UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549





Form 10-K





x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the fiscal year ended December 31, 2009





 ̈ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





Commission file number 333-156352





E & M GROUP, INC.


(Exact name of registrant as specified in its charter)





Nevada

88-0492246(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)





2373 208thSt., Unit F4Torrance, CA

90501(Address of principal executive offices)

(Zip Code)





Registrant's telephone number: (213) 995-5036





Copies of Communications to:


Stoecklein Law Group


402 West Broadway, Suite 690


San Diego, CA 92101.


(619) 704-1310


Fax (619) 704-1325





Securities registered under Section 12(b) of the Act:  None





Securities registered under Section 12(g) of the Act:  None





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.


Yes  ̈    No x





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.


Yes  ̈    No x





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.


Yes x    No  ̈





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).


Yes  ̈    No  ̈








Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     ̈





Indicate by check mark whether the registrant a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "small reporting company" in Rule 12b-2 of the Exchange Act.





Large accelerated filer   ̈
Accelerated filer   ̈Non-accelerated filer   ̈ (Do not check if a smaller reporting company)
Smaller reporting company  x





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).


Yes x    No  ̈





The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of June 30, 2009 (the last business day of the registrant's most recently completed second fiscal quarter) was $150,000
based on a share value of $0.01.





The number of shares of Common Stock, $0.001 par value, outstanding on March 25, 2010 was 31,500,000 shares.








E & M GROUP, INC.


FOR THE FISCAL YEAR ENDED


DECEMBER 31, 2009





Index to Report on Form 10-K





PART I
PageItem 1.
Business
2Item 1A.
Risk Factors
4Item 1B.
Unresolved Staff Comments
7Item 2.
Properties
8Item 3.
Legal Proceedings
8Item 4.
Submission of Matters to a Vote of Security Holders
8PART IIItem 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
8Item 6.
Selected Financial Data
9Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
9Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
11Item 8.
Financial Statements and Supplementary Data
11Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
11Item 9A (T)
Controls and Procedures
13Item 9B.
Other Information
14PART IIIItem 10.
Directors, Executive Officers and Corporate Governance
15Item 11.
Executive Compensation
20Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
21Item 13.
Certain Relationships and Related Transactions, and Director Independence
21Item 14
Principal Accounting Fees and Services
22PART IVItem 15.
Exhibits, Financial Statement Schedules
23





FORWARD-LOOKING STATEMENTS





This document contains “forward-looking statements”.  All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements
of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.





Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words.  These forward-looking statements present our estimates and assumptions
only as of the date of this report.  Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made.  Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.  You should, however, consult further disclosures we make in future filings of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K.





Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.  Our future financial condition and results of operations, as well as any forward-looking statements, are subject
to change and inherent risks and uncertainties.  The factors impacting these risks and uncertainties include, but are not limited to:





·
our current lack of working capital;


·
inability to raise additional financing;


·
the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;


·
deterioration in general or regional economic conditions;


·
adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;


·
changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;


·
inability to efficiently manage our operations;


·
inability to achieve future sales levels or other operating results; and


·
the unavailability of funds for capital expenditures.





For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Item 1A. Risk Factors” in this document.


1


Throughout this Annual Report references to “we”, “our”, “us”, “E & M”, “the Company”, and similar terms refer to E & M Group, Inc.





PART I





ITEM 1. BUSINESS





Business Development





E & M Group, Inc. is a development stage company, originally incorporated in the state of Nevada on March 2, 2001 under the name Madison Management, Inc. We were formed to provide business development, market development and financial goal-setting to prospective clients (small corporations).





On July 24, 2009, the officers and directors of the Company, Ms. Pam Elliott, Ms. Sharilyn Gallison, Ms. Sandra Lary, and Ms. Elaine Evans gave the Company notice of their resignations from their positions as officers and members of the Board of Directors, which resignations were accepted by the Company on August 6, 2009.





Prior to the resignations of Ms. Pam Elliott and Ms. Sandra Lary, the Board of Directors appointed Mr. Donghwan Kim to serve as the Company’s President, Secretary and Treasurer and to serve as a member of the Company’s Board of Directors.





On December 11, 2009, we amended our articles of incorporation changing our name from Madison Management, Inc. to E & M Group, Inc.





On December 18, 2009, Mr. Donghwan Kim gave the Company notice of his resignation from his position as President, CEO, Secretary and Treasurer of the Company, which resignation was accepted by the Company on December 18, 2009. Mr. Kim remained as a director of the Company. Concurrently, on December 18, 2009, the Board of Directors appointed
Jooin Kim to serve as President and CEO, Misun Kim to serve as Secretary and a Director, Jisun Kim to serve as Treasurer and a Director, and Peter Duchine to serve as a Director of the Company.





On January 14, 2010, we increased our total number of shares which we are authorized to issue from 25,000,000 to 100,000,000 shares of common stock of $0.001 par value.





On March 3, 2010, we effectuated a 10-for-1 forward stock split of our $0.001 par value common stock.


2


Business of Issuer





Initially, we were seeking to establish E & M Group in the business of providing business development, market development and financial goal-setting to prospective clients (small corporations). As a result of our lack of revenue generation, we plan to re-assess our business plan, and aggressively seek out other business opportunities.
In an effort to substantiate stockholder value, we are seeking compatible business opportunities. We can provide no assurance that we will be able to locate compatible business opportunities. Currently, we are in preliminary discussions with a private company, who is in the mineral resource business, interested in a potential merger with us. The mineral resource business generally consists of three stages: exploration, development and production. Mineral resource companies that are in the exploration stage have
not yet found mineral resources in commercially exploitable quantities and are engaged in exploring land in an effort to discover them. Mineral resource companies that have located a mineral resource in commercially exploitable quantities and are preparing to extract that resource are in the development stage, while those engaged in the extraction of a known mineral resource are in the production stage. The private company is in the exploration stage.





As of the date of this filing, there have been no definitive agreements reached with this company. If and when we enter into a definitive agreement with any company, we will file a current report on Form 8-K.





Until we enter into a transaction with another viable entity, we will continue to sustain ourselves through continuing with our current attempt to build the Company to provide business development, market development and financial goal-setting to prospective small businesses. Unless we pursue and establish ourselves with other business
ventures in the near term, which we intend to do, we anticipate it will be extremely difficult without sufficient capital and a turnaround in the economy for us to generate revenues during the next twelve months.





Personnel





We are a development stage company and currently do not have any employees.  We look to our officers and directors who collectively have a varied background in business management, marketing, and sales.  We do not anticipate hiring employees over the next 12 months.  We intend to use the services of consultants
to perform various professional services.  We believe that this use of third-party service providers may enhance our ability to contain general and administrative expenses.


3


ITEM 1A. RISK FACTORS





An evaluation of us is extremely difficult. At this stage of our business operations, even with our good faith efforts, potential investors have a high probability of losing their investment.





There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Our future operating results will depend on many factors, including our ability to raise adequate working capital, demand and acceptance of our business plan, the level
of our competition and our ability to attract and maintain key management and employees.


