UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549







FORM 10-K





(Mark One)


þ
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.For the Fiscal Year EndedJune 30, 2010o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.For the transition period from _____________ to _____________





Commission File No.333-44315





ROTATE BLACK, INC.


(Exact name of small business issuer as specified in its charter)







NEVADA

75-3225181(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)932 Spring Street Petoskey, Michigan

49770(Address of principal executive offices)

(Zip Code)




(231) 347-0777
 (Registrant’s telephone number, including area code)
  Securities registered under Section 12 (b) of the Exchange Act:Title of Each Class of Securities to be Registered

Name of Each Exchange on Which RegisteredCommon Stock, par value $.001 per share

none (listed on OTC Bulletin Board)
  Securities registered under Section 12 (g) of the Exchange Act:
 None


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes oNo þIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes oNo þIndicate 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  þNo oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this 10-K or any amendments to this Form 10-K.  o  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 definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):




Large accelerated filer
o
Accelerated filer
oNon-accelerated filer
o
Smaller reporting company
þ




Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes oNo þThe aggregate market value of the common stock held by non-affiliates of the registrant was approximately $4,470,900 (assuming, for this purpose, that executive officers, directors and holders of 10% or more of the common stock are affiliates), based on the closing price of the registrant’s common stock as reported on the Over-the-Counter Bulletin Board on October 12, 2009.At November 3, 2010, 16,366,912 shares of the registrant’s common stock (par value of $0.001) were outstanding.DOCUMENTS INCORPORATED BY REFERENCENo documents are incorporated by reference into this Report except those Exhibits so incorporated as set forth in the Exhibit index.










ROTATE BLACK, INC.


FORM 10-K


TABLE OF CONTENTS




PAGEPART IITEM 1
Business


1ITEM 1A
Risk Factors


11ITEM 1B
Unresolved SEC Staff Comments


19ITEM 2
Properties


19ITEM 3
Legal Proceedings


20ITEM 4
Submission of Matters to a Vote of Security Holders


20PART IIITEM 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


21ITEM 6
Selected Financial Data


23ITEM 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations


23ITEM 7A
Quantitative and Qualitative Disclosures About Market Risk


29ITEM 8
Financial Statements and Supplementary Data


29ITEM 9
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure


30ITEM 9A
Controls and Procedures


30ITEM 9B
Other Information


30PART IIIITEM 10
Directors, Executive Officers and Corporate Governance


31ITEM 11
Executive Compensation


32ITEM 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


34ITEM 13
Certain Relationships and Related Transactions, and Director Independence


36ITEM 14
Principal Accountant Fees and Services


37PART IVITEM 15
Exhibits and Financial Statement Schedules


38SIGNATURES


39


i





PART I




FORWARD LOOKING STATEMENTS




This Annual Report contains forward-looking statements within the meaning of the federal securities laws that involve a number of risks and uncertainties. Our future results may differ materially from our historical results and actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors. These factors are described in the “Risk Factors” section below. Among the factors that could cause actual results to differ materially from those expected are the following: business conditions and general economic conditions; competitive factors, such as pricing and marketing efforts; and the pace and success of product research and development. These and other factors may cause expectations to differ.





ITEM 1:  BUSINESS




GENERAL OVERVIEW OF BUSINESS




Rotate Black, Inc. (“Rotate Black, Inc.” or the “Company” ”We” ”Us” “Our”) was incorporated in Nevada on August 2, 2006 to be the successor by merger of BevSystems International, Inc. and BevSystems International Ltd. (“BevSystems”) under a plan of reorganization (the “Plan”) effective August 15, 2008, as approved by the United States Bankruptcy Court in Tampa, Florida. Under the terms of the Plan, BevSystems merged into the Company with the Company as the survivor.





On August 15, 2008, the Company commenced operations and all activity prior thereto has been charged to operations.





The Company has shifted its major focus of managing and developing of a casino in New York State to the management of the development of a casino in Gulfport, Mississippi.  We have sold our intertest in Rotate Black Gaming, Inc., including our development assets and contract rights to the Seneca project to Catskill Gaming and Development, LLC (‘Catskill’).  Catskill has the resources, relationships and contacts to finalize the project while allowing us the ability to focus on managing the development of the casino project in Gulfport, Mississippi where cash flows and development times have a more foreseeable future.





Gaming.On October 7, 2008, the Company entered into certain agreements with Rotate Black, LLC (“RBL”) a Michigan Limited Liability Company for the acquisition of its gaming assets. Under the terms of the agreements, we acquired land, receivables and contract rights for an aggregate of 5,312,000 (retroactively adjusted to reflect the reverse split) shares of its common stock.





Pursuant to the RBL acquisition agreement, we acquired a seventy five percent (75%) ownership in RBL’s wholly owned affiliate Rotate Black Gaming, Inc. (RBG), a Nevada corporation. In accordance with a December 2009 Executive Order issued by the President of the Seneca Nation of Indians (Nation), RBG is the Presidential Representative to pursue the development of a Class III world-class casino resort tentatively scheduled to be named “the Seneca Catskills Resort and Casino” consistent with the terms of Development and Management Agreements previously entered into with the Nation. To date, RBG has completed the overall plans for the three phased development, acquired property and transferred the property to the Nation.







1





On July 1, 2010, the Company entered into an agreement with Catskill Gaming and Development, LLC (“Catskill”), pursuant to which the Company and its affiliate RBL, agreed to sell to Catskill shares of stock constituting 100% of the ownership of RBG, for aggregate consideration of $21 million in cash (the “Agreement”).  According to the Agreement, the cash consideration is to be paid in installments as follows:





(a)
$2 million on or before the first anniversary of the date of the opening for business to the public of a gaming facility under a management agreement between Catskills, as manager, and the Seneca Nation of Indians, in or near the Counties of Ulster and Sullivan in the State of New York (the “Opening Date”);(b)
$2 million on the second anniversary;(c)
$3.4 million on the third anniversary;(d)
$3.4 million on the fourth anniversary;(e)
$3.4 million on the fifth anniversary;(f)
$3.4 million on the sixth anniversary; and(g)
$3.4 million on the seventh anniversary.





In connection with the transaction, Catskill has agreed to assume indebtedness of RBG and RBL, in the aggregate amount of $6.3 million.





The Company expects to close the transaction on or before December 31, 2010.





Big Easy Gaming Vessel.On February 2, 2010, Rotate Black, Inc entered into a purchase agreement with the Chapter 11 Trustee of Cruise Holding II, LLC to purchase the gaming vessel “The Big Easy” for $3,250,000, as amended. Pursuant to the Purchase Agreement, the Company paid a deposit of $125,000 and issued a note in the amount of $125,000, which was personally guaranteed by the Company’s Chief Executive Officer, John Paulsen. The Purchase Agreement provides for a closing no later than March 15, 2010, subject to a single extension of no more than 30 days, at the election of the Company upon a payment to the Trustee of an additional cash deposit of $50,000. The Purchase Agreement also provides that the $250,000 deposit shall be forfeited as liquidated damages in the event that the Company defaults, breaches the terms of the offer, or breaches the terms of any sale order that may be entered by the U.S. Bankruptcy Court for the Southern District of Florida.





On February 8, 2010, the US Bankruptcy Court for the Southern District of Florida approved the Private Sale of the M/V Big Easy free and clear of liens, claims and encumbrances to us. The Court ordered that any party in interest objecting to the sale order may file a motion for reconsideration within ten calendar days, so long as the objecting party enters into a binding Asset Purchase Agreement with the Trustee at a cost higher than $3,525,000 and tenders a cash deposit in the amount of $525,000. Then if the Court agrees to vacate the Company’s sale order, Rotate Black would be entitled to receive a break up fee of $250,000 and a refund of its cash deposit along with the cancellation of the promissory note and personal guaranty. At the time of this filing no one had objected to the Court’s approved sale order.





On June 10, 2010, the Company entered into an Offer to Purchase and Sales Agreement (the “Purchase Agreement”) with the seller of The Big Easy, Cruise Holdings II, LLC (“Seller”). Pursuant to the Purchase Agreement, as full consideration for the acquisition of The Big Easy, the Company issued a Promissory Note to Seller in the amount of $2,975,000 (the “Secured Note”); delivered to Seller the Preferred Mortgage to secure the Secured Note; and issued to Seller an unsecured Promissory Note (the “Unsecured Note”) in the amount of $600,000 in exchange for trustee fees that was personallyguaranteed by the Company’s Chief Executive Officer, John Paulsen. The closing of the transaction was approved by the Bankruptcy Court on June 11, 2010.  The vessel was moved in July 2010 from its mooring in St. Petersburg, Florida to Tampa Bay, Florida where it is being repainted and fit out to make it ready for our casino operation. When completed, the vessel will be moved to its Gulfport, Mississippi location.


2





Pursuant to the offer, the Company purchased The Big Easy, a gaming vessel for an aggregate purchase price of $4,264,500, payable: (a) by issuance of a secured note payable to the seller of $2,975,000 (the Secured Note), (b) issuance of an unsecured note payable to the seller of $600,000 (Unsecured Note), fees of 414,500 and cash of $275,000. The Secured Note is collateralized by the gaming vessel and both notes are guaranteed by an officer of the Company.The Secured Note is payable on June 11, 2011 and bears interest at 14.5%, per annum, payable $35,000, per month, commencing June 11, 2010. The Unsecured Note bears interest at 14.5%, per annum, and is payable monthly, in an amount equal to 2% of the monthly gross gaming revenue generated from operations, as defined, until June 2012 when all principal and interest are due. As of September 17, 2010, both notes are in default and the interest rate was increased to 20%, per annum.





On October 21, 2010, Rotate Black MS, LLC (RBMS) (an affiliate of ours), as Lessee, entered into a Ninety-Nine (99) year ground lease with Lessors. The Private Lease provides RBMS with approximately five (5) acres of land in Gulfport, Mississippi located in the Bert Jones Yacht Basin. These five (5) acres of land coupled with approximately four and half (4.5) acres of adjacent and contiguous land being provided pursuant to the ground lease with the Gulfport Redevelopment Commission (discussed in detail below) allows RBMS to control more than the minimum seven (7) acres of contiguous land required to have a gaming eligible site in Gulfport, Mississippi.





The term of the Private Lease commenced as of October 20, 2010 and terminates at 11:59 p.m. October 19, 2109.  Pursuant to the terms of the Private Lease, RBMS will pay monthly rent equal to $20,000 (the “Preliminary Rent”) until the earlier of: (1) 11.59 p.m. on the last day of the ninth (9th) month following the Effective Date; or (ii) the date RBMS commences its initial temporary gaming operations on the leased premises. The Preliminary Rent accrues and RBMS is under no obligation to make any Preliminary Rent Payments until the earlier of: (i) the date RBMS commences any construction on the leased premises; or (ii) February 1, 2011.  If RBMS does not receive an approval to proceed with the development of a casino on the leased premises from the Mississippi Gaming Commission on or prior to March 1, 2011, then the Private Lease is immediately terminable.





Upon the expiration of the Preliminary Term, the primary term (the “Primary Term”) of the Private Lease commences.   The rent payable during the primary term is a percentage rent with a minimum rent guarantee.  The percentage rent is equal to four percent (4%) of the gross gaming revenues (as defined in the Private Lease).  The minimum rent guarantee is $50,000 per month for the first (1st) six (6) months of the Primary Term; $75,000 per month beginning on the first (1st) day of the seventh (7th) month of the Primary Term; and $110,000 per month beginning the first (1st) day of the seventh (7th) month following the commencement of gaming operations at the permanent gaming facility, with an annual consumer price index adjustment of the minimum rent on the annual anniversary of the minimum rent reaching $110,000.  Permanent gaming facility means the land-based gaming facility developed by RBMS subsequent to the initial gaming operations.





On October 22, 2010, RBMS, as Lessee, entered into a Fifty-Nine (59) year ground lease with GRC.  The lease is dated October 20, 1010 and effective as of October 28, 2010 (the “GRC Lease Effective Date”). The GRC lease provides RBMS with approximately four and a half (4.5) acres of land adjacent and contiguous to the land leased under the Private Lease.





