UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


_______________________





FORM 10-K


_______________________





(MARK ONE)





[X]           Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934





For the fiscal year ended December 31, 2010





[   ]           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: 000-27831











SUNGAME CORPORATION(Exact name of registrant as specified in its charter)Delaware

20-8017623(State or other jurisdiction of incorporation or organization)

(IRS Employee Identification No.)501 Silverside Road, Suite 105, Wilmington, DE

19809(Address of principal executive offices)

(Zip Code)Registrant's telephone number, including area code: (310) 666-0051Securities Registered pursuant to Section 12(b) of the Exchange Act:Title of each class

Name of each exchange on which registeredNone

NoneSecurities Registered pursuant to Section 12(g) of the Exchange Act:Common Stock, $0.001 Par Value(Title of class)














Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes  o No  x


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o No  x





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x No  o





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





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b2 of the Exchange Act.





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





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 aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.





As of December 31, 2010 the market value wasapproximately $2,000,000 based upon a pre-split close of $0.20 on 31 December 2010There are approximately4,977,000 shares of our common voting stock held by non-affiliates.  This valuation is based upon the bid price of our common stock as quoted on the OTCBB on that date ($-0-).


APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY


PROCEEDINGS DURING THE PRECEDING FIVE YEARS:





Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes  [  ]  No  [ ]





(APPLICABLE ONLY TO CORPORATE REGISTRANTS)





Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.  The number of shares outstanding of the registrant's common stock as of  March 15, 2011 is 10,000,000.





(DOCUMENTS INCORPORATED BY REFERENCE)


None





2


SUNGAME CORPORATION


FORM 10-K





TABLE OF CONTENTS








PagePART I
4Item 1.  Business.
4Item 1A.  Risk Factors.
11Item 1B.  Unresolved Staff Comments.
11Item 2. Properties.
11Item 3.  Legal Proceedings.
11Item 4.  (Removed and Reserved).
11PART II
11Item 5.  Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities.
11Item 6. Selected Financial Data.
13Item 7. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations.
13Item 7A. Quantitative And Qualitative Disclosures About Market Risk.
18Item 8. Financial Statements And Supplementary Data.
19Item 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure.
29Item 9A. Controls And Procedures.
29Item 9B. Other Information
29PART III
30Item 10. Directors, Executive Officers And Corporate Governance.
30Item 11. Executive Compensation.
31Item 12. Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters.
33Item 13. Certain Relationships And Related Transactions, And Director Independence.
33Item 14. Principal Accounting Fees And Services.
35PART IV
35Item 15. Exhibits, Financial Statement Schedules.
35SIGNATURES
36







3





PART I





This annual report on Form 10-K contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about the Company, us, our future performance, our beliefs and our Management's assumptions. In addition, other written or oral statements that constitute forward-looking statements may be made by us or on our behalf. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or  variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict or assess. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after the filing of this Form 10-K, whether as a result of new information, future events, changes in assumptions or otherwise.





Unless the context otherwise requires, throughout this Annual Report on Form 10-K the words “Company,” “we,” “us” and “our” refer to Sungame Corporation and its consolidated subsidiaries.





Item 1.  Business.





History





SunGame Corporation (“We,” “Us,” “Our”) was organized under the laws of the State of Delaware on November 14, 2006 as SunGame International, Inc.  On November 17, 2006, we changed our name to SunGame Corporation. We are a Delaware corporation organized for the purpose of engaging in any lawful business with a current plan to engage in the internet virtual world and Social Gaming space.





Overview





Background and History





SunGame Corporation (“We,” “Us,” “Our”) was organized under the laws of the State of Delaware on November 14, 2006 as SunGame International, Inc. On November 17, 2006, we changed our name to SunGame Corporation. We are a Delaware corporation organized for the purpose of engaging in any lawful business with a current plan to engage in the internet virtual world space.




We are an early development stage company in the process of establishing a three dimensional, Virtual World communities. Leveraging the increasing popularity of online communities with this proprietary “virtual world”, we intend to capitalize on the ever increasing popularity of gaming. With an initial focus on casual and tournament based games, we will also offer visitors a broad spectrum of social activities including group chats, music download, media sharing, content creation, advertisements and other features designed to build the community and generate repeat traffic to the Virtual world.







4













In addition, we have the mission to become a leading supplier in social gaming and related services to the business-to-business segment, including customized social games, virtual worlds, virtual eWallets, cross platform solutions and social network branding. In that regard we have focused the development during the period on a Facebook based cross platform game for subagames.com by Wicked Interactive.





In October 2008, we secured a $250,000 investment from Singapore based Mindzeye Consulting Pte, Ltd (Mindzeye) and India based Diamond Star Exports Pvt. Ltd. (Diamond Star).  As a result of such an investment, we have deployed the core system of SunGame and new servers in Singapore.  Customers have begun to participate in the games available in the world and loading money into their eWallets.  We have not recognized sales from the activities at this time, but we have had users of the product.





Since January 2009, we have established a development center in the Philippines for Virtual World and Social Gaming Development.  We have also developed a proprietary Virtual World center with B2C and B2B provisioning.





We are currently working to launch our first facebook game during 2nd quarter of 2011.





Industry





Despite the popularity of game console systems such as the Wii and Nintendo, the number one platform for games in 2007 was still personal computer.  This is largely attributed to online gaming, and this trend is expected to continue as computer graphics and memory increases and prices decline.





The “average” game player is no longer the 25 year old male.  As consumer exposure to computers and the internet increases, so does this player base. According to the Entertainment Software Association's 2007 ESSENTIAL FACTS ABOUT THE COMPUTER AND VIDEO GAME INDUSTRY, the average gamer is 33 years old and has been playing for 12 years. The following facts from that report provide insight with regard to our target audience.





o
40% of all players are women, and women over 18 years of age are one of the industry's fastest growing demographics; today adult women represent a greater portion of the game-playing population (33%) than boys age 17 or younger (18%).o
26% of game players are over the age of 50, an increase from 9% in 1999. This figure is sure to rise in coming years with nursing homes and senior centers across the nation now incorporating video games  into their activities.






5


o
51% of most frequent game players say they play games online at least one hour per week, up from 31 percent in 2002.o
The average adult woman plays games 7.4 hours per week and the average adult man plays 7.6 hours per week.





o
45% of parents say they play computer and video games with their kids weekly.





Traditional online, virtual world games require players to pay a monthly fee to take part in the virtual world. In order to participate in these worlds, users must create an avatar - a character that will represent them in the virtual world.  This endeavor, in and of itself has spawned an industry; there are businesses devoted solely to the creation of customized avatars and their accessories and eBay regularly auctions “turnkey” avatars.  The maintenance of a virtual designee is an art that many individuals take great pride in, with some participants logging substantial amounts of time and money to create.





The general strategy of the virtual communities is to create a virtual world around a game on a massive scale, so that millions can use it at any time.  Games are initially free, enabling the community to develop, then as the audience reaches critical mass, retailer and advertising revenue will follow.  It seems that this strategy is working quite effectively.





In May of 2007, IBM announced a new virtual IBM Business Center offering a place for IBM sales people, clients and partners to meet and conduct business together. The center has six divisions: Reception; Sales Center; Technical Support Library; Innovation Center; Client Briefing Center; and Conference Center, all accessible through Second Life.  Staffed by real IBM sales representatives from around the world, their avatars can chat with visitors in several languages and build business relationships.





Consumer Applications





As a member of our Virtual Worlds, residents utilize their avatar to access a multitude of activities. Navigation is intuitive and the site is designed to attract members to the profit centers such as tournaments and music download.





Our Virtual Worlds offer virtual currencies, which can be earned by players as they spend time in the virtual world. While many residents will elect this option, as the average age of gamers rises and they assume the responsibilities of families and jobs, gamers have less time and more money, many prefer depositing cash into the virtual wallet.  To that end, residents can also purchase Sun Bucks at a rate of 100 for each $1.