We are highly dependent on our officers and directors.





We rely heavily on our officers and directors to provide services and for continued business development. It would be difficult to replace our officers and directors at such an early stage of development of the Company. Our business could be materially adversely affected if our officers and
directors were to leave and if we were unable to retain qualified replacements.





Potential issuance of additional common stock could dilute existing stockholders.





We are authorized to issue up to 100,000,000 shares of common stock. To the extent of such authorization, our Board of Directors has the ability, without seeking stockholder approval, to issue additional shares of common stock in the future for such consideration as the Board of Directors may consider sufficient. We are not currently seeking
additional equity financing, which if sought or obtained may result in additional shares of our common stock being issued. The issuance of additional common stock in the future will reduce the proportionate ownership and voting power of the common stock held by our existing stockholders.





Our auditor’s report reflects the fact that without realization of additional capital, it would be unlikely for us to continue as a going concern.





Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have suffered losses from operations during our operating history and our ability to continue as a going concern is dependent upon obtaining future profitable
operations. Additionally, our auditor’s report reflects that the ability of the Company to continue as a going concern is dependent upon its ability to obtain additional sources of capital or borrowings and, ultimately, the achievement of significant operating revenues. Although management believes that the proceeds from the sale of securities, together with funds from operations, will be sufficient to cover anticipated cash requirements, we will be required to seek additional capital to fund future growth
and expansion. No assurance can be given that such financing will be available or, if available, that it will be on commercially favorable terms. Moreover, favorable financing may be dilutive to investors.


4


We will need additional capital in the future to finance our operations, which we may not be able to raise or it may only be available on terms unfavorable to us or our stockholders, which may result in our inability to fund our working capital requirements and harm our operational results.





We believe that current cash on hand and the other sources of liquidity may not be sufficient enough to fund our operations through fiscal 2010. In that event, we would need to raise additional funds to continue our operations.





Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly
limited.





We may acquire assets or other businesses in the future.





We may consider acquisitions of other assets or other businesses. Any acquisition involves a number of risks that could fail to meet our expectations and adversely affect our profitability. For example:





·
The acquired assets or business may not achieve expected results;




·
We may incur substantial, unanticipated costs, delays or other operational or financial problems when integrating the acquired assets;




·
We may not be able to retain key personnel of an acquired business;




·
Our management’s attention may be diverted; or




·
Our management may not be able to manage the acquired assets or combined entity effectively or to make acquisitions and grow our business internally at the same time.





If these problems arise we may not realize the expected benefits of an acquisition.


5


Risks Relating To Our Common Stock





If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board, which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.





Companies trading on the OTC Bulletin Board, such as us, generally must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. More specifically, FINRA has enacted Rule 6530,
which determines eligibility of issuers quoted on the OTC Bulletin Board by requiring an issuer to be current in its filings with the Commission. Pursuant to Rule 6530(e), if we file our reports late with the Commission three times in a two-year period or our securities are removed from the OTC Bulletin Board for failure to timely file twice in a two-year period, then we will be ineligible for quotation on the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely
affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.





Because our common stock is deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.





Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock
is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:





·
Deliver to the customer, and obtain a written receipt for, a disclosure document;


·
Disclose certain price information about the stock;


·
Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;


·
Send monthly statements to customers with market and price information about the penny stock; and


·
In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.





Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise
additional capital in the future.


6


FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.





In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our
stock and have an adverse effect on the market for our shares.





Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.





Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board
of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.





We have a limited number of personnel that are required to perform various roles and duties as well as be responsible for monitoring and ensuring compliance with our internal control procedures. As a result, our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation
being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.





ITEM 1B. UNRESOLVED STAFF COMMENTS





None.


7


ITEM 2. PROPERTIES





We currently maintain an executive office at 2373 208th St., Unit F4, Torrance, California, for which we have executed a 36 month lease, commencing on January 12, 2010. Our monthly rent for this office is $2,500. We believe our current office space is adequate
for our immediate needs; however, as our operations expand, we may need to locate and secure additional office space.  We sublease the office space from ENSAP International, Inc., a related party.  ENSAP International, Inc. is an entity that is owned and controlled by the officers and directors of E&M Group, Inc. and their immediate family members.





ITEM 3. LEGAL PROCEEDINGS





We are not a party to any material legal proceedings.





ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.





PART II





ITEM 5.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASE OF EQUITY SECURITIES





Market Information





On May 19, 2009, we were cleared for trading by the Financial Industry Regulatory Authority on the Over-the-Counter Bulletin Board under the symbol “MMGT.” We changed our name to E & M Group, Inc. and at the same time requested our symbol be changed to EMGR. Our common stock is currently thinly traded on the Over-the-Counter
Bulletin Board, with a closing price of $0.02 on March 26, 2010.





Holders of Common Stock





As of March 25, 2010, we had approximately 16 stockholders of record of the 31,500,000 shares outstanding (post split).


8


Dividends





The payment of dividends is subject to the discretion of our Board of Directors and will depend, among other things, upon our earnings, our capital requirements, our financial condition, and other relevant factors. We have not paid or declared any dividends upon our common stock since our inception and, by reason of our present financial
status and our contemplated financial requirements, do not anticipate paying any dividends upon our common stock in the foreseeable future.





We have never declared or paid any cash dividends. We currently do not intend to pay cash dividends in the foreseeable future on the shares of common stock. We intend to reinvest any earnings in the development and expansion of our business. Any cash dividends in the future to common stockholders will be payable when, as and if declared
by our Board of Directors, based upon the Board’s assessment of:





·
our financial condition;


·
earnings;


·
need for funds;


·
capital requirements;


·
other factors, including any applicable laws.





Therefore, there can be no assurance that any dividends on the common stock will ever be paid.





Recent Sales of Unregistered Securities





We have no recent sales of unregistered securities.





Issuer Purchases of Equity Securities





The Company did not repurchase any of its equity securities during the fourth quarter ended December 31, 2009.





ITEM 6. SELECTED FINANCIAL DATA





Not applicable.





ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





OVERVIEW AND OUTLOOK





We are a development stage company incorporated in the State of Nevada in March 2001. We were formed to provide business development, market development and financial goal-setting to prospective small businesses.


9


Since our inception on March 2, 2001 through December 31, 2009, we have generated $53,500 in revenues and have incurred a net loss of $115,694.  For the year ended December 31, 2009, we generated $5,000 in revenues and incurred a net loss of $68,824.





Operation Plan





During the next twelve months we plan to continue to focus our efforts on enhancing and marketing our business management, marketing and sales consulting services. However, and alternatively, we have been seeking other ventures, which may provide us opportunities which are more likely to provide us greater financial reward.





Liquidity and Capital Resources





The following table summarizes total current assets, total current liabilities and working capital at December 31, 2009 compared to December 31, 2008.





