UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC. 20549


                                   FORM 10-QSB

(Mark One)

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934.

                   For the Quarterly Period Ended May 31, 2006

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

        For the transition period from ______________ to ________________

                        Commission file number 000-28506

                                TRACKPOWER, INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

            WYOMING                                               13-3411167
(State or Other Jurisdiction                                   (I.R.S. Employer
      of Incorporation)                                      Identification No.)

                                 67 WALL STREET
                         SUITE 2211, NEW YORK, NY 10005
                    (Address of Principal Executive Offices)

                                 (212) 804-5704
                (Issuer's Telephone Number, Including Area Code)

                                       N/A
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

Check  whether the Issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

The  number  of  shares  of  common  stock  outstanding  as of  July  21,  2006:
712,981,040

Transitional Small Business Disclosure format (Check one): Yes |_| No |X|


<PAGE>

                                TRACKPOWER, INC.


                                      INDEX


PART I.  FINANCIAL INFORMATION

Item 1.  Condensed Financial Statements (unaudited)
                Condensed Balance Sheet................................       3
                Condensed Statements of Operations.....................       4
                Condensed Statements of Stockholders' Equity...........       5
                Condensed Statements of Cash Flows.....................       6
                Notes to Condensed Financial Statements................       7

Item 2.  Management's Discussion and Analysis or Plan of Operation.....      13


Item 3.  Controls and Procedures.......................................      18


PART II. OTHER INFORMATION

Item 2.  Unregistered Sales of Equity Securities.......................      20

[Item 5. Other Information.............................................      20

Item 6.  Exhibits .....................................................      21


Signatures and Certifications...........................................     23


<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  CONDENSED FINANCIAL STATEMENTS.


                                TRACKPOWER, INC.
                             CONDENSED BALANCE SHEET
                                   (UNAUDITED)
                                  May 31, 2006

<TABLE>
<CAPTION>
<S>                                                                               <C>
ASSETS
Current Assets:
   Cash                                                                           $      32,629
   Prepaid expenses                                                                      20,006
                                                                                  -------------
Total current assets                                                                     52,635
                                                                                  -------------
Office equipment                                                                         21,913
   Less: Accumulated depreciation                                                       (14,296)
                                                                                  -------------
       Net office equipment                                                               7,617

Due from related parties                                                                 42,367
Deferred financing costs                                                                 74,250
Investments                                                                           6,211,614
                                                                                  -------------
TOTAL ASSETS                                                                      $   6,388,483
                                                                                  -------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable                                                               $     296,401
     Due to related parties                                                             253,408
   Accrued professional fees                                                             64,716
   Accrued interest                                                                      60,650
     Accrued directors' fees                                                             11,250
   Note payable                                                                          21,000
                                                                                  -------------
Total current liabilities                                                               707,425
                                                                                  -------------

     Note payable                                                                     1,000,000

                                                                                  -------------
Total liabilities                                                                     1,707,425
                                                                                  -------------

Shareholders' equity:
   Series A 8% convertible preferred  stock, $3,000 initial value, no par
   value, unlimited shares authorized, 1,000 shares issued and outstanding            3,000,000
   Common stock, $.0001 par value; unlimited shares authorized,
   684,981,040 shares, issued and outstanding                                            68,498
   Additional paid in capital                                                        29,153,578
   Common stock subscribed                                                              370,000
   Accumulated deficit                                                              (27,911,018)
                                                                                  -------------
       Total shareholders' equity                                                     4,681,058
                                                                                  -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                        $   6,388,483
                                                                                  -------------
                See accompanying notes to financial statements.
</TABLE>


                                       3
<PAGE>

                                TRACKPOWER, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                    May 31,
                                                             2006             2005
                                                        -------------    -------------
<S>                                                     <C>              <C>
 Revenues:                                              $          --    $          --

 Costs and expenses:
     Wages and consulting fees                                158,731           60,078
     Management and consulting fees, related party             61,234           35,000
       Professional fees                                      157,930           23,814
       General and administrative                              72,018           31,570
     Interest                                                  75,412               --
     Depreciation and amortization                                187              265
     Share of loss of equity accounted investment             321,068               --
                                                        -------------    -------------
     Total costs and expenses                                 846,580          150,727

 Net loss                                                    (846,580)        (150,727)

     Preferred dividends                                       60,493               --
                                                        -------------    -------------

 Net loss applicable to common shareholders             $    (907,073)   $    (150,727)
                                                        =============    =============

 Loss per share of common stock:
 Weighted average number of common shares outstanding     552,880,965      275,129,618
 Loss per share                                         $     (0.0016)   $     (0.0005)
</TABLE>

                See accompanying notes to financial statements.


                                       4
<PAGE>

                                TRACKPOWER, INC.
                  CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                   Common Stock
                                         --------------------------------
                                                                                   Common              Additional
                                                                                    Stock               Paid-in
                                            Shares              Amount            Subscribed            Capital
                                         ------------        ------------        ------------         ------------
<S>                                       <C>                <C>                 <C>                  <C>
Balance, February 28, 2005                257,992,951        $     25,799        $     37,200         $ 24,684,873

Common stock issued in connection
with private placements                    81,740,000               8,174                  --              809,226

Common stock issued for
consulting services provided                1,000,000                 100             (26,800)              26,700

Common stock subscribed                            --                  --             564,800                   --

Loss for the three month period
 ended May 31, 2005                                --                  --                  --                   --

                                         ------------        ------------        ------------         ------------
Balance, May 31, 2005                     340,732,951        $     34,073        $    575,200         $ 25,520,799
                                         ------------        ------------        ------------         ------------

<CAPTION>

                                                                Total
                                         Accumulated         Stockholders'
                                           Deficit       (Deficiency)/Equity
                                         ------------         ------------
<S>                                      <C>                  <C>
Balance, February 28, 2005               $(25,161,363)        $   (413,491)

Common stock issued in connection
with private placements                            --              817,400

Common stock issued for
consulting services provided                       --                   --

Common stock subscribed                            --              564,800

Loss for the three month period
 ended May 31, 2005                          (150,727)            (150,727)

                                         ------------         ------------
Balance, May 31, 2005                    $(25,312,090)        $    817,982
                                         ------------         ------------