The term of the GRC Lease commences as of the Effective Date and terminates at 11:59 p.m. on October 31, 2069.  Pursuant to the terms of the GRC Lease, RBMS will pay an initial base rent of $50,000 to the GRC upon commencement of construction of the initial gaming operations.  After commencement of the gaming operations, the rent payable to the GRC is a percentage rent with a minimum rent guarantee.  The percentage rent is equal to one percent (1%) of the gross gaming revenues (as defined in the GRC Lease).  The minimum rent guarantee is $600,000 per annum. For the first lease year, RBMS shall be entitled to a $50,000 credit.  Beginning with the sixth (6th) lease year, there is an annual 2% minimum rent guarantee increase.  After the earlier of: (i) commencement of the permanent land-based casino or (ii) October 15, 2015, the GRC is entitled to additional rent in an amount equal to 25 bps of Adjusted EBITDA (as defined in the GRC Lease) generated by RBMS on the entire 9.5 acre parcel.  This additional rent shall increase by 25 bps each lease year for the three immediately subsequent lease years.   In the event Adjusted EBITDA exceeds $75 million in any lease year, RBMS shall pay the GRC an additional 25 bps of the amount of Adjusted EBITDA in excess of $75 million.




3





We expect completion of The Big Easy Gaming vessel in May of 2011.  When completed, the first phase of the casino will be 238 feet long and 62 feet wide vessel featuring:





●
approximately 26,000 square-feet of gaming space, including 875 slot machines, 18 table games, including blackjack, craps, roulette and baccarat;


●
120 room hotel;


●
three distinctive and diverse dining options, including a 30-seat 24-hour snack bar, a 110-seat restaurant, and 400-seat BBQ;


●
three bar areas;


●
a surface parking lot that will accommodate approximately 600 vehicles.





Gaming and Other Developments currently on hold





Dayton.The Company entered into a cancelable development agreement with RBL associated with Schaller Development’s “Traditions Casino Resort” to be developed and located in Dayton, Nevada. Pursuant to Rotate Black’s current negotiations with Schaller Development Rotate Black would contribute $5.0 million of working capital into a newly formed subsidiary Rotate Black Dayton, Inc. Then, Rotate Black Dayton, Inc. would sell shares representing 20% of the outstanding shares of Rotate Black Dayton to pay for Schaller’s contribution of $6.5 million of land and carrying all approvals and entitlements for gaming. The purchase price of Dayton of $219,154 was allocated to deferred expenses and included the predevelopment expenses as of the date acquired.As of June 30, 2009, the Dayton casino development project was terminated by the Company has written-off the deferred expenses of $233,960.   The Company has pending litigation in regards to this project and seeking to recover damages. (see Litigation section of 10-K)





India.(Rotate Black India Pvt LTD)Under a stock purchase agreement the Company acquired a fifty percent (50%) interest in Rotate Black India Pvt. LTD (“RBIP”), which was formed and registered in Ahmadabad, India. RBIP was created pursuant to a joint venture with Sandesh, Ltd, one of India’s largest media groups, for the acquisition of a Five Star casino resort in the GOA region of India. The Company plans to combine its operating experience with Sandesh’s media and talent capabilities to create India’s premier casino resort.  The purchase price of India of $136,121 was allocated to investment in joint venture and includes all the investment of RBL as of the date acquired. The Company had identified potential properties for acquisition, but does not anticipate an acquisition until new Indian gaming laws are solidified in India.  Although the Company has identified potential properties for acquisition, it does not anticipate an acquisition until new Indian gaming laws are solidified and, therefore, has written-off the investment expense of $136,121.





Life O2 Oxygenated Water





The intangible assets acquired under the Plan consisted of a license of patents, pending patents, trade secrets, know-how and other intangibles of Life O2 Oxygenated Water (Life O2) which were assigned to us under the Plan. The license grants us the exclusive worldwide (as defined), irrevocable, perpetual, royalty-free right to all the intangible assets for use in the production, marketing, distribution, sublicensing and sale of Life O2, subject to certain previously granted licenses, and only for human consumption. The Company has the right to assign the rights under the license to any corporate successor by way of merger, etc. The Company is entitled to sublicense, exclusively or not, or to subcontract the manufacture of products under the license.





As of the June 30, 2010, the Company has not arranged a similar license and bottling arrangement, has determined that the carrying amount has been impaired and wrote-off of the intangible assets.





As of June 30, 2010, the Life O2 project is on hold.




4





GOVERNMENT REGULATION





The ownership, management, and operation of gaming facilities are subject to many federal, state, provincial, tribal and/or local laws, regulations and ordinances, which are administered by the relevant regulatory agency or agencies in each jurisdiction. These laws, regulations and ordinances are different in each jurisdiction, but primarily deal with the responsibility, financial stability and character of the owners and managers of gaming operations as well as persons financially interested or involved in gaming operations.




We may not own, manage or operate a gaming facility unless we obtain proper licenses, permits and approvals. Applications for a license, permit or approval may be denied for reasonable cause. Most regulatory authorities license, investigate, and determine the suitability of any person who has a material relationship with us. Persons having material relationships include officers, directors, employees, and security holders.




Once obtained, licenses, permits, and approvals must be renewed from time to time and generally are not transferable. Regulatory authorities may at any time revoke, suspend, condition, limit, or restrict a license for reasonable cause. License holders may be fined and in some jurisdictions and under certain circumstances gaming operation revenues can be forfeited. We may be unable to obtain any licenses, permits, or approvals, or if obtained, they may not be renewed or may be revoked in the future. In addition, a rejection or termination of a license, permit, or approval in one jurisdiction may have a negative effect in other jurisdictions. Some jurisdictions require gaming operators licensed in that state to receive their permission before conducting gaming in other jurisdictions.




The political and regulatory environment for gaming is dynamic and rapidly changing. The laws, regulations, and procedures dealing with gaming are subject to the interpretation of the regulatory authorities and may be amended.





Any changes in such laws, regulations, or their interpretations could have a negative effect on our operations and future development of gaming opportunities.  Certain specific provisions applicable to us are described below.





Indian Gaming Regulatory Matters





Because the “Seneca Catskills Casino and Resort” project is on tribal property, the following is a summary of some of the particulars relating to regulations of gaming properties on tribal lands.





Gaming on Indian Lands (lands over which Indian tribes have jurisdiction and which meet the definition of Indian Lands under the Indian Gaming Regulatory Act of 1988, (the “Regulatory Act’) is regulated by federal, state and tribal governments. The regulatory environment regarding Indian gaming is always changing. Changes in federal, state or tribal law or regulations may limit or otherwise affect Indian gaming or may be applied retroactively and could then have a negative effect on our operations. The terms and conditions of management agreements or other agreements, and the operation of casinos on Indian Land, are subject to the Regulatory Act, which is implemented by the NIGC. The contracts also are subject to the provisions of statutes relating to contracts with Indian tribes, which are supervised by the Department of the Interior. The Regulatory Act is interpreted by the Department of the Interior and the National Indian Gaming Commission (“NIGC”) and may be clarified or amended by the judiciary or legislature.





Under the Regulatory Act, the NIGC has the power to:




●
inspect and examine certain Indian gaming facilities;


●
oversee tribal gaming ordinances (enacted at a local level);


●
review and approve management contracts and management teams;


●
oversee payment terms including repayments for development;


●
set limits on contract terms and fees;


●
insure adequacy of accounting processes and guaranteed payments to the tribe;


●
perform background checks on persons associated with Indian gaming;


●
inspect, copy and audit all records of Indian gaming facilities;


●
hold hearings, issue subpoenas, take depositions, and adopt regulations; and


●
penalize violators of the Regulatory Act.





Penalties for violations of the Regulatory Act include fines, and possible temporary or permanent closing of gaming facilities. The Department of Justice may also impose federal criminal sanctions for illegal gaming on Indian Lands and for theft from Indian gaming facilities.




5





Mississippi Regulatory Matters





In June 1990, Mississippi enacted legislation legalizing dockside casino gaming for counties along the Mississippi River, which is the western border for most of the state, and the Gulf Coast, which is the southern border for most of the state. Subsequently, this legislation was amended to allow land-based gaming along the Gulf Coast of Mississippi.





State gaming regulations are subject to amendment and interpretation by the Mississippi Gaming Commission. Changes in Mississippi laws or regulations may limit or otherwise materially affect the types of gaming that may be conducted in Mississippi and such changes, if enacted, could have an adverse effect on us and our Mississippi gaming operations.





Our gaming operations in Mississippi will be subject to regulatory control by the Mississippi Gaming Commission, the State Tax Commission and various other local, city and county regulatory agencies (collectively referred to as the “Mississippi Gaming Authorities”). Our affiliate, Rotate Black MS, LLC, is seeking to obtain gaming licenses from the Mississippi Gaming Authorities. Commission may, at any time, and for any cause it deems reasonable, revoke, suspend, condition, limit or restrict a license or approval to own shares of stock in our subsidiaries that operate in Mississippi.





Substantial fines for each violation of Mississippi’s gaming laws or regulations may be levied against us, our affiliate and the persons involved. Disciplinary action against us or one of our affiliate gaming licensees in any jurisdiction may lead to disciplinary action against us or any of our affiliate licensees in Mississippi, including, but not limited to, the revocation or suspension of any such affiliate gaming license.





We, along with our Mississippi gaming affiliate, must periodically submit detailed financial, operating and other reports to the Mississippi Gaming Commission and/or the State Tax Commission. Numerous transactions, including but not limited to substantially all loans, leases, sales of securities and similar financing transactions entered into by our Mississippi gaming affiliate must be reported to or approved by the Mississippi Gaming Commission. In addition, the Mississippi Gaming Commission may, at its discretion, require additional information about our operations.





Certain of our officers and employees and the officers, directors and certain key employees of our Mississippi gaming subsidiaries must be found suitable or be licensed by the Mississippi Gaming Commission. We will file all required findings of suitability and key employee licenses related to our Mississippi property during the gaming license process and believe that the required licenses will be obtained, although the Mississippi Gaming Commission at its discretion may require additional persons to file applications for findings of suitability or key employee licenses. In addition, any person having a material relationship or involvement with us may be required to be found suitable or licensed, in which case those persons must pay the costs and fees associated with such investigation. The Mississippi Gaming Commission may deny an application for a finding of suitability for any cause that it deems reasonable. Changes in certain licensed positions must be reported to the Mississippi Gaming Commission. In addition to its authority to deny an application for a finding of suitability, the Mississippi Gaming Commission has jurisdiction to disapprove a change in a licensed position. The Mississippi Gaming Commission has the power to require us and any of our Mississippi gaming subsidiaries to suspend or dismiss officers, directors and other key employees or to sever relationships with other persons who refuse to file appropriate applications or who the authorities find unsuitable to act in such capacities.





Employees associated with gaming must obtain work permits that are subject to immediate suspension under certain circumstances. The Mississippi Gaming Commission will refuse to issue a work permit to a person who has been convicted of a felony, committed certain misdemeanors or knowingly violated the Mississippi Gaming Control Act, and it may refuse to issue a work permit to a gaming employee for any other reasonable cause.




6





At any time, the Mississippi Gaming Commission has the power to investigate and require the finding of suitability of any record or beneficial stockholder of ours. The Mississippi Gaming Control Act requires any person who individually or in association with others acquires, directly or indirectly, beneficial ownership of more than 5% of our common stock to report the acquisition to the Mississippi Gaming Commission, and such person may be required to be found suitable. In addition, the Mississippi Gaming Control Act requires any person who, individually or in association with others, becomes, directly or indirectly, a beneficial owner of more than 10% of our common stock, as reported to the U.S. Securities and Exchange Commission, to apply for a finding of suitability by the Mississippi Gaming Commission and pay the costs and fees that the Mississippi Gaming Commission incurs in conducting the investigation.





The Mississippi Gaming Commission has generally exercised its discretion to require a finding of suitability of any beneficial owner of 5% or more of a registered publicly traded corporation’s stock. However, the Mississippi Gaming Commission has adopted a regulation that may permit certain “institutional” investors to obtain waivers that allow them to beneficially own, directly or indirectly, up to 15% (19% in certain specific instances) of the voting securities of a registered publicly traded corporation without a finding of suitability. If a stockholder who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information, including a list of beneficial owners.





Any person who fails or refuses to apply for a finding of suitability or a license within 30 days after being ordered to do so by the Mississippi Gaming Commission may be found unsuitable. We believe that compliance by us with the licensing procedures and regulatory requirements of the Mississippi Gaming Commission will not affect the marketability of our securities. Any person found unsuitable who holds, directly or indirectly, any beneficial ownership of our securities beyond such time as the Mississippi Gaming Commission prescribes may be guilty of a misdemeanor. We are subject to disciplinary action if, after receiving notice that a person is unsuitable to be a stockholder or to have any other relationship with us or our subsidiaries operating casinos in Mississippi, we:




●
pay the unsuitable person any dividend or other distribution upon its voting securities;


●
recognize the exercise, directly or indirectly, of any voting rights conferred by its securities;


●
pay the unsuitable person any remuneration in any form for services rendered or otherwise, except in certain limited and specific circumstances; or


●
fail to pursue all lawful efforts to require the unsuitable person to divest itself of the securities, including, if necessary, our immediate purchase of the securities for cash at a fair market value.