December 31,
2009
December 31,
2008
Increase / (Decrease)$
%Current Assets
$38,307
$6,559
$31,748
484%Current Liabilities
2,508
21,929
(19,421)
(89%)Working Capital (deficit)
$35,799
$(15,370)
$51,169
333%





Financing





In November 2009, Donghwan Kim, a Director of the Company, loaned the Company $49,000. The loan bears no interest and is due upon demand but cannot be demanded before December 2020.





Satisfaction of our cash obligations for the next 12 months.





As of December 31, 2009, our cash balance was $27,057. Our plan for satisfying our cash requirements for the next twelve months is through sale of shares of our common stock, third party financing, and/or traditional bank financing. We anticipate sales-generated income during that same period of time, but do not anticipate generating sufficient
amounts of revenues to meet our working capital requirements. Consequently, we intend to make appropriate plans to insure sources of additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities.


10


Since inception, we have financed our cash flow requirements through issuance of common stock. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt of listing or some form of advertising revenues. Additionally we anticipate obtaining additional financing
to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital.





We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly
companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do
so can have a material adverse effect on our business prospects, financial condition and results of operations.





Going Concern





The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company is in the
development stage and, accordingly, has generated minimal revenues from operations.  As shown on the accompanying financial statements, the Company has incurred a net loss of $115,694 for the period from inception (March 2, 2001) to December 31, 2009. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.





The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its business opportunities.





Summary of product and research and development that we will perform for the term of our plan.





We do not anticipate performing any significant product research and development under our plan of operation. In lieu of product research and development we anticipate maintaining control over our advertising to assist us in determining the allocation of our limited advertising dollars.


11


Expected purchase or sale of plant and significant equipment.





We do not anticipate the purchase or sale of any plant or significant equipment, as such items are not required by us at this time or in the next 12 months.





Significant changes in the number of employees.


We are a development stage company and currently do not have any employees.  We look to our officers and directors who collectively have a varied background in business management, marketing and sales consulting.  We do not anticipate hiring employees over the next 12 months.  We intend to use the services
of consultants to perform various professional services.  We believe that this use of third-party service providers may enhance our ability to contain general and administrative expenses.





Off-Balance Sheet Arrangements





We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.





ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





We do not expect to enter into financial instruments for trading or hedging purposes. We do not currently anticipate entering into interest rate swaps and/or similar instruments.





ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





See Index to Financial Statements and Financial Statement Schedules appearing on page F-1 through F-16 of this Form 10-K.








ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





We have had no disagreements with our independent auditors on accounting or financial disclosures.


12


ITEM 9a (T). CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures





Our Principal Executive Officer, Jooin Kim, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on his evaluation, Mr. Kim concluded that our disclosure controls and procedures
are effective in timely alerting him to material information relating to us required to be included in our periodic SEC filings and in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.





Management’s Report on Internal Control Over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control, as is defined in the Securities Exchange Act of 1934.  These internal controls are designed to provide reasonable assurance that the reported financial information
is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable.  There are inherent limitations in the effectiveness of any system of internal controls, including the possibility of human error and overriding of controls.  Consequently, an effective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.





Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally
accepted accounting principles and the receipts and expenditures of company assets are made and in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.





Management has undertaken an assessment of the effectiveness of our internal control over financial reporting based on the framework and criteria established in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).  Based upon this
evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2009.


13


This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our registered public accounting firm pursuant to the temporary rules of the Securities and Exchange Commission that
permit the company to provide only management’s report in this annual report.





Changes in Internal Control Over Financial Reporting





There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.





ITEM 9B. OTHER INFORMATION





(a)Article I Name-





As of December 11, 2009, the Company amended its articles of incorporation changing its company name from Madison Management, Inc. to E & M Group, Inc. The name change occurred as a result of a stockholder proposal which was approved by a Majority Consent of Stockholders on October 26, 2009.





The Company’s trading symbol changed from MMGT to EMGR, effective March 2, 2010, in conjunction with the Company’s name change.





(b)Resignation of Director and Officers





On December 18, 2009, Mr. Donghwan Kim gave the Company notice of his resignation from his position as President, CEO, Secretary and Treasurer of the Company, which resignation was accepted by the Company on December 18, 2009. Mr. Kim remained as a director of the Company.





(c)  Appointment of Officers





On December 18, 2009, the Board of Directors appointed Jooin Kim to serve as President and CEO, Misun Kim to serve as Secretary, and Jisun Kim to serve as Treasurer of the Company.





Jooin Kim – President and CEO, (See Resumé in Item 10 below).





Misun Kim – Secretary, (See Resumé in Item 10 below).





Jisun Kim – Treasurer, (See Resumé in Item 10 below).


14


(d) Appointment of Director





On December 18, 2009, the Board of Directors appointed Misun Kim, Jisun Kim and Peter Duchine to serve as members of the Company’s Board of Directors.  Currently, the Company does not have separate committees within the Board of Directors such as an Audit, Nominating, or Governance committees due to having limited resources.  Therefore,
the Company’s entire board of directors will perform some of the functions associated with these separate committees.





Peter Duchine, (See Resumé in Item 10 below).





Misun Kim (See Resumé in Item 10 below).





Jisun Kim (See Resumé in Item 10 below).





PART III





ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





The members of our board of directors serve for one year terms and are elected at the next annual meeting of stockholders, or until their successors have been elected. The officers serve at the pleasure of the board of directors.





On July 24, 2009, the officers and directors of the Company, Ms. Pam Elliott, Ms. Sharilyn Gallison, Ms. Sandra Lary, and Ms. Elaine Evans gave the Company notice of their resignations from their positions as officers and members of the Board of Directors, which resignations were accepted by the Company on August 6, 2009.





Prior to the resignations of Ms. Pam Elliott and Ms. Sandra Lary, the Board of Directors appointed Mr. Donghwan Kim to serve as the Company’s President, Secretary and Treasurer and to serve as a member of the Company’s Board of Directors.





On December 18, 2009, Mr. Donghwan Kim gave the Company notice of his resignation from his position as President, CEO, Secretary and Treasurer of the Company, which resignation was accepted by the Company on December 18, 2009. Mr. Kim remained as a director of the Company. Concurrently, on
December 18, 2009, the Board of Directors appointed Jooin Kim to serve as President and CEO, Misun Kim to serve as Secretary and a Director, Jisun Kim to serve as Treasurer and a Director, and Peter Duchine to serve as a Director of the Company.


15





Information as to our current directors and executive officers is as follows:





Name
Age
Title
TermJooin Kim
27
President & Chief Executive Officer
12/18/09Misun Kim
31
Secretary & Director
12/18/09Jisun Kim
29
Treasurer & Director
12/18/09Donghwan Kim
58
Director
07/24/09Peter Duchine
60
Director
12/18/09





Duties, Responsibilities and Experience





Jooin Kim – President & Chief Executive Officer Mr. Jooin Kim is the President and Chief Executive Officer of E & M Group, Inc. Mr. Kim has been a Director of Hydroderm
U.S.A. since 2006. Between 2008 and 2009, Mr. Kim was the owner of Happy Technology. Between 2005 and 2007, Mr. Kim was a General Manager for Compu USA. Mr. Kim studied computer programming at ITT Technical Institute between 2002 and 2004.