<CAPTION>

                                           ------------------------------      ---------------- -------------
                                                  Preferred Stock                      Common Stock
                                           ------------------------------      ---------------- -------------
                                                                                                                      Common
                                                                                                                       Stock
                                              Shares            Amount            Shares            Amount           Subscribed
                                           ------------      ------------      ------------      ------------       ------------

<S>                                              <C>        <C>                <C>              <C>                <C>
Balance, February 28, 2006                        1,000      $  3,000,000       468,052,951      $     46,805       $    909,200


Common stock issued in connection
with private placements                              --                         202,920,000            20,292          (909,200)

Common stock issued pursuant to
compensation arrangement                             --                           9,008,089               901                --

Common stock issued for consulting
services provided                                    --                             500,000                50                --

Common stock issued in lawsuit
settlement                                           --                           4,500,000               450                --

Common stock subscribed                              --                                  --                --           370,000

Loss for the three month period ended
  May 31, 2006                                       --                                  --                --                --

                                           ------------      ------------      ------------      ------------       ------------
Balance, May 31, 2006                             1,000      $  3,000,000       684,981,040      $     68,498       $    370,000
                                           ------------      ------------      ------------      ------------       ------------

<CAPTION>

                                             Additional                                Total
                                              Paid-in          Accumulated         Stockholders'
                                              Capital             Deficit       (Deficiency)/Equity
                                            ------------       ------------       ------------

<S>                                        <C>                <C>                <C>
Balance, February 28, 2006                 $ 26,866,267       $(27,003,945)      $  3,818,327


Common stock issued in connection
with private placements                       1,906,893                --          1,017,985

Common stock issued pursuant to
compensation arrangement                        242,318                --            243,218

Common stock issued for consulting
services provided                                17,950                --             18,000

Common stock issued in lawsuit
settlement                                      120,150                --            120,600

Common stock subscribed                              --                --            370,000

Loss for the three month period ended
  May 31, 2006                                       --          (907,073)          (907,073)

                                           ------------       ------------       ------------
Balance, May 31, 2006                      $ 29,153,578       $(27,911,018)      $  4,681,058
                                           ------------       ------------       ------------
</TABLE>

                See accompanying notes to financial statements.

                                       5
<PAGE>

                                TRACKPOWER, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                     May 31,

                                                                2006             2005
                                                            -----------      -----------
<S>                                                         <C>              <C>
   NET CASH FROM OPERATIONS
       Net (loss)                                           $  (907,073)     $  (150,727)
       Adjustments to reconcile net (loss)
         to net cash used in operating activities:
            Depreciation and amortization                           187              265
            Loss in equity accounted investment                 321,068               --
            Common stock issued for consulting services          18,000               --
            provided
            Amortization of deferred financing costs              4,050               --
        Changes in:
            Prepaid expenses                                     29,994           (2,519)
            Due from/to related parties                         167,116               --
            Preferred dividends payable                         (59,178)              --
            Accounts payable and accrued expenses               (47,883)           8,513
                                                            -----------      -----------
   Net cash used in operating activities                       (473,719)        (144,468)
                                                            -----------      -----------

   CASH FLOWS FROM INVESTING ACTIVITIES:
             Purchase of office equipment                        (4,826)              --
             Acquisition of investment                               --          (41,525)
             Increase in due from/to related parties                 --         (407,761)
             Capital contributions to investments                    --         (714,876)
                                                            -----------      -----------
   Net cash used in investing activities                         (4,826)      (1,164,162)
                                                            -----------      -----------

   CASH FLOWS FROM FINANCING ACTIVITIES:
             Repayment of notes payable                      (1,486,616)              --
             Decrease in bank indebtedness                           --           (5,742)
             Proceeds on issuance of common stock             1,017,986          817,400
             Proceeds from common stock subscribed              370,000          564,800
                                                            -----------      -----------
   Net cash provided by financing activities                    (98,630)       1,376,458
                                                            -----------      -----------

                                                            -----------      -----------
   Increase in cash                                            (577,175)          67,828
                                                            -----------      -----------
   CASH,  beginning of period                               $   609,804               --
                                                            -----------      -----------
   CASH,  end of period                                     $    32,629      $    67,828
                                                            -----------      -----------
</TABLE>

Noncash activities:

During the three month  period ended May 31, 2006,  the Company  issued  500,000
shares of its common stock,  valued at $18,000 for consulting services provided,
9,008,089  common  shares,  valued  at  $243,218  to an  officer  pursuant  to a
compensation  arrangement and 4,500,000  common shares,  valued at $120,600,  as
part of a lawsuit settlement.

During the three month period ended May 31, 2005, the Company  issued  1,000,000
shares of its common stock, valued at $26,800 for investor relations  consulting
services provided.


                See accompanying notes to financial statements.

                                       6
<PAGE>

                                TRACKPOWER, INC.

                     Notes to Condensed Financial Statements
                                  May 31, 2006

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      NATURE OF BUSINESS

      TrackPower's  present  business  strategy  and  direction  is primarily to
acquire  interests in horseracing  tracks and also to evaluate other horseracing
industry opportunities.

      BASIS OF PRESENTATION

      The accompanying  unaudited financial statements of TrackPower,  Inc. have
been prepared in accordance with generally  accepted  accounting  principles for
interim financial  information and with the instructions to Form 10-QSB and item
310  (b)  of  Regulation  S-B.  Accordingly  they  do  not  include  all  of the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements. In the opinion of management, all adjustments
(consisting  of  normal  recurring  accruals)  considered  necessary  for a fair
presentation  have been included.  Operating  results for the three months ended
May 31, 2006 are not necessarily  indicative of the results that may be expected
for the fiscal year ending February 28, 2007. For further information,  refer to
the financial  statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the fiscal year ended February 28, 2006.

      GOING CONCERN

      The  accompanying  financial  statements  have been prepared  assuming the
Company  will  continue  on  a  going  concern  basis,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business.  The Company has suffered  recurring losses from operations  during
its operating history. The ability of the Company to continue as a going concern
is  dependent  upon  obtaining  future  financing  and  profitable   operations.
Management is in the process of evaluating future business opportunities,  which
would generate  revenue to sustain the operations of the Company.  The financial
statements do not include any  adjustments  relating to the  recoverability  and
classification  of recorded assets and  classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.