We may be required to disclose to the Mississippi Gaming Commission upon request the identities of the holders of any of our debt securities. In addition, under the Mississippi Gaming Control Act, the Mississippi Gaming Commission may, in its discretion, (1) require holders of our securities, including our notes, to file applications, (2) investigate such holders and (3) require such holders to be found suitable to own such securities. Although the Mississippi Gaming Commission generally does not require the individual holders of obligations such as the notes to be investigated and found suitable, the Mississippi Gaming Commission retains the discretion to do so for any reason, including but not limited to a default, or where the holder of the debt instrument exercises a material influence over the gaming operations of the entity in question. Any holder of debt securities required to apply for a finding of suitability must pay all investigative fees and costs of the Mississippi Gaming Commission in connection with such an investigation.





The Mississippi regulations provide that a change in control of us may not occur without the prior approval of the Mississippi Gaming Commission. Mississippi law prohibits us from making a public offering of our securities without the approval of the Mississippi Gaming Commission if any part of the proceeds of the offering is to be used to finance the construction, acquisition or operation of gaming facilities in Mississippi, or to retire or extend obligations incurred for one or more such purposes. The Mississippi Gaming Commission has the authority to grant a continuous approval of securities offerings and has granted such approval to us, subject to renewal every three years.





Regulations of the Mississippi Gaming Commission prohibit certain repurchases of securities of publicly traded corporations registered with the Mississippi Gaming Commission, including holding companies, without prior approval of the Mississippi Gaming Commission. Transactions covered by these regulations are generally aimed at discouraging repurchases of securities at a premium over market price from certain holders of greater than 3% of the outstanding securities of the registered publicly traded corporation. The regulations of the Mississippi Gaming Commission also require prior approval for a “plan of recapitalization” as defined in such regulations.




7





We must maintain in the State of Mississippi current stock ledgers, which may be examined by the Mississippi Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Mississippi Gaming Authorities. A failure to make such disclosure may be grounds for finding the record holder unsuitable. We must render maximum assistance in determining the identity of the beneficial owner.





Mississippi law requires that certificates representing shares of our members’ interests bear a legend to the general effect that the securities are subject to the Mississippi Gaming Control Act and regulations of the Mississippi Gaming Commission. The Mississippi Gaming Commission has the authority to grant a waiver from the legend requirement, which we have obtained. The Mississippi Gaming Commission, through the power to regulate licenses, has the power to impose additional restrictions on the holders of our securities at any time.





The Mississippi Gaming Commission enacted a regulation in 1994 requiring that, as a condition to licensure, an applicant must provide a plan to develop infrastructure facilities amounting to 25% of the cost of the casino and a parking facility capable of accommodating 500 cars. In 1999, the Mississippi Gaming Commission approved amendments to this regulation that increased the infrastructure development requirement from 25% to 100% for new casinos (or upon acquisition of a closed casino), but grandfathered existing licensees and development plans approved prior to the effective date of the new regulation. “Infrastructure facilities” include any of the following:




●
hotel;


●
theme parks;


●
golf courses;


●
marinas;


●
entertainment facilities;


●
tennis complexes; or


●
any other facilities approved by the Mississippi Gaming Commission.





Parking facilities, roads, sewage and water systems or civic facilities are not considered “infrastructure facilities.” The Mississippi Gaming Commission may reduce the number of rooms required in a hotel if it is satisfied that sufficient rooms are available to accommodate the anticipated number of visitors. In 2003 and in 2006, the Mississippi Gaming Commission again amended its regulation regarding development plan approval but left the 100% infrastructure requirement intact. In 2007, the Mississippi Gaming Commission further amended this regulation. Among other things, the 2007 amendment retained the 100% infrastructure requirement and added a requirement that the qualified infrastructure be owned or leased by certain specified persons.





License fees and taxes are payable to the State of Mississippi and to the counties and cities in which a Mississippi gaming affiliate’s respective operations will be conducted. The license fee payable to the state of Mississippi is based upon gross revenue of the licensee (generally defined as gaming receipts less payout to customers as winnings) and equals 4% of gross revenue of $50,000 or less per month, 6% of gross revenue in excess of $50,000 but less than $134,000 per calendar month, and 8% of gross revenue in excess of $134,000 per calendar month. The foregoing license fees are allowed as a credit against the licensee’s Mississippi income tax liability for the year paid. Additionally, a licensee must pay a $5,000 annual license fee and an annual fee based upon the number of games it operates. The gross revenue tax imposed by the Mississippi communities and counties in which our casino operations are located equals 0.4% of gross revenue of $50,000 or less per calendar month, 0.6% of gross revenue over $50,000 and less than $134,000 per calendar month and 0.8% of gross revenue greater than $134,000 per calendar month. These fees have been imposed in, among other cities and counties, Biloxi and Coahoma County. Certain local and private laws of the state of Mississippi may impose fees or taxes on the Mississippi gaming subsidiaries in addition to the fees described above.





In April 2010, the Mississippi Gaming Commission adopted a regulation amendment that imposes a flat annual fee on each casino operator licensee, covering all investigative fees for that year associated with an operator licensee, any entity registered as a holding company or publicly traded corporation of that licensee, and any person required to be found suitable in connection with that licensee or any holding company or publicly traded corporation of that licensee.  The particular fee is based on the average number of gaming devices operated by the licensee during a twelve (12) month period, as reported to the Mississippi Gaming Commission.  The investigative fee is $325,000 for licensees with 1500 or more gaming devices, $250,000 for licensees with 1000 to 1499 gaming devices, and $150,000 for licensees with less than 1000 gaming devices.  The fee is payable in four (4) equal quarterly installments.  The amendment provides that should such total investigative fees collected by the Mississippi Gaming Commission exceed the amount allowed by Mississippi statute, then the excess fees will be credited to the licensees for the following year.  The amended regulation also provides a schedule of various fees applicable to licensees and persons not covered by the annual investigative fee.




8





The Mississippi Gaming Commission requires, as a condition of licensure or license renewal, that casino vessels on the Mississippi Gulf Coast that are not self-propelled must be moored to withstand a Category 4 hurricane with 155 mile-per-hour winds and 15-foot tidal surge.  A 1996 Mississippi Gaming Commission regulation prescribes the hurricane emergency procedure to be used by the Mississippi Gulf Coast casinos.





The sale of food or alcoholic beverages at our Mississippi gaming locations is subject to licensing, control and regulation by the applicable state and local authorities. The agencies involved have full power to limit, condition, suspend or revoke any such license, and any such disciplinary action could (and revocation would) have a material adverse effect upon the operations of the affected casino or casinos. Certain of our officers and managers and our Mississippi gaming subsidiaries must be investigated by the Alcoholic Beverage Control Division of the State Tax Commission in connection with liquor permits that have been issued. The Alcoholic Beverage Control Division of the State Tax Commission must approve all changes in licensed positions.





Compliance with Other Laws





We are subject to various federal, state and local laws and regulations in addition to gaming regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, employees, currency transactions, taxation, zoning and building codes, and marketing and advertising.





The Internal Revenue Service (“IRS”) requires operators of casinos located in the United States to file information returns for United States citizens, including names and addresses of winners, for all winnings in excess of stipulated amounts. The IRS also requires operators to withhold taxes on certain winnings.





Regulations adopted by the Financial Crimes Enforcement Network of the Treasury Department (“FinCEN”) require us to report currency transactions in excess of stipulated amounts occurring within a gaming day, including identification of the patron by name and social security number. FinCEN has also established regulations that require us to file suspicious activity reports on all transactions that we know, suspect, or have reason to suspect fall into specific categories that are deemed to be suspicious. We believe our programs meet the requirements of the applicable regulations.





Laws and regulations are always subject to change, can be interpreted differently in the future, and new laws and regulations may be enacted which could adversely affect the tax, regulatory, operational or other aspects of the gaming industry and our company. Furthermore, noncompliance with one or more of these laws and regulation could result in the imposition of substantial penalties against us.





(c)  FINANCIAL POSITION AND FUTURE FINANCING NEEDS -- GOING CONCERN





We were a development stage company through March 31, 2010 when the Big Easy Gaming management agreement became effective. We have a limited history in the casino and gaming business.  Since inception, a majority of our operating and development expenses have been funded by private placement offerings and a loan from one of our stockholders, RBL.





For the year ended June 30, 2010 and 2009 we had revenues of $600,000 and $0, respectively.  All revenues in 2010 were related to the Big Easy Gaming management agreement as discussed previously.  Future management fees will be $200,000 per month until operations commence, at which time management fees will increase to $250,000 per month until certain performance measurements are achieved within the management agreement.




9





The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of June 30, 2010, we had an accumulated deficit of $4,850,386 and had net losses totaling $2,123,955 for the year ended June 30, 2010.  Additionally, as of June 30, 2010, we had total current assets of $21,762 compared with total current liabilities of $6,977,823.





We intend to engage in private placement offerings from time to time to provide the Company with working capital to pay down certain debt obligations, for other general corporate and operations uses, and to enable us to pursue our strategy to develop and acquire and operate gaming business opportunities. The Company plans to make sales of its common stock in private transactions or to borrow funds as needed to raise sufficient capital to fund the development of business, projected operating expenses and commitments. However, there can be no assurance that we will be able to obtain sufficient funding to develop our current business plan. In the event that we cannot obtain additional funds when needed, we may be forced to renegotiate some or all of our debt and curtail or cease some or all of our activities.




Although we believe we will be successful with our plans, due to market factors and economic conditions, no assurance can be given that financing will be available to the Company on favorable terms or at all.





The financial statements do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern.





(d)  COMPETITION





The Company expects to concentrate in the business of casino and gaming business development, management, operations and ownership. The gaming industry is highly competitive and continues to proliferate throughout the country as more jurisdictions are choosing to allow gaming or the expansion thereof. Gaming activities include traditional land−based casinos, river boat and dockside gaming, casino gaming on Indian land, state−sponsored video lottery and video poker in restaurants, bars and hotels, pari−mutuel betting on horse racing and dog racing, sports bookmaking, card rooms, and online gaming outside the United States.  Future casinos managed by Rotate Black compete with all of these forms of gaming, and will compete with any new forms of gaming that may be legalized in additional jurisdictions, as well as with other types of entertainment.  Rotate Black also competes with other gaming companies for opportunities to acquire legal gaming sites in emerging gaming jurisdictions and for the opportunity to manage casinos on Indian land.  Most of Rotate Black’s competitors have more personnel and greater financial and other resources than Rotate Black and we have limited expertise in operating a casino and the gaming business.  Further expansion of gaming could also significantly affect Rotate Black’s business.





(e)  COMPLIANCE WITH THE SARBANES-OXLEY ACT OF 2002





On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The Sarbanes-Oxley Act imposes a wide variety of new regulatory requirements on publicly-held companies and their insiders. Many of these requirements will affect us. For example:





●
Our chief executive officer and chief financial officer must now certify the accuracy of the financial statements contained in our periodic reports;


●
Our periodic reports must disclose our conclusions about the effectiveness of our disclosure controls and procedures;


●
Our periodic reports must disclose whether there were significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses; and


●
We may not make any loan to any director or executive officer and we may not materially modify any existing loans.





The Sarbanes-Oxley Act has required us to review our current policies and procedures to determine whether we comply with the Sarbanes-Oxley Act and the new regulations promulgated thereunder. We will continue to monitor our compliance with all future regulations that are adopted under the Sarbanes-Oxley Act and will take actions necessary to ensure that we are in compliance therewith.


10





ITEM 1A:  RISK FACTORS





The purchase of securities offered hereby involves significant risks and is suitable only for investors of adequate financial means which have no need for liquidity in this investment and who can afford to lose their entire investment. Investing in common stock involves a high degree of risk. Certain risks relate to investments generally, others to us and our investments and others arise due to our present status but each investor should carefully consider all of the risks described below, together with all of the other information included in this prospectus, before you decide whether to make an investment in our common stock. The risks set out below are not the only risks we face. If any of the following risks occur, our business, financial condition and results of operations could be materially adversely affected. In such case, our net asset value and the trading price of our common stock could decline, and you may lose all or part of your investment. The following risks affect us and our business:





GENERAL RISK FACTORS





Investments in our stock by new shareholders will be diluted immediately.