Misun Kim – Secretary & Director Ms. Misun Kim is the Secretary and a Director of E & M Group, Inc. Since 2005, Ms. Kim has been the Chief Executive Officer of Hydroderm
U.S.A. Ms. Kim is also a songwriter and works in the Artists and Repertoire division for Can Entertainment since 2004. Between 2005 and 2009, Ms. Kim was the Stage Manager for Redwon Production. Between 2004 and 2005, Ms. Kim attended Patton College. Between 2001 and 2003 Ms. Kim attended New York University and received a cello performance degree.





Jisun Kim – Treasurer & Director Ms. Jisun Kim is the Treasurer and a Director of E & M Group, Inc. From 2006 through present, Ms. Kim has been a Director of Hydroderm
U.S.A. Between 2008 and 2009, Ms. Kim was a loan officer for CPS Mortgage Company and between 2005 and 2007 she was a loan officer for Compass Finance. From 2001 through 2004 Ms. Kim attended Santa Monica College where she received a degree in business administration.





Charles Kim – Director Mr. Donghwan Kim, a citizen of South Korea, is a Director of E & M Group, Inc. Mr. Kim has been the President of the Korean division of ENSAP International Co., LTD. since June 1, 2009. From October 1,
1980 through present, Mr. Kim has been the Chairman of Taerim Electronics. Mr. Kim also holds the position of President for both Hydroderm U.S.A., Inc., and Hydroderm Asia, from March 1, 2008 through present and August 8, 2003 through present, respectively. Mr. Kim also currently resides as Chairman and Chief Financial Officer of Charista Global Corp., a position he has held since December 1, 2008.


16





Peter Duchine – Director Mr. Duchine is a Director of E & M Group, Inc. Mr. Duchine has been an Assembly and Test Subcontractor for Amkor Technologies since March of 1992. As
an Assembly and Test Subcontractor, Mr. Duchine provides services as a technical test advisor, manages test business of $100,000,000 to $200,000,000 per year and provides leading edge technology solutions. Between August of 1987 and February of 1992, Mr. Duchine served as a semiconductor manufacturer for California Micro Devices.





None of the above Officers and/or Directors businesses are affiliated with or currently doing business with E & M Group, Inc.





Limitation of Liability of Directors





Pursuant to the Nevada General Corporation Law, our Articles of Incorporation exclude personal liability for our Directors for monetary damages based upon any violation of their fiduciary duties as Directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, or any transaction from which a Director receives an improper personal benefit. This exclusion of liability does not limit any right which a Director may have to be indemnified and does not affect any Director’s liability under federal or applicable state securities laws. We have agreed to indemnify our directors against expenses, judgments, and amounts paid in settlement in connection with any claim against a Director if he acted in good faith and in a manner he believed
to be in our best interests.





Election of Directors and Officers





Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified.





No Executive Officer or Director of the Corporation has been the subject of any Order, Judgment, or Decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities
industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.





No Executive Officer or Director of the Corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.


17





No Executive Officer or Director of the Corporation is the subject of any pending legal proceedings.





Involvement in Certain Legal Proceedings





No Executive Officer or Director of the Corporation has been the subject of any Order, Judgment, or Decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him/her from acting as an investment advisor, underwriter, broker or dealer in the securities
industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.





No Executive Officer or Director of the Corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.





Audit Committee and Financial Expert





We do not have an Audit Committee.  Our directors perform some of the same functions of an Audit Committee, such as: recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the independent auditors independence, the financial statements and their audit report; and reviewing
management's administration of the system of internal accounting controls.  The Company does not currently have a written audit committee charter or similar document.





We have no financial expert.  We believe the cost related to retaining a financial expert at this time is prohibitive.  Further, because of our start-up operations, we believe the services of a financial expert are not warranted.





Section 16(a) Beneficial Ownership Reporting Compliance





Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires executive officers and directors, and persons who beneficially own more than ten percent of an issuer's common stock, which has been registered under Section 12 of the Exchange Act, to file initial reports of ownership and reports of changes
in ownership with the SEC.





As a company with securities registered under Section 15(d) of the Exchange Act, our executive officers and directors, and persons who beneficially own more than ten percent of our common stock are not required to file Section 16(a) reports.


18





Code of Ethics





A code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:





(1)
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;


(2)
Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;


(3)
Compliance with applicable governmental laws, rules and regulations;


(4)
The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and


(5)
Accountability for adherence to the code.





We have not adopted a corporate code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.





Our decision to not adopt such a code of ethics results from our having only three officers and two directors operating as the management for the Company.  We believe that the limited interaction which occurs having such a small management structure for the Company eliminates the current need for such a code, in that violations
of such a code would be reported to the party generating the violation.





Corporate Governance





Nominating Committee





We do not have a Nominating Committee or Nominating Committee Charter.  Our Board of Directors performs some of the functions associated with a Nominating Committee.  We have elected not to have a Nominating Committee in that we are an initial-stages operating company
with limited operations and resources.





Director Nomination Procedures





Generally, nominees for Directors are identified and suggested by the members of the Board or management using their business networks.  The Board has not retained any executive search firms or other third parties to identify or evaluate director candidates in the past and does not intend to in the near future.  In
selecting a nominee for director, the Board or management considers the following criteria:


19





1.
whether the nominee has the personal attributes for successful service on the Board, such as demonstrated character and integrity; experience at a strategy/policy setting level; managerial experience dealing with complex problems; an ability to work effectively with others; and sufficient time to devote to the affairs of the Company;


2.
whether the nominee has been the chief executive officer or senior executive of a public company or a leader of a similar organization, including industry groups, universities or governmental organizations;


3.
whether the nominee, by virtue of particular experience, technical expertise or specialized skills or contacts relevant to the Company’s current or future business, will add specific value as a Board member; and


4.
whether there are any other factors related to the ability and willingness of a new nominee to serve, or an existing Board member to continue his service.





The Board or management has not established any specific minimum qualifications that a candidate for director must meet in order to be recommended for Board membership.  Rather, the Board or management will evaluate the mix of skills and experience that the candidate offers, consider how a given candidate meets the Board’s
current expectations with respect to each such criterion and make a determination regarding whether a candidate should be recommended to the stockholders for election as a Director.  During 2009, the Company received no recommendation for Directors from its stockholders.





The Company will consider for inclusion in its nominations of new Board of Directors nominees proposed by stockholders who have held at least 1% of the outstanding voting securities of the Company for at least one year.  Board candidates referred by such stockholders will be considered on the same basis as Board candidates referred
from other sources.  Any stockholder who wishes to recommend for the Company’s consideration a prospective nominee to serve on the Board of Directors may do so by giving the candidate’s name and qualifications in writing to the Company’s Secretary at the following address:  2373 208th Street, Unit F4, Torrance, CA 90501.





ITEM 11. EXECUTIVE COMPENSATION





Summary Compensation





Our executive officers have not received any compensation, including plan or non-plan compensation, nor has our executive officers earned any compensation as of the date of this Prospectus.