      USE OF ESTIMATES

      The  preparation  of financial  statements  in conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Significant estimates include the recoverability of assets and
the fair  value of common  stock  and other  equity  securities  issued.  Actual
results could differ from those estimates.


                                       8
<PAGE>

      DUE TO/FROM RELATED PARTIES

Periodically,  the Company advances funds and pays expenses on behalf of related
parties  and funds are  advanced  and  expenses  are paid by related  parties on
behalf  of the  Company.  These  transactions  result  in  non-interest  bearing
payables or receivables to related parties.

At May 31, 2006, amounts due from related parties were:

                                                       May 31, 2006
                                                       ------------

    Entities with certain common directors
     and/or officers                                     $  42,367
                                                         ---------

    Total                                                $  42,367
                                                         ---------



At May 31, 2006, amounts due to related parties were:

                                                       May 31, 2006
                                                       ------------

    Officers and directors                               $  50,418
    Entities with certain common directors
    and/or officers                                        202,990
                                                         ---------

    Total                                                $ 253,408
                                                        ----------


Amounts due to or from related parties are non-interest  bearing,  unsecured and
do not have any specific repayment terms.

      INVESTMENTS

      Baymount Incorporated

      As of May 31, 2006, the Company holds 1,730,000  common shares of Baymount
Incorporated.  The Company also holds the  following  warrants of Baymount:  (i)
200,000 warrants that have vested and are exercisable at a price of CAD$0.20 per
common share until May 11, 2006; (ii) 400,000 warrants that are exercisable at a
price of  CAD$0.30  per common  share and vest on the date that Wheat City Horse
Park receives  regulatory  approval for a horseracing license in the Province of
Manitoba; and (iii) 400,000 warrants that are exercisable at a price of CAD$0.40
per common share and vest on the date that Wheat City receives from its auditors
an audited  consolidated  financial statement  evidencing that Wheat City's cash
flow for the previous financial year was positive.

      The fair value of the  investment,  based on the  closing  share  price of
Baymount on July7,  2006 of $0.13  (CAD$0.145),  exceeds the  carrying  value of
$78,414 by $146,486.

      American Racing and Entertainment, LLC.

      On October 14, 2005, the Company issued $3,000,000 Series A 8% Convertible
Cumulative  Preferred Stock to acquire a 50% membership  interest in Tioga Downs
Racetrack,  LLC  ("TDRLLC") (an entity which owned Tioga Downs  Racetrack)  from
Asolare II LLC, a related  party due to two  directors of the Company also being
members  of  Asolare  II.  The other 50%  member of  TDRLLC  was  Southern  Tier
Acquisition  II, LLC. On November 8, 2005, the Company  entered into  agreements
with Southern Tier  Acquisition II, LLC and Nevada Gold NY, Inc. (a wholly owned
subsidiary  of  Nevada  Gold &  Casinos,  Inc.  AMEX:UWN)  pursuant  to which on
November 28, 2005, the Company  exchanged its 50%  membership  interest in Tioga
Downs Racetrack, LLC ("TDRLLC") for a 25% membership interest in American Racing
and  Entertainment,  LLC  ("American  Racing").  On March 1, 2006,  the  Company
reduced its ownership interest in American Racing from 25% to 20% as a result of
a $20,000,000  investment ($5,000,000 by way of equity and $15,000,000 by way of
proposed indebtedness) in American Racing by Oneida Entertainment LLC. Since the
formation of TDRLLC and subsequent  transfer to American Racing, the Company has
made capital contributions  totaling $3,570,966 ($1,516,616 of which was made by
Southern Tier Acquisition II, LLC on behalf of TrackPower).


                                       9
<PAGE>

American  Racing owns Tioga Downs  racetrack and on May 1, 2006 acquired  Vernon
Downs racetrack. The Tioga Downs and Vernon Downs facilities are being renovated
and will reopen as horseracing and electronic gaming facilities.  The members of
American  Racing are assisting in the  development  of the properties and in the
event that proposed debt  financing is not  sufficient to complete the projects,
each  of the  parties  may be  required  to  make  additional  material  capital
contributions.  Due to the Company's  ability to exhibit  significant  influence
over the day to day business  affairs of American  Racing,  the Company uses the
equity method to account for its investment in American Racing.

The carrying  value of the Company's  investment  in American  Racing at May 31,
2006 was as follows:


             Acquisition cost of Tioga Downs interest       $      3,000,000

             Capital contributions to Tioga Downs
             Racetrack, LLC or American Racing                     3,570,966
                                                               --------------

             Total                                          $      6,570,966

             Less: Membership share of losses since
             acquisition
             October 15, 2005 to December 31, 2005                   116,698
             January 1, 2006 to March 31, 2006                       321,068
                                                               --------------
             Total                                                   437,766
                                                               --------------

             Carry value as of May 31, 2006                 $      6,133,200
                                                               --------------


The $437,766  membership  share of losses  represents  the Company's  portion of
losses for the period since  acquisition  on October 14, 2005 to March 31, 2006.
The losses of TDRLLC from October 14, 2005 to November 28, 2005 were $113,540 of
which 50% ($56,770) was to the account of the Company and the losses of American
Racing  from  November  29 to  December  31,  2005  were  $239,713  of which 25%
($59,928)  were to the account of the Company.  The American  Racing losses from
January 1, 2006 to February 28, 2006 were $396,440 of which 25%  ($99,160)  were
to the  account  of the  Company.  The  losses  for the month of March 2006 were
$503,290,  20%, (or $100,658) of which were losses  attributable to TrackPower's
investment.  The losses for the three  month  period  ended  March 31, 2006 also
included $121,250 being  TrackPower's share of a commitment fee paid by American
Racing on financing.


                                       10
<PAGE>

The fiscal year end of  American  Racing is December  31st and  accordingly  the
equity portion of losses recorded by the Company was up to March 31, 2006.

