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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      DC. 20549**

**FORM      10-KSB**

|                            |                                                                                                             |
|---------------------------------|------------------------------------------------------------------------------------------------------------------|
| [**X**]                    | ANNUAL                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934     |
|                       | For                the fiscal year ended September 30, 2007                                                      |
|                            |                                                                                                             |
| [                  ]  | TRANSITION                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934 |
|                            | For                the transition period from _______________ to                ________________                 |

**RACINO      ROYALE, INC.**

| **Nevada**(State                or other jurisdiction of incorporation or organization)                                                                   | **88-0436364**(I.R.S.                Employer Identification No.)                  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|
|                                                                                                                                                      |                                                                               |
| **144                Front Street, Suite 700****Toronto,                Ontario, Canada, M5J 2L7**(Address                of Principal Executive Offices) | **416-477-2303**(Issuer’s                Telephone No., including area code) |
|  Securities                registered pursuant toSection                12(b) of the Act:                                                            |  None                                                                         |
|  Securities                registered pursuant toSection                12(g) of the Act:                                                            |  Common                Stock, par value $0.00001                         |

**DOCUMENTS      INCORPORATED BY REFERENCE**

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**PART      I**

**ITEM      1 - DESCRIPTION OF BUSINESS**

**History**

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**PART      II**

**ITEM      5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER      MATTERS**

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**ITEM      6 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS/ PLAN OF OPERATION**

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| 1.   | the                issuance of 5,000,000 common shares in satisfaction of $250,000 of                related                party debt, |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | foreign                exchange translation losses recorded in accumulated other comprehensive                income, and |
|----------------|---------------------------------------------------------------------------------------------------------------------------|

| 3.   | the                $1,487,342 net loss for the year. |
|----------------|------------------------------------------------------|

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**Inflation**

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**ITEM      7 - FINANCIAL STATEMENTS**

**REPORT      OF INDEPENDENT REGISTERED PUBLIC      ACCOUNTING FIRM**

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**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**“SF      PARTNERSHIP, LLP”**

**Toronto,      Canada                                                                           CHARTERED      ACCOUNTANTS**

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**RACINO      ROYALE, INC. AND SUBSIDIARY**

| **ASSETS**                                                                                                                                                                                                                 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                       |   | **2007** |   |
|                          **Current assets**                                                                                                                              |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                                   |   | $ | 2,475 |   |
| Advances                to corporation (Note 5)                                                                                                                                                                            |   |   | 27,170 |   |
| Prepaid                expenses                                                                                                                                                                                            |   |   | 256 |   |
|                                                                                                                                                                                                                       |   |   |   |   |
| **                                Total current                assets     **        |   | ** ** | **29,901** |   |
|                                                                                                                                                                                                                       |   |   |   |   |
|                                 **Total assets**                                                                                                |   | **$** | **29,901** |   |
|                                                                                                                                                                                                                       |   |   |   |   |
|                                                                                                                                                                                                             |   |
| **LIABILITIES**                                                                                                                                                                                                            |   |
|                                                                                                                                                                                                                       |   |   |   |   |
|    **Current                liabilities**                                                                                                                                                              |   |   |   |   |
| Due                to related parties (Note 4)                                                                                                                                                                             |   | $ | 78,297 |   |
| Accounts                payable                                                                                                                                                                                            |   |   | 31,037 |   |
| Accrued                liabilities                                                                                                                                                                                         |   |   | 8,000 |   |
|                                                                                                                                                                                                                       |   |   |   |   |
|    **Total                current liabilities**                                                                                                                                                             |   | ** $** | **117,334** |   |
|                                                                                                                                                                                                             |   |   |   |   |
| **STOCKHOLDERS’                DEFICIENCY**                                                                                                                                                                          |   |
| Common                stock, $.00001 par value; 100,000,000 shares authorized,                33,223,886 shares issued and outstanding (Note 6)                                                                       |   | $ | 333 |   |
| Additional                paid-in capital                                                                                                                                                                                  |   |   | 6,822,394 |   |
| Accumulated                deficit                                                                                                                                                                                         |   |   | (6,910,160 | ) |
|                                                                                                                                                                                                                       |   |   |   |   |
|     **Total                stockholders’ deficiency**                                                                                                                                            |   | ** ** | **(87,433** | **)** |
|                                                                                                                                                                                                                       |   |   |   |   |
|                  **Total                liabilities and stockholders’ deficiency**                                              |   | **$** | **29,901** |   |
|                                                                                                                                                                                                                       |   |   |   |   |

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**RACINO      ROYALE, INC. AND SUBSIDIARY**