Due, in part, to increases in our share price, some of our present shareholders have acquired an interest in us at a total cost substantially less than the total cost that newer investors will likely pay for their shares. Therefore, the newer investors will bear a greater proportion of the risk of loss (measured by the cost of shares). As of November 3, 2010, there were 20,000,000 shares of common stock authorized and 16,366,912 common shares outstanding.





We may sell additional equity in the future that may further dilute the value of your investment.





Reductions in the price of our stock resulting from the performance of our portfolio or other market conditions might result in stock being sold to new investors, including management, at prices below the price paid by you. Senior management may be granted the right, and others may have the right, under certain circumstances, to acquire additional shares of our stock at a price equal to the market price as it exists at a point in the future. If such a grant of a right occurred at a time where the price of the stock has fallen relative to the current market value and falls below the price paid by you, management might be given the right to purchase stock at a price below your cost. In either of these cases, the value of your investment would be further diluted.





Future credit agreements impose restrictions on us which may prevent us from engaging in transactions that might benefit us, including responding to changing business and economic conditions or securing additional financing, if needed.





In the event we enter into one or more loan agreements to fund operations, expansion or acquisitions, these typically contain customary events of default and restrictive covenants that require us to maintain specified levels of performance and financial ratios and prohibit us from taking certain actions without satisfying the financial tests or obtaining the consent of the lenders including, the following examples of typical and customary restrictions on:





●
making investments in excess of specified amounts;


●
incurring additional indebtedness in excess of a specified amount;


●
paying cash dividends;


●
making capital expenditures in excess of a specified amount;


●
creating certain liens;


●
prepaying our other indebtedness;


●
engaging in certain mergers or combinations; and


●
engaging in transactions that would result in a change of control of our company.





Should we be unable to comply with the terms and covenants of our credit agreements, we would be required to obtain modifications of the terms of these agreements or secure another source of financing to continue to operate our business. A default could result in the acceleration of our obligations under the credit agreements.




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Limitation of Liability and Indemnification of Management.





While limitations of liability and indemnification are themselves limited, we have instituted provisions in our bylaws indemnifying, to the extent permitted, against and not making management liable for, any loss or liability incurred in connection with our affairs, so long as such loss or liability arose from acts performed in good faith and not involving any fraud, gross negligence or willful misconduct. Therefore, to the extent that these provisions provide any protection to management, that protection may limit the right of a shareholder to collect damages from members of management. Management is accountable to the shareholder as a fiduciary and, consequently, members of management are required to exercise good faith and integrity in handling our affairs.





If we are not able to build and sustain proper information technology infrastructure, our business could suffer.





We depend on information technology as an enabler to improve the effectiveness of our operations and to interface with our customers, as well as to maintain financial accuracy and efficiency. If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, we could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions, or the loss of or damage to intellectual property through security breach.





If we are unable to hire or retain key employees, it could have a negative impact on our business.





Our continued growth requires us to develop our leadership bench and to implement programs designed to retain talent. However, there is no assurance that we will continue to be able to hire or retain key employees. We compete to hire new employees, and then must train them and develop their skills and competencies. Our operating results could be adversely affected by increased costs due to increased competition for employees, higher employee turnover or increased employee benefit costs. Any unplanned turnover could deplete our institutional knowledge base and erode our competitive advantage.





Your influence in matters requiring shareholder action will be subject to control of certain shareholders.





There are officers and directors and major shareholders with a controlling interest who hold a large percentage of the issued and outstanding shares of our voting securities who would likely exercise voting control over all matters that may be submitted for approval by our shareholders. Even for those members of management and holders of controlling blocks of our shares, while the number of shares controlled is less that a majority, their position of control is material and significant.





Pursuant to our Articles of Incorporation, our Board of Directors has the authority to issue shares of stock without any further vote or action by the stockholders. The issuance of stock under certain circumstances could have the effect of delaying or preventing a change in control of the Company or may deter takeover attempts.





Our Articles of Incorporation contain provisions that may have the effect of discouraging, delaying or making more difficult a change in control and preventing the removal of incumbent directors. The existence of these provisions may reduce any premiums over market price that a potential acquirer would offer to shareholders for their shares of our common stock. Furthermore, we are subject to provisions of the Nevada Revised Statutes that may make it difficult for a potential acquirer to exert control over our Board of Directors and may discourage attempts to gain control without the consent of the Board of Directors.




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RISKS ASSOCIATED WITH LAWS AND REGULATIONS





Our Business May Become Subject to Extensive Additional Regulation at the Federal and State Levels.





Our operations are and will be affected by current and future legislation and by the policies established from time to time by various federal and state regulatory authorities. It is not possible to predict what changes, if any, will be made to existing federal and state legislation and regulations or the effect that such changes may have on our future business and earnings prospects.





The Requirements under Sarbannes-Oxley impose increasing costs for compliance and review of accounting and reporting processes.





We will need to make substantial financial and manpower investments in order to assess our internal controls over financial reporting, and our internal controls over financial reporting may be found to be deficient causing us to incur additional costs for remedying and compliance.





Changes in the legal and regulatory environment could limit our business activities, increase our operating costs, reduce consumer demand for gaming or result in litigation.





The conduct of our businesses, and the advertising and marketing and operation of our facilities, are subject to various laws and regulations administered by federal, state and local governmental agencies in the United States, as well as to foreign laws and regulations administered by government entities and agencies in markets in which we operate.





These laws and regulations may change, sometimes dramatically, as a result of political, economic or social events. Such regulatory environment changes include changes in licensing or the right to operate gaming facilities, laws related to advertising and marketing practices, accounting standards, taxation requirements, competition laws and environmental laws (relating to operations of facilities). Changes in laws, regulations or governmental policy and the related interpretations may alter the environment in which we do business and, therefore, may impact our results or increase our costs or liabilities. In particular, governmental bodies in jurisdictions where we operate may impose new requirements, or other restrictions to continue operations of a gaming facility.





Our management agreements with the various tribes are subject to governmental or regulatory modification.




The NIGC has the power to require modifications to Indian management agreements under some circumstances or to void such agreements or secondary agreements, including loan agreements, if we fail to obtain the required approvals or to comply with the necessary laws and regulations. While we believe that our management agreements and related secondary documents meet the applicable requirements, the NIGC has the right to review each of these agreements and has the authority to reduce the term of a management agreement or the management fee or otherwise require modification of the management agreements and secondary agreements. Such changes would negatively affect our profitability.





The Indian tribes have sovereign powers and we may be unable therefore to enforce remedies against them.





The tribes with which we have agreements are independent governments that have rights to tax persons and enterprises conducting business on their lands. They also have the right to require licenses and to impose other forms of regulation and regulatory fees on persons and businesses operating on their tribal lands. As a sovereign power, Indian tribes are generally subject only to federal regulation. States do not have the authority to regulate them, unless such authority has been specifically granted by the U.S. Congress. Thus, state laws generally do not apply to tribes or to activities taking place on tribal lands. In the absence of a conflicting federal or properly authorized state law, tribal law governs. Unless another law is specified, contracts with the tribes are governed by tribal law (and not state or federal law). In our agreements with these tribes, we generally have agreed that state law will govern the rights and obligations under these agreements. However, such provisions may be unenforceable particularly with respect to remedies against collateral located on tribal lands and they offer no protection against third-party claims against the collateral. If such provisions are determined to be unenforceable, then we may be unable to recover any amounts loaned or advanced to the tribes.




13





RISKS ASSOCIATED WITH REVENUE AND EARNINGS





We cannot guarantee paying dividends to our stockholders.





We are allowed by our articles of incorporation and/or by-laws to pay dividends to our stockholders. However, there can be no guarantee we will have sufficient revenues to pay dividends during any period. Investors in need of liquidity through the payment of dividends should refrain from common stock which does not have a dividend requirement.





We may experience fluctuations in our quarterly and annual results.





We could experience fluctuations in our quarterly and annual operating results due to a number of factors, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets, changes in the gaming industry, and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.





Our business could suffer if we are unable to compete effectively.





Our businesses operate in highly competitive markets. We compete against global, regional and local operators of gaming facilities on the basis of appearance, quality, accessibility and perceived attractiveness. Increased competition and actions by our competitors could lead to downward pressure on prices for food and beverages and other items sold within our facilities and/or a decline in our market share, either of which could adversely affect our results.





Demand for our gaming locations may be adversely affected by changes in consumer preferences and tastes or if we are unable to innovate or market our facilities effectively.





We are a consumer gaming company operating in highly competitive markets and will rely on continued demand for our facilities. To generate revenues and profits, we must sell appeal to our customers and to consumers. Any significant changes in consumer preferences and any inability on our part to anticipate and react to such changes could result in reduced demand for our facilities and erosion of our competitive and financial position. Our success depends on our ability to respond to consumer trends. Consumer preferences may shift due to a variety of factors, including the aging of the general population, changes in social trends, changes in travel, vacation or leisure activity patterns, weather, negative publicity resulting from regulatory action or litigation against companies in the industry, or a downturn in economic conditions. Any of these changes may reduce consumers’ willingness to patronize our facilities.





Adverse changes in discretionary consumer spending would decrease our gaming revenues.





The gaming industry is heavily dependent on discretionary consumer spending patterns. Our business is sensitive to numerous factors that affect discretionary consumer income, including adverse general economic conditions, changes in employment trends and levels of unemployment, increases in interest rates, acts of war, terrorist or political events, a significant rise in energy prices or other events or actions that may lead to a decrease in consumer confidence or a reduction in discretionary income. Declines in consumer spending within the gaming industry, especially for extended periods, could have a material adverse effect on our business, financial condition and results of operations.




14





Development of new casinos is subject to many risks, some of which we may not be able to control.





The opening of our proposed gaming facilities will depend on, among other things, obtaining adequate financing, the completion of construction, hiring and training of sufficient personnel and obtaining all regulatory licenses, permits, allocations and authorizations. The number of the approvals by federal and state regulators and other authorities needed to construct and open new gaming facilities is extensive, and any delay in obtaining or the failure to obtain these approvals could prevent or delay the completion of construction or opening of all or part of the gaming facilities or otherwise adversely affect the design and features of the proposed casinos.


Even if approvals and financing are obtained, building a new casino is a major construction project that entails significant risks. These risks include, but are not limited to:





●
shortages of materials or skilled labor;


●
unforeseen engineering, environmental and/or geological problems;


●
work stoppages;


●
weather interference;


●
unanticipated cost increases; and


●
unavailability of construction equipment.





Obtaining any of the requisite licenses, permits, allocations and authorizations from regulatory authorities could increase the total cost, delay or prevent the construction or opening of any of these planned casino developments or otherwise affect their design. In addition, once developed, we may be unable to manage these casinos on a profitable basis or to attract a sufficient number of guests, gaming customers and other visitors to make the various operations profitable independently.





The failure to obtain necessary licenses, permits and approvals could delay the construction or operation of the project, which could have a material adverse effect on the operating results of our business.





We have not yet obtained, and cannot assure you that we will be able to obtain, all regulatory licenses, permits and approvals necessary to operate our casinos.  Even if all necessary licenses or permits are issued, these licenses, permits and other approvals could have conditions and restrictions that could adversely affect completion or operation of the our casinos. The failure to obtain any other necessary license, permit or approval in a timely manner and without adverse conditions and restrictions may delay, restrict or prevent the casino from being constructed or operated as currently contemplated, thereby materially impairing our ability to satisfy our obligations under the notes.





We will depend solely on the Big Easy Gaming vessel casino to generate cash sufficient to make payments on the notes, and we will be subject to greater risks than a company with geographically diverse operations.





Until our Big Easy Gaming vessel casino is completed, we will rely exclusively on funds from the sales of shares, stockholder loans and private financing. Our ability to generate cash flow will depend on the future operating performance of the Big Easy Gaming vessel, which is subject to many economic, competitive, regulatory and business factors that are beyond our control.





In addition, our revenues and cash flow will be heavily dependent upon the patronage of persons living within a 100-mile radius of each casino and we have limited casino operating experience and financial limitations. Therefore, we are subject to greater risks than a company with larger operations or that are more geographically diversified operations, including:





●
a continued downturn or worsening of regional or local economic conditions;


●
an increase in competition in our market;


●
inaccessibility of  our casino due to road construction or closures of primary access routes; and


●
adverse weather, natural, and other disasters, including flood or fire at the casino or in the surrounding area.