         NOTES PAYABLE


                                                           May 31, 2006
                                                           ------------

            SIG Communications Partnership 10% unsecured
            promissory note                                $   21,000

            Melillo Investments, 11% 5 year secured
            promissory note                                 1,000,000
                                                           ----------

            Total                                          $1,021,000

            Less: current portion                              21,000
                                                           ----------

            Long term portion                              $1,000,000
                                                           ----------


SIG Communications Partnership Promissory Note

10%  promissory  note due to SIG  Communications  Partnership  in the  amount of
$20,000  (excluding  an  interest  accrual of  $1,000).  The SIG  Communications
Partnership  note and related  accrued  interest  was due May 16,  2000.  During
fiscal 2002,  accrued  interest of $4,500 was added to the note  principal.  The
Company agreed to repay the outstanding  balance in monthly  payments of $3,500.
At February 28, 2006,  $3,500 has been repaid.  The Company is in default of its
agreement.


Melillo Investments Promissory Note

On January 13, 2006, the Company issued a $1,000,000 11% secured promissory note
to Melillo Investments pursuant to a financing.  The financing consisted of a $1
million loan and a commitment  fee of 3,000,000  shares of the Company's  common
stock. The promissory note pays interest quarterly in arrears beginning on March
31,  2006 at the rate of 11% per  annum.  The  promissory  note  matures  on the
earlier of the fifth  anniversary of the date of issuance or on the closing date
of new debt  financing  of no less than $5  million.  Additionally,  the Company
entered  into a pledge and  security  agreement  to secure the  promissory  note
providing as collateral all of the Company's 20% membership interest in American
Racing.  Two of the Company's  directors  executed a limited  personal  guaranty
agreement  whereby they both  individually  guaranteed  the  obligations  of the
Company  under  promissory  note.  Upon the  occurrence of certain  events,  the
guaranties  will be limited to only the interest  payable  under the  promissory
note for the first twelve months from the date of the promissory note.

      LOSS PER SHARE

      Loss per common  share is based on the weighted  average  number of shares
outstanding  during  each  period  presented.  Warrants  to  purchase  stock are
included as common stock equivalents only when dilutive.


                                       11
<PAGE>

      RELATED PARTY TRANSACTIONS

      During  the  quarter  ended May 31,  2006,  the  Company  paid  $50,000 in
compensation to two directors for their personal  guarantee of a $1,000,000 note
payable and  $102,015 to officers  and  directors as a 5% success fee on private
placements  arising  from  their  introductions.  An  entity  solely  owned by a
director of the Company paid certain  expenses on behalf of the Company totaling
$178,652.  The Company also pays; 1) $15,000 per month in management  fees to an
entity  solely  owned by a director  of the  Company  for  strategic  consulting
services,  2) $5,350  per month to an entity  controlled  by an  officer  of the
Company for corporate  secretarial services, 3) CAD$250 per hour to an entity in
which the Company's CFO is an officer for financial consulting services.

RECENT ACCOUNTING PRONOUNCEMENTS

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections"  ("SFAS 154"). SFAS 154 replaces APB No. 20,  "Accounting  Changes"
and SFAS No. 3, "Reporting  Accounting Changes in Interim Financial  Statements"
and establishes retrospective application as the required method for reporting a
change in  accounting  principle.  SFAS 154 provides  guidance  for  determining
whether  retrospective  application  of a  change  in  accounting  principle  is
impracticable  and for  reporting a change  when  retrospective  application  is
impracticable. The reporting of a correction of an error by restating previously
issued  financial  statements  is also  addressed.  SFAS  154 is  effective  for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after December 15, 2005.  The Company does not  anticipate  that the adoption of
SFAS 154 will have a  material  impact on its  consolidated  balance  sheets and
statements of operations, shareholders' equity and cash flows.

FASB  STATEMENT  NO. 123R,  SHARE BASED  PAYMENT.  The FASB issued SFAS No. 123R
which revises SFAS No. 123 and is effective for small business issuers as of the
beginning of the first  interim or annual  reporting  period after  December 31,
2005.  SFAS No. 123R requires  public entities to measure the cost of employment
services  received  in  exchange  for an  award  of  equity  instruments  on the
grant-date fair value of the award.  The cost will be recognized over the period
during  which an employee is  required  to provide  service in exchange  for the
award--the   requisite   service  period  (usually  the  vesting   period).   No
compensation  cost is recognized for equity  instruments  for which employees do
not render the requisite service.  Employee share purchase plans will not result
in  recognition  of  compensation  cost if  certain  conditions  are met;  those
conditions  are much the same as the related  conditions  in Statement  123. The
Company does not anticipate  that the adoption of SFAS 123R will have a material
impact  on  its  consolidated  balance  sheets  and  statements  of  operations,
shareholders' equity and cash flows.

In February 2006, the FASB issued SFAS No. 155,  "Accounting  for Certain Hybrid
Financial Instruments." which amends SFAS No. 133 and SFAS No. 140. SFAS No. 155
permits hybrid financial  instruments  that contain an embedded  derivative that
would  otherwise  require  bifurcation  to  irrevocably be accounted for at fair
value,  with changes in fair value  recognized in the  statement of income.  The
fair value election may be applied on an  instrument-by-instrument  basis.  SFAS
No. 155 also eliminates a restriction on the passive derivative instruments that
a qualifying  special  purpose  entity may hold.  SFAS No. 155 is effective  for
those  financial  instruments  acquired or issued  after  December  1, 2006.  At
adoption,  any difference  between the total  carrying  amount of the individual
components of the existing  bifurcated hybrid financial  instrument and the fair
value of the  combined  hybrid  financial  instrument  will be  recognized  as a
cumulative-effect  adjustment to beginning retained  earnings.  The Company does
not  expect  the new  standard  to have any  material  impact  on our  financial
position and results of operations.


                                       12
<PAGE>

In March  2006,  the FASB  issued SFAS No. 156,  "Accounting  for  Servicing  of
Financial Assets, an amendment of FASB Statement No. 140." SFAS No. 156 requires
all  separately  recognized  servicing  assets and servicing  liabilities  to be
initially measured at fair value, if practicable. The standard permits an entity
to subsequently measure each class of servicing assets or servicing  liabilities
at fair value and report changes in fair value in the statement of income in the
period in which the changes occur.  SFAS No. 156 is effective for the Company as
of December 1, 2006.  The Company  does not expect the new  standard to have any
material impact on our financial position and results of operations.