|                                                                                                         |   | **2007**   |           |   | 2006   |   |       | (Note                1)Period                fromRe-entering                theDevelopment                StageThrough                to Sep. 30 2007 |   |
|--------------------------------------------------------------------------------------------------------------|--------|------------|----------------|--------|--------|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **Revenues**                                                                                                 |   |       |           |   |   |   |       |                                                                                                                                                       |   |
| Provincial                grant income                                                                       |   | **$**      | **-**          |   |   | $      | 96,347     |                                                                                                                                                       |   | $ | 96,347 |   |
| Parimutuel                betting income                                                                     |   | ** ** | **-**          |   |   |   | 19,018     |                                                                                                                                                       |   |   | 19,018 |   |
| Miscellaneous                income                                                                          |   | ** ** | **-**          |   |   |   | 571        |                                                                                                                                                       |   |   | 571 |   |
| **Total                Revenues**                                                                            |   | ** ** | **-**          |   |   |   | 115,936    |                                                                                                                                                       |   |   | 115,936 |   |
| **Cost                of Revenues**                                                                          |   |       |           |   |   |   |       |                                                                                                                                                       |   |   |   |   |
| Purses                and awards                                                                             |   | ** ** | **-**          |   |   |   | 60,177     |                                                                                                                                                       |   |   | 60,177 |   |
| Bets                paid out                                                                                 |   | ** ** | **-**          |   |   |   | 12,539     |                                                                                                                                                       |   |   | 12,539 |   |
| **Total                Cost of Revenues**                                                                    |   | ** ** | **-**          |   |   |   | 72,716     |                                                                                                                                                       |   |   | 72,716 |   |
| **Gross                Margin**                                                                              |   | ** ** | **-**          |   |   |   | 43,220     |                                                                                                                                                       |   |   | 43,220 |   |
| **Expenses**                                                                                                 |   |       |           |   |   |   |       |                                                                                                                                                       |   |   |   |   |
| Management                fees – related party                                                         |   | ** ** | **51,743**     |   |   |   | -          |                                                                                                                                                       |   |   | 51,743 |   |
| Professional                fees                                                                             |   | ** ** | **39,965**     |   |   |   | 25,431     |                                                                                                                                                       |   |   | 65,396 |   |
| General                and administrative                                                                    |   | ** ** | **79,562**     |   |   |   | 92,295     |                                                                                                                                                       |   |   | 186,907 |   |
| **Total                Expenses**                                                                            |   | ** ** | **171,270**    |   |   |   | 117,726    |                                                                                                                                                       |   |   | 304,046 |   |
| **Other                Expense:**                                                                            |   |       |           |   |   |   |       |                                                                                                                                                       |   |   |   |   |
| **Foreign                Currency Gain**                                                                     |   | ** ** | **1,399**      |   |   |   | -          |                                                                                                                                                       |   |   | 1,399 |   |
| **Loss                from Impairment of Licensing Rights (note 3)**                                         |   | ** ** | **(1,317,471** | **)**  |   |   | -          |                                                                                                                                                       |   |   | (1,317,471 | ) |
| **Loss                from Continuing Operations**                                                           |   | ** ** | **(1,487,342** | **)**  |   |   | (74,506    | )                                                                                                                                                          |   |   | (1,576,898 | ) |
| **Income                from Discontinued Operations, Net of Income Taxes**(note                7)           |   | ** ** | **-**          |   |   |   | 14,508     |                                                                                                                                                       |   |   | 14,508 |   |
| **(Loss)                Income Before Income Taxes**                                                         |   | ** ** | **(1,487,342** | **)**  |   |   | (59,998    | )                                                                                                                                                          |   |   | (1,562,390 | ) |
| Provision                for income taxes (note 8)                                                           |   | ** ** | **-**          |   |   |   | -          |                                                                                                                                                       |   |   | - |   |
| **Net                (Loss) Income**                                                                         |   | ** ** | **(1,487,342** | **)**  |   |   | (59,998    | )                                                                                                                                                          |   |   | (1,562,390 | ) |
| Foreign                currency translation adjustment                                                       |   | ** ** | **(12,037**    | **)**  |   |   | 12,037     |                                                                                                                                                       |   |   | - |   |
| **Comprehensive                (Loss) Income**                                                               |   | **$**      | **(1,499,379** | **)**  |   | $      | (47,961    | )                                                                                                                                                          |   | $ | (1,562,390 | ) |
|                                                                                                         |   |       |           |   |   |   |       |                                                                                                                                                       |   |   |   |   |
| **Earnings                for Weighted Average Number of Shares Outstanding During the                Year** |   |       |           |   |   |   |       |                                                                                                                                                       |   |   |   |   |
| **Basic**                                                                                                    |   |       |           |   |   |   |       |                                                                                                                                                       |   |   |   |   |
| Loss                from continuing operations                                                               |   | **$**      | **(0.05**      | **)**  |   | $      | (0.003     | )                                                                                                                                                          |   |   |   |   |
| Net                Loss                                                                                      |   | **$**      | **(0.05**      | **)**  |   | $      | (0.002     | )                                                                                                                                                          |   |   |   |   |
| **Diluted**                                                                                                  |   |       |           |   |   |   |       |                                                                                                                                                       |   |   |   |   |
| Loss                from continuing operations                                                               |   | **$**      | **(0.05**      | **)**  |   | $      | (0.003     | )                                                                                                                                                          |   |   |   |   |
| Net                Loss                                                                                      |   | **$**      | **(0.05**      | **)**  |   | $      | (0.002     | )                                                                                                                                                          |   |   |   |   |
| **Weighted                Average Number of****Common                Shares Outstanding During the Year**    |   |       |           |   |   |   |       |                                                                                                                                                       |   |   |   |   |
| Basic                                                                                                        |   | ** ** | **28,848,886** |   |   |   | 24,648,543 |                                                                                                                                                       |   |   |   |   |
| Diluted                                                                                                      |   | ** ** | **29,092,788** |   |   |   | 24,791,009 |                                                                                                                                                       |   |   |   |   |

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**RACINO      ROYALE, INC. AND SUBSIDIARY**