15





The occurrence of any one of the events described above could harm our business, resulting in insufficient cash flow to make payments on the notes.





If we are not able to generate sufficient cash flow from our business to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments or seek to raise additional capital. Our ability to raise additional capital will be limited by the restrictive covenants contained in the indenture governing the notes and may be limited by other agreements we enter into in the future. As a result, these measures may not be available to us or, if available, they may not be available on acceptable terms or otherwise be sufficient to enable us to satisfy our obligations under the notes. If our cash flow is insufficient and we are unable to implement one or more of these alternatives, we may not be able to service our debt obligations, including the notes.





We have a limited base of operations.





Our principal operations currently consist of the five proposed gaming facilities. These limited sources of income, combined with the potentially significant investment associated with any new managed facilities, may cause our operating results to fluctuate significantly. Additionally, delays in the opening of any future casinos or our failure to open a new casino could also significantly adversely affect our profitability. Future growth in revenues and profits will depend on our ability to increase the number of our owned and managed casinos and facilities or develop new business opportunities. We may be unable to successfully acquire, develop or manage any additional casinos or facilities.





The gaming industry is subject to many risks, including adverse economic and political conditions and changes in the legislative and land use regulatory climate.





Similar to investment in other entertainment enterprises, adverse changes in general and local economic conditions may adversely impact investments in the gaming industry. Examples of economic conditions subject to change include, among others:





●
competition in the form of other gaming facilities and entertainment opportunities;


●
changes in regional and local population and disposable income;


●
unanticipated increases in operating costs;


●
restrictive changes in zoning and similar land use laws and regulations, or in health, safety and environmental laws, rules and regulations;


●
risks inherent in owning, financing and developing real estate as part of our casino operations;


●
the inability to secure property and liability insurance to fully protect against all losses, or to obtain such insurance at reasonable costs;


●
inability to hire trained and knowledgeable managers and supervisors;


●
inability to hire a sufficient number of employees to maintain our desired level of operations;


●
seasonality;


●
changes or cancellations in local tourist, recreational or cultural events; and


●
changes in travel patterns or preferences (which may be affected by increases in gasoline prices, changes in airline schedules and fares, strikes, weather patterns or relocation or construction of highways).




16


We may be unable to successfully compete with other gaming activities.





The gaming industry is highly competitive. Gaming activities include traditional land-based casinos; river boat and dockside gaming; casino gaming on Indian land; state-sponsored lotteries and video poker in restaurants, bars and hotels; pari-mutuel betting on horse racing, dog racing and jai alai; sports bookmaking; Internet gaming; and card rooms. Our operations and the casinos that we are trying to develop and operate, compete or will compete, as the case may be, with all these forms of gaming, and any new forms of gaming that may be legalized in additional jurisdictions, as well as with other types of entertainment. Our operations may be unable to successfully compete with new or existing gaming operations within the vicinity of our operations or with gaming operations available on the Internet.





RISKS ASSOCIATED WITH SMALLER PUBLIC COMPANIES





The Market Price of Our Common Stock May Fluctuate Significantly.





The market price and liquidity of the market for shares of our common stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors, may adversely affect our ability to raise capital through future equity financings. These factors include:





●
significant volatility in the market price and trading volume of securities of gaming industry companies or other companies in the industry, which are not necessarily related to the operating performance of these companies;


●
changes in regulatory policies or tax guidelines;


●
our common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market makers for the common stock which can adversely affect its price;


·
changes in earnings or variations in operating results;


●
any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;


●
departure of one or more of our key personnel;


●
operating performance of companies comparable to us;


●
potential legal and regulatory matters;


●
changes in prevailing interest rates;


●
general economic trends and other external factors; and


●
loss of a major funding source.





Our common stock is subject to the “Penny Stock” rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.





The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or option to acquire any equity security with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:




17





●
that a broker or dealer approve a person’s account for transactions in penny stocks; and


●
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.





In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:





●
obtain financial information and investment experience objectives of the person; and


●
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.





The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:





●
sets forth the basis on which the broker or dealer made the suitability determination; and


●
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.





Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.





Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.





Our common stock is thinly-traded.





For most of our history our common stock has been thinly-traded, both privately and on the various exchanges on which it has been listed, making it difficult for stockholders to sell shares of our common stock at a predictable price or at all. The volatility in the market price of our common stock may cause stockholders to encounter significant short term variations in the market price of the stock on account of factors beyond our control.




18





ITEM 1B: UNRESOLVED STAFF COMMENTS





As a smaller reporting company, the Company is not required to provide the information required by this item.





ITEM 2:  PROPERTIES





Administrative Offices.  We maintained our corporate office at 932 Spring Street, Petoskey, Michigan 49770. On August 8, 2008, the Company entered into a lease for office space, commencing on September 1, 2008 through August 31, 2011. Rent is payable in advance, in annual installments. The initial year’s rent is $46,200, increasing as defined. The Company has an option to extend the lease for an additional three year period.





Gaming.  On May 26, 2009, the Company entered into an agreement to acquire additional real property in Sullivan County, New York. The purchase price for the property was 1,409,829 shares of common stock of the Company, $1,750,000 in cash on escrow and $1,750,000 in cash upon closing. On May 11, 2009, the Company issued 630,735 shares of common stock and RBL transferred, on behalf of the Company, 779,034 shares of the Company’s common stock to the seller was deposited under the agreement. The shares were valued at $7,049,142, $1.00, per share.




In October 2009, the Company issued 779,093 shares of common stock to RBL.





On November 9, 2009, the Company issued 70,000 shares of common stock in satisfaction of anti-dilution rights of the land purchase agreement, which the Company has valued at $350,000, $5.00 per share.





On March 16, 2010, the Company issued 208,613 shares of common stock in satisfaction of all anti-dilution rights of the land purchase agreement, which the Company has valued at $521,532, $2.50, per share.





On May 21, 2010, the Company issued 500,000 shares of common stock in satisfaction of all anti-dilution rights of the land purchase agreement, which the Company has valued at $550,000, $.1.10, per share.







19





On July 1, 2010, the Company entered into an agreement with Catskill, pursuant to which the Company and its affiliate Rotate Black, LLC, agreed to sell to Catskill shares of stock constituting 100% of the ownership of Rotate Black Gaming, Inc. (“RBG”), for aggregate consideration of $21 million (the “Agreement”).  According to the Agreement, the consideration is to be paid in installments as follows:




(a)
$2 million on or before the first anniversary of the date of the opening for business to the public of a gaming facility under a management agreement between Catskills, as manager, and the Seneca Nation of Indians, in or near the Counties of Ulster and Sullivan in the State of New York (the “Opening Date”);(b)
$2 million on the second anniversary;(c)
$3.4 million on the third anniversary;(d)
$3.4 million on the fourth anniversary;(e)
$3.4 million on the fifth anniversary;(f)
$3.4 million on the sixth anniversary; and(g)
$3.4 million on the seventh anniversary.





In connection with the transaction, Catskill has agreed to assume indebtedness of RBG and RBL, in the aggregate amount of $6.3 million.





The Company expects to close the transaction on or before December 31, 2010.





ITEM 3:  LEGAL PROCEEDINGS





A complaint has been filed against the Company, RBL and others in the amount of $5,000,000 pursuant to the termination of the development agreement for Dayton. The company and RBL have filed a counterclaim for damages related to the project. Although the matter is in its early stages, the Company believes that the action is without merit and intends to defend itself against this action.





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





There were no matters submitted to a vote of security holders during the period ending June 30, 2010.




20





PART II





ITEM 5:   MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





The Company’s common stock is presently traded on the over-the-counter bulletin board stock market and is quoted on the National Association of Securities Dealers (“NASD”) Over-The Counter Bulletin Board (“OTCBB”) under the symbol under the symbol “ROBK.OB.” Until we began trading on July 8, 2008, the stock was available only through the Pinksheets, LLC were reported under the symbol ROBK.pkbut no market was maintained nor quotes published.





The Company’s stock was not quoted for trading for the previous two years prior to July 8, 2009 and therefore, market closing and the high and low prices at the end of each quarter for the years ended June 30, 2009 and 2008 (except for the most recent quarter) are not available. The following table sets forth the quarterly high and low daily close for our common stock as reported by the OTCBB since we began trading on July 8, 2009. The bids reflect inter-dealer prices without adjustments for retail mark-ups, mark-downs or commissions and may not represent actual transactions.





Year Ended June 30, 2010

High


LowFirst Quarter

$
3.00



1.50Second Quarter


3.60



1.50Third Quarter


2.40



0.75Fourth Quarter


1.75



0.60Year Ended June 30, 2009First Quarter

$
n/a



n/aSecond Quarter


n/a



n/aThird Quarter


n/a



n/aFourth Quarter


n/a



n/aRetroactively adjusted to reflect the reverse split





The OTCBB is a quotation service sponsored by the NASD that displays real-time quotes and volume information in over-the-counter (“OTC”) equity securities. The OTCBB does not impose listing standards or requirements, does not provide automatic trade executions and does not maintain relationships with quoted issuers. A company traded on the OTCBB may face loss of market makers and lack of readily available bid and ask prices for its stock and may experience a greater spread between the bid and ask price of its stock and a general loss of liquidity with its stock. In addition, certain investors have policies against purchasing or holding OTC securities. Both trading volume and the market value of our securities have been, and will continue to be, materially affected by the trading on the OTCBB.





Penny Stock Considerations





Our shares will be “penny stocks” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Our shares thus will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock. Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000, or annual income exceeding $100,000 individually or $300,000 together with his or her spouse, is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:




21





●
Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;


●
Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;


●
Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value and information regarding the limited market in penny stocks; and


●
Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account.





Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may be decrease, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.





Holders





As of June 30, 2010, there were 16,599,829 shares of common stock issued and outstanding, held by approximately 126 shareholders of record, including 6,252,238 (retroactively adjusted to reflect the reverse split) shares in the public float. As of November 3, 2010, there were 16,366,912 shares of common stock issued and outstanding, held by approximately 121 shareholders of record.





Dividends on Common Stock





We have not declared a cash dividend on our common stock in the last three fiscal years and we do not anticipate the payment of dividends in the near future. We may not pay dividends on our common stock without first paying dividends on our preferred stock. There are no other legal restrictions that currently limit our ability to pay dividends on our common stock other than those generally imposed by applicable state law.





Equity Compensation Plans





We have not yet adopted any stock option or equity compensation plan.





Recent Sales of Unregistered Securities





●
Securities sold – not applicable. (All securities sold as of the date hereof have been sold pursuant to exemptions under Regulation D and were therefore sold as restricted securities).


●
Use of proceeds – not applicable.





Purchase of Equity Securities by the Issuer and Affiliated Purchasers





None during the year ended June 30, 2010.




22





ITEM 6:  SELECTED FINANCIAL DATA





As a smaller reporting company, the Company is not required to provide the information required by this item.





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





FORWARD LOOKING STATEMENTS





This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, relating to our financial condition, profitability, liquidity, resources, business outlook, market forces, corporate strategies, contractual commitments, legal matters, capital requirements and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. We note that many factors could cause our actual results and experience to change significantly from the anticipated results or expectations expressed in our forward-looking statements. When words and expressions such as: “believes,” “expects,” “anticipates,” “estimates,” “plans,” “intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,” “possible,” “seeks,” “may,” “could,” “should,” “might,” “likely,” “enable,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “believes,” “estimates,” “projects” or similar words or expressions are used in this Form 10-K, as well as statements containing phrases such as “in our view,” “there can be no assurance,” “although no assurance can be given,” or “there is no way to anticipate with certainty,” forward-looking statements are being made and these words or phrases or similar expressions should be interpreted as intended to identify these forward-looking statements.





In addition to the risks discussed in Item 1 “Factors That May Affect Our Future Performance”, various other risks and uncertainties may affect the operation, performance, development and results of our business and could cause future outcomes to change significantly from those set forth in our forward-looking statements, including the following factors: These statements are subject to risks and uncertainties beyond our reasonable control that could cause our actual business and results of operations to differ materially from those reflected in our forward-looking statements. Forward-looking statements are not guarantees of future performance. Our forward-looking statements are based on trends which we anticipate in our industry and our good faith estimate of the effect on these trends of such factors as industry capacity, product demand and product pricing. The inclusion of projections and other forward-looking statements should not be regarded a representation by us or any other person that we will realize our projections or that any of the forward-looking statements contained in this prospectus will prove to be accurate.