In July 2006,  the FASB  issued  FASB  Interpretation  No. 48,  "Accounting  for
Uncertainty in Income Taxes - an  interpretation  of FASB Statement No. 109 (FIN
48),  which  clarifies the accounting  for  uncertainty  in tax positions.  This
Interpretation  requires  that we recognize  in our  financial  statements,  the
impact of a tax  position,  if that  position  is more  likely than not of being
sustained  on  audit,  based  on  the  technical  merits  of the  position.  The
provisions  of FIN 48 are effective as of the beginning of our 2007 fiscal year,
with the cumulative effect of the change in accounting  principle recorded as an
adjustment to opening retained earnings.  We are currently evaluating the impact
of adopting FIN 48 on our financial statements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

      FORWARD LOOKING STATEMENTS

      Certain  matters   discussed  in  this  Quarterly  Report  may  constitute
forward-looking   statements  within  the  meaning  of  the  Private  Securities
Litigation  Reform Act of 1995 and as such may involve risks and  uncertainties.
These forward-looking statements relate to, among other things,  expectations of
the business  environment in which the Company  operates,  projections of future
performance,  perceived opportunities in the market and statements regarding the
Company's  goals.  The Company's  actual results,  performance,  or achievements
expressed or implied in such forward-looking statements may differ. We are under
no duty to update,  and do not undertake to update,  any of the  forward-looking
statements  contained in this quarterly report to conform them to actual results
or to changes in our expectations.


         RECENT DEVELOPMENTS

ONEIDA ENTERTAINMENT INVESTMENT IN AMERICAN RACING AND ENTERTAINMENT

      On March 1, 2006,  Oneida  Entertainment,  LLC  ("Oneida")  completed a $5
million  equity  investment in American  Racing on March 1, 2006.  Prior to this
investment,  TrackPower  held a 25%  ownership  interest in American  Racing and
Southern Tier and Nevada Gold NY, Inc. (a wholly owned subsidiary of Nevada Gold
& Casinos,  Inc.  AMEX:UWN)  held the  remaining 25% and 50%,  respectively.  In
conjunction with this  investment,  an affiliate of Oneida provided a commitment
to fund $15  million in a  subordinated  secured  credit  facility  to  American
Racing.  The  closing of this credit  facility is subject to certain  conditions
precedent and the commitment  will terminate if the financing is not consummated
by June 1, 2006.


                                       13
<PAGE>

      As a result of Oneida  purchasing  a 20%  membership  interest in American
Racing,  the membership  interests of TrackPower and Southern Tier each declined
from 25% to 20% and the membership interest of Nevada Gold NY, Inc. dropped from
50% to 40%. In order to compensate  TrackPower  and Southern Tier for consulting
services  provided to American  Racing,  TrackPower  and Southern Tier will each
receive a consulting  fee from Nevada Gold equal to 7.5% of the base  management
fee paid from American Racing to Nevada Gold.

AMERICAN RACING AND ENTERTAINMENT ACQUISITION OF VERNON DOWNS

      On May 3, 2006 the Company  announced that Vernon Downs  Acquisition,  LLC
("VDA")  completed  the  acquisition  of Mid-State  Raceway,  Inc.  ("Raceway").
Raceway  operates  Vernon Downs  racetrack and is also the 100% equity holder of
Mid-State  Development  Corp., which operates a hotel at Vernon Downs racetrack.
VDA is a special purpose  Delaware limited  liability  company owned by American
Racing and  Entertainment,  LLC, a limited liability company in which TrackPower
is a 20% member.

OPENING OF TIOGA DOWNS RACETRACK

      On June 9, Tioga Downs racetrack opened for racing, simulcasting, food and
beverage and  entertainment.  Representatives  of TrackPower,  together with its
business  partners  including  local and state  dignitaries,  were present for a
ribbon cutting ceremony.

      On June 27, 2006 the Company announced that the New York State Lottery had
approved a license to operate 750 video gaming machines at Tioga Downs Raceway.

      On July 4, 2006  Tioga  Downs  opened the new 19,000  square  foot  gaming
facility.  Approximately  10,000  visitors  enjoyed  750 video  gaming  machines
reporting $343.00 win per unit.

PLAN OF OPERATIONS

      The  Company  holds a 20%  membership  interest  in  American  Racing  and
Entertainment,  LLC, a New York Limited Liability company,  that is developing a
horseracing and gaming facility in Nichols, New York known as Tioga Downs and is
renovating  another New York  facility  known as Vernon  Downs.  The Tioga Downs
facility  began to  operate in June 2006 and the  Company  is in the  process of
reopening the Vernon Downs facility.  Under the terms of the operating agreement
with American  Racing the Company,  TrackPower and its partners are obligated to
advance further amounts to the venture.

      The  Company  will need to raise  additional  cash to  continue to pay its
operating expenses in the next twelve months until the distribution from the new
ventures exceed the day to day operating  costs.  The Company also plans to seek
other racing and gaming opportunities in the United States.

      The Company plans to raise  additional  funds,  in the next twelve months,
through the issuance of its common stock or through a combination  of equity and
debt security instruments.  It is anticipated that the debt security instruments
will have  conversion  features  that would cause  further  dilution to existing
shareholders.


                                       14
<PAGE>

RESULTS OF OPERATIONS

      FOR THE THREE MONTH PERIOD ENDED MAY 31, 2006

      Total costs and expenses  totaled  $846,580 during the three-month  period
ended May 31,  2006  approximately  $696,000  higher than during the three month
period ended May 31, 2005.

      Wages and consulting fees were $60,078 during the three month period ended
May 31, 2005  compared to $158,731  during the three month  period ended May 31,
2006. The wages and consulting  fees during the three month period ended May 31,
2005  represented  $50,900 of employment  costs of the Company's CEO,  $4,071 in
accounting staff employment costs and marketing  consulting  services of $5,107.
Wages and  consulting  costs  during the three month  period  ended May 31, 2006
consisted  of  employment  costs of  $111,967  (including  an accrual of $37,242
representing  future common stock based  compensation  pursuant to an employment
letter  memorandum) paid to the Company's CEO, financial  accounting  consulting
costs totaling $12,606 and various consulting fees totaling $34,158.