Game Play





The primary focus of the GameConnect community is gaming.  Visitors will be able to select from a broad spectrum of chance and skill-based games.  They will be able to challenge one or more other visitors to enter tournaments for cash prizes.











6





Game Creation





Our games, both Virtual Worlds and Facebook games, will be focusing on the gaming community.  To that end, we have, and will continue to established relationships with independent gamer developers around the world.  Game developers will be able to register and be certified to upload their games to the GameConnect portfolio.  Once there, our incentive program offers registered programmers a percentage of the revenue generated by their games, in addition to technical support with regard to system requirements, site code, etc.  Management is confident this structure will attract a substantial number of developers to the virtual world.





Music Downloading





Music is a highly popular online media which will be offered to visitors in a number of ways within our games.  Music is streamed continuously over the site with a feature that enables visitors to click on the details of a title and/or buy and download the song at any time.





Media Upload





Users will be able to upload and share their own photos, music, documents and videos for display in their virtual residence on our Virtual Worlds.





Networking





·
Chat





Community is the backbone of theVirtual Worlds. While many visitors will come to play games, residents are also there to socialize with others.





·
Events





Once a resident has established their avatar and “personal space” i.e., a home or apartment, they may invite other residents, alone or in groups, to visit their Virtual World home, host an event, or go visit other Virtual World features together.




Administrative





·
Profile Management





Subscribers will be able to create their own content online, including the design of their room, changes to their avatar and updating of their profile.





Rather than having each individual create their own unique avatar, we provide users with a broad range of “fixed” avatars with some variables to change - i.e., hair color, outfit etc.  This structure provides us with some control with regard to the server capacity and speed, in addition to reducing the general system requirements for all users (i.e., not all residents will have the


capacity on their system to interact with high resolution).





·
Account Management





Once registered,  users can manage their finances,  including deposit cash  to their Wallet, purchasing virtual goods,  upgrading their membership or  paying  subscription fees.





With our Virtual Worlds, basic membership is available at no charge to visitors; however users will also have the option of a VIP membership for a monthly fee.  As a VIP member, users will have access to a premier apartment, be granted a monthly Sun Bucks allowance, secure priority reservations for high profile tournaments, and early notification of special events and new features.




7





Business Applications





The substantial opportunities in the interactive market give corporations a significant economic incentive to develop multi-media marketing campaigns.  This “Transmedia” approach is particularly popular within the entertainment industry as it enables producers to convey a story through a myriad of layers, encouraging fan participation and interaction.





Conventional websites are no longer adequate for success.  Television shows such as LOST and Heroes are the definitive examples, offering their audience an “experience” including ancillary materials, wikis, exploration games, back stories, cast bios, blogs, fan discussions, spoiler rumors, and screenshots.





Sun Game will pursue this sector, offering its development services to companies looking to utilize a multi-media marketing strategy. Anticipated activities include the following.





Third Party/Private Label Development





We will create turnkey virtual worlds for companies seeking to establish a presence in this sector. Initially our focus will be the entertainment sector.  Management believes this market represents a significant opportunity as their focus on promotion is well established, and a virtual presence provides a distinct marketing advantage.  Longer term it is expected that a virtual component will be commonplace within many market sectors, particularly those websites looking to appeal to a younger or computer savvy audience.  We offer a natural outsourcing alternative for those firms with the desire but without the capabilities to develop or maintain such an operation.





Operational





Companies can build private, secure, virtual “corporate headquarters” on GameConnect. Business residents will essentially enter their own “world” as created for them by us.  The activities and features of these worlds will be determined by the host.





Access Administration





Our platform will enable each business to remotely control the entry to their own virtual world.  Office administrators can establish passwords and clearance levels to ensure that only the proper employees gain access to confidential information.





Commercial





Product placement is common in all forms of media, however brand marketing in the virtual world provides customers with a significantly improved product interaction, and many companies and organizations now incorporate virtual worlds in their advertising budget.





E-Commerce





By creating an online store within our Virtual Worlds, users will be able to “interact” with products.  For example, IBM has built a virtual store for Sears, where users can mock up a kitchen with Sears' appliances.







8


Gaming





As virtual worlds continue to gain in popularity, corporations will continue to seek ways to participate in this media.  SunGame will work with corporate clients to develop online games for consumers. Games will be designed to generate brand and product awareness.





Advertising





While the use of advertising within “virtual worlds” is a comparatively new idea, management expects advertisement placement within its Virtual World games will make a contribution to revenue in the relatively near term.





Competition





There are a number of companies active in the virtual world and gaming sectors that are already established.  These companies include:





·
SecondLife.com·
Zynga.com


·
Pogo.com·
King.com


·
Gameaccount.com





These established sites each have targeted a very specific genre of internet users.  For example SecondLife is developed more towards technical users and Zynga has launched Social Networking games on Facebook.





There are 3 main market segments within the virtual world industry:





1.
Virtual world provisioning to end users2.
White label provisioning of virtual worlds to corporations using own proprietary software


3.
Virtual world customization (branding) to corporations using own or 3rd party virtual world systems





We are in a position to be able to offer a solution to all three markets segments.  We have already launched the first Virtual World to end users and will ensure successful growth of this business.  We have developed software and will begin the marketing of White Label provisioning of Virtual Worlds.  Each corporate customer that buys a White Label Virtual World System from us will have the opportunity to customize and brand the virtual world using their own resources or place that branding project in conjunction with us.  In many cases, it will be more natural to place most or all of the customization/branding project with the Company.





Expansion Strategy





We have developed a focused, multi-pronged expansion strategy.  The following tactics will be used to achieve our objectives.





Increase Membership Through Managed Growth





We have implemented a controlled approach to growth; seeking to increase membership at rates that will enable it to support its membership and maintain appropriate server to customer ratios.  Management estimates it can service approximately 5,000 registered users for each network server, which will correspond to 200 simultaneous users in each network server.  Management also anticipates the current software platform will support approximately 1 million registered users.





We intend to promote the world through several channels. As the vast majority of virtual world communities achieve critical mass through word-of-mouth and grass roots “buzz”, we will promote SunGames through other social communities.  We will also look to reach potential residents through related blogs, gaming societies and conferences.




9





Solicit Game Developers





The initial game selection at GameConnect comprises three traditional skill-based games, including bowling, golf and jewel catcher. In keeping with our strategy to outsource the development of content, we expect the majority of its new gaming content will be created by independent game developers.  As new and exciting offerings will be critical to our success, the world's culture will seek to nurture the creative abilities of the independent developer, providing an environment that facilitates their efforts to develop a following.





We have created a package for game developers who become certified to provide content. In addition to retaining ownership of their intellectual property, developers will be entitled to 10% of the revenues generated by their product.





Pursue The Business To Business Market





Management anticipates the business to business (“B2B”) sector represents a significant opportunity for us.  It is estimated that 170 high profile companies, such as Coke, Dell, Ben and Jerry's, and Sun Microsystems have set up virtual worlds.  We anticipate the B2B sector will be attracted to our less technical interface, along with our ability to deliver customized, turn-key virtual worlds.





As an early entrant in the market, we are looking to establish a presence within the corporate marketplace by providing a comprehensive package for users. Beyond the creation of the virtual world, we will be able to provide a variety of user activities, including back-end provisioning, customer relations management, hardware and software setup, registration pages, profile pages, etc.





Backlog of Orders





We currently have no orders for sales at this time.





Government Contracts





We have no government contracts.





Company Sponsored Research And Development





We are not conducting any research.





Number Of Persons Employed





As of December 31, 2010, we have 1 full-time employee, Guy M. Robert and 1 part-time administrative employee.  Mr. Robert works up to 40 hours per week and other Directors work on an as needed basis up to 40 hours per week.








10





Item 1A.  Risk Factors.





We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.





Item 1B.  Unresolved Staff Comments.





We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.





Item 2. Properties.





We do not own any property, real or otherwise.  Our operations are principally located at 501 Silverside Road, Suite 105, Wilmington, DE 19809.  We pay monthly rent or fees for the use of this office and related facilities of $90.