|                                                                           |   | Number                of Shares |           |   | Amount |   |    | Additional                Paid-in Capital |   |   | Accumulted                Deficit |   |   | Accumulated                Comprehensive Loss |           |   | Total                Equity (Deficit) |   |
|--------------------------------------------------------------------------------|--------|---------------------------------|----------------|--------|--------|--------|---------|-------------------------------------------|--------|--------|-----------------------------------|--------|--------|-----------------------------------------------|----------------|--------|---------------------------------------|--------|
| Balance                December 15, 2004                                       |   |                            | 23,223,886     |   |   | $      | 233     |                                      |   | $      | 5,278,750                         |   |   | $                                             | (5,032,234     | )      |                                  | $      | (315,536 | ) |   | $ | 68,787 | ) |
| Net                loss for the period                                         |   |                            | -              |   |   |   | -       |                                      |   |   | -                                 |   |   |                                          | (15,050        | )      |                                  |   | - |   |   |   | (15,050 | ) |
|                                                                           |   |                            |           |   |   |   |    |                                      |   |   |                              |   |   |                                          |           |   |                                  |   |   |   |   |   |   |   |
| Restatement                of foreign currency translation adjustments         |   |                            | -              |   |   |   | -       |                                      |   |   | -                                 |   |   |                                          | (315,536       | )      |                                  |   | 315,536 |   |   |   | - |   |
| Balance,                September 30, 2005                                     |   |                            | 23,223,886     |   |   | $      | 233     |                                      |   | $      | 5,278,750                         |   |   | $                                             | (5,362,820     | )      |                                  | $      | - |   |   | $ | (83,837 | ) |
| Issuance                of common stock for licensing rights                   |   |                            | 5,000,000      |   |   |   | 50      |                                      |   |   | 1,200,000                         |   |   |                                          | -              |   |                                  |   | - |   |   |   | 1,200,050 |   |
| Issuance                of common stock purchase warrants for licensing rights |   |                            | -              |   |   |   | -       |                                      |   |   | 93,694                            |   |   |                                          | -              |   |                                  |   | - |   |   |   | 93,964 |   |
| Foreign                currency translation adjustment                         |   |                            | -              |   |   |   | -       |                                      |   |   | -                                 |   |   |                                          | -              |   |                                  |   | 12,037 |   |   |   | 12,037 |   |
| Net                loss for year                                               |   |                            | -              |   |   |   | -       |                                      |   |   | -                                 |   |   |                                          | (59,998        | )      |                                  |   | - |   |   |   | (59,998 | ) |
| Balance,                September 30, 2006                                     |   |                            | 28,223,886     |   |   | $      | 283     |                                      |   | $      | 6,572,444                         |   |   | $                                             | (5,422,818     | )      |                                  | $      | 12,037 |   |   | $ | 1,161,946 |   |
| Issuance                of common stock for related party debt                 |   |                            | 5,000,000      |   |   |   | 50      |                                      |   |   | 249,950                           |   |   |                                          | -              |   |                                  |   | - |   |   |   | 250,000 |   |
| Foreign                currency translation adjustment                         |   |                            | -              |   |   |   | -       |                                      |   |   | -                                 |   |   |                                          | -              |   |                                  |   | (12,037 | ) |   |   | (12,037 | ) |
| Net                loss for year                                               |   |                            | -              |   |   |   | -       |                                      |   |   | -                                 |   |   |                                          | (1,487,342     | )      |                                  |   | - |   |   |   | (1,487,342 | ) |
|                                                                           |   |                            |           |   |   |   |    |                                      |   |   |                              |   |   |                                          |           |   |                                  |   |   |   |   |   |   |   |
| **Balance,                September 30, 2007**                                 |   | ** **                      | **33,223,886** |   |   | **$**  | **333** |                                      |   | **$**  | **6,822,394**                     |   |   | **$**                                         | **(6,910,160** | **)**  |                                  | **$**  | **-** |   |   | **$** | **(87,433** | **)** |

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**RACINO      ROYALE, INC. AND SUBSIDIARY**

|                                                                                                                 |   | **For                the year ended September 30, 2007** |         |   | **For                the year ended September 30, 2006** |       |        | **(Note                1)****Period                from****Re-entering                the Development Stage Through to September 30,                2007** |   |
|----------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|--------------|--------|----------------------------------------------------------|------------|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   **Operating                activities**                                                             |   |                                                     |         |   |                                                     |       |        |                                                                                                                                                       |   |
| (Loss)                                                                                                               |   | $                                                        | (1,487,342   | )      |                                                     | $          | (74,506     | )                                                                                                                                                          |   | $ | (1,576,898 | ) |
| **Adjustments                to reconcile net (loss) to net****cash                (used) by operating activities:** |   |                                                     |         |   |                                                     |       |        |                                                                                                                                                       |   |   |   |   |
|            Impairment                of licensing rights      |   |                                                     | 1,317,471    |   |                                                     |       | -           |                                                                                                                                                       |   |   | 1,317,471 |   |
| **Changes                in operating assets and liabilities:**                                                      |   |                                                     |         |   |                                                     |       |        |                                                                                                                                                       |   |   |   |   |
| Decrease                (increase) in accounts receivable                                                            |   |                                                     | 5,847        |   |                                                     |       | (5,847      | )                                                                                                                                                          |   |   | - |   |
| Decrease                (increase) in prepaid expenses                                                               |   |                                                     | (256         | )      |                                                     |       | -           |                                                                                                                                                       |   |   | (256 | ) |
| Increase                (decrease) in accounts payable                                                               |   |                                                     | 10,124       |   |                                                     |       | 20,913      |                                                                                                                                                       |   |   | 27,076 |   |
| Increase                (decrease) in accrued liabilities                                                            |   |                                                     | (7,431       | )      |                                                     |       | 15,431      |                                                                                                                                                       |   |   | 8,000 |   |
| **Net                cash provided by (used in) operating activities**                                               |   | ** **                                               | **(161,587** | **)**  |                                                     | ** ** | **(44,009** | **)**                                                                                                                                                      |   | ** ** | **(224,607** | **))** |
|    **Investing                activities**                                                       |   |                                                     |         |   |                                                     |       |        |                                                                                                                                                       |   |   |   |   |
| Acquisition                of licensing rights                                                                       |   |                                                     | -            |   |                                                     |       | (23,727     | )                                                                                                                                                          |   |   | (23,727 | ) |
| **Net                cash provided by (used in) investing activities**                                               |   | ** **                                               | **-**        |   |                                                     | ** ** | **(23,727** | **)**                                                                                                                                                      |   | ** ** | **(23,727** | **)** |
|    **Financing                activities**                                                       |   |                                                     |         |   |                                                     |       |        |                                                                                                                                                       |   |   |   |   |
|       Increase                in due to/from related parties                           |   |                                                     | 149,040      |   |                                                     |       | 68,250      |                                                                                                                                                       |   |   | 301,127 |   |
| **Net                cash provided by (used in) financing activities**                                               |   | ** **                                               | **149,040**  |   |                                                     | ** ** | **68,250**  |                                                                                                                                                       |   | ** ** | **301,127** |   |
|                                                                                                                 |   |                                                     |         |   |                                                     |       |        |                                                                                                                                                       |   |   |   |   |
| **Increase                (decrease) in cash and cash equivalents from continuing                operations**        |   | ** **                                               | **(12,547**  | **)**  |                                                     | ** ** | **514**     |                                                                                                                                                       |   | ** ** | **52,793** |   |
|                                                                                                                 |   |                                                     |         |   |                                                     |       |        |                                                                                                                                                       |   |   |   |   |
| **Increase                (decrease) in cash and cash equivalents from discontinued                operations**      |   | ** **                                               | **-**        |   |                                                     | ** ** | **14,508**  |                                                                                                                                                       |   | ** ** | **(50,318** | **)** |
|                                                                                                                 |   |                                                     |         |   |                                                     |       |        |                                                                                                                                                       |   |   |   |   |
| **Effect                of Exchange Rate Changes**                                                                   |   | ** **                                               | **(12,037**  | **)**  |                                                     | ** ** | **12,037**  |                                                                                                                                                       |   | ** ** | **-** |   |
|                                                                                                                 |   |                                                     |         |   |                                                     |       |        |                                                                                                                                                       |   |   |   |   |
| **Increase                (decrease) in cash and cash equivalents**                                                  |   | ** **                                               | **(24,584**  | **)**  |                                                     | ** ** | **27,059**  |                                                                                                                                                       |   | ** ** | **2,475** |   |
|                                                                                                                 |   |                                                     |         |   |                                                     |       |        |                                                                                                                                                       |   |   |   |   |
| **Cash                and cash equivalents, beginning of year**                                                      |   | ** **                                               | **27,059**   |   |                                                     | ** ** | **-**       |                                                                                                                                                       |   | ** ** | **-** |   |
|                                                                                                                 |   |                                                     |         |   |                                                     |       |        |                                                                                                                                                       |   |   |   |   |
| **Cash                and cash equivalents, end of year**                                                            |   | **$**                                                    | **2,475**    |   |                                                     | **$**      | **27,059**  |                                                                                                                                                       |   | **$** | **2,475** |   |