Future Compensation





Our executive officers have agreed to provide services to us without compensation until such time as we have earnings from our revenue.


20


Board Committees





We currently do not have any committees of the board of directors.





ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS





The following table sets forth information, to the best of our knowledge, about the beneficial ownership of our common stock on March 25, 2010 relating to the beneficial ownership of our common stock by those persons known to beneficially own more than 5% of our capital stock and by our directors
and executive officers.  The percentage of beneficial ownership for the following table is based on 31,500,000 shares of common stock outstanding.





Name of Beneficial Owner
Number Of Shares
Percent Beneficially OwnedJooin Kim, President & Chief Executive Officer
0
--Misun Kim, Secretary & Director
2,000,000
6%Jisun Kim, Treasurer & Director
2,000,000
6%Donghwan Kim, Director
12,500,000
40%Peter Duchine, Director
0
--All Directors, Officers and Principle Stockholders as a Group
16,500,000
52%





“Beneficial ownership” means the sole or shared power to vote or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., thepower to dispose of or to direct the
disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have “beneficial ownership” of any security that such person has the right to acquire within 60 days from the date of this prospectus.





ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPNDENCE





In November 2009, Donghwan Kim, a Director of the Company, loaned the Company $49,000. The loan bears no interest and is due upon demand but cannot be demanded before December 2020.





In November 2009, the Company loaned $30,000 to ENSAP International Co., Ltd., a California Corporation owned by Donghwan Kim, a Director of the Company. The loan bears no interest and is due upon demand but cannot be demanded before November 2010.  In December 2009, the Company
received a partial repayment of $20,000 from ENSAP.  As of December 31, 2009, the balance owed to the Company was $10,000.


21


The officers and directors are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests.  The Company has not formulated
a policy for the resolution of such conflicts.





Director Independence





The Board of Directors has not made the determination if any of its Directors are considered independent directors in accordance with the director independence standards of the American Stock Exchange.  Therefore, as of the date of this filing, each director should be considered as non-independent.





ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES





(1) AUDIT FEES





The aggregate fees billed for professional services rendered by the principal accountant, Moore & Associates, Chartered, for the audit of our annual financial statements and review of the financial statements included in our Form 10-Q or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements for fiscal years 2009 and 2008 were $6,500 and $5,000, respectively.





In October 2009, the registrant engaged De Joya Griffith & Company, LLC to serve as the registrant’s independent registered public accountants. The aggregate fees billed for professional services rendered by De Joya Griffith Company, LLC for the review of the period ended September
30, 2009, for the audit of our annual financial statements for the fiscal year ended December 31, 2009, and re-audit of our annual financial statement for the fiscal year ended December 2008 was $7,250.





(2) AUDIT-RELATED FEES





None.





(3) TAX FEES





None.





(4) ALL OTHER FEES





None.


22





(5) AUDIT COMMITTEE POLICIES AND PROCEDURES





We do not have an audit committee.





(6) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.





Not applicable.





ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES





(a)





1.
The financial statements listed in the "Index to Financial Statements" on page 23 are filed as part of this report.





2.
Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.





3.
Exhibits included or incorporated herein: See index to Exhibits.





(b)           Exhibits





Incorporated by referenceExhibit
number
Exhibit description
Filed
herewith
Form
Period
ending
Exhibit
Filing date3(i)(a)
Articles of Incorporation of Madison Management, Inc. filed on March 2, 2001

S-1

3(i)(a)
12/19/083(i)(b)
Amended and Restated Articles of Incorporation, filed on December 11, 2009
X3(i)(c)
Amended and Restated Articles of Incorporation, filed on January 14, 2010
X3(ii)(a)
Bylaws of Madison Management, Inc.

S-1

3(ii)(a)
12/19/0831.1
Certification of Jooin Kim pursuant to Section 302 of the Sarbanes-Oxley Act
X32.1
Certification of Jooin Kim pursuant to Section 906 of the Sarbanes-Oxley Act
X





23


SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





E & M GROUP, INC.








By:/S/ Jooin Kim


Jooin Kim, President





Date: March 31 2010





Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.





Signature
Title
Date/S/ Jooin Kim
President, Chief Executive Officer,
March 31, 2010Jooin Kim
Principal Executive Officer and
Principal Accounting Officer/S/ Misun Kim
Secretary & Director
March 31, 2010Misun Kim/S/ Jisun Kim
Treasurer & Director
March 31, 2010Jisun Kim/S/ Donghwan Kim
Director
March 31, 2010Donghwan Kim/S/ Peter Duchine
Director
March 31, 2010Peter Duchine


24


E & M GROUP, INC.





INDEX TO FINANCIAL STATEMENTS





YEARS ENDED DECEMBER 31, 2009 AND 2008








PagesReport of Independent Registered Public Accounting Firm
F-1Balance Sheets, December 31, 2009 and 2008
F-2Statements of Operations for the Years Ended December 31, 2009 and 2008 and the period from Inception (March 2, 2001) to December 31, 2009
F-3Statement of Stockholders' Deficit for the period from Inception (March 2, 2001) to December 31, 2009
F-4 – F-6Statements of Cash Flows for the Years Ended December 31, 2009 and 2008 and the period from Inception (March 2, 2001) to December 31, 2009
F-7Notes to Financial Statements
F-8 – F-16








25





De Joya Griffith & Company, LLC
 
 CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS











Report of Independent Registered Public Accounting Firm





To The Board of Directors and Stockholders


E & M Group, Inc.


Torrance, CA 90501





We have audited the accompanying balance sheets of E & M Group, Inc. (formerly Madison Management) (A Development Stage Company) as of December 31, 2009 and 2008, and the related statements of operations, stockholders’ deficit, and cash flows for the years then ended and from inception (March 2, 2001) to December 31, 2009. These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audit.





We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.





In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of E & M Group, Inc. (formerly Madison Management) (A Development Stage Company) as of December 31, 2009 and 2008, and the results of their operations and cash flows for the years then ended and from inception
(March 2, 2001) to December 31, 2009 in conformity with accounting principles generally accepted in the United States.





The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard
to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





De Joya Griffith & Company, LLC





/s/ De Joya Griffith & Company, LLC


Henderson, Nevada


March 30, 2010








2580 Anthem Village Drive, Henderson, NV  89052


Telephone (702) 563-1600  ●  Facsimile (702) 920-8049





F-1





E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)(A DEVELOPMENT STAGE COMPANY)BALANCE SHEETSDecember 31,2009


2008ASSETSCurrent assets:Cash

$
27,057


$
6,559Prepaid expenses


1,250



-Notes receivable - related party


10,000



-Total current assets


38,307



6,559Total assets

$
38,307


$
6,559LIABILITIES AND STOCKHOLDERS' DEFICITCurrent liabilities:Accounts payable

$
2,508


$
6,929Notes payable - related party


-



15,000Total current liabilities


2,508



21,929Long-term liabilities:Notes payable - related party


49,000



-Total long-term liabilities


49,000



-Total liabilities


51,508



21,929Stockholders' deficit:Common stock, $0.001 par value, 100,000,000 sharesauthorized, 31,500,000 and 31,500,000 shares issued and outstandingas of December 31, 2009 and 2008, respectively


31,500



31,500Additional paid-in capital


70,993



-Deficit accumulated during development stage


(115,694
)


(46,870
)Total stockholders' deficit


(13,201
)


(15,370
)Total liabilities and stockholders' deficit

$
38,307


$
6,559











The accompanying notes are an integral part of these statements.