Item 3.  Legal Proceedings.





We are not a party to any pending legal proceedings nor are any of our property the subject of any pending legal proceedings.





Item 4.  (Removed and Reserved).





PART II





Item 5.  Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities.









Quotations on the OTCBB reflect inter-dealer prices, without retail mark-up, markdown or commission and may not reflect actual transactions.  Our common stock will be subject to certain rules adopted by the SEC that regulate broker-dealer practices in connection with transactions in “penny stocks.”  Penny stocks generally are securities with a price of less than $5.00, other than securities registered on certain national exchanges or quoted on the Nasdaq system, provided that the exchange or system provides current price and volume information with respect to transaction in such securities. The additional sales practice and disclosure requirements imposed upon broker-dealers are and may discourage broker-dealers from effecting transactions in our shares which could severely limit the market liquidity of the shares and impede the sale of shares in the secondary market.





The penny stock rules require broker-dealers, prior to a transaction in a penny stock not otherwise exempt from the rules, to make a special suitability determination for the purchaser to receive the purchaser's written consent to the transaction prior to sale, to deliver standardized risk disclosure documents prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock.  In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt.  A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.





As of December 31, 2010, we have43shareholders of record of our common stock pursuant to transfer agent records..





11


We have not paid any dividends to shareholders.  There are no restrictions which would limit our ability to pay dividends on common equity or that are likely to do so in the future.  The Delaware Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend; we would not be able to pay our debts as they become due in the usual course of business; or our total assets would be less than the sum of the total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.




We have sold securities within the past three years without registering the securities under the Securities Act of 1933 as shown in the following table:





Name
Equity
Paid per Security
Date of

Purchase
Accredited or

SophisticatedAdversor, Inc.
1500 common shares
$1500 services  -formation of company
2006
AccreditedAdversor, Inc.
4,125,500 common shares
$775,000 debt relief
2008
AccreditedFriedland Capital
902,000 common shares
$50,000 corporate advisory finance services
2008
AccreditedRanulf Jose Goss
1,375,000 common shares
$137,500 development services
2008
AccreditedMindzeye Consulting Pte. Ltd
500,000 common shares
$125,000 cash
2008
AccreditedMindzeye Consulting Pte. Ltd
500,000 warrant
$125,000 cash
2008
AccreditedDiamon Star Exports Ltd.
1,600,000 common shares
$400,000  in programming services
2008
AccreditedMindzeye Consulting Pte. Ltd
500,000 common shares
$125,000 cash
2009
AccreditedMindzeye Consulting Pte. Ltd
100,000 common shares
$25,000 in development services
2009
AccreditedDiamon Star Exports Ltd.
900,000 common shares
Payment of services under agreement
2009
Accredited








Exemptions From Registration For Unregistered Sales





All of the sales by Company of the unregistered securities listed immediately above were made by the Company in reliance upon Section 4(2) of the Act. All of the individuals and/or entities listed above that purchased the unregistered securities were all known to the Company and its management, through pre-existing business relationships, as long standing business associates, friends, and employees. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to management of the Company in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities,  without such securities  either being first registered or otherwise exempt from registration in any further resale or disposition.





12





Item 6. Selected Financial Data.





We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.





Item 7. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations.





THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. FORWARD-LOOKING STATEMENTS ARE STATEMENTS NOT BASED ON HISTORICAL INFORMATION AND WHICH RELATE TO FUTURE OPERATIONS, STRATEGIES, FINANCIAL RESULTS OR OTHER DEVELOPMENTS. FORWARD LOOKING STATEMENTS ARE NECESSARILY BASED UPON ESTIMATES AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND OUR CONTROL AND MANY OF WHICH, WITH RESPECT TO FUTURE BUSINESS DECISIONS, ARE SUBJECT TO CHANGE. THESE UNCERTAINTIES AND CONTINGENCIES CAN AFFECT ACTUAL RESULTS AND COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING STATEMENTS MADE BY, OR ON OUR BEHALF. WE DISCLAIM ANY OBLIGATION TO UPDATE FORWARD-LOOKING STATEMENTS.







Background and History





SunGame Corporation (“We,” “Us,” “Our”) was organized under the laws of the State of Delaware on November 14, 2006 as SunGame International, Inc. On November 17, 2006, we changed our name to SunGame Corporation. We are a Delaware corporation organized for the purpose of engaging in any lawful business with a current plan to engage in the internet virtual world space.




We are an early development stage company in the process of establishing a three dimensional, Virtual World communities. Leveraging the increasing popularity of online communities with this proprietary “virtual world”, we intend to capitalize on the ever increasing popularity of gaming. With an initial focus on casual and tournament based games, we will also offer visitors a broad spectrum of social activities including group chats, music download, media sharing, content creation, advertisements and other features designed to build the community and generate repeat traffic to the Virtual world.

















13


In addition, we have the mission to become a leading supplier in social gaming and related services to the business-to-business segment, including customized social games, virtual worlds, virtual eWallets, cross platform solutions and social network branding. In that regard we have focused the development during the period on a Facebook based cross platform game for subagames.com by Wicked Interactive.













As each generation of computers become more powerful and affordable, and access to broadband internet increasingly available within the home, the gaming industry has become one of the most successful industries online. The most popular online game, World of Warcraft, a “Massively Multiplayer Online Role- Playing Game” or “MMORPG” enables over 1 million players from around the world to play simultaneously. Released in November 2004, it is estimated that World of Warcraft generated revenues in excess of $100 million in each of several different markets in its first year alone and recently announced it had signed its 10 millionth registered user. The potential for success in this sector has resulted in a perpetual delivery of new games to the market, much to the delight of the consumers, who seem to have a strong appetite for product.




The other component of the GameConnect experience is the social networking aspect. The original web-based communities were formed to serve people with shared interests and activities, enabling them to communicate through message boards and email services. Relevant content is created and posted by the members. Within relatively short order, social networking revolutionized the way we communicate and share information on an everyday basis. Networks such as Facebook now boast over 500 million members, and the YouTube phenomenon is influencing the nature of presidential elections.




The next generation of the social network is set in a virtual world, members can create avatars to represent themselves and buy “real estate” which is then developed and customized to reflect their own personality and lifestyle. A number of successful Virtual Worlds are growing fast including Mindark’s Entropia and Club Penguin (bought by Disney for $350M, plus possible $350 earnout).




However, while people around the world participate in these communities every day, few social networks have been able to establish a successful business model. We intend to capitalize on the social networking, gaming and virtual world trends, providing users with a wide variety of games through various partners, at the Virtual World online community, the players can socialize, play games, share content and compete in tournament and buy virtual goods.




We will work to balance the more popular “standard” games such as bowling and golf, with original content created by independent game developers. Like many of the traditional online game sites, ours has instituted an “outsourcing” strategy, allowing members of the community to develop the content -- for gamers, by gamers.




The developer friendly culture is expected to result in continual generation of original and challenging games to keep residents within the world.





14


RESULTS OF OPERATIONS


FOR YEAR ENDED DECEMBER 31, 2010 COMPARED TO


YEAR ENDED DECEMBER 31, 2010





Revenues





For the year ended December 31, 2010 we recognized revenue in the amount of $50,112 compared to the year ended December 31, 2009, in which we recognized revenue in the amount of $25,000 from our operational activities.  The $25,112 increase in revenue for the year ended December 31, 2009 was attributable to developing sales operations.





Operating Expenses





For the year ended December 31, 2010, we incurred a total operational expense of $158,034 compared to $455,182  for the year ended December 31, 2009.  The net decrease of $297,148 was the result of the decrease of expenses attributable to software development costs and start-up costs.





Net Income (Loss) From Operations





For the year ended December 31, 2010, we incurred a net loss of $107,922 compared to a net loss of $430,182 for the year ended December 31, 2009.  The decrease of $322,260 was a result of the increase in revenue and decrease in operational expenses as discussed in the preceding paragraphs. As of December 31, 2010, we have an accumulated deficit of $2,416,215.