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**RACINO      ROYALE, INC. AND SUBSIDIARY**

**1.      Nature      of Business and Basis of Presentation and Development Stage      Activities**

|   | The                Company was incorporated on                September 2, 1999 in the State of Nevada as LMC Capital Corp. and                was                organized for the purpose of creating a corporate vehicle to locate                and                acquire an operating business.  On December 12, 2001, the                Company changed its name to K-Tronik International Corp.                ("KTI"). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | By                agreement dated November 29, 2001 and approved by the board of directors                effective December 12, 2001, KTI issued 14,285,714 shares of restricted                common stock to the shareholders of  K-Tronik Int'l Corporation,                a Nevada corporation, in exchange for 100% interest in K-Tronik Asia                Corporation ("KTA"), a Korean corporation.  In connection with                this transaction, K-Tronik Int'l Corporation changed its name effective                December 12, 2001 to K-Tronik N.A. Inc.                ("KTNA"). |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                acquisition resulted in the former shareholders of KTNA acquiring                93.4% of                the outstanding shares of KTI and has been accounted for as a reverse                acquisition with KTNA being treated as the accounting parent and                KTI, the                legal parent, being treated as the accounting                subsidiary.  Accordingly, the consolidated results of operations                of KTI included those of KTNA for all periods shown and those of                the KTI                since the date of the reverse                acquisition. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | KTNA                and KTA were engaged in the manufacture and distribution of various                types                of electronic stabilizers and illuminator ballasts for fluorescent                lighting fixtures.  KTNA granted credit, on an unsecured basis,                to distributors and installers located throughout the United                States. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On                December 15, 2004, KTI entered into an agreement to sell all of its                interest in KTNA and the fixed assets of its subsidiary,                KTA.  KTI is no longer engaged in the business of manufacturing,                distributing or selling electronic ballasts and is considered to                have                re-entered the development stage at December 15,                2004. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  On                June 13, 2006, KTI announced it would implement a new corporate strategy                focusing on horseracing track development opportunities.  An                agreement was signed on June 19, 2006 to buy exclusive rights for                a                racetrack and    casino (racino) development opportunity in                Saskatchewan, Canada.  As part of the new strategy the Company                incorporated 6584292 Canada Inc. under which it would operate the                new                development opportunity.  On July 5, 2006, KTI changed its name                to Racino Royale, Inc. (“RR” or the “Company”) to reflect its intention to                engage in the business of owning or leasing race-courses and/or conduct                horse-races.  |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Going                Concern** |
|--------|----------------------------------|

|   | The                accompanying consolidated financial statements have been prepared                on a                going concern basis, in accordance with accounting principles generally                accepted in the United States of                America. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                going concern basis of presentation assumes that the Company will                continue                in operation for the foreseeable future and will be able to realize                its                assets and discharge its liabilities and contingencies in the normal                course of operations. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  There                is doubt about the Company's ability to continue as a going concern                as it                has operating losses from continuing operations of $1,487,342 (2006                -                $74,506) and a working capital deficiency of $87,433 as at September                30,  2007.  The Company's ability to continue as a going                concern is dependent upon the |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |  Company's              ability to raise additional capital and successfully complete a business              acquisition or business opportunity.  The outcome of these              matters cannot be predicted at this time.   |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
|   | The                consolidated financial statements have been prepared on a going concern                basis and do not include any adjustments to the amounts and                classifications of the assets and liabilities that would be necessary                if                the going concern basis was not appropriate.   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **2.** | **Summary                of Significant Accounting                Policies** |
|--------|------------------------------------------------------------------------------|

|   | a) | Principles                of Consolidation |
|--------|----|--------------------------------------------|

|   | The                accompanying consolidated financial statements include the accounts                of the                Company as described in note 1 and its wholly owned subsidiary 6584292                Canada Inc.  All material intercompany balances and transactions                have been eliminated. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Cash                and Cash Equivalents |
|--------|----|------------------------------------------|

|   | The                Company considers all highly liquid investments with an initial maturity                date of three months or less and money market accounts to be cash                equivalents. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | Licensing                Rights |
|--------|----|---------------------------------|

|   | Licensing                rights are recorded at cost and are considered to have a perpetual                life.                Licensing rights are tested for impairment on a periodic basis or                when                events or circumstances dictate. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d) | Revenue                Recognition |
|--------|----|------------------------------------|

|   | The                Company derives revenues from the conduct of                horse-races.  Revenues are primarily grants received from the                government to subsidize the horse-races and to a much lesser extent                from                parimutuel wagering. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Revenues                are recognized upon approval by regulatory authority.  As a                result, grant income is recognized subsequent to the race date whereas                wagering revenues are recognized on the race                date. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | e) | Foreign                Currency Translation |
|--------|----|---------------------------------------------|

