    
    
    
    11.3 g/tincluding
52 to 90 m
    
    38 meters
    
    
    2.88
    %
    
    
    0.73 g/t
    
    
    
    14.3 g/t
 45




---



##### Table of Contents



From/To
    
    Length
    
    
    Copper
    
    
    Gold
    
    
    Silverincluding detailed analyses52 to 54 m
    
    2 meters
    
    
    3.43
    %
    
    
    1.29 g/t
    
    
    
    23.3 g/t54 to 56 m
    
    2 meters
    
    
    2.77
    %
    
    
    0.82 g/t
    
    
    
    12.1 g/t56 to 58 m
    
    2 meters
    
    
    2.70
    %
    
    
    0.50 g/t
    
    
    
    8.6 g/t58 to 59.6 m
    
    1.6 meters
    
    
    2.83
    %
    
    
    0.49 g/t
    
    
    
    7.6 g/t59.6 to 62 m
    
    2.4 meters
    
    
    0.61
    %
    
    
    0.11 g/t
    
    
    
    3.7 g/t62 to 64 m
    
    2 meters
    
    
    0.74
    %
    
    
    0.09 g/t
    
    
    
    2.4 g/t64 to 65.05 m
    
    1.05 meters
    
    
    1.13
    %
    
    
    0.14 g/t
    
    
    
    5.5 g/t65.05 to 66 m
    
    0.95 meters
    
    
    3.67
    %
    
    
    0.93 g/t
    
    
    
    15.2 g/t66 to 68 m
    
    2 meters
    
    
    2.02
    %
    
    
    0.84 g/t
    
    
    
    9.2 g/t68 to 70 m
    
    2 meters
    
    
    4.26
    %
    
    
    2.22 g/t
    
    
    
    28.1 g/t70 to 71.23 m
    
    1.23 meters
    
    
    1.42
    %
    
    
    0.44 g/t
    
    
    
    6.1 g/t71.23 to 72.75 m
    
    1.52 meters
    
    
    3.88
    %
    
    
    1.19 g/t
    
    
    
    22.5 g/t72.75 to 74 m
    
    1.25 meters
    
    
    3.59
    %
    
    
    0.92 g/t
    
    
    
    14.3 g/t74 to 76 m
    
    2 meters
    
    
    3.32
    %
    
    
    0.62 g/t
    
    
    
    22.6 g/t76 to 78 m
    
    2 meters
    
    
    3.31
    %
    
    
    1.57 g/t
    
    
    
    14.7 g/t78 to 80 m
    
    2 meters
    
    
    2.51
    %
    
    
    0.57 g/t
    
    
    
    9.7 g/t80 to 82 m
    
    2 meters
    
    
    3.28
    %
    
    
    0.54 g/t
    
    
    
    14.9 g/t82 to 84 m
    
    2 meters
    
    
    4.11
    %
    
    
    0.70 g/t
    
    
    
    20.7 g/t84 to 86 m
    
    2 meters
    
    
    3.34
    %
    
    
    0.35 g/t
    
    
    
    11.2 g/t86 to 88 m
    
    2 meters
    
    
    3.43
    %
    
    
    0.50 g/t
    
    
    
    17.4 g/t88 to 90 m
    
    2 meters
    
    
    4.11
    %
    
    
    0.40 g/t
    
    
    
    26.8 g/t
     46




---



##### Table of Contents



From/To
    
    Length
    
    
    Copper
    
    
    Gold
    
    
    Silver5.1 to 246 m
    
    
    240.9 m
    
    
    
    0.81
    %
    
    
    0.08 g/t
    
    
    
    2.9 g/t16.7 to 807 ft
    
    790.4 ftincluding5.1 to 130 m
    
    
    124.9 m
    
    
    
    1.32
    %
    
    
    0.15 g/t
    
    
    
    4.8 g/t16.7 to 426.5 ft
    
    409.8 ft
     47




---



##### Table of Contents



From/To
    
    Length
    
    
    Copper
    
    
    Gold
    
    
    Silver4 to 319.9 m
    
    
    313.9
    m
    
    
    0.46
    %
    
    pending
    
    
    1.1 g/t13 to 1047 ft
    
    1030
    ftincluding 
122 to 154 m
    
    
    32
    m
    
    
    0.82
    %
    
    pending
    
    
    2.2 g/t400 to 505 ft
    
    105
    ft224 to 242 m
    
    
    18
    m
    
    
    1.04
    %
    
    pending
    
    
    2.1 g/t735 to 794 ft
    
    59
    ft286 to 319.9 m
    
    
    33.9
    m

    
    
    0.62
    %
    
    pending
    
    
    1.3 g/t938 to 1047 ft
    
    109
    ft
      48




---



##### Table of Contents




    
    The Company paid Silver a consultancy fee for $75,000.00 for services through
February 29, 2008;
    
    The Company may extend the agreement for a one-year term for each year after
February 29, 2008 by paying a consultancy fee of $150,000.00 per year;
    
    In addition to the cash consultancy fees the Company will pay Silver a non-cash
transaction fee for any transaction the Company makes involving acquisition of an
interest in a Panamanian Mineral Concession, directly or indirectly in any form,
with a party introduced to the Company by Silver. Each transaction will be
 49




---



##### Table of Contents



as agreed between then and in the form of a percentage interest in the Mineral
Concession interest acquired by the Company and/or stock of the Company; and
    
    For the transaction fee for the Company, Bellhaven and Cuprum transaction the
Company has paid Silver 1,000,000 shares of the Companys common stock (issued as
restricted securities) and if the Company completes its acquisition of the 65%
interest in Cuprum, it will transfer to Silver 7.5% of Cuprums outstanding stock.
If the Company earns the additional 10% interest in Cuprum by obtaining the
Bankable Feasibility Study, the Company will transfer to Silver 5% of Cuprums
outstanding stock. If the Company completes more than 50% of the full payment due
to Bellhaven and Cuprum but not all and thus earns a reduced interest in Cuprum,
the balance of the transaction fee to Silver will be proportionally reduced.
 Panamanian Regulations
  Plan of Operation
    50




---



##### Table of Contents



Personnel
  51




---



##### Table of Contents



ITEM 3A(T). CONTROLS AND PROCEDURES
      52




---



##### Table of Contents



PART II. OTHER INFORMATION
 
   
          53




---



##### Table of Contents



54




---



##### Table of Contents



31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of
Principal Executive Officer31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of
Principal Financial Officer32.1
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Principal Executive Officer32.2
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Principal Financial Officer
 55




---



##### Table of Contents



SIGNATURES
  EMPIRE MINERALS CORP.
(Registrant)November 14, 2007
    By:

/s/ Pinchas AlthausPINCHAS ALTHAUSChief Executive Officer and PresidentNovember 14, 2007
    By:
    /s/ Diego RocaDIEGO ROCAExecutive Vice President, Chief
Financial Officer and Treasurer 56