Net Income (Loss) Applicable to Common Stock





For the year ended December 31, 2010, we recognized a net loss per share of $0.01 compared to a net loss per share of $0.05 for the year ended December 31, 2009. The reduction in net loss is directly attributable to the increase in revenue and reduction in operating expenses as discussed in the preceding paragraphs.





LIQUIDITY AND CAPITAL RESOURCES





At December 31, 2010, we had cash on hand of $60 and total assets of $19,128, consisting of cash of $60, accounts receivable of $17,600 and net fixed assets of $1,468.  At December 31, 2010, we had total current liabilities of $282,058, consisting of $112,035 of accounts payable, $8,751 of credit cards payable, and $161,272 loan payable to a stockholder.  At December 31, 2010, we had a working capital deficit of $264,398.





During the year ended December 31, 2010, cash used in operating activities was $44,986 compared to $402,744 during the year ended December 31, 2009.  During the year ended December 31, 2010, net losses of $113,737 were adjusted for a non-cash item consisting of $420 in depreciation.  During the year ended December 31, 200, net losses of $430,182 were adjusted for non-cash items consisting of $206 in depreciation.





During the year ended December 31, 2010,our total funds used for investing activities was $767 for fixed assets.  During the year ended December 31, 2009, we did not use or receive funds from investing activities.







15





During the year ended December 31, 2010, we received$43,802 from our financing activities in the form of debt.  During the year ended December 31, 2009, we received $382,470 from our financing activities primarily from the sale of equity.





During the year ended December 31, 2010, the Company was infused with $182,376 in the form of paid-in capital to relieve some of the Company debt.





We anticipate funding operations through private investments and loans made by our current shareholders and management, however, we have no commitments for such funding as of the date of this report.  In addition, we anticipate generating revenue in the near future, however, we have no current commitments or contracts that could result in such revenue.  Management will have complete discretionary control over the actual utilization of said funds and there can be no assurance as to the manner or time in which said funds will be utilized.





We foresee that we will need a minimum of $500,000 to fund our operations for the next 12 months as follows:




System Development and Integration

$
200,000Professional Fees

$
100,000Sales, Marketing, Strategic Partnerships

$
100,000General & Administrative

$
50,000Working Capital

$
50,000Total

$
500,000








We will need substantial additional capital to support our proposed future operations.  We have no significant  revenues from operations.  We have no committed source for any funds as of the date hereof.  No representation is made that any funds will be available when needed.  In the event funds cannot be raised when needed, we may not be able to carry out our business plan, may never achieve sales or royalty income, and could fail in business as a result of these uncertainties.




Because of the limited financial resources that we have, it is unlikely that we will be able to diversify our operations.  Our probable inability to diversify our activities into more than one area will subject us to economic fluctuations within the virtual world industry and therefore increase the risks associated with our operations due to lack of diversification.





We anticipate generating the vast majority of our revenues from our advertisers. Advertisers can generally terminate their contracts, at any time.  Advertisers could decide to not do business with us if their investment in advertising with us does not generate sales leads, and ultimately customers, or if we do not deliver their advertisements in an appropriate and effective manner.  If we are unable to remain competitive and provide value to advertisers, they may stop placing ads with us, which would negatively harm future revenues and business.  In addition, expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns.  Any decreases in or delays in advertising spending due to general economic conditions could delay or reduce our revenues or negatively impact our ability to grow our revenues.




16





In the event we are unable to achieve additional capital raising through future private or public offerings, we will limit operations to fit within our capital availability. In such event, we will probably seek loans for operating capital.  We have not achieved any commitments for loans from any source.  In any event our business can be operated with a skeleton staff and have limited advertising/marketing budget, which could cause us to remain unprofitable and eventually fail.





Going Concern





The independent registered public accounting firm's report on our financial statements as of December 31, 2010 and 2009 includes a “going concern” explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.





We are dependent on raising additional equity and/or, debt to fund any negotiated settlements with our outstanding creditors and meet our ongoing operating expenses. There is no assurance that we will be able to raise the necessary equity and/or debt that we will need to be able to negotiate acceptable settlements with our outstanding creditors or fund our ongoing operating expenses. We cannot make any assurances that we will be able to raise funds through such activities.





Capital Resources





We have only common stock as our capital resource.





We have no material commitments for capital expenditures within the next year, however if operations are commenced, substantial capital will be needed to pay for participation, investigation, exploration, acquisition and working capital.





Need For Additional Financing





We do not have capital sufficient to meet our cash needs. We have not generated revenue and have minimal resources to conduct planned operations. We estimate that our monthly expenses to commence planned operations within the next 12 months are approximately $24,000 (approximately $300,000 per year). Thus, using currently available capital resources (the primary source of which is non-binding commitments and expectations from management and current shareholders), we expect to be able to conduct planned operations for a minimum period of 2-3 months. We are currently relying solely on current shareholders and management to provide the necessary funds to continue operations. We do not have any commitments for such funding from shareholders or management.





At the present time, we have not made any arrangements to raise additional cash. Management and current shareholders are expected, but have not committed, to provide the necessary working capital so as to permit us to conduct planned operations until such time as we have begun to generate revenue and/or have become sufficiently funded.  However, if we do not begin to generate revenue or cannot raise additional needed funds, we will either have to suspend development operations until we do raise the funds, or cease operations entirely.





In addition, the United States and the global business community is experiencing severe instability in the commercial and investment banking systems which is likely to continue to have far-reaching effects on the economic activity in the country for an indeterminable period. The long-term impact on the United States economy and our operating activities and ability to raise capital cannot be predicted at this time, but may be substantial.






17





Critical Accounting Policies





We have identified the policies below as critical to its business operations and the understanding of our results from operations. The impact and any associated risks related to these policies on our business operations is discussed throughout Management's Discussion and Analysis of Financial Conditions and Results of Operations where such policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Note 1 in the Notes to the Consolidated Financial Statements beginning on page 24 for the years ended December 31, 2010 and 2009. Note that our preparation of this document requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of expenses during the reporting periods. There can be no assurance that actual results will not differ from those estimates.





Risks And Uncertainties





We operate in an emerging industry that is subject to market acceptance and technological change. Our operations are subject to significant risks and uncertainties, including financial, operational, technological and other risks associated with operating an emerging business, including the potential risk of business failure.





Software Costs





The costs for internal use software, whether developed or obtained, are assessed to determine whether they should be capitalized or expensed in accordance with American Institute of Certified Public Accountants' Statement (“SOP”) 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. Capitalized software costs are reflected as property and equipment on the balance sheet and are to be depreciated when we begin recording revenue the deemed date that the software is placed in service. As of the date of these financial statements the development of the software necessary to achieve the business purposes of our Company is in an undeterminable state causing us to deem the asset to be impaired. This conclusion requires that the costs incurred to date be treated as expenses as opposed to the capitalizing of the software.





Start-Up Costs





Start-up costs that would commonly be capitalized as Other Assets to be amortized over a period of five years have also been deemed to be impaired for the same reasons stated in the paragraph on “Software Costs”. Based on these circumstances, management has elected to expense these start-up costs as well.





“Long-lived assets” are reviewed for impairment of value whenever events or changes in circumstances indicate that the carrying value of the assets might not be recoverable or at least at the end of each reporting period. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying value of an asset is not recoverable. For Long-lived assets to be held and used, management measures fair value based on quoted market prices or based on discounted estimates of future cash flows.





Off-Balance Sheet Arrangements





As of December 31, 2010, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred to as structured finance or special purpose entities, that had been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we were engaged in such relationships.







Item 7A. Quantitative And Qualitative Disclosures About Market Risk.





We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.








18





Item 8. Financial Statements And Supplementary Data.








RONALD R. CHADWICK, P.C.