|   | The                Company accounts for foreign currency translation pursuant to the                Statement of Financial Accounting Standards (“SFAS”) No. 52, “Foreign                Currency Translation”.  The Company’s foreign subsidiary’s                functional currency is the Canadian dollar.  All assets and                liabilities of the Company’s foreign subsidiary are translated into United                States dollars using the rate of exchange in effect at the end of                the                period.  Revenues and expenses are translated at the average                rate of exchange prevailing throughout the period.  Translation                adjustments are reflected as a separate component of stockholders'                deficit                in accumulated other comprehensive loss for the                period. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| f)                         | Comprehensive                Income (Loss)  |
|--------------------------------------------------------------------|--------------------------------------------------|
|   | The              Company adopted SFAS No. 130, “Reporting Comprehensive              Income”.  SFAS No. 130 establishes standards for reporting and              presentation of comprehensive income (loss) and its components in a              full              set of financial statements.  Comprehensive income (loss) is              presented in the consolidated financial statements of operations, and              consists of unrealized gains (losses) on available for sale marketable              securities; foreign currency translation adjustments and charges in              market              value of future contracts that qualify as a hedge; and negative equity              adjustments recognized in accordance with SFAS No. 87, “Employers’              Accounting for Pensions”.  SFAS No. 130. requires only              additional disclosures in the consolidated financial statements and              does              not affect the Company’s consolidated financial position or results of              operations. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | g) | Advertising                Costs |
|--------|----|----------------------------------|

|   | The                Company expenses advertising costs as incurred in accordance with                SOP                93-7. |
|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | h) | Use                of Estimates |
|--------|----|---------------------------------|
|   |   |                The                preparation of consolidated financial statements, in conformity with                accounting principles generally accepted in the United States of                America                requires management to make estimates and assumptions that affect                the                reported amounts of assets and liabilities and the disclosure of                contingent assets and liabilities at the date of the financial statements                and the reported amounts of revenues and expenses during the reporting                period. Actual results could differ from those estimates.  These                estimates are reviewed periodically, and, as adjustments become necessary,                they are reported in earnings in the period in which they become                known. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | i) | Long-Lived                Asset Impairment |
|--------|----|--------------------------------------------|

|   | The                carrying values of long-lived assets are periodically reviewed by                management and impairments would be recognized if the expected future                operating non-discounted cash flows derived from an asset were less                than                carrying value.  No impairments have been                recorded. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | j) | Fair                Value of Financial Instruments |
|--------|----|----------------------------------------------------|

|   | Financial                instruments reported in the Company's consolidated balance sheet                consist                of cash, accounts receivables, and accounts payable and accrued expenses,                the carrying value of which approximate fair value due to the current                maturity of these items. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | k) | Earnings                (loss) Per Share |
|--------|----|------------------------------------------|

|   | The                Company accounts for earnings (loss) per share under the provisions                of                SFAS No. 28, “Earnings (Loss) Per Share”, which requires a dual                presentation of basic and diluted earnings (loss) per                share.  Basic earnings (loss) per share excludes dilution and is                computed by dividing income available to common stockholders by the                weighted average number of common shares outstanding for the                period.  Diluted earnings per share is computed assuming the                exercise or conversion of common stock equivalent shares, if dilutive,                consisting of unissued shares under options and warrants. Diluted                loss per                share is not computed if                anti-dilutive. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | l) | Stock                Based Compensation |
|--------|----|-----------------------------------------|

|   | The                Company follows SFAS No. 123, "Accounting for Stock-Based Compensation,"                as amended by SFAS No. 148, "Accounting for Stock Based Compensation-                Transition and Disclosure.  No options have been granted to date                from the Company’s stock option                plan.. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | m) | Income                Taxes |
|--------|----|-----------------------------|

|   | The                Company accounts for income taxes pursuant to SFAS No. 109, "Accounting                for Income Taxes". Deferred taxes are provided on a liability method                whereby deferred tax assets are recognized for deductible temporary                differences, and deferred tax liabilities are recognized for taxable                temporary differences. Temporary differences are the differences                between                the reported amounts of assets and liabilities and their tax bases.                Deferred tax assets are reduced by a valuation allowance when, in                the                opinion of management, it is more likely than not that some portion                or all                of the deferred tax assets will not be                realized. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | n) | Recent                Accounting Pronouncements |
|--------|----|-------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   |   |  In              February 2007, the FASB issued FASB Statement NO. 159, “The Fair Value              Option for Financial Assets and Financial Liabilities – Including an              Amendment of FASB Statement No. 115” (“SFAS 159”). The fair value option              established by SFAS 159 permits all entities to choose to measure eligible              items at fair value at specified election dates. A business entity              will              report unrealized gains or loses on items for which the fair value              option              has been elected in earnings (or another performance indication if              the              business entity does not report earnings) at each subsequent reporting              date. The fair value option: (a) may be applied instrument by instrument,              with a few exceptions, such as investments otherwise accounted for              by the              equity method; (b) is irrevocable (unless a new election date occurs);              and              (c) is applied only to entire instruments and not to portions of              instruments. FASB No. 159 is effective as of the beginning of the fiscal              years beginning after November 15, 2007. The Company is currently              evaluating what impact, if any, SFAS 159 will have on its financial              position or results of operations. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   |   |  FASB              Interpretation No. 48, “*Accounting for Uncertainty in Income              Taxes, an interpretation of FASB Statement No.109*.”              Interpretation 48 prescribes a recognition threshold and a measurement              attribute for the financial statement recognition and measurement of              a tax              position taken or expected to be taken in a tax              return.  Benefits from tax positions should be recognized in the              financial statements only when it is more likely than not that the              tax              position will be sustained upon examination by the appropriate taxing              authority that would have full knowledge of all relevant              information.  The amount of tax benefits to be recognized for a              tax position that meets the more-likely-than-not recognition threshold              is              measured as the largest amount of benefit that is greater than fifty              percent likely of being realized upon ultimate settlement.  Tax              benefits relating to tax positions that previously failed to meet the              more-likely-than-not recognition threshold should be recognized in              the              first subsequent financial reporting period in which that threshold              is met              or certain other events have occurred.  Previously recognized              tax benefits relating to tax positions that no longer meet the              more-likely-than-not recognition threshold should be derecognized in              the              first subsequent financial reporting period in which that threshold              is no              longer met.  Interpretation 48 also provides guidance on the              accounting for and disclosure of tax reserves for unrecognized tax              benefits, interest and penalties and accounting in interim periods.              Interpretation 48 is effective for fiscal years beginning after December              15, 2006.  The change in net assets as a result of applying this              pronouncement will be a change in accounting principle with the cumulative              effect of the change required to be treated as an adjustment to the              opening balance of retained earnings on January 1, 2007, except in              certain              cases involving uncertainties relating to income taxes in purchase              business combinations.  In such instances, the impact of the              adoption of Interpretation 48 will result in an adjustment to              goodwill.  The Company adopted Interpretation 48 on October 1,              2006, which did not have a material impact on the Company’s financial              statements. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **3.** | **Impairment                of Licensing Rights** |
|--------|---------------------------------------------------|
|   |   |
|--------|--------|
|   | On              June 14, 2006, the Company acquired the exclusive rights for a racetrack              development opportunity in Saskatchewan,              Canada |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Cash                                                                        |   | **$**      | **22,727**    |   |
|-----------------------------------------------------------------------------|--------|------------|---------------|--------|
| Capital                stock issuance (5,000,000 shares at $0.24 per share) |   | ** ** | **1,200,050** |   |
| Warrants                (500,000 at $0.10 per share)                        |   | ** ** | **93,694**    |   |
| Legal                costs                                                  |   | ** ** | **1,000**     |   |
| Total                                                                       |   | **$**      | **1,317,471** |   |