F-2





E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)(A DEVELOPMENT STAGE COMPANY)STATEMENT OF OPERATIONSInception(March 2, 2001)For the years ended


toDecember 31,


December 31,2009


2008


2009Revenue

$
5,000


$
-


$
15,000Revenue - related party


-



8,500



38,500Total revenue


5,000



8,500



53,500Expenses:General and administrative


15,653



8,237



30,243Consulting fees


-



1,100



11,100Consulting fees - stock based


-



-



22,500Consulting fees - related party


-



-



5,000Legal and professional fees


60,100



23,938



102,280Total expenses


75,753



33,275



171,123Net operating loss


(70,753
)


(24,775
)


(117,623
)Other income:Forgiveness of debt


1,929



-



1,929Total other income


1,929



-



1,929Net loss

$
(68,824
)

$
(24,775
)

$
(115,694
)Weighted average number of common shares


31,500,000



31,500,000outstanding - basicNet loss per share - basic

$
(0.00
)

$
(0.00
)











The accompanying notes are an integral part of these statements.





F-3


E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)(A DEVELOPMENT STAGE COMPANY)STATEMENT OF STOCKHOLDERS' DEFICITDeficitAccumulatedAdditional



During

TotalCommon Shares

Paid-In

Subscriptions

Development

Stockholders'Shares

Amount

Capital

Receivable

Stage

DeficitMarch 2001Issuance of common stock for services

12,500,000

$  12,500

$            -

$                  -

$                 -

$         12,500April 2001Issuance of common stock for services

10,000,000

10,000

-

-

-

10,000August - December 2001Issuance of common stock for cash

9,000,000

9,000

-

(1,500)

-

7,500Net loss

-

-

-

-

(23,048)

(23,048)Balance, December 31, 2001

31,500,000

31,500

-

(1,500)

(23,048)

6,952


F-4





E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)(A DEVELOPMENT STAGE COMPANY)STATEMENT OF STOCKHOLDERS' DEFICITJanuary 2002Cash received for subscriptions receivable

-

-

-

500

-

500February 2002Cash received for subscriptions receivable

-

-

-

1,000

-

1,000Net loss

-

-

-

-

(2,309)

(2,309)Balance, December 31, 2002

31,500,000

31,500

-

-

(25,357)

6,143Net loss

-

-

-

-

(4,318)

(4,318)Balance, December 31, 2003

31,500,000

31,500

-

-

(29,675)

1,825Net loss

-

-

-

-

(320)

(320)Balance, December 31, 2004

31,500,000

31,500

-

-

(29,995)

1,505Net loss

-

-

-

-

(320)

(320)Balance, December 31, 2005

31,500,000

31,500

-

-

(30,315)

1,185


F-5





E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)(A DEVELOPMENT STAGE COMPANY)STATEMENT OF STOCKHOLDERS' DEFICITNet loss

-

-

-

-

14,380

14,380Balance, December 31, 2006

31,500,000

31,500

-

-

(15,935)

15,565Net loss

-

-

-

-

(6,160)

(6,160)Balance, December 31, 2007

31,500,000

31,500

-

-

(22,095)

9,405Net loss

-

-

-

-

(24,775)

(24,775)Balance, December 31, 2008

31,500,000

31,500

-

-

(46,870)

(15,370)August 2009Forgiveness of debt from a related party

-

-

70,993

-

-

70,993Net loss

-

-

-

-

(68,824)

(68,824)Balance, December 31, 2009

31,500,000

$  31,500

$   70,993

$                  -

$     (115,694)

$       (13,201)











The accompanying notes are an integral part of these statements.





F-6


E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)(A DEVELOPMENT STAGE COMPANY)STATEMENT OF CASH FLOWSInception(March 2, 2001)For the years ended


toDecember 31,


December 31,2009


2008


2009CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(68,824
)

$
(24,775
)

$
(115,694
)Adjustments to reconcile net lossto net cash used in operating activities:Shares issued for services


-



-



22,500Changes in operating assets and liabilities:(Increase) in prepaid expenses


(1,250
)


-



(1,250
)Increase (decrease) in accounts payable


(4,421
)


4,803



2,508Net cash used in operating activities


(74,495
)


(19,972
)


(91,936
)CASH FLOWS FROM INVESTING ACTIVITIESProceeds from repayment of notes receivable - related party


20,000



-



20,000Payments for notes receivable - related party


(30,000
)


-



(30,000
)Net cash provided by investing activities


(10,000
)


-



(10,000
)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from sale of common stock, net of offering costs


-



-



9,000Proceeds from donated capital


70,993



-



70,993Proceeds from notes payable


49,000



-



49,000Proceeds from notes payable - related party


-



15,000



15,000Payments to notes payable - related party


(15,000
)


-



(15,000
)Net cash provided by financing activities


104,993



15,000



128,993NET CHANGE IN CASH


20,498



(4,972
)


27,057CASH AT BEGINNING OF YEAR


6,559



11,531



-CASH AT END OF YEAR

$
27,057


$
6,559


$
27,057SUPPLEMENTAL INFORMATION:Interest paid

$
-


$
-


$
-Income taxes paid

$
-


$
-


$
-Non-cash activities:Number of shares issued for services


-



-



22,500,000











The accompanying notes are an integral part of these statements.





F-7
 E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Organization


The Company was incorporated on March 2, 2001 (Date of Inception) under the laws of the State of Nevada, as Madison Management, Inc. On December 11, 2009, the Company amended its articles of incorporation and changed its name to E & M Group, Inc.





The Company has not commenced significant operations and, in accordance with ASC Topic 915, the Company is considered a development stage company.





Nature of operations


The Company’s primary business is to establish or reestablish solid management organizations for its clients.  The Company provides placement of professional and competent personnel into key slots to create a strong, focused management and marketing group for the benefit of the client.





Cash and cash equivalents


For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.  As of December 31, 2009 and 2008, there are no cash equivalents.





Revenue Recognition


The Company recognizes revenue when it is earned on the accrual basis of accounting in accordance with generally accepted accounting principles.





Advertising Costs


Advertising costs are anticipated to be expensed as incurred; however there were no advertising costs included in general and administrative expenses for years ended December 31, 2009 and 2008.





Fair value of financial instruments


Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2009 and 2008. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and accounts payable.
Fair values were assumed to approximate carrying values for cash, prepaid expenses and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.





Stock-based compensation


The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards.  This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such
transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.