Certified Public Accountant


2851 South Parker Road, Suite 720


Aurora, Colorado  80014


Telephone (303)306-1967


Fax (303)306-1944





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





Board of Directors


Sungame Corporation


Wilmington, Delaware





I have audited the accompanying balance sheets of Sungame Corporation (a development stage company) as of December 31, 2010 and 2009, and the related statements of operations, stockholders' equity and cash flows for the years then ended and for the period from November 14, 2006 (inception of the development stage) through December 31, 2010 . These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.





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





In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sungame Corporation as of December 31, 2010 and 2009, and the  results of its operations and its cash flows for the years then ended and for the period from November 14, 2006 (inception of the development stage) through December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.





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




Aurora, ColoradoFebruary 10, 2011
By:
/s/ Ronald R. ChadwickRonald R. Chadwick, P.C.


19





SUNGAME CORPORATION


(A DEVELOPMENT STAGE COMPANY)


Balance Sheets





December 31,2010


2009ASSETS:Current Assets:Cash

$
60


$
2,011Accounts Receivable


17,600



-Total Current Assets


17,660



2,011Fixed AssetsOffice Equipment


2,140



1,373Accumulated Depreciation


(672
)


(252
)Total Fixed Assets


1,468



1,121TOTAL ASSETS

$
19,128


$
3,132LIABILITIES AND STOCKHOLDERS' DEFICIENCY:Current Liabilities:Accounts Payable

$
112,035


$
51,582Credit Cards Payable


8,751



649Contracts Payable


-



165,000Loans Payable - Stockholder


161,272



117,470Total Current Liabilities


282,058



334,701Stockholders' Deficiency:Common stock, par value, $0.001


10,000



10,000100,000,000 authorized with:10,000,000 issued and outstandingPaid in Capital


2,143,285



1,960,909Preferred Stock, par value $0.0015,000,000 authorized with none outstandingAccumulated deficit


(2,416,215
)


(2,302,478
)Total Stockholders' Deficiency


(262,930
)


(331,569
)TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY

$
19,128


$
3,132








The accompanying notes are an integral part of these financial statements





20





SUNGAME CORPORATION


(A DEVELOPMENT STAGE COMPANY)


Statements of Operations





November 13,Year ended


2006, (Inception)December 31,


to December 31,2010


2009


2010Revenue:

$
50,112


$
25,000


$
75,112Total Income


50,112



25,000



75,112Costs and Expenses:Software development


57,151



371,235



1,413,435Stock based compensation


-



-



587,300Depreciation


420



206



672Consulting costs


45,000



-



302,500Bad debts


4,214



-



4,214Startup costs


51,249



83,741



177,391Total Expenses


158,034



455,182



2,485,512Net Loss From Operations


(107,922
)


(430,182
)


(2,410,400
)Other Income and (Expenses)Interest expense


(5,815
)


-



(5,815
)(5,815
)


-



(5,815
)Net Loss

$
(113,737
)

$
(430,182
)

$
(2,416,215
)Per Share InformationLoss per common share

$
(0.01
)

$
(0.05
)Weighted average numberof shares outstanding


10,000,000



9,550,000








The accompanying notes are an integral part of these financial statements





21


SUNGAME CORPORATION


(A DEVELOPMENT STAGE COMPANY)


Statements of Cash Flows


November 13,Year ended


2006, (Inception)December 31,


to December 31,2010


2009


2010Cash Flows from Operating ActivitiesNet Income (Loss)

$
(113,737
)

$
(430,182
)

$
(2,416,215
)Adjustments to reconcile net loss tonet cash used by operating activities:Depreciation


420



206



672(Increase) in accounts receivable


(17,600
)






(17,600
)Increase/(decrease) in accrued expenses


-



-



190,000Increase in accounts payable


85,931



27,232



886,789Compensatory stock issuances










837,300Net Cash Used by Operating Activities


(44,986
)


(402,744
)


(519,054
)Cash Flows from Investing Activities(Increase) in Fixed Assets


(767
)


-



(767
)Net Cash Used for Investing Activities


(767
)


-



(767
)Cash Flows from Financing ActivitiesSales of Common Stock and Warrants


-



375,000



251,500Paid in capital


-



-



107,109(Decrease) Increase in Loans Payable


43,802



7,470



161,272Net Cash Provided by Financing Activities


43,802



382,470



519,881Net Increase in Cash & Cash Equivalents


(1,951
)


(20,274
)


60Beginning Cash & Cash Equivalents


2,011



22,285



-Ending Cash & Cash Equivalents

$
60


$
2,011


$
60SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid for interest expense

$
5,815


$
-


$
-Cash paid for income taxes

$
-


$
-


$
-NON-CASH TRANSACTIONSStock issued for services

$
-


$
375,000


$
837,300Paid in capital - debt relief


182,376







182,376Stock issued for debt relief


-



-



863,369





The accompanying notes are an integral part of these financial statements


22


SUNGAME CORPORATION


(A DEVELOPMENT STAGE COMPANY)


Statements of Stockholders Equity (Deficit)
















Common

Shares


Common

Dollars at

$0.001 Par


Paid in

Capital


Preferred

Shares


Preferred

Dollars

$0.001 Par


Accumulated

Deficit


Stockholders'

DeficiencyBalances 11/14/06


-


$
-


$
-



-


$
-


$
-


$
-Shares to parent for services


1,500



1



1,499















1,500Net loss for year






















(1,500
)


(1,500
)Balances at December 31, 2006


1,500


$
1


$
1,499



-


$
-


$
(1,500
)


-Net loss for year






















(890,443
)


(890,443
)Balances at December 31, 2007


1,500


$
1


$
1,499



-


$
-


$
(891,943
)


(890,443
)Shares issued to parent for debtrelief


4,123,500



4,124



770,876















775,000Shares issued for services


3,875,000



3,875



583,425















587,300Shares issued for cash


500,000



500



119,500















120,000Warrants issued for cash










5,000















5,000Additional paid-in capital from parent










107,109















107,109Net loss for year






















(980,353
)


(980,353
)Balances at December 31, 2008


8,500,000


$
8,500


$
1,587,409






$
-


$
(1,872,296
)


(276,387
)Shares issued for cash


500,000



500



124,500















125,000Shares issued for services


1,000,000



1,000



249,000















250,000Net loss for year






















(430,182
)


(430,182
)Balances at December 31, 2009


10,000,000


$
10,000


$
1,960,909



-


$
-


$
(2,302,478
)


(331,569
)Forgiveness of debt










182,376















182,376Net loss for year






















(113,737
)


(113,737
)Balances at December 31, 2010


10,000,000


$
10,000


$
2,143,285



-


$
-


$
(2,416,215
)


(262,930
)















The accompanying notes are an integral part of these financial statements




23


SUNGAME CORPORATION


(A DEVELOPMENT STAGE COMPANY)


NOTES TO FINANCIAL STATEMENTS


FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009








1. Business and Summary of Significant Accounting Policies





Business





The accompanying financial statements include the accounts of SunGame Corporation (“the Company”), a Delaware corporation.  The Company is an early development stage company that intends to become a leader in providing virtual worlds and online games. The Company believes that it can exploit the market that is at the confluence of social games and social virtual world, and that this market is very significant. The Company will provide various types of Games in an online Virtual World where the users, regardless of location can play games, chat, buy virtual goods, and where our customers are corporations and game aggregators.





The main activity will be to provide a social games and social virtual worlds that attracts players who interact in a seamless environment. The main goal will be to introduce competitive and unique products in an already established market place. The Company will be a premier marketer of money related activities that will have distinct comparative advantages compared to both direct and indirect competitors.





The Company was incorporated in Delaware on November 14, 2006. The Company’s fiscal year end is December 31st.





Summary of Significant Accounting Policies




Development Stage Company





The Company is a development stage company as defined by Accounting Standards Codified No. 915. The Company is devoting substantially all of its present efforts to establish a new business. All losses accumulated since inception have been considered as part of the Company’s development stage activities.




Risks and Uncertainties





The Company operates in an emerging industry that is subject to market acceptance and technological change. The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological and other risks associated with operating an emerging business, including the potential risk of business failure.