|   |   | The              warrants are exercisable at $0.10 per share, expiring in three yeas              from              the date of issuance |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | The                licensing rights were tested for recoverability and as a result of                a                change in events and circumstances it was determined that the carrying                amount may not be recoverable.  As a result, an impairment                charge was recognized for the full amount of the                licensing.  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **4.** |   | **Due                to Related Parties** |
|--------|--------|-------------------------------------------|

|   | Amounts                due to related parties are non-interest bearing, unsecured and have                no                specified terms of repayment and arise from the related companies                settling                liabilities on behalf of the Company.  At September 30, 2007,                $78,297 was due to Eiger Technology Inc. Eiger Technology Inc. is                considered a related party due to its ownership interest in                Racino. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **5.** |   | **Advances                to Corporation** |
|--------|--------|--------------------------------------------|

|   | On                September 12, 2007, the Company entered into a Letter of Intent to                acquire                all the issued and outstanding common shares of InterAmerican Gaming                Corp.                (“InterAmerican”)(Note 11). Pursuant to the Letter of Intent the Company                agreed to fund the development of InterAmerican prior to                closing. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Amounts                due from InterAmerican at September 30, 2007 were as                follows: |
|--------|-----------------------------------------------------------------------------------------------------|

**$    **
**27,170**

**6.      Capital      Stock**

|   | The                Company has authorized capital of 100,000,000 shares of common stock                with                a par value of $0.00001 of which 33,223,886 shares are issued and                outstanding as of September 30, 2007 (28,223,886 as at September                30,                2006). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In                August 2007, RR issued 5,000,000 common shares, valued at $250,000,                to                Eiger Technology, Inc. for past services                provided. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | The                Company has an Incentive Stock Option Plan which was approved at                a                shareholders meeting held on November 12, 2001. The Company is authorized                to issue up to 1,000,000 shares of its common stock under the plan.                 There |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  are              no stock options outstanding as of September 30, 2007 and the Company              has              not recorded any stock-based compensation in the current or any prior              periods. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**7.      Discontinued      Operations**

|   | On                December 15, 2004, KTI entered                into an agreement to sell all of its interest in KTNA and the fixed                assets                of its subsidiary, KTA.  The terms of the agreement call for KTA                to use the purchase proceeds to retire the debts of KTNA and its                subsidiary KTA to the purchaser.  KTI and the purchaser also                entered into agreements whereby KTI transfers to the purchaser ownership                of all of the issued and outstanding shares of KTNA, its U.S. subsidiary                which owns KTA.  Upon final closing of the agreements described                above, the purchaser is to own all of the issued and outstanding                shares of                KTNA and the assets of KTA.  KTI is no longer engaged in the                business of manufacturing, distributing or selling electronic                ballasts. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As                such, the operations of KTNA and KTA are presented in the consolidated                financial statements as discontinued                operations. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                          |   | **2007**   |   |   | 2006   |   |
|---------------------------------------------------------------|--------|------------|--------|--------|--------|--------|
| Revenues                  of discontinued operations          |   | **$**      | **-**  |   |   | $      | - |   |
| Income                  from discontinued operations,         |   | **$**      | **-**  |   |   | $      | 14,508 |   |
| Income                  taxes                                 |   | ** ** | **-**  |   |   |   | - |   |
|                                                          |   | **$**      | **-**  |   |   | $      | 14,508 |   |
| Earnings                  per share (basic and fully diluted) |   | **$**      | **-**  |   |   | $      | 0.0006 |   |

| **8.** | **Income                Taxes** |
|--------|---------------------------------|

|   | The                provision for income taxes has been computed as                follows: |
|--------|--------------------------------------------------------------------------------------------|

|                                                                                                                                                                         |   | **2007**   |        |   | 2006   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|-------------|--------|--------|--------|
| Expected                  income tax expense (recovery) at the statutory rate of                  24.5%                                                                      |   | **$**      | **(41,961** | **)**  |   | $      | (14,702 | ) |
| Tax                  effect of expenses that are not deductible for income tax purposes                  (net of                  other amounts deductible for tax purposes) |   | ** ** | **-**       |   |   |   | - |   |
|                                                                                                                                                                         |   | ** ** | **(41,961** | **)**  |   |   | (14,702 | ) |
| Changes                  in valuation allowance                                                                                                                              |   | ** ** | **41,961**  |   |   |   | 14,702 |   |
| Provision                  for income taxes                                                                                                                                  |   | **$**      | **-**       |   |   | $      | 0.0006 |   |