●
our growth strategies;


●
our development and potential acquisition of new facilities;


●
risks related to development and construction activities;


●
anticipated trends in the gaming industries;


●
patron demographics;


●
general market and economic conditions;


●
access to capital and credit, including our ability to finance future business requirements;


●
the availability of adequate levels of insurance;


●
changes in federal, state, and local laws and regulations, including environmental and gaming license legislation and regulations;


●
regulatory approvals;


●
competitive environment;


●
risks, uncertainties and other factors described from time to time in this and our other SEC filings and reports.





We undertake no obligation to publicly update or revise any forward-looking statements as a result of future developments, events or conditions. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ significantly from those forecast in any forward-looking statements.




23





MANAGEMENT’S ANALYSIS OF BUSINESS





As used herein the terms “we”, “us”, “our,” the “Registrant,” and the “Company” means, Rotate Black, Inc., a Nevada corporation.





The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included in this report. This discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results may differ materially from those anticipated in these forward-looking statements.





Overview





We own, manage and/or invest in gaming-related opportunities. The Company continues to actively investigate, individually and with partners, new business opportunities. We currently have a management agreement with our affiliate, RBMS.  As of June 30, 2010, the Company, RBL and an officer of the Company will own 46.6% of the voting interests of RBMS. The Company has accounted for its investment in RBMS on the equity method as it does not meet all the control requirements to consolidate.





Sale of RBG





On July 1, 2010, the Company and RBL entered into an agreement to sell 100% of the common stock of RBG to Catskill Gaming and Development, LLC (Catskill) for an aggregate consideration of $21,000,000 in cash and the assumption indebtedness of $6,300,000 payable as follows:





(a)
$2,000,000 on or before the first anniversary of the date of the opening for business to the public of a gaming facility under a management agreement between Catskills, as manager, and the Seneca Nation of Indians,(b)
$2,000,000 on the second anniversary;(c)
$3,400,000 on the third anniversary;(d)
$3,400,000 on the fourth anniversary;(e)
$3,400,000 on the fifth anniversary;(f)
$3,400,000  million on the sixth anniversary; and(g)
$3,400,000 on the seventh anniversary.





The Company expects to close the transaction on or before December 31, 2010.





The Dayton casino development project is on hold and, as of June 30, 2009, and We have determined that the recovery of the carrying value is uncertain and have written-off the deferred expenses associated with the acquisition of $233,960. We are currently seeking another similar location in Nevada.




24





India consists of a 50% interest in Rotate Black India Pvt Ltd., an Indian joint venture. Although We have identified potential properties for acquisition, We do not anticipate an acquisition until new Indian gaming laws are solidified, which is uncertain.As of December 31, 2009, India is on hold and We have determined that the recovery of the carrying value is uncertain and has written-off the investment in the joint venture.




The Company has shifted its major focus of managing and developing of a casino in New York State to the management of the development of a casino in Gulfport, Mississippi.  We have sold our intertest in Rotate Black Gaming, Inc., including our development assets and contract rights to the Seneca project to Catskill Gaming and Development, LLC (‘Catskill’).  Catskill has the resources, relationships and contacts to finalize the project while allowing us the ability to focus on managing the development of the casino project in Gulfport, Mississippi where cash flows and development times have a more foreseeable future.





Results of Operations





Revenue





For the years ended June 30, 2010 and June 30, 2009, we had revenues of $600,000 and $-0-, respectively. Revenues consisted of management fees related to the management agreement with RBMS.




Our revenue for 2010 will not be indicative of future results because the Company previously a development stage entity until March 31, 2010.


Operating Expenses





Operations for the years ended June 30, 2010 and 2009 are not comparable because, during 2009, the Company was not operational inasmuch as management was pursuing contracts and approvals but not expending capital or incurring expenses while awaiting contracts and approvals.





Operating expenses for the years ended June 30, 2010 and 2009, totaled $2.7 million and $1.9 million, respectively, an increase of $.8 million. Operating expenses consisted primarily of consulting fees, interest expense, write-off impaired assets or investments, legal and accounting expense, salaries, stock based compensation, rent for administrative office space and various general and administrative costs.





General and administrative expenses, were $1.4 million and $.7 million, respectively, an increase of $.7 million,which consisted primarily of fees for outside  legal and consulting services and traveling in connection with the Seneca project development.





Also, in operating expenses for the year ended June 30, 2010  were the write-offs of our investments in the joint venture in India of $139,782 and our LIFE O2 intangible assets of $374,265, as compared to our write-off of our Dayton project’s deferred expensed of $233,960, for the year ended June 30, 2009.  Our management has determined that the fair value was uncertain because the gaming laws in India may not stabilize for two to three years.





Interest expense for the years ended June 30, 2010 and 2009 were $276,900 and $51,703, respectively, an increase of approximately $225,000 resulting primarily from the derivative expense on the note payable – land.




25





Net losses





Net losses for the years ended June 30, 2010 and 2009 totaled $2.1 and $1.9 million, respectively, an increase of $.2 million. This increase in net loss was attributable to our increased expenses for our Seneca project, offset in part by our management fee revenue.





Noncontrolling interest





Noncontrolling interests for the years ended June 30, 2010 and 2009 were $19,583 and $84,210, respectively.





Liquidity and Capital Resources





At June 30, 2010, we had current assets of approximately $21,000 and current liabilities of approximately $7,000,000 , as compared to current assets of approximately $104,000 and current liabilities of approximately $3.800,000.  Current liabilities increase primarily from the Notes payable – Big Easy and an increase in accounts payable and accrued expenses of approximately $471,000, offset in part by a decrease in loan payable – stockholder of approxamately $650,000.





We do not have sufficient funds to continue our operating activities. Future operating activities are expected to be funded management fee income and other futher revenues and by sales of common stock and, to a limited extent, provided by loans from RBL, our major stockholder, until such time that operations will generate sufficient funds to support our development projects.





Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations arising from normal business operations when they come due. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts of and classification of liabilities that might be necessary in the event we cannot continue.





On October 26, 2009, we entered into an agreement with CapStone Investments to act as placement agent (Agent) for a proposed offering by the Company of up to $12,500,000 of debt obligations or other financings, on a best-efforts basis.





We plan to utilize the proceeds of the CapStone financing to fund the acquisition of assets and operations of the casino properties under the Purchase Opportunities.





On August 31, 2010, the Company entered into a agreement to engage Citadel Securities, LLC (Citadel) as its non-exclusive financial advisor to provide certain financial advisory services in connection with the financing of its Gulfport, Mississippi casino development project.  The Company will pay fees to Citadel, as follows:




26




●
4.00% of the gross proceeds of any equity financing received by the Company or its affiliates in connection with the development project induced to the Company by Citadel;


●
3.00% of the gross proceeds of any debt financing received by the Company or its affiliates in connection with the development project induced to the Company by Citadel;


●
2.00% of the gross proceeds of any equity or debt financing received by the Company or its affiliates in connection with the development project introduced to Citadel by the Company as not defined by the agreement;


●
1.00% of the gross proceeds of any equity financing received by the Company or its affiliates in connection with the development project introduced to Citadel by the Company as defined by the agreement.





Cash Flows





Cash Flows from Operating Activities.  Net cash used in operating activities was $261,000 for the year ended June 30, 2010 and $971,000 for the year ended June 30, 2009, a decrease of $709,000, resulting primarily from a decrease in net loss, net of noncash adjustments, offset in part  by an increase from unbilled development advances of $543,000.




Cash Flows from Investing Activities.  Net cash used in investing activities was $752,000 and $295,000 for the years ended June 30, 2010 and 2009, respectively, an increase of $457,000, resulting primarily from the purchase of the gaming vessel, net of notes payble of $3,575,000.




Cash Flows from Financing Activities.  Net cash provided by financing activities was $999,000 and $1,281,000, for the years ended June 30, 2010 and 2009, respectively, a decrease of $282,000. The decrease resulted from repayments of loans payments –stockholders, offset in part by sales of the our common stock.




Off-balance Sheet Arrangements





The Company has no off-balance sheet arrangements other than the guarantees discussed in the Notes to the consolidated financial statements.





Impact of Inflation





We believe that inflation has not had a material impact on our results of operations for the period ended June 30, 2010. We cannot be assured that future inflation will not have an adverse impact on our operating results and financial condition.





CRITICAL ACCOUNTING POLICIES AND ESTIMATES





The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Critical accounting policies are those that are both important to the presentation of our financial condition and results of operations and require management’s most difficult, complex, or subjective judgments. Our most critical accounting policy relates to the valuation of our intangible assets.





Application of Critical Accounting Policies and Estimates





The significant accounting policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results are as follows:




27





Consolidated Financial Statements





Investments in 50% or less owned entities without controlling influence by the Company are accounted for using the equity method.  Under the equity method, the Company recognizes its ownership share of the income and losses of the equity entity. The Company has accounted for its investment in RBMS on the equity method as it does not meet all the controlling influence requirements to consolidate.





All significant intercompany accounts and transactions have been eliminated in consolidation.





Contract Rights and Intangible Assets





Contract rights and intangible assets are valued at cost and, if there is a finite life, will be amortized over their estimated useful lives of each asset as determined by management. Amortization will commence upon the placement of individual assets into service and the initial determination of the lives assigned to each. The Company expects this to occur for the Contract Right upon the effective date of the Development Agreement. As of June 30, 2010, all the Contract Rights had not commenced amortization.





The Company will evaluate the carrying value of the intangible assets for impairment at least annually or upon the occurrence of an event which may indicate that the carrying amount may be greater than its fair value. If impaired, the Company will write-down such impairment. In addition, the useful life of the intangible assets will be evaluated by management at least annually or upon the occurrence of an event which may indicate that the useful life may have been definitive and the Company would have commenced amortization over such useful life.




Contract Rights were valued based management’s forecast of expected future net cash flows, with revenues based on projected revenues under the Development and Management Agreements.





Use of Estimates





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




Revenue Recognition




Revenue is recognized when evidence of an arrangement exists, pricing is fixed and determinable, collection is reasonably assured and delivery or performance of service has occurred.




Income (Loss) per Common Share





Basic net income (loss) per share was computed by dividing the net income (loss) for the period by the basic weighted average number of shares outstanding during the period. Diluted net income (loss) per share was computed by dividing the net income (loss) for the period by the weighted average number and any potentially diluted shares outstanding during the period.[





Basic loss per share has been retroactively restated to reflect the reverse stock split.




28





Share-Based Compensation





We recognize compensation expense for all share-based payment awards made to employees, directors and others based on the estimated fair values on the date of the grant. Options are valued using the Black-Scholes Option-Pricing Model using the market price of our common stock on the date of valuation, an expected dividend yield of zero, the remaining period or maturity date of the warrants and the expected volatility of our common stock.





Intangible Assets





Intangible assets are valued at cost and will be amortized over their estimated useful lives as determined by management. The Company will evaluate the carrying value of the intangible assets for impairment at least annually or upon the occurrence of an event which may indicate that the carrying amount may be greater than its fair value. If impaired, the Company will write-down such impairment.




Deferred Income Taxes





Deferred income taxes are provided for temporary differences between financial statement and income tax reporting under the liability method, using expected tax rates and laws that are expected to be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not, that the deferred tax assets will not be realized. The Company’s policy is to classify income tax assessments, if any, for interest in interest expenses and for penalties in general and administrative expenses.





ITEM 7A:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Market risk is the risk of loss from changes in market rates or prices, such as interest rates and commodity prices. We are exposed to market risk in the form of changes in interest rates and the potential impact such changes may have on our variable rate debt. We have not invested in derivative based financial instruments.





We are primarily exposed to price risk from sales of consumer goods and services within gaming facilities. There are also market risks associated with the pricing and acquisition of gaming facilities but these risks are managed once the pricing is established by contract. Any fluctuations in value of gaming facilities will not have a direct effect on operations but could affect the market pricing of our Company. The fluctuations may result from perceived changes in the underlying operations and predicted profitability. The economic characteristics of our gaming facilities, the general market conditions and supply and demand for gaming opportunities are referenced as risks but difficult to quantify on a forward-looking basis.





The information to be reported under this item is not required of smaller reporting companies.





ITEM 8:  FINANCIAL STATEMENTS





Our consolidated financial statements for the years ended June 30, 2010 and 2009 are included as a separate section of this report being on page F-1.


29





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





None.





ITEM 9A:  DISCLOSURE CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures





Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Annual Report on Form 10-K, have concluded that, based on such evaluation, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.