      Management and consulting fees paid to related parties were $35,000 during
the quarter  ended May 31, 2005 and $61,234 in the current  quarter.  During the
current quarter $45,000 was for the strategic  consulting services of a director
and $16,234 was for corporate secretarial services of an officer.

      General and  administrative  expenses were $31,570  during the three month
period  ended May 31,  2005  compared to $72,018  during the three month  period
ended May 31, 2006.

      Within   general  and   administrative   costs;   1)  travel,   meals  and
entertainment totaled $9,569 during the three months ended May 31, 2005 compared
to $32,268  during the three month  period  ended May 31,  2006,  2) auto lease,
repair and gasoline  expenses were $10,295 during the quarter ended May 31, 2006
up from $5,715  during the three month period  ended May 31,  2005,  3) rent and
insurance  expenses were $12,238 in the current  quarter and $3,695 in the prior
year, 4) corporate  fees were $3,800 during the three month period ended May 31,
2005  compared  to $6,664 in the  comparative  period in the  current  year,  5)
directors  fees were  static at $3,750 in both  quarters,  6)  foreign  exchange
losses were $4,026  during the three month period ended May 31, 2005 compared to
a gain of $33 during the quarter ended May 31, 2006, and 7) other  miscellaneous
costs totaled  $6,836 during the current  quarter and $1,015 in the  comparative
period of the prior year.

      Professional   fees  were   $157,930   during  the   current   quarter  up
significantly  from  $23,814  during the  comparative  period in the prior year.
Accounting  fees were $9,000 during each of the three month  periods  ending May
31, 2006 and 2005. Legal fees were $14,814 during the quarter ended May 31, 2005
and $98,930 during the current  quarter.  The increase is a result of legal fees
associated with the Tioga Downs investment and higher legal fees associated with
general corporate matters of a public company. The Company also incurred $50,000
in guarantee  fees  associated  with two  directors  personally  guaranteeing  a
$1,000,000 note payable.


                                       15
<PAGE>

      Amortization  decreased  from $265 during the three month period ended May
31, 2005 to $187 during the current quarter.

      Interest  expense  during the three  month  period  ended May 31, 2006 was
$75,412.  Interest  expenses arose from notes payable issued during fiscal 2006.
Interest expense also included $4,050 of amortized deferred financing costs.

      The Company  began to account for its  investment  in American  Racing and
Entertainment,  LLC through the equity method  effective at acquisition  date on
October 14, 2005.  During the three month period ended May 31, 2006, the Company
recorded $321,068 in losses arising from the operations of American Racing.  For
the period January 1 to February 28, 2006 the company recorded 25% of the losses
recorded  by American  Racing and  Entertainment  and for the period  March 1 to
March 31, 2006 the Company recorded 20% of the  consolidated  losses of American
Racing and  Entertainment.  Effective  March 1, 2006,  the Company's  membership
interest  in American  Racing and  Entertainment  decreased  by 5% due to Oneida
Entertainment, LLC becoming a 20% membership partner.

      The  Company  also  accrued  $60,493  as  dividends  on  the  Series  A 8%
Convertible  Cumulative  Preferred Stock issued during the quarter ended May 31,
2006.

      The Company  recorded a net loss of $907,073 during the three month period
ended May 31,  2006  (less  than  $0.01  per  share)  compared  to a net loss of
$150,727 (also less than $0.01 per share) during the  comparative  period in the
current year.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      The  discussion  and  analysis  of results  of  operations  and  financial
condition are based upon the financial  statements,  which have been prepared in
accordance with accounting principles generally accepted in the United States of
America  (GAAP).  The  preparation  of  these  financial   statements   requires
management to make estimates and judgments  that affect the reported  amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. Management evaluates the estimates on an on-going basis,
including those related to bad debts, investments, customer accounts, intangible
assets,  income taxes, and  contingencies  and litigation.  Management bases its
estimates on historical  experience and on various other  assumptions  that they
believe to be reasonable under the circumstances,  the results of which form the
basis for making  judgments  about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.  Note 2 of the "Notes
to Financial  Statements" of the Company's Annual Audited  Financial  Statements
includes a summary of the  significant  accounting  policies and methods used in
the  preparation  of  the  financial  statements.   The  following  is  a  brief
description of the more significant  accounting policies and methods the Company
uses.

Fair Value of Financial Instruments:

      Cash,  accounts  payable,   accrued  expenses,   note  payable  and  loans
receivable are carried in the financial  statements at amounts which approximate
fair value.


                                       16
<PAGE>

Investments:

      The  Company's  investments  consist of common  stock of  publicly  quoted
company  and a  membership  interest  in a private  New York  Limited  Liability
Company. The common stock of the publicly quoted company are considered "held to
maturity" and therefore have been recorded at cost. Any unrealized  losses which
are considered  "other than temporary" are classified as realized losses through
operations.  The investment in the private New York Limited Liability Company is
accounted for using the equity method.


      FINANCIAL CONDITION

      During the three month period ended May 31, 2006,  total assets  decreased
from  $7,273,764 to $6,388,483.  The decrease is primarily the result of reduced
cash balances.

      The  carrying  value of the American  Racing  investment,  of  $6,133,200,
consists  of the  original  amount  paid  for the  Tioga  Downs  Racetrack,  LLC
interest,  cash amounts  transferred to Tioga Downs  Racetrack,  LLC or American
Racing less the Company's share of losses from operations.

      The Company's  liabilities  decreased from  $3,455,437 at the beginning of
the quarter to  $1,707,425  at the end.  The decrease is a result of the Company
repaying a $1,486,616 note payable which matured on May 29, 2006.

      Accounts  payable  increased  $261,403 at the  beginning of the quarter to
$296,401 at the end. The increase is  attributable  to higher levels of activity
associated with the Company's investments. Due to related parties decreased from
$287,143 at February  28, 2006 to  $253,408  at May 31,  2006.  Amounts  owed to
related parties primarily represents unpaid amounts for services rendered to the
Company by related  parties.  Due from related  parties  increased  from zero at
February  28, 2006 to $42,367 at May 31, 2006.  Amounts owed by related  parties
primarily  represent costs and expenses paid by the Company on behalf of related
parties.