----

|                                                                            |   | **2007**   |         |   | 2006   |   |
|---------------------------------------------------------------------------------|--------|------------|--------------|--------|--------|--------|
| Deferred                  income tax liabilities                                |   |       |         |   |   |   |
|      Net                  operating loss carryforwards |   | **$**      | **122,581**  |   |   | $      | 80,620 |   |
|      Valuation                  allowance              |   | ** ** | **(122,581** | **)**  |   |   | (80,620 | ) |
| Deferred                  income taxes                                          |   | **$**      | **-**        |   |   | $      | - |   |
|                                                                            |   |       |         |   |   |   |   |   |

|   |  The              Company has tax losses available to be applied against future years              income.  Due to the losses incurred from a predecessor business              and expected future operating results, management determined that it              is              more likely than not that the deferred tax asset resulting from the              tax              losses available for carryforward will not be realized in timely manner,              through the reduction of future income tax payments. Accordingly a              100%              valuation allowance has been recorded for deferred income tax              assets. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
|   |  As              at September 30, 2007, the Company had approximately $670,725 of Federal              and State net operating loss carryovers available to offset future              taxable              income.  Such carryovers expire in various              years |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
| **9.** | **Related                Party Transactions** |
|--------|-----------------------------------------------|

|   | All                related party transactions are in the normal course of operations                and are                measured at the exchange amount, which is the amount of consideration                established and agreed to by both parties. During the year, the Company                issued 5,000,000 shares of its common stock to Eiger Technology,                Inc. for                past cash advances and services and services provided. Subsequently                the                Company received an additional $78,297 in further advances and/or                services                provided. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
|   |  Payables              to KTNA in the amount of $14,508 were written off as a component of              discontinued operations during the year ended September 30,              2006 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **10.** | **Comparative                Information** |
|---------|--------------------------------------------|

|   | Certain                comparative figures have been reclassified in order to conform with                the                current year's presentation. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| **11.** | **Subsequent                Event** |
|---------|-------------------------------------|
|   |   |
|--------|--------|
|   |  The              Company intends to issue 13,500,000 shares of its common stock to acquire              all of the issued and outstanding shares of InterAmerican. InterAmerican              is a private casino management which is pursuing acquisitions of existing              operations as well as developing Latin American casino              projects. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ITEM      8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING      AND**

**FINANCIAL      DISCLOSURE**

----

**PART      III**

**ITEM      9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;      COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.**

| **Name**                        |   | **Age** |   | **Position**                         |
|---------------------------------|--------|---------|--------|--------------------------------------|
|                            |   |    |   |                                 |
| John                G. Simmonds |   | 57      |   | Chairman                of the Board |
| Jason                R. Moretto |   | 38      |   | Director                             |
| Carrie                J. Weiler |   | 48      |   | Director                             |

**Biographical      Information Regarding Directors**

**John      G. Simmonds, President, Chief Executive Officer and Chairman of the Board.      **

**Jason      R. Moretto, Director.**

**Carrie      J. Weiler, Corporate Secretary and Director. **

----

**Board      and Committee      Meetings**

**Board      of Directors Independence**

**Shareholder      Communications**

----

**Report      of Audit Committee of the Board of Directors**

| ·   | reviewing                and discussing the audited financial statements with                management; |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | discussing                with the Company’s independent auditors information relating to the                auditors’ judgments about the quality of the Company’s accounting policies                and financial reporting practices; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | recommending                to the Board that the Company include the audited financials in its                Annual                Report on Form 10-KSB; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | overseeing                compliance with the Securities and Exchange Commission requirements                for                disclosure of auditors’ services and                activities. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Review      of Audited Financial Statements**

----

**Executive      Officers**

| **Name**                        |   | **Age** |   | **Position**                                    |
|---------------------------------|--------|---------|--------|-------------------------------------------------|
|                            |   |    |   |                                            |
| John                G. Simmonds |   | 57      |   | Director,                CEO                    |
| Gary                N. Hokkanen |   | 51      |   | CFO                                             |
| Carrie                Weiler    |   | 48      |   | Director                and Corporate Secretary |

**John      G. Simmonds, Director and CEO of the Company. **

**Carrie      J. Weiler, Director and Corporate Secretary of the Company. **

**Gary      N. Hokkanen, CFO.**

**Compliance      with Section 16(a) of the Securities Exchange Act of      1934**

----

**ITEM      10. EXECUTIVE COMPENSATION.**

**SUMMARY      COMPENSATION TABLE**

|                                                    |   |   |   | Annual                      |   | Long-Term                  Compensation |   |                                         |    |                                     |   |                                                     |   |                                                    |
|---------------------------------------------------------|--------|--------|--------|-----------------------------|--------|-----------------------------------------|--------|----------------------------------------------|---------|------------------------------------------|--------|----------------------------------------------------------|--------|---------------------------------------------------------|
|                                                    |   |   |   | Compensation           |   | Awards                             |   |                                         |    |                                     |   |                                                     |   |                                                    |
| Name                  and Principal Position            |   | Year   |   | Salary                  ($) |   | Bonus                  ($)              |   | Restricted                  Stock Awards ($) |    | Stock                  Option Awards ($) |   | Securities                  underlying options/ SARS (#) |   | Non-Equity                  Incentive Plan Compensation |   | Non-qualified                  Deferred Compensation Earnings |   | All                  Other Compensation ($) |   | Total                  Compensation ($) |   |   |
| John                G. Simmonds Chief Executive Officer |   |   |   |                        |   |                                    |   |                                         |    |                                     |   |                                                     |   |                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |   | 2007   |                        |   | 0                                  |   |                                         | 0  |                                     |   | 0                                                   |   |                                                    | 0  |   |   | 0  |   |   | 0  |   |   | 0  |   |   | 0  |   |   | 0  |   |
|                                                    |   |   | 2006   |                        |   | 0                                  |   |                                         | 0  |                                     |   | 0                                                   |   |                                                    | 0  |   |   | 0  |   |   | 0  |   |   | 0  |   |   | 0  |   |   | 0  |   |
|                                                    |   |   | 2005   |                        |   | 0                                  |   |                                         | 0  |                                     |   | 0                                                   |   |                                                    | 0  |   |   | 0  |   |   | 0  |   |   | 0  |   |   | 0  |   |   | 0  |   |

**Option      Grants in 2007 Fiscal Year**

**Compensation      of Directors**

The      Company does not compensate its directors at this      time.