Earnings per share


The Company follows ASC Topic 260 to account for the earnings per share. Basic earning per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earning per common share calculations are determined by dividing net
income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.


F-8
 E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Income taxes


The Company follows ASC Topic 740 for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized
or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.





Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary
differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.





The Company applies a more-likely-than-not recognition threshold for all tax uncertainties. ASC Topic 740 only allows the recognition of those tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities. As of December 31, 2009 and 2008, the Company reviewed its tax positions
and determined there were no outstanding, or retroactive tax positions with less than a 50% likelihood of being sustained upon examination by the taxing authorities, therefore this standard has not had a material affect on the Company.





The Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months.





The Company classifies tax-related penalties and net interest as income tax expense. As of December 31, 2009 and 2008, no income tax expense has been incurred.





Use of estimates


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ significantly from those estimates.





Concentrations


In 2009 and 2008, one customer accounted for 100% and 100% of sales, respectively.


F-9
 E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Recent pronouncements





Below is a listing of the most recent accounting standards and their effect on the Company.





In February 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-08 (ASU 2010-08), Technical Corrections to Various Topics.  This amendment eliminated inconsistencies and outdated provisions and provided the needed clarifications to various topics within Topic 815.  The amendments
are effective for the first reporting period (including interim periods) beginning after issuance (February 2, 2010), except for certain amendments.  The amendments to the guidance on accounting for income taxes in reorganization (Subtopic 852-740) should be applied to reorganizations for which the date of the reorganization is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  For those reorganizations reflected in interim financial statements
issued before the amendments in this Update are effective, retrospective application is required.  The clarifications of the guidance on the embedded derivates and hedging (Subtopic 815-15) are effective for fiscal years beginning after December 15, 2009, and should be applied to existing contracts (hybrid instruments) containing embedded derivative features at the date of adoption.  The Company does not expect the provisions of ASU 2010-08 to have a material effect on the financial position,
results of operations or cash flows of the Company.





In January 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-07 (ASU 2010-07), Not-for-Profit Entities (Topic 958): Not-for-Profit Entities: Mergers and Acquisitions.  This amendment to Topic 958 has occurred as a result of the issuance of FAS 164.  The Company does not expect
the provisions of ASU 2010-07 to have a material effect on the financial position, results of operations or cash flows of the Company.





In January 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-06 (ASU 2010-06), Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.  This amendment to Topic 820 has improved disclosures about fair value measurements on the basis of
input received from the users of financial statements.  This is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements.  Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.  Early adoption is permitted.  The Company
does not expect the provisions of ASU 2010-06 to have a material effect on the financial position, results of operations or cash flows of the Company.





In January 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-05 (ASU 2010-05), Compensation – Stock Compensation (Topic 718).  This standard codifies EITF Topic D-110 Escrowed Share Arrangements and the Presumption of Compensation.





In January 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-04 (ASU 2010-04), Accounting for Various Topics—Technical Corrections to SEC Paragraphs.


F-10
 E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Recent pronouncements (continued)





In January 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-03 (ASU 2010-03), Extractive Activities—Oil and Gas (Topic 932): Oil and Gas Reserve Estimation and Disclosures.  This amendment to Topic 932 has improved the reserve estimation and disclosure requirements by (1) updating
the reserve estimation requirements for changes in practice and technology that have occurred over the last several decades and (2) expanding the disclosure requirements for equity method investments.  This is effective for annual reporting periods ending on or after December 31, 2009.  However, an entity that becomes subject to the disclosures because of the change to the definition oil- and gas- producing activities may elect to provide those disclosures in annual periods beginning after
December 31, 2009.  Early adoption is not permitted.  The Company does not expect the provisions of ASU 2010-03 to have a material effect on the financial position, results of operations or cash flows of the Company.





In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary.  This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP.  It clarifies the decrease in ownership provisions of Subtopic
810-10 and removes the potential conflict between guidance in that Subtopic and asset derecognition and gain or loss recognition guidance that may exist in other US GAAP.  An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10).  For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December
15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160.  The Company does not expect the provisions of ASU 2010-02 to have a material effect on the financial position, results of operations or cash flows of the Company.





In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force).  This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them
to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis.  The Company does not expect the provisions of ASU 2010-01 to have a material effect
on the financial position, results of operations or cash flows of the Company.





In December 2009, the FASB issued Accounting Standards Update 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.  This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 167. (See FAS 167 effective date below)





In December 2009, the FASB issued Accounting Standards Update 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets.  This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 166. (See FAS 166 effective date below)


F-11
 E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Recent pronouncements (continued)





In October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing.  This Accounting Standards Update amends the FASB Accounting Standard Codification for EITF 09-1.  (See EITF 09-1 effective date below)





In October 2009, the FASB issued Accounting Standards Update 2009-14, Software (Topic 985): Certain Revenue Arrangements That Include Software Elements.  This update changed the accounting model for revenue arrangements that include both tangible products and software elements.Effective
prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010.  Early adoption is permitted.  The Company does not expect the provisions of ASU 2009-14 to have a material effect on the financial position, results of operations or cash flows of the Company.





In October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements.  This update addressed the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than a combined unit
and will be separated in more circumstances under existing US GAAP.  This amendment has eliminated that residual method of allocation.Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010.  Early adoption is permitted. The Company does not expect the provisions of ASU 2009-13 to have a material effect on the financial position, results of operations
or cash flows of the Company.





In September 2009, the FASB issued Accounting Standards Update 2009-12, Fair Value Measurements and Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).  This update provides amendments to Topic 820 for the fair value measurement of investments in certain entities
that calculate net asset value per share (or its equivalent).  It is effective for interim and annual periods ending after December 15, 2009.  Early application is permitted in financial statements for earlier interim and annual periods that have not been issued. The Company does not expect the provisions of ASU 2009-12 to have a material effect on the financial position, results of operations or cash flows of the Company.





In July 2009, the FASB ratified the consensus reached by EITF (Emerging Issues Task Force) issued EITF No. 09-1, (ASC Topic 470) “Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance” (“EITF 09-1”).  The provisions of EITF 09-1, clarifies the accounting treatment and
disclosure of share-lending arrangements that are classified as equity in the financial statements of the share lender.  An example of a share-lending arrangement is an agreement between the Company (share lender) and an investment bank (share borrower) which allows the investment bank to use the loaned shares to enter into equity derivative contracts with investors.  EITF 09-1 is effective for fiscal years that beginning on or after December 15, 2009 and requires retrospective application
for all arrangements outstanding as of the beginning of fiscal years beginning on or after December 15, 2009.   Share-lending arrangements that have been terminated as a result of counterparty default prior to December 15, 2009, but for which the entity has not reached a final settlement as of December 15, 2009 are within the scope.  Effective for share-lending arrangements entered into on or after the beginning of the first reporting period that begins on or after June 15, 2009.  The
Company does not expect the provisions of EITF 09-1 to have a material effect on the financial position, results of operations or cash flows of the Company.