      The  Company  settled  a  lawsuit  with a  former  consultant  by  issuing
4,500,000  shares of the  Company's  common  stock,  valued at  $120,600  and by
issuing a cash  payment  of  $125,000  during the  quarter  which had been fully
accrued for at February 28,  2006.  Accrued  professional  fees  decreased  from
$73,134 at February 28, 2006 to $64,716 at May 31, 2006.

      During the year ended February 28, 2006, the Company issued  $3,000,000 in
Series A preferred  shares to acquire the Tioga Downs  assets,  which formed the
basis of the eventual American Racing investment.

      In order to continue to meet capital  contributions to the American Racing
investment  the Company  issued a $1,000,000  note payable,  during fiscal 2006,
pursuant to which $18,384 in accrued and unpaid  interest was outstanding at May
31, 2006.  In addition the Company  accrued  $42,226 in interest  payments  made
subsequent  to May 31, 2006 on a $1,486,616  note payable the principal of which
was paid prior to the end of the quarter.

      As mentioned  above in January 2006, the Company,  entered into $1 million
of debt  financing  with Melillo  Investments.  The financing  consisted of a $1
million  secured  promissory  note and 3 million shares of the Company's  Common
Stock. The note pays interest  quarterly in arrears  beginning on March 31, 2006
at the rate of 11% per annum and matures on the earlier of the fifth anniversary
of the date of issuance or on the closing date of new debt  financing of no less
than $5 million.


                                       17
<PAGE>

      The stockholders' equity increased from $3,818,327 at February 28, 2006 to
$4,681,058 at May 31, 2006. The increase is attributable to:

      -     202,920,000  common  shares  issued for net  proceeds of  $1,927,185
            ($909,200 of which had been received during fiscal 2006 and recorded
            in common  stock  subscribed  at  February  28,  2006)  and  further
            subscriptions   for  37,000,000   common  shares  (for  proceeds  of
            $370,000) but not issued as of May 31, 2006,

      -     500,000 common shares issued for consulting services provided valued
            at $18,000,

      -     9,008,089  common shares  (valued at $243,218)  issued to an officer
            and director pursuant to compensation arrangements,

      -     4,500,000 shares of common stock (valued at $120,600) issued as part
            of a lawsuit settlement,

      -     an increase in the  accumulated  deficit  arising  from the $907,073
            loss for the year.

      LIQUIDITY AND CAPITAL RESOURCES

      During the quarter  ended May 31, 2006,  the Company used $473,719 in cash
from operating  activities  primarily as a result of operating losses. Cash used
in financing  activities  during the first  quarter  amounted to $98,630,  which
resulted  from  private  placements  of shares  of the  Company's  common  stock
totaling  $1,387,986 offset by a repayment of notes payable of $1,486,616.  Cash
used in  investing  activities  totaled  $4,826 and  represented  capital  asset
acquisitions.

      The  revenues  of the Company  during the quarter  ended May 31, 2006 were
zero  therefore  did  not  play a  significant  role  in  financing  operations.
Management  expects to begin  receiving  distributions  from the American Racing
investment during fiscal 2007.

      The Company  continues to be  successful  in raising  sufficient  funds to
offset  operating  losses.  The Company issued  202,920,000  common shares under
private placements for total net proceeds of $1,927,185. In addition the Company
received  common stock  subscriptions  totaling  $370,000 during the quarter for
which stock certificates  totaling  37,000,000 common shares had not been issued
as of May 31, 2006.  There can be no  assurance  that the  Company's  ability to
raise capital through private placements will continue.

      Management  is hopeful that the future  business  direction of the Company
will  substantially  decrease  the history of  operating  losses and provide the
ability to improve the Company's liquidity.  The Company will require additional
capital  over the next  year in order to  satisfy  existing  liabilities  and to
provide further capital contributions to its investments. Failure to obtain such
capital could adversely impact the Company's operations and prospects.


                                       18
<PAGE>


      OFF-BALANCE SHEET ARRANGEMENTS.

      The Company does not have any off balance sheet arrangements.

      ITEM 3. CONTROLS AND PROCEDURES.


As of the end of the period  covered by this report,  an evaluation  was carried
out  under  the  supervision  and  with  the   participation  of  the  Company's
management,  including the Company's Chief Executive Officer and Chief Financial
Officer,  of  the  effectiveness  of  the  Company's   disclosure  controls  and
procedures,  as defined in Rule 13a-15(e)  promulgated  under the Securities and
Exchange  Act of 1934  (the  "Exchange  Act").  Based on their  evaluation,  the
Company's  Chief Executive  Officer and Chief  Financial  Officer have concluded
that the Company's  disclosure  controls and  procedures are effective to ensure
that  information  required to be  disclosed  by the Company in reports  that it
files or submits under the Exchange Act is recorded,  processed,  summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.

There have been no changes in the Company's  internal  controls  over  financial
reporting during the Company's most recently  completed fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal
controls over financial reporting.



                                       19
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES.

The Company issued the following unregistered  securities during the three month
period ended May 31, 2006. The offering was for one  restricted  common share at
$0.01 per share plus one-half warrant  exercisable at $0.04 at any time over the
next three years.

<TABLE>
<CAPTION>

                                                                     NUMBER OF                 NUMBER OF
                    DATE          SECURITIES SOLD TO                 SHARES                    WARRANTS
<S>              <C>                                                      <C>                       <C>
       March 1, 2006          Carrie Francey                          300,000                   150,000

       March 1, 2006          Paul Francey                            500,000                   250,000

       March 1, 2006          Stuart Cumming                          200,000                   100,000

       March 1, 2006          Scott Gerham                          1,000,000                   500,000

       March 1, 2006          Michael Scauzillo                     4,000,000                 2,000,000

       March 1, 2006          Ester Scott                          12,000,000                 6,000,000

       March 1, 2006          David Atlin & Randi Atlin             7,500,000                 3,750,000

       March 1, 2006          Catarina Developments                16,500,000                 8,250,000

      March 14, 2006          High Rock Investments                 2,000,000                 1,000,000

      March 14, 2006          Stephen Dulmage                       8,000,000                 4,000,000

      March 14, 2006          Glen Hills Holdings Ltd               4,400,000                 2,200,000