Use of Estimates





The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenue and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. These estimates and assumptions are based on management’s future expectations for the Company’s operations. The Company’s actual results could vary materially from management’s estimates and assumptions.








24





Property and Equipment





Property and equipment, when acquired, will be stated at cost. Depreciation will be computed using the straight-line method to allocate the cost of depreciable assets over the estimated useful lives of the assets.





Software Costs





The costs for internal use software, whether developed or obtained, are assessed to determine whether they should be capitalized or expensed in accordance with American Institute of Certified Public Accountants’ Statement (“SOP”) 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. Capitalized software costs are reflected as property and equipment on the balance sheet and are to be depreciated when the Company begins recording revenue the deemed date that the software is placed in service. As of the date of these financial statements the development of the software necessary to achieve the business purposes of the Company is in an undeterminable state causing the Company to deem the asset to be impaired. This conclusion requires that the costs incurred to date be treated as expenses as opposed to the capitalizing of the software.





Start-up Costs





Start-up costs that would commonly be capitalized as Other Assets to be amortized over a period of five years have also been deemed to be impaired for the same reasons stated in the paragraph on “Software Costs”. Based on these circumstances, management has elected to expense these start-up costs as well.





“Long-lived assets” are reviewed for impairment of value whenever events or changes in circumstances indicate that the carrying value of the assets might not be recoverable or at least at the end of each reporting period. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying value of an asset is not recoverable. For Long-lived assets to be held and used, management measures fair value based on quoted market prices or based on discounted estimates of future cash flows.





Concentration of Credit Risk





The Company’s financial instruments that are exposed to concentrations and credit risk primarily consist of amounts due to related parties. The Company presently uses one vendor for all of its software development.





25





Income Taxes





Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such asset will not be recovered.





At December 31, 2010 and 2009 the Company had net operating loss carry forwards of approximately $1,525,000 and $1,400,000 which begin to expire in 2026. The deferred tax asset of approximately $595,000 and $550,000 in 2010 and 2009 created by the net operating losses have been offset by a 100% valuation allowance. The change in the valuation allowance in 2010 and 2009 was $45,000 and $168,000.








2.           Going Concern Uncertainty and Managements’ Plans





In the Company’s audited financial statements for the fiscal year ended December 31, 2010, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about the Company’s ability to continue as a going concern.  The Company’s interim financial statements for the year ended December 31, 2010 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.  The Company reported a net loss of $113,737 for the year ended December 31, 2010, and an accumulated deficit of $2,416,215 as of December 31, 2010.  At December 31, 2010, the Company’s total current liabilities exceed total current assets by $264,398.





The future success of the Company is likely dependent on its ability to attain additional capital, or to find an acquisition to add value to its present shareholders and ultimately, upon its ability to attain future profitable operations.  There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations.  Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern.





3.           Property and Equipment





The Company has incurred software costs in the development of its social games and virtual worlds in the amount of $1,413,435 as of December 31, 2010. Per the discussion under “Software Costs” this amount has been expensed at this time.











26





4.           Contracts Payable





During the year ended December 31, 2008, the Company entered into a Corporate Finance Advisory Services Agreement with Friedland Global Capital Markets, LLC (Friedland) the Agreement provides that the Company would pay a total of $190,000 for services as set forth in the Agreement.  In July 2008, Friedland agreed to suspend payment of the fees until the completion of financing.  These funds are non-interest paying and due on demand. During the year ended December 31, 2009 the Company made payments in the amount of $25,000 against this obligation. In the second quarter of 2010 the Company completed negotiations for the mutual release of all obligations under this contract with no further liability. The cancellation of the contract was treated as an additional contribution to Paid-in-Capital.





5.           Advance Payable, Related Party





At December 31, 2009 the Company had working capital advances due to the Company’s majority shareholder, Adversor, Inc. (“Adversor”) of $117,470. These funds are non-interest bearing and due on demand. Also, included in the Company’s $51,582 in accounts payable at end 2009 were $26,600 owed to Adversor. In 2009 the Company recording consulting fees to Adversor of $26,000. At December 31, 2010 the Company had working capital advances due to Adversor of $161,272, also non-interest bearing and due on demand. Included in the Company’s $112,035 in accounts payable at end 2010 were $106,013 owed to Adversor. In 2010 the Company recorded consulting fees to Adversor of $45,000





6.           Stockholders’ Deficiency





Common Stock





In October 2008, the Company entered into a Security Purchase Agreement (Security Purchase Agreement) with a third party, the Company received cash of $125,000 in exchange for 500,000 shares of restricted common stock and a warrant exercisable for 500,000 shares of the Company’s restricted common stock.  The warrant has an exercise price of $0.80 per share and a term of three years.  The shares were sold at a price of $0.25 per share with $0.24 per share allocated to the common stock and $0.01 per share allocated to the warrant.





In October 2008, the Company entered into Services Agreements with two parties.  The Services Agreements provides for the Company to receive services totaling up to $625,000 in connection with the development of its website and gaming software to be paid for by the issuance of up to 2,500,000 shares of the Company’s common stock.  During the year ended December 31, 2008, the Company issued 1,600,000 of these shares in exchange for services performed at that time totaling $400,000.  The shares were issued at a price of $0.25 per share.





In October 2008, the Company issued 4,123,500 shares of its restricted common stock to its majority shareholder, Adversor, in exchange for their efforts in the settlement of $775,000 of outstanding accounts payable owed to an unrelated third party vendor.  The shares were issued at a price of $0.188 per share.









27





In September 2008, the Company issued 1,373,000 shares of its restricted common stock to a director, Mr. Goss, of the Company as payment for services totaling $137,300.  The shares were issued at a price of $0.10 per share.





In June 2008, the Company issued 902,000 shares of its restricted common stock to Friedland, in exchange for services totaling $50,000 provided under the Finance Advisory Services Agreement.  The shares were issued at a price of $0.055 per share.





In March of 2009, pursuant the Securities Purchase Agreement the Company received further cash of $125,000 in exchange for 500,000 shares of restricted common stock and a warrant exercisable for 500,000 shares of the Company’s restricted common stock.  The warrant has an exercise price of $0.80 per share and a term of three years.  The shares were sold at a price of $0.25 per share with $0.24 per share allocated to the common stock and $0.01 per share allocated to the warrant. The Company also issued 100,000 shares of its restricted common stock in exchange for consulting services valued at $25,000.





In October of 2009, the Company issued 900,000 shares of its restricted common stock in exchange for consulting services valued at $225,000.




For clarification purposes, Adversor has been characterized as a holding company by nature. As a fair and accurate depiction, Adversor owed a majority share of Sungame, and thus could be interpreted as a parent subsidiary relationship, particularly under accounting rules. However, Adversor was never intended to exert control over Sungame, and was intended to relinquish the stock, which it did, and therefore Sungame takes the founded position it was never a subsidiary, regardless of the classification for accounting purposes; although we do understand the source of confusion. We trust this adequately explains our position.


Warrants





At December 31, 2010 and 2009, the following warrants to purchase common stock were outstanding:





Number of common

shares covered by warrants
Exercise Price
Expiration Date500,000
$0.80
October 2011500,000
$0.80
March 2012Sum
1,000,000





Other Capital Transactions





During the year ended December 31, 2010 the Company negotiated a settlement on a contract in the amount of $165,000 and was forgiven accounts payable in the amount of $17,376. The Company has treated such amounts as capital contributions and as such has increased Additional Paid in Capital by $182,376.





7.           8K Information filed





On November 3, 2010, the Company filed form 8K with the Securities and Exchange Commission (SEC) reporting the Company’s signing of a binding letter of intent with Freevi, Inc., a Nevada corporation and having their headquarters in Nevada, to merge the two entities. Freevi, Inc. is a private corporation that is entering into the social networking business space, with acumen in multimedia.





This merger is proposed to be a “stock only” transaction. The Company will cause a reverse split in its outstanding shares of 1 new share for each 40 shares now outstanding. After this reverse split the shares will be exchanged on a 1 for 1 basis as this is considered to be the approximate fair value for each entity.