Changes in Controls and Procedures





There were no changes in our internal controls over financial reporting or in other factors identified in connection with the evaluation required by Exchange Act Rules 13a-15(d) or 15d-15(d) that occurred during the quarter ended June 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. Subsequent to June 30, 2010, we hired a controller under our plan to upgrade our procedures and controls.





Management’s Report on Internal Control Over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.





Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





Our management assessed the effectiveness of our internal controls over financial reporting as of June 30, 2010 based on the framework inInternal Control-Integrated Framework, published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, we have concluded that our internal controls over financial reporting were not effective as of June 30, 2010.





Management is working to improve its disclosure controls and procedures over financial reporting and to resolve deficiencies.





This Annual Report on Form 10-K does not include an attestation report by our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only our management’s report in this Annual Report on Form 10-K.


ITEM 9B:  OTHER INFORMATION
 
 None.


30
 PART III





ITEM 10:  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





The following section sets forth, as of June 30, 2010, the names, ages and current positions with the Company held by the Directors, Executive Officers and Significant Employees; together with the year such positions were assumed. There is no immediate family relationship between or among any of the Directors, Executive Officers or Significant Employees, and the Company is not aware of any arrangement or understanding between any Director or Executive Officer and any other person pursuant to which he was elected to his current position. Each Executive Officer will serve until he or she resigns or is removed or otherwise disqualified to serve, or until his or her successor is elected and qualified.





Each Director will serve until he or she resigns or is removed or otherwise disqualified to serve or until his or her successor is elected. The Company currently has three Directors.





NAME

AGE

POSITIONJohn Paulsen

47

Chairman and CEODual Cooper

67

President and COODennis Piotrowski

69

DirectorDr. William N. Thompson

69

DirectorWilliam J. (Jeff) Marshall

55

Director





John Paulsen.  Mr. Paulsen has been Chief Executive Officer and Director of the Company since August 2008.  Mr. Paulsen has also been managing partner of Rotate Black LLC, a business involved in buying and selling companies, since January 2004.  Mr. Paulsen was also Chief Executive Officer of Solstice Resorts, Inc. Inc., a small public company in the business of gaming resort development, from January 2006 to December 2007.  Prior to his involvement with these companies, Mr. Paulsen held various executive officer positions at various other development companies.  Mr. Paulsen attended Morraine Valley Community College from 1982 to 1985 and Arizona State University from 1985 to 1988.





Dual B. Cooper.  Mr. Cooper has been a director of the Company since May 2009.  Mr. Cooper has been an independent consultant to various gaming companies from July 2005 to January 2006, when he became President and Chief Operating Officer of the Company.  Mr. Cooper served as Chief Operating Officer/general manager of Tulalip Casino, Washington’s largest casino from November 2003 to July 2005.  Prior to his affiliation with this Washington casino, Mr. Cooper held executive positions at the following casinos and casino development companies, among others:  Pechanga Entertainment Center in Temecula, California, Four Queens Hotel and Casino in Las Vegas, Nevada, Pegasus Entertainment, Inc. in Las Vegas, Nevada, Palace Casino, Inc. – Maritime Group Ltd. in Biloxi, Mississippi, Casino Magic, Corp., where he served as President and CEO of the corporation, Grand Casino, Inc., where he served as Executive Vice President of the Southern region, Main Street Station in Las Vegas, Nevada, Bally’s Casino Resort in Las Vegas, Nevada, Ramada Express Hotel and Casino in Laughlin, Nevada, Desert Inn Hotel and Casino in Las Vegas, Nevada, and Harrah’s in Atlantic City, New Jersey.  Mr. Cooper attended Cerritos College from 1963 to 1965.





Dennis Piotrowski.  Mr. Piotrowski was been a director of the Company since May 2009.  Mr. Piotrowski has been an independent consultant to Coast Casinos and various Native American Tribes from January 2005 to January 2006 when he became executive vice president and director of the Company.  Prior to January 2005, Mr. Piotrowski served in various general manager or executive positions with the following casinos:  Caribe Gaming in Aruba, Panama City, and Colorado, the Horseshoe Hotel & Casino in Las Vegas, Nevada, the Silver Nugget Casino in Las Vegas, Nevada, and the Lady Luck Casino in Las Vegas Nevada.  Mr. Piotrowski attended the University of Detroit from 1959 to 1960, the American Institute of Banking from 1962 to 1964 and Wayne State University from 1965 to 1974.




31





Dr. William N. Thompson.  Dr. Thompson has been a director of the Company since May 2009.  Dr. Thompson received a B.A. from Michigan State University, an M.A. from Michigan State University, and a Ph.D. in Political Science – Public Administration from the University of Missouri-Columbia.  He has been a professor at the University of Nevada, Las Vegas since 1988 and prior to that date; Dr. Thompson held various professorial positions at the University of Nevada, Las Vegas, Troy State, and Western Michigan University.  Dr. Thompson has written extensively on the gaming industry.





William J. (Jeff) Marshall was appointed chief executive officer and a member of our Board of Directors on February 3, 2008.  He has also served as Chairman of the Board since February 2008.  From 2006 to 2008, Mr. Marshall served as Managing Partner of CRT Private Equity, the private equity investment arm of CRT Capital Group which absorbed RockRidge Capital Partners in 2006 which Mr. Marshall was the Founder & Senior Managing Partner from 2002 to 2006. From 1996 to 2002, Mr. Marshall was the Senior Managing Partner at VantagePoint Venture Partners with over $3.5 billion under management and four technology investment funds.  From 1985 to 1996, Mr. Marshall was a Senior Managing Director, Chief Technology Officer and Head of the Communications Technologies Group (CTG) at Bear Stearns, where, in addition to his other duties, he worked with the Corporate Finance and Technology Group advising both public and private companies on financing, mergers and acquisitions and other strategic transactions.  Mr. Marshall was a member of the board of directors of the Securities Industry Association Technology Committee from 1989 to 2005.  He is a graduate of New York University in Finance and Computer Applications and Information Systems (B.S.), and the Harvard Management Program in Strategic Technology and Business Development.





COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT





Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, directors and persons who own more than ten percent of our common stock to file initial reports of ownership and changes in ownership with the SEC. Additionally, SEC regulations require that we identify any individuals for whom one of the referenced reports was not filed on a timely basis during the most recent fiscal year or prior fiscal years. To our knowledge, based solely on a review of reports furnished to us, each of the directors, Mssrs. Paulsen, Cooper, Piotrowski, and Marshall were late filing their Form 4s upon receipt of stock and option grants. Additionally, the Company conferred with its three major shareholders to confirm the information to be reported under Section 16(a) of the Exchange Act resulting in a delay in filing by these shareholders of notifications of ownership.





CODE OF ETHICS





The Board of Directors of the Company adopted a Code of Ethics effective as of August 1, 2009.





The Code of Ethics in general prohibits any officer, director or advisory person (collectively, “Access Person”) of the Company from acquiring any interest in any business which we (i) are considering a purchase or sale thereof, (ii) are being purchased or sold by us, or (iii) are being sold short by us. The Access Person is required to advise us in writing of his or her acquisition or sale of any such security.





ITEM 11:  EXECUTIVE COMPENSATION





The Compensation Committee of the Board of Directors deliberates executive compensation matters to the extent they are not delegated to the Chief Executive Officer. Compensation of our officers and directors is based on comparative compensation levels for similar positions and time spent.





The following table sets forth the cash and other compensation we paid during the past three fiscal years to our chief executive officer, president and other individuals who served as executive officers and whose total compensation was $100,000 or more.




32





Summary compensation table





Name and principal position

Year

Salary


Stock

Awards


TotalJohn Paulsen (CEO since 2006) (1)

2010

$
8,253


$
0


$
8,2532009

$
76,550


$
171,000


$
247,5502008


N/A



N/A



N/ADual Cooper (COO since 2006) (2)

2010

$
106,222


$
0


$
106,2222009

$
46,249


$
171,000


$
217,1492008


N/A



N/A



N/A





1.
Mr. Paulsen became President and CEO of Rotate Black, Inc. and succeeded to this office in connection with the acquisition discussed herein. He was also named Chairman of the Board of Directors.


2.
Mr. Cooper served as COO of Rotate Black, Inc. and succeeded to this office in connection with the acquisition discussed herein. He was also named President.





Columns for bonus, option awards, non-equity incentive plan compensation, change in pension value and nonqualified deferred compensation earnings and all other compensation are omitted from the table as all amounts are $0.





Compensation for our officers and directors is based on comparative compensation levels for similar positions and time.





●
Grants of plan-based awards table





There were no grants of plan-based awards during the year to the named individuals.





●
Outstanding equity awards at fiscal year-end table





There were no outstanding equity awards at June 30, 2010, for the named individuals.





●
Option exercises and stock vested table





There were no option exercises or stock vested during the year for the named individuals.





●
Pension benefits





The named individuals are not covered by a pension plan.





●
Nonqualified defined contribution and other nonqualified deferred compensation plans





We do not have a nonqualified defined contribution or deferred compensation plan.





●
Potential payments upon termination or change-in-control




There are no potential payments upon termination or change-in-control for the named individuals.




33





Compensation of directors





Name

Director Fee

Earned or Paid

in Cash ($)John Paulsen

NoneDual Cooper

NoneDennis Piotrowski (1)

NoneDr. William N. Thompson (1)

NoneWilliam J. (Jeff) Marshall (1)

None





We do not currently provide for compensation of directors.




The columns for stock awards, option awards, non-equity incentive plan compensation, change in pension value and nonqualified deferred compensation earnings and all other compensation are omitted as there were none.





●
Compensation committee interlocks and insider participation





The outside Directors served on the Compensation Committee.





●
Compensation committee





Based on the Compensation Discussion and Analysis required by Item 402(b) between the compensation committee and management, the compensation committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the 10-K.





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




SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS





The following table indicates all persons who, as of October 29, 2010, the most recent practicable date, are known by us to own beneficially more than 5% of any class of our outstanding voting securities. As of November 3 2010, there were 16,366,912 shares of our common stock outstanding. Except as otherwise indicated below, to the best of our knowledge, each person named in the table has sole voting and investment power with respect to the securities beneficially owned by them as set forth opposite their name.




34





Title of Class

Name and Address of

Beneficial Owner

Amount and Nature of

Beneficial Owner


% of ClassCommon

Rotate Black, LLC (a)


2,425,973



14.82
%628 Harbor View LanePetoskey, MI 49770Common

Shawanga Lodge, LLC


1,832,442



11.20
%Flaum Management Company, Inc.39 State Street, Suite 300Rochester, NY 14614





(a)
Company owned by Kelly Paulsen, the wife of John Paulsen, our CEO and Chairman.





SECURITY OWNERSHIP OF MANAGEMENT





The following table indicates the beneficial ownership of our voting securities of all Directors of the Company and all Executive Officers who are not Directors of the Company, and all officers and directors as a group, as of October 19, 2010, the most recent practicable date. As of November 3, 2010, there were 16,366,912 shares of our common stock outstanding. Except as otherwise indicated below, to the best of our knowledge, each person named in the table has sole voting and investment power with respect to the securities beneficially owned by them as set forth opposite their name. There are no options outstanding.





Title of Class

Name and Address of

Beneficial Owner

Amount and Nature of

Beneficial Owner


% of ClassCommon

John Paulsen (a)


2,874,161



17.56
%932 Spring StreetPetoskey, Michigan 49770Common

Dual Cooper (b)


348,651



2.13
%932 Spring StreetPetoskey, Michigan 49770Common

Dennis Piotrowski


280,000



1.71
%932 Spring StreetPetoskey, Michigan 49770Common

Dr. William N. Thompson


16,000



.10
%932 Spring StreetPetoskey, Michigan 49770Common

William J. (Jeff) Marshall


-0-



-0-932 Spring StreetPetoskey, Michigan 49770Common

All officers and directors as a Group (5 persons)


3,518,812



21.50
%





(a)
Chairman and CEO


(b)
President and COO




35


ITEM 13:     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR   INDEPENDENCE




We were incorporated in Nevada on August 2, 2006 to be the successor by merger of BevSystems International, Inc. and BevSystems International Ltd. under a plan of reorganization. On March 31, 2004, BevSystems filed under Chapter 7 of the Bankruptcy Code. All costs of the bankruptcy were paid by RBL, an entity substantially owned by Kelly Paulsen, the spouse of our chief executive officer. Under the reorganization, We issued RBL 1,800,000 shares of our common stock, which we value at $517,256, the amount that RBL advanced on our behalf.