**Employment      Arrangements**

**ITEM      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND      MANAGEMENT.**

----

|                                                                                                      |   | **Amount                and Nature of** |       |                            |   |                         |
|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|------------|---------------------------------|--------|------------------------------|
|                                                                                                      |   | **Beneficial                Ownership** |       |                            |   |                         |
| **Name                and Address of**                                                                    |   |                                    |       | **Options/**                    |   |                         |   |   |
| **Beneficial                Owner**                                                                       |   | **Shares**                              |       | **Warrants                (1)** |   | **Total                (1)** |   | **Percent                (1)** |
|                                                                                                      |   |                                    |       |                            |   |                         |   |   |   |   |   |   |   |   |   |   |
| ETIFF                Holdings, LLC                                                                        |   |                                    | 1,650,000  |                            |   |                         | 0 |   |   |   | 1,650,000 |   |   |   | 5.0% |   |
| Foundation                Venture Leasing Inc., in trust                                                  |   |                                    | 14,021,600 |                            |   |                         | 0 |   |   |   | 14,021,600 |   |   |   | 42.2% |   |
| Foundation                Opportunities Inc.                                                              |   |                                    | 2,000,000  |                            |   |                         | 0 |   |   |   | 2,000,000 |   |   |   | 6.0% |   |
| John                G. Simmonds                                                                           |   |                                    | 0          |                            |   |                         | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Jason                R. Moretto                                                                           |   |                                    | 1,000,000  |                            |   |                         | 0 |   |   |   | 1,000,000 |   |   |   | 3.0% |   |
| Gary                N. Hokkanen                                                                           |   |                                    | 0          |                            |   |                         | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Carrie                Weiler                                                                              |   |                                    | 0          |                            |   |                         | 0 |   |   |   | 0 |   |   |   | 0 |   |
|                                                                                                      |   |                                    |       |                            |   |                         |   |   |   |   |   |   |   |   |   |   |
| All                executive officersand                directors as agroup                (4 persons)(2) |   |                                    | 1,000,000  |                            |   |                         | 0 |   |   |   | 1,000,000 |   |   |   | 3.0% |   |

| (1)  | Includes                options and warrants exercisable as of the date hereof or within                60 days hereafter. Holdings of less than 1% are indicated by “*”.                Based upon 33,223,886 shares issued and outstanding as December 19,                2007, (excluding any shares issuable under options or                warrants,). |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                                                                                                                                                                                                                               |
| (2)       | Officers                and Directors as a group include John Simmonds, Jason Moretto, Carrie                Weiler and Gary Hokkanen.                                                                                                                                                                                                                                             |

**ITEM      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

----

**ITEM      13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.**

| **Exhibit                No.** | **Description**                                                                                            | **Form/Period/Dated**      | **Filed**                         |
|--------------------------------|------------------------------------------------------------------------------------------------------------|----------------------------|-----------------------------------|
|                           |                                                                                                       |                       |                              |
| 3.1                            | Articles                of Incorporation                                                                   | Form                10-SB  | September                28, 2000 |
|                           |                                                                                                       |                       |                              |
| 3.2                            | Certificate                of Amendment to Articles of Incorporation                                       | Form                10-SB  | September                28, 2000 |
|                           |                                                                                                       |                       |                              |
| 3.3                            | Certificate                of Amendment to Articles of Incorporation dated October 13,                2000 | Form                10-QSB | November                7, 2000   |
|                           |                                                                                                       |                       |                              |
| 3.4                            | Bylaws                                                                                                     | Form                10-QSB | November                7, 2000   |
|                           |                                                                                                       |                       |                              |
| 14.1                           | Code                of Business Conduct                                                                    | Form                10-KSB | December                30, 2005  |
|                           |                                                                                                       |                       |                              |
| 31.1                           | Certification                of Chief Executive Officer Pursuant to Section 302                            |                       | Herein                            |
|                           |                                                                                                       |                       |                              |
| 31.2                           | Certification                of Chief Financial Officer Pursuant to Section 302                            |                       | Herein                            |
|                           |                                                                                                       |                       |                              |
| 32.1                           | Certification                of Chief Executive OfficerPursuant                to Section 906              |                       | Herein                            |
|                           |                                                                                                       |                       |                              |
| 32.2                           | Certification                of Chief Financial OfficerPursuant                to Section 302              |                       | Herein                            |
|                           |                                                                                                       |                       |                              |

----

**ITEM      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

**Fees**

| **Year** | **Audit                Fees** | **Note                1****Audit                Related** | **Tax**              | **Financial                Information Systems Design and****Implementation                Fees** | **Other                Fees** | **Total** |
|----------|-------------------------------|-----------------------------------------------------------|----------------------|---------------------------------------------------------------------------------------------------|-------------------------------|-----------|
|     |                          |                                                      |                 |                                                                                              |                          |      |
| 2006     | $17,577                       | $Nil                                                      | $                Nil | $                Nil                                                                              | $                Nil          | $17,577   |
|     |                          |                                                      |                 |                                                                                              |                          |      |
| 2007     | $8,000                        | $18,703                                                   | $                Nil | $                Nil                                                                              | $                Nil          | $26,703   |

----

**SIGNATURES**

|   | **RACINO                ROYALE, INC.**                                                      |
|--------|--------------------------------------------------------------------------------------------------|
| By:    | /s/                John G Simmonds                                                               |
|   | **John                G. Simmonds**, CEO(principal                executive officer)   |
| By:    | /s/                Gary N Hokkanen                                                               |
|   | **Gary                N. Hokkanen**, CFO(principal                financial officer)        |

| ***Name***                                                        |   | ***Title***                  |   | ***Date***                             |
|-------------------------------------------------------------------|--------|------------------------------|--------|----------------------------------------|
|  /s/                John G Simmonds                          |   |  CEO/Chairman           |   |  December                24, 2007 |
| **     John                G. Simmonds** |   |                         |   |                                   |
|  /s/                Jason Moretto                            |   |                Director |   |  December                24, 2007 |
| **     Jason                R. Moretto** |   |                              |   |                                   |
|  /s/                Carrie J Weiler                          |   |                Director |   |  December                24, 2007 |
| **     Carrie                J. Weiler** |   |                              |   |                                   |