F-12
 E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Recent pronouncements (continued)





In June 2009, the FASB issued SFAS No. 167 (ASC Topic 810), “Amendments to FASB Interpretation No. 46(R) (“SFAS 167”).   SFAS 167 amends the consolidation guidance applicable to variable interest entities. The provisions of SFAS 167 significantly affect the overall consolidation analysis under FASB Interpretation
No. 46(R).  SFAS 167 is effective as of the beginning of the first fiscal year that begins after November 15, 2009. SFAS 167 will be effective for the Company beginning in 2010. The Company does not expect the provisions of SFAS 167 to have a material effect on the financial position, results of operations or cash flows of the Company.





In June 2009, the FASB issued SFAS No. 166, (ASC Topic 860) “Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140” (“SFAS 166”). The provisions of SFAS 166, in part, amend the derecognition guidance in FASB Statement No. 140, eliminate the exemption from consolidation for qualifying
special-purpose entities and require additional disclosures. SFAS 166 is effective for financial asset transfers occurring after the beginning of an entity’s first fiscal year that begins after November 15, 2009. The Company does not expect the provisions of SFAS 166 to have a material effect on the financial position, results of operations or cash flows of the Company.





NOTE 2 – GOING CONCERN





The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the development stage and, accordingly, has generated minimal revenues
from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start up costs and expenses. As a result, the Company incurred accumulated net losses from Inception (March 2, 2001) through the period ended December 31, 2009 of ($115,377). In addition, the Company’s development activities since inception have been financially sustained through equity and debt financing.





The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock, debt financing and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification
of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.





NOTE 3 – NOTES RECEIVABLE – RELATED PARTY





Notes receivable consists of the following at December 31, 2009 and 2008:





December 31, 2009

December 31, 2008Note receivable to an entity owned and controlled by officers and directors of the Company, unsecured, 0% interest, due upon demand but cannot be demanded before November 2010

$            10,000

$                    -$            10,000

$                    -





Interest income for the years ended December 31, 2009 and December 31, 2008 was $0 and $0, respectively.





F-13
 E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS


NOTE 4 – NOTES PAYABLE – RELATED PARTY





Notes payable consists of the following at December 31, 2009 and 2008:





December 31, 2009

December 31, 2008Note payable to an entity owned by a former officer and director, unsecured, 0% interest, due upon demand

$                  -

$            15,000Note payable to an entity owned and controlled by officers and directors of the Company, unsecured, 0% interest, due upon demand but cannot be demanded before December 2020

49,000

-$        49,000

$          15,000





Interest expense for the years ended December 31, 2009 and December 31, 2008 was $0 and $0, respectively.





NOTE 5 – INCOME TAXES





At December 31, 2009 and 2008, the Company had federal operating loss carryforwards of $115,377 and $46,870, respectively, which begins to expire in 2021.





The provision for income taxes consisted of the following components for the years ended December 31, 2009 and 2008:





2009

2008Current:Federal
$                  -

$                  -State
-

-Deferred
-

-$                  -

$                  -





Components of net deferred tax assets, including a valuation allowance, are as follows at December 31, 2009 and 2008:





2009

2008Deferred tax assets:Net operating loss carryforward
$   40,382

$    16,405Total deferred tax assets
40,382

16,405Less: Valuation allowance
(40,382)

(16,405)Net deferred tax assets
$             -

$             -





The valuation allowance for deferred tax assets as of December 31, 2009 and 2008 was $40,382 and $16,405, respectively, which will begin to expire 2021.  In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be
realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible.  Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment.  As a result, management determined it was more likely than not the deferred tax assets would not be realized as of December 31, 2009
and 2008 and maintained a full valuation allowance.


F-14
 E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS


NOTE 5 – INCOME TAXES (CONTINUED)





Reconciliation between the statutory rate and the effective tax rate is as follows at December 31, 2009 and 2008:





2009

2008Federal statutory rate
(35.0)%

(35.0)%State taxes, net of federal benefit
(0.00)%

(0.00)%Change in valuation allowance
35.0%

35.0%Effective tax rate
0.0%

0.0%





NOTE 6 – STOCKHOLDERS’ EQUITY





Common Stock





The Company is authorized to issue 25,000,000 shares of its $0.001 par value common stock.  Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders.  Holders of common stock do not have cumulative voting rights and are entitled to share ratably in dividends,
if any.  In the event of  a liquidation, dissolution or winding up of our Company, the holders of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities.  All of the outstanding shares of common stock are fully paid and non-assessable.  Holders of common stock have no preemptive rights to purchase our common stock.  There are no conversion or redemption rights or sinking fund provisions with respect to the common
stock.





On December 11, 2009, the Company amended its articles of incorporation and increased its authorized capital to 100,000,000 shares of it $0.001 par value common stock.





On March 2, 2010, the Company effected a 10-for-1 forward stock split of its $0.001 par value common stock.





All share and per share amounts have been retroactively  restated to reflect the splits discussed below.





On March 5, 2001, the Company issued 12,500,000 shares of its par value common stock to its founders, officers and directors for services rendered to the Company valued at $12,500.





On April 5, 2001, the Company issued 10,000,000 shares of its par value common stock to various consultants for services rendered to the company valued at $10,000.





During August – December 2001, the Company received subscriptions for 900,000 shares of stock for cash of $7,500 and subscriptions receivable of $1,500.





In January 2002, the Company received cash of $500 and reduced the balance of subscriptions receivable.





In February 2002, the Company received cash of $1,000 and reduced the remaining balance of subscriptions receivable.





In August 2009, E Venture Resources, Inc. forgave $70,993 of debt which was recorded as donated capital.  EVR, Inc. is an entity that is owned and controlled by a former officer of the Company.


As of December 31, 2009, there have been no other issuances of common stock.


F-15
 E & M GROUP, INC. (FORMERLY MADISON MANAGEMENT, INC.)
 (A DEVELOPMENT STAGE COMPANY)
 NOTES TO FINANCIAL STATEMENTS


NOTE 7 – WARRANTS AND OPTIONS





As of December 31, 2009, there were no warrants or options outstanding to acquire any additional shares of common stock.





NOTE 8 – RELATED PARTY TRANSACTIONS





The Company had a month-to-month lease at $250 per month to lease office space from a former officer, director and shareholder of the Company.  During the years ended December 31, 2009 and 2008, the Company had rent expense of $1,750 and $0, respectively.  In September 2009, the Company ceased leasing office space. Office
services are provided without charge by an officer and director of the Company.  Such costs are immaterial to the financial statements and, accordingly, have not been reflected therein.





NOTE 9 – SUBSEQUENT EVENTS





The Company has evaluated subsequent events through March 30, 2010, the date which the financial statements were available to be issued.





On January 12, 2010, the Company executed a sublease agreement with ENSAP International, Inc. (“ENSAP”).  The term is for three years commencing January 12, 2010 and ending on January 12, 2013 with a monthly rent of $2,500.  ENSAP is a related party and is an entity that is owned and controlled by the officers
and directors of the Company and their immediate family members.





F-16