28





8.           Subsequent Events


On January 10, 2011, The Company filed a form 8K with the SEC reporting the reverse split of the outstanding shares. In addition, the Company increased the authorized shares from 100,000,000 to 300,000,000.





Item 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure.





None





Item 9A. Controls And Procedures.





Evaluation of Disclosure Controls and Procedures





Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this annual report on Form 10-K.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of such date, at a reasonable level of assurance, in ensuring that the information required to be disclosed by our company in the reports we file or submit under the Exchange Act is: (i) accumulated and communicated to our management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.





Internal Control Over Financial Reporting




Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f).  Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on our evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2009.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting pursuant to temporary rules of the Securities and Exchange Commission.




Changes in Internal Control Over Financial Reporting





There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





Item 9B. Other Information





None







29


PART III





Item 10. Directors, Executive Officers And Corporate Governance.





The following individuals were serving as our executive officers and directors on December 31, 2010:





Name
Age
PositionGuy M. Robert
47
President, CEO, ,CFO, DirectorVacant

Secretary, Treasurer, DirectorRanulf Jose Goss
32
Director








Guy M. Robert.  Mr. Robert has served as the President, Chief Executive Officer, Chief Financial Officer and a Director of SunGame since inception. He also serves as President of Adversor, Inc., a beneficial owner of SunGame Corporation, since incorporation. After a career in IT consulting and Global Product Management for Ericsson 1989-1992 and Vodafone from 1992-1995, Mr. Robert has focused his entrepreneurial spirit and management capabilities within the international IT community. He established and was a Director or CEO of companies such as XPonCard Thailand Ltd.1999-2004, MobylNet SL, Spain, 2002-2005 and Communication Information Services 2000-2004 which was acquired by a publicly listed group. Mr. Robert is a Market Economist, graduated from the Stockholm Market Institute.





Michael Segal.  Mr. Segal who was a director since June 8, 2007, resigned from the Company’s Board of Directors on November 3, 2010 citing a difference of opinion with the other Directors relating to the business model of Freevi, Inc. and the future of SGMZ as a result of the merger.





Ranulf Jose Goss.Mr. Goss has been a Director of SunGame Corporation since October 2008. As CEO of SunGame SEA, Mr. Goss manages online virtual world and walkthrough development for SunGame US. Prior to joining the Company, he was a Producer at Matahari Studios, a leading game development company in the Philippines. As the senior project manager he oversaw supplier relationships, academic relationships and technical research. From February to May 2006, Mr. Goss was Chief Game Architect at E-commerce Percs, where he lead the PC game development team, and was Project Manager for Online MMORPG being Co-developed with a Korean Online Game. In August 2005, he founded SlyceSoft Games Development, the premier 3-D Digital game producer company in the Philippines. He directly managed the artistic and technical team that planned, designed, and developed the Away-Agila, the upcoming first and only 3-D Filipino folklore-based adventure game in the Philippines. The game was released in prototype in May 2005 and is expected to be published in late 2009. From 1999 to July 2005, Mr. Goss held several positions with TrendMicro, Inc. His senior position was Global Database Administrator where he managed the day-to-day operations of multiple, multi-tier, distributed, large-scale SQL server databases to service the real-time technical support needs of customers in the United States, Europe, and Philippines. Prior to that he was the Quality Assurance Engineer, where he was responsible for leading the QA project team that was involved in the planning and executing testing efforts of specific software upgrades for multiple, multi-tier, distributed, large-scale SQL server databases environment. His first position with the company was as a Systems Engineer, providing customer support for the installation and use of Trend Micro products. He wrote advanced T-SQL ueries, complex joins, indexes, Data Transformation Services (DTS), triggers, stored procedures, data extraction, transformation, and validation of SQL queries.  Mr. Goss is currently Chairperson, Manila Chapter of the International Game Developers Association. He attended La Salle University where he obtained a B.S. in Computer Studies.







30


All executive officers are elected by the Board and hold office until the next Annual Meeting of stockholders and until their successors are elected and qualify.





Compliance With Section 16(a) Of The Exchange Act





Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the registrant's officers and directors, and persons who own more than 10% of a registered class of the registrant's equity securities, to file reports of ownership and changes in ownership of equity securities of the Registrant with the Securities and Exchange Commission. Officers, directors and greater-than 10% shareholders are required by the Securities and Exchange Commission regulation to furnish the registrant with copies of all Section 16(a) forms that they file.





Item 11. Executive Compensation.





Compensation.





The following table sets forth compensation awarded to, earned by or paid to our Chief Executive Officer and the four other most highly compensated executive officers for the years ended December 31, 2010 and 2009 (collectively, the “Named Executive Officers”).





SUMMARY COMPENSATION TABLEName and

principal position
Year
Salary
Bonus
Stock Awards
Option Awards
Non-Equity Incentive Plan Compensation
Nonqualified Deferred Compensation Earnings
All Other Compensation
TotalGuy Robert, CEO(1)
2010
0
0
0
0
0
0
0
02009
0
0
0
0
0
0
0
0Michael Segal, sec/treas.
2010
0
0
0
0
0
0
0
02009
0
0
0
0
0
0
0
0





(1)  Mr. Robert does not receive a salary for his services from SunGame.  Mr. Robert is an employed as an executive officer of the Company by Adversor, Inc., a majority shareholder of the Company. Mr. Robert owns 49% of Adversor, Inc. and receives 49% of any dividends paid by Adversor as compensation for his services. Mr. Robert does not have an employment agreement with Adversor. Mr. Robert's dividend payments by Adversor are shown as other compensation in the above table.





OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2010OPTION AWARDS
STOCK AWARDSName
Number of Securities Underlying Unexercised Options

(#)

Exercisable
Number of Securities Underlying Unexercised Options

(#)

Unexercisable
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options

(#)
Option Exercise Price

($)
Option Expiration Date
Number of Shares or Units of Stock That Have Not Vested

(#)
Market Value of Shares or Units of Stock That Have Not Vested

($)
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested

(#)
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested

(#)Guy Robert
0
0
0
0
0
0
0
0
0Michael Segal
0
0
0
0
0
0
0
0
0





31





Employment Contracts





We do not have an employment contract with any executive officer.





We have made no Long Term Compensation payouts.





Director Compensation





DIRECTOR COMPENSATIONName
Fees

Earned or

Paid in

Cash
Stock

Awards
Option

Awards
Non-Equity

Incentive

Plan

Compensation
Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings
All

Other

Compensation
TotalGuy Robert(1)
0
0
0
0
0
0
0Michael Segal
0
0
0
0
0
0
0





(1)  Mr. Robert does not receive a salary for his services from SunGame.  Mr. Robert is an employed as an executive officer of the Company by Adversor, Inc., a majority shareholder of the Company.  Adversor, Inc. compensates Mr. Robert for his services. Mr. Robert is an owner of Adversor, Inc.





Our directors do not receive compensation for their attendance at meetings of the board of directors.





All of our officers and/or directors will continue to be active in other companies. All officers and directors have retained the right to conduct their own independent business interests.





It is possible that situations may arise in the future where the personal interests of the officers and directors may conflict with our interests. Such conflicts could include determining what portion of their working time will be spent on our business and what portion on other business interest. To the best ability and in the best judgment of our officers and directors, any conflicts of interest between us and the personal interests of our officers and directors will be resolved in a fair manner which will protect our interests. Any transactions between us and entities affiliated with our officers and directors will be on terms which are fair and equitable to us. Our Board of Directors intends to continually review all corporate opportunities to further attempt to safeguard against conflicts of interest between their business interests and our interests.





We have no intention of merging with or acquiring an affiliate, associated person or business opportunity from any affiliate or any client of any such person.







32


Item 12. Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters.





The following table and the notes thereto set forth information, as of March 15, 2011 (except as otherwise set forth herein), concerning beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of common stock by: (i) each director of the Company, (ii) each executive officer (iii) all executive officers and directors as a group, and (iv) each holder of 5% or more of the Company’s outstanding shares of common stock.