      March 14, 2006          Deer Field Investments                3,520,000                 1,760,000
      April 10, 2006          Alexa Usher-Jones                    25,000,000                12,500,000

      April 10, 2006          Frank Helmut Biemann                    970,000                   485,000

      April 10, 2006          Ted McKinney                             30,000                    15,000

        May 31, 2006          Alexa Usher-Jones                    15,000,000                 7,500,000

         May 5, 2006          Charles Schwab                        1,000,000                   500,000

        May 31, 2006          Donna Neuperger                       4,000,000                 2,000,000

         May 5, 2006          Jancar Investments                    1,000,000                   500,000

         May 5, 2006          James MacLean                        10,000,000                 5,000,000

        May 31, 2006          Jancar Investments                    2,500,000                 1,250,000

        May 31, 2006          Lawrence Aziz                         2,000,000                 1,000,000

         May 5, 2006          Northmount Capital                    2,500,000                 1,250,000

        May 31, 2006          Northmount Capital                    5,000,000                 2,500,000
        May 31, 2006          KFT, LLLP                            25,000,000                12,500,000

        May 31, 2006          Wanda McColl                          2,500,000                 1,250,000

        May 31, 2006          Brian Masulka                         2,500,000                 1,250,000

        May 31, 2006          Susan Masulka                         4,000,000                 2,000,000

        May 31, 2006          Paul Marsiglio                        6,750,000                 3,375,000

        May 31, 2006          David & Randi Atlin                   5,000,000                 2,500,000

        May 31, 2006          Ester Scott                          12,500,000                 6,250,000

        May 31, 2006          Catharine Doncaster                   6,250,000                 3,125,000

        May 31, 2006          Joshua Marsiglio                      1,000,000                   500,000

        May 31, 2006          Katarina Marsiglio                    1,000,000                   500,000

        May 31, 2006          Luigi & Angela Marsiglio              7,500,000                 3,750,000
</TABLE>

      On May 31,  2006,  the Company  also issued  9,008,089  restricted  common
shares,  valued at $243,218 to Edward  Tracy,  the Company's CEO pursuant to the
provisions of his compensation letter memorandum.


                                       20
<PAGE>

      On May 31, 2006,  the Company  issued  500,000  restricted  common shares,
valued at $18,000 to James  Ahearn,  a director of the Company,  for  consulting
services provided.

      On May 17,  2006,  the Company  paid  $125,000  cash and issued  4,500,000
restricted common shares,  valued at $120,600, to Roger Newel as a settlement of
a lawsuit.

      The  issuance  of the  foregoing  securities  by the Company was a private
placement  made in reliance on Section 4(2) of the  Securities  Act of 1933,  as
amended.

      The primary use of proceeds was to fund the working  capital  needs of the
Company.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

On January 13, 2006, TrackPower,  Inc. (the "Company"),  entered into $1 million
of debt financing with Melillo Investments of Phoenixville,  PA ("Lender").  The
financing  consisted  of a $1  million  secured  promissory  note (the  "Melillo
Secured  Promissory  Note") and 3 million shares of the Company's  Common Stock.
The Company  entered into a Pledge and Security  Agreement (the "Melillo  Pledge
and Security  Agreement")  to secure the Secured  Promissory  Note  providing as
collateral all of  TrackPower's  25% membership  interest in American Racing and
Entertainment, LLC.

On February 27, 2006, TrackPower executed a $1,516,616 note bearing 12% interest
per annum due and  payable to  Southern  Tier  Acquisitions  II, LLC  ("Southern
Tier")  on  May  29,  2006  in  order  to  meet  its   obligations  for  capital
contributions to American Racing and Entertainment, LLC ("American Racing"). The
note is secured by an assignment of 23% of TrackPower's  membership  interest in
American  Racing to  Southern  Tier.  This note  matured and was paid on May 29,
2006.

Section 9(x) of the Melillo  Pledge and Security  Agreement  contains a covenant
that   prohibits  the  Company  from  assigning  its  interest  in  the  Pledged
Collateral,  the Company's  membership  interest in American  Racing.  Under the
terms of the promissory note payable to Southern Tier, the Company  assigned 23%
of its  membership  interest  in  American  Racing  to  Southern  Tier to secure
repayment  of the note.  This  assignment  was in  violation  of the  restricted
covenant  in  the  Melillo  Pledge  and  Security  Agreement.   Therefore,  this
assignment of the Company's  membership in American  Racing Southern Tier was an
Event of Default under the terms of the Melillo Secured Promissory Note.


ITEM 6. EXHIBITS


EXHIBIT                                 DOCUMENT
-------                                 --------

31.1        Certification  pursuant to Section 302 of the  Sarbanes-Oxley Act of
            2002.*

31.2        Certification  pursuant to Section 302 of the  Sarbanes-Oxley Act of
            2002.*


                                       21
<PAGE>

32.1        Certification  pursuant  to  18  U.S.C.  Section  1350,  as  adopted
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

32.2        Certification  pursuant  to  18  U.S.C.  Section  1350,  as  adopted
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

-----------------------

(*)   Filed with this Report.

      (REMAINDER OF PAGE LEFT INTENTIONALLY BLANK)


                                       22
<PAGE>

                                   SIGNATURES

In accordance with the registration  requirements of the Securities Exchange Act
of 1934,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereto duly authorized.



DATE:  JULY 21, 2006                   BY: /s/ Edward Tracy
                                           -------------------------------------
                                           Edward M. Tracy
                                           President and Chief Executive Officer


DATE:  JULY 21, 2006                   BY: /s/ Gary N. Hokkanen
                                           -------------------------------------
                                           Gary N. Hokkanen
                                           Chief Financial Officer
                                           (principal financial officer)


                                       23
<PAGE>

                                  EXHIBIT INDEX



EXHIBIT                                 DOCUMENT
-------                                 --------

31.1        Certification  pursuant to Section 302 of the  Sarbanes-Oxley Act of
            2002.*

31.2        Certification  pursuant to Section 302 of the  Sarbanes-Oxley Act of
            2002.*

32.1        Certification  pursuant  to  18  U.S.C.  Section  1350,  as  adopted
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

32.2        Certification  pursuant  to  18  U.S.C.  Section  1350,  as  adopted
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

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(*)   Filed with this Report.


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