Name and Address of Beneficial Owner(1)

Number of Shares of

common stock

Beneficially Owned(2)


Percentage of

common stock

Outstanding(3)Guy M. Robert(4)


1,300,000



13.00
%Adversor, Inc.(4)


2,925,000



29.25
%Michael Segal


100,500


1
%Ranulf Jose Goss


798,000



7.98
%Sudhir Shah


1,000,000



10.00
%Diamond Star Exports Ltd.(5)


2,500,000



25.00
%Mindzeye Consulting Pte. Ltd.


100,000



1.00
%Jeffrey Friedland(6)


268,250



02. 68
%Officers and Directors as a group (3 people)


5,023,000



50..23
%







December 3  is the beneficiary of 2,925,000 shares









Item 13. Certain Relationships And Related Transactions, And Director Independence.





Other than the stock transactions discussed below, we have not entered into any transaction nor are there any proposed transactions in which any of our founders, directors, executive officers, shareholders or any members of the immediate family of any of the foregoing had or is to have a direct or indirect material interest.





On Wednesday, 3 November 2010, Michael Segal resigned from SGMZ’s Board of Directors. Mr. Segal’s resignation came from a difference of opinion with the other Directors of the business model of Freevi, Inc. and SGMZ future in respect with the merger. Mr. Segal was the Secretary and Treasurer of SGMZ, but was not on any committees of the Board of Directors and was not an Officer of SGMZ.





Mr. Robert, our Chief Executive Officer and a director, is the founder and organizer of SunGame.  Mr. Robert does not receive a salary for his services from SunGame.  Mr. Robert is employed as an executive officer of the Company by Adversor, Inc., a majority shareholder of the Company.  Adversor, Inc. compensates Mr. Robert for his services. Mr. Robert is an owner of Adversor, Inc.  Because of his present management positions with, his organizational efforts on behalf of and his percentage share ownership in our company, Mr. Robert may be deemed to be a “promoter,” as that term is defined in Rule 405 of the Securities Act of 1933.




33


In October 2008, Diamond Star Export, Ltd. and Adversor, Inc., greater than 10% shareholders of our Company, entered into Lock Up Agreements with us whereby they agreed to that, until the earlier of: (1) 90 days after the shareholder's stock has been registered under an effective Registration Statement with the SEC, (2) the second anniversary of the date of the agreement or  (3) 90 days after Change in Control (as defined in the Securities Exchange Act of 1934), that they will not make or cause any sale more than 5% of shares outstanding per quarter, irrespective of whether their shares are subsequently registered. In exchange each received $100.





In October 2008, Mr. Ranulf Goss, our director, entered into a Lock-Up Agreement with us whereby they agreed to that, until the earlier of: (1) 90 days after the shareholder's stock has been registered under an effective Registration Statement with the SEC, (2) the second anniversary of the date of the agreement or (3) 90 days after Change in Control (as defined in the Securities Exchange Act of 1934), that they will not make or cause any sale more than 5% of shares outstanding per quarter, irrespective of whether their shares are subsequently registered. In exchange he received $100.





In March 2009, per the Security Purchase Agreement (dated October 2008), with Mindzeye Consulting Pte, Ltd., we received cash of $125,000 in exchange for 500,000 shares of restricted common stock. The shares were sold at a price of $0.25 per share.





During the year ended December 31, 2008, our majority shareholder, Adversor, paid $20,000 for services on our behalf. In addition, during the year ended December 31, 2008, Adversor forgave $87,109 in debt owed to them. We have treated such amounts as capital contributions and as such have increased Additional Paid in Capital by $107,109.





In October 2008, we issued 4,123,500 shares of our restricted common stock to our majority shareholder, Adversor, in exchange for their efforts in the settlement of $775,000 of outstanding accounts payable owed to an unrelated third party vendor. The shares were issued at a price of $0.188 per share.





In September 2008, we issued 1,373,000 shares of our restricted  common stock to our director, Mr. Goss, as payment for services totaling $137,300.  The shares were issued at a price of $0.10 per share.





During the year ended December 31, 2008, we entered into a Corporate Finance Advisory Services Agreement with Friedland Global Capital Markets, LLC ("Friedland"). The Agreement provides that we will pay a remaining total of $65,000 for services as set forth in the Agreement and $140,000 upon the commencement of the trading of our stock. These funds payable are non-interest bearing and due on demand. At September 30, 2009, we owe Friedland a total of $65,000.





In June 2008, we issued 902,000 shares of our restricted common stock to Friedland, in exchange for services totaling $50,000 provided under the Finance Advisory Services Agreement. The shares were issued at a price of $0.055 per share.





During the year ended December 31, 2008, Adversor advanced $107,109 to support operations. Adversor forgave the total $107,109 and the Company has treated it as capital contribution and an increase the Additional Paid In Capital.





During the year ended December 31, 2007, our majority shareholder, Adversor, Inc. (Adversor) advanced funds of $118,369 to us for operations. During the year ended December 31, 2008, we repaid $8,369 of the outstanding amount. At December 31, 2008, Adversor is owed $110,000. These funds are non-interest bearing and due on demand. During the nine months ended September 30, 2009, Adversor advanced funds of $7,470 to us for operations. At September 30, 2009, Adversor is owed $117,470.







34


Item 14. Principal Accounting Fees And Services.





Audit Fees





We were billed $3,720 for the fiscal year ended December 31, 2010 and $9,500 for the fiscal year ended December 3, 2009 for professional services rendered by the principal accountant for the audit of our annual financial statements, the review of our quarterly financial statements, and other services performed in connection with our statutory and regulatory filings.





Audit Related Fees





There were $0 in audit related fees for the fiscal year ended December 31, 2010 and $0 in audit related fees for the fiscal year ended December 31, 2009. Audit related fees include fees for assurance and related services rendered by the principal accountant related to the audit or review of our financial statements, not included in the foregoing paragraph.





Tax Fees





Tax fees were $0 for the fiscal year ended December 31, 2010 and $0 for the fiscal year ended December 31, 2009.





All Other Fees





There were no other professional services rendered by our principal accountant during the last two fiscal years that were not included in the above paragraphs.





Preapproval Policy





Our Board of Directors’ current policy is to pre-approve all audit and non-audit services that are to be performed and fees to be charged by our independent auditor to assure that the provision of these services does not impair the independence of the auditor.  Our board pre-approved all audit and non-audit services rendered by our principal accountant in 2010 and 2009.





PART IV


Item 15. Exhibits, Financial Statement Schedules.





(a) Financial Statements and Schedules. The following financial statements and schedules for the Company as of December 31, 2010 are filed as part of this report.





(1)   Financial statements of the Company and its subsidiaries.





(2)   Financial Statement Schedules:





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





(A) EXHIBITS.





The following Exhibits are incorporated herein by reference or are filed with this report as indicated below.





Exhibit No.
Description of Exhibits3.01
Certificate of Incorporation (1)3.01(a)
Certificate of Amendment of Certificate of Incorporation (2)3.02
By-laws (1)3.02(a)
Certificate of Amendment of Bylaws (3)21.1
Subsidiaries (2)31.1
Certification pursuant to Sarbanes-Oxley Section 30232.1
Certification pursuant to 18 U.S.C. Section 1350





(1) Incorporated by reference to our Registration Statement on Form S-1 filed with the SEC on May 1, 2009.


(2) Incorporated by reference to our Registration Statement on Form S-1/A filed with the SEC on August 7, 2009.


(3) Incorporated by reference to our Registration Statement on Form S-1/A filed with the SEC on January 19, 2010.


35





SIGNATURES





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








Sungame Corporation:





By:
/s/ Guy M. RobertName:
Guy M. RobertTitle:
Principal Executive Officer, President and Chief Executive Officer, Chief Financial Officer and Principal Accounting OfficerDate:
March 22, 2011In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:By:
/s/ Ranulf GossName:
Ranulf GossTitle:
DirectorDate:
March 22, 2011