In October 2008, We acquired from RBL: (1) 75% of the outstanding common stock of Rotate Black-Gaming, Inc., (Gaming), (2) all of the assets of a casino development in Dayton, Nevada (Dayton) and (3) a 50% joint venture interest in Rotate Black India Pvt Ltd. (India) in exchange for an aggregate of 8,088,180 shares (retroactively adjusted to reflect the reverse split) of our common stock, which we valued at $3,952,319, the carrying amounts on RBL of the assets and liabilities acquired as of the date of acquisition, as RBL is under common control with Us.





On November 9, 2009, the Company issued 300,000 shares (retroactively adjusted to reflect the reverse split) of common stock to RBL as repayment of loan payable – stockholder of $450,000, $1.50, per share.





On January 19, 2010, the Company issued 25,000 shares (retroactively adjusted to reflect the reverse split) of common stock to RBL as repayment of loan payable –stockholder of $67,500, $2.50, per share





On January 21, 2010, the Company issued 150,000 shares (retroactively adjusted to reflect the reverse split) of common stock to RBL as repayment of loan payable –stockholder of $375,000, $2.50, per share.





On March 15, 2010 the Company issued 20,000 shares (retroactively adjusted to reflect the reverse split) of common stock to RBL as repayment of loan payable –stockholder of $50,000, $2.50, per share.





On April 26, 2010, the Company issued 5,900 shares (retroactively adjusted to reflect the reverse split) of common stock to RBL as repayment of loan payable –stockholder of $7,965, $1.35, per share.





The loan payable-stockholder of $1,026,093, as of June 30, 2010, was due to RBL, consisted primarily of Development Advances paid by RBL, on our behalf and is payable on demand with interest at 12%.





As of June 30, 2010, RBL owned 170 members’ shares of RBMS, an affiliate of ours, which represented 8.4% ownership in RBMS.





As of June 30, 2010, Mr. Cooper owned 41 shares of RBMS, which represented 2% ownership in RBMS.





At June 30, 2010, there was no compensation owed Mr. Paulsen.





At June 30, 2010, there was no compensation owed Mr. Cooper.




36





ITEM 14:  PRINCIPAL ACCOUNTANT FEES AND SERVICES





AUDIT FEES:





For the fiscal years ended June 30, 2010 and 2009, audit fees for services rendered for the audit of the Company’s financial statements included in its report on Form 10-K and the reviews of the financial statements included in its reports on Form 10-Q filed with the SEC, including those paid to our predecessor auditor,


were as follows:





2010

$
178,6582009

$
104,661





All of the audit fees for the year ended June 30, 2009 were to the Company’s previous auditors, except for the audit fee for the year ended June 30, 2009 of $40,000.





AUDIT RELATED FEES





None.





TAX FEES





The auditors have billed no fees for tax services.





OTHER FEES





None.




37





PART IV





ITEM 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES





(a) Financial statements - See index to on page F-1.





(b) Exhibits – The following exhibits are filed with this report or are incorporated herein by reference to a prior filing, in accordance with Rule 12b-32 under the Securities Exchange Act of 1934.







Exhibits10.1
Development Agreement between the Seneca Nation of Indians and Solstice International, Inc., dated June 22, 2007, filed herewith10.2
Management Agreement between the Seneca Nation of Indians and Solstice International, Inc., dated June 22, 2007, filed herewith10.3
Agreement between Rotate Black Gaming, Inc. and 3D LLC dated November 1, 2009, filed herewith10.4
Accepted Offer to Purchase between Rotate Black, Inc. and Mark Calvert, Chapter 11 Trustee of Cruise Holdings II, LLC (the “Trustee”), dated January 29, 2010,

incorporated by reference from Exhibit 10.1 of Form 8-K filed on February 8, 201010.5
Promissory Note from Rotate Black, Inc. to the Trustee, dated January 28, 2010, incorporated by reference from Exhibit 10.2 of Form 10-K filed on February 8, 201010.6
Unconditional Guarantee from John Paulsen to the Trustee, dated January 28, 2010, incorporated by reference from Exhibit 10.3 of Form 8-K filed on February 8, 201010.7
Letter Agreement between Rotate Black, Inc. and the Trustee, dated April 16, 2010, incorporated by reference from Exhibit 10.1 of Form 8-K filed on April 27, 201010.8
Offer to Purchase and Sale Agreement between Rotate Black, Inc. and Cruise Holdings II, LLC, dated June 10, 2010, incorporated by reference from Exhibit 10.1 of Form 8-K filed on June 16, 201010.9
Secured Promissory Note issued by Rotate Black, Inc. in favor of Cruise Holdings II, LLC, dated June 10, 2010, incorporated by reference from Exhibit 10.2 of Form 8-K filed on June 16, 201010.10
Preferred Mortgage issued by Rotate Black, Inc. in favor of Cruise Holdings II, LLC, dated June 10, 2010, incorporated by reference from Exhibit 10.3 of Form 8-K filed on June 16, 2010




10.11
Unsecured Promissory Note issued by Rotate Black, Inc. in favor of Cruise Holdings II, LLC, dated June 10, 2010, incorporated by reference from Exhibit 10.4 of Form 8-K filed on June 16, 201010.12
Unconditional Guaranty from John Paulsen in favor of Cruise Holdings II, LLC, dated June 11, 2010, incorporated by reference from Exhibit 10.5 of Form 8-K filed on June 16, 201010.13
Agreement with Catskills Gaming and Development, LLC, dated July 1, 2010, incorporated by reference from Form 8-K filed on July 9, 2009





10.14
Placement Agreement between Capstone Investments and Rotate Black, Inc., dated October 26, 2009 and filed herein.





10.15
Placement Agreement between CRT Capital Corp, LLC and Solstice International, Inc., dated February 12, 2008 and filed herein.




31.1
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934




32.1
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350




38





SIGNATURES




Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on November 3, 2010.




ROTATE BLACK, INC.By:
/s/ John PaulsenJohn Paulsen, Chairman,(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)




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




Date

Title (Capacity)

SignatureNovember 3, 2010

Chairman, CEO and CFO

/s/ John Paulsen(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

John PaulsenNovember 3, 2010

President, COO and Director

/s/ Dual CooperDual CooperNovember 3, 2010

Director

/s/ Dr. William N. ThompsonDr. William N. ThompsonNovember 3, 2010

Director

/s/ Dennis PiotrowskiDennis PiotrowskiNovember 3, 2010

Director

/s/ William J. (Jeff) MarshallWilliam J. (Jeff) Marshall


39






Rotate Black, Inc. and Subsidiary
 Index to Consolidated Financial Statements
   PageReport of Independent Registered Public Accounting Firm


F-2Consolidated Balance Sheets as of June 30, 2010 and 2009


F-3Consolidated Statement of Operations for the years ended June 30, 2010 and 2009


F-4Consolidated Statement of Stockholders' Equity for the years ended June 30, 2010 and 2009


F-5Consolidated Statement of Cash Flows for the years ended June 30, 2010 and 2009


F-7Notes to Consolidated Financial Statements


F-8
  F-1
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the Board of Directors and Stockholders
 Rotate Black, Inc. and Subsidiary
 
 We have audited the accompanying consolidated balance sheet of Rotate Black, Inc. and Subsidiary as of June 30, 2010 and 2009 and the related consolidated statements of income, stockholders' equity and cash flows for the years ended June 30, 2010 and 2009. Rotate Black, Inc. and Subsidiary are responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.
 
 We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
 
 In our opinion, the financial statement referred to above presents fairly, in all material respects, the financial position of Rotate Black, Inc. and Subsidiary, as of June 10, 2010 and 2009 and the results of its operations and its cash flows for the years ended June 30, 2010 and 2009, 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 3 to the consolidated financial statements, the Company has incurred losses since inception, resulting in an accumulated deficit of $4,850,386. This issue raises substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
  Most & Company, LLP
 
 Most & Company, LLP
 
 New York, New York
 November 3, 2010
 
 F-2
  ROTATE BLACK, INC. AND SUBSIDIARY
 CONSOLIDATED BALANCE SHEET
 June 30,


June 30,2010


2009ASSETSCurrent AssetsCash

$
1,226


$
15,453Prepaid expenses


20,536



88,902Total current assets


21,762



104,355Unbilled development advances


2,331,684



2,069,499Fixed assets - net


4,286,399



49,179Contract rights


6,323,884



6,323,884Intangible assets


-



374,265Investment in joint venture


-



139,781Land purchase deposit


8,470,674



7,049,142Deferred development cost


31,631



-Deferred financing fee


25,000



-Security deposit


3,600



3,600TOTAL ASSETS

$
21,494,634


$
16,113,705LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesAccounts payable and accrued expenses

$
2,232,444


$
1,761,367Due to affiliate


138,993



-Note payable - land


-



268,000Mortgage payable - Big Easy vessel


2,975,000



-Note payable - Big Easy vessel


600,000



-Loan payable - stockholder


1,026,093



1,675,932Note payable - truck - current portion


5,293



5,213Total current liabilities


6,977,823



3,710,512Note payable - truck


7,335



12,628Derivative liability


220,050



-Contingent liability


62,000



-Deferred revenues


49,621



47,078Shares to be issued


-



3,995,467TOTAL LIABILITIES


7,316,829



7,765,685STOCKHOLDERS'  EQUITYCONTROLLING INTERESTCommon stock, $0.01 par value, 100,000,000shares authorized; 16,599,829 and 13,464,366

shares issued and outstanding as ofJune 30, 2010 and June 30, 2009,respectively


165,999



134,644Additional paid-in capital


17,524,014



9,601,629Accumulated deficit


(4,850,386
)


(2,746,014
)TOTAL ROTATE BLACK, INC.STOCKHOLDERS' EQUITY


12,839,627



6,990,259NONCONTROLLING INTEREST


1,338,178



1,357,761TOTAL STOCKHOLDERS' EQUITY


14,177,805



8,348,020TOTAL LIABILITIES ANDSTOCKHOLDERS' EQUITY

$
21,494,634


$
16,113,705
 See notes to  financial statements
 F-3
 ROTATE BLACK, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENT OF OPERATIONS
 Years EndedJune 30,2010


2009Revenue

$
600,000


$
-Operating expensesSalary expense


145,125



120,171Stock based compensation


347,361



766,570General and administrative expenses


1,421,377



741,045Write-off investment in joint venture


139,782



-Write-off intangible assets


374,265



-Write-off deferred expenses


-



233,960Loss on settlement of accounts payable


19,145



-Interest expense


276,900



51,703Total expenses


2,723,955



1,913,449Net Loss


(2,123,955
)


(1,913,449
)Less:  Net loss attributable to noncontrolling interest


19,583



84,210Net loss attributable to Rotate Black, Inc.

$
(2,104,372
)

$
(1,829,239
)Basic and diluted net loss per common shareattributed to Rotate Black, Inc.

$
(0.14
)

$
(0.18
)Basic and diluted averagecommon shares outstanding


14,681,666



10,096,660
 See notes to  financial statements
  F-4
 ROTATE BLACK, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
 Common Stock

Additional

StockNumber of

Shares

Amount

Paid-in

Capital

Subscription

Receivable


Accumulated

Deficit


Controlling

Interest


Noncontrolling

InterestBalance - June 30, 2008


20


$
1


$
99


$
(100
)

$
(6,188
)

$
(6,188
)August 15, 2008 - Common stock issued inconnection with the acquisition of BevSystems


200,000



2,000



55,009



-



-



57,009



-August 15, 2008 - Common stock issued inpayment of due to stockholder


1,799,980



18,000



494,979



100



-



513,079



-August 21, 2008 - Common stock issued inconnection with employment agreements


1,660,000



16,600



456,500



-







473,100



-August 27, 2008 - Common stock issued inconnection with services rendered


922,000



9,220



253,550



-



-



262,770



-October 3, 2008 - Purchase of Rotate BlackGaming, Inc.


5,312,000



53,120



4,272,793



-



(910,587
)


3,415,326


$
1,441,971October 7, 2008 - Purchase of Dayton assets


1,096,180



10,962



208,192



-



-



219,154October 7, 2008 - Purchase of interest in jointventure


1,680,000



16,800



119,321



-



-



136,121



-November 16, 2008 - Common stock issued inconnection with consulting agreement


20,000



200



5,500



-



-



5,700



-November and December, 2008 - Common stocksold for cash


22,800



228



56,772



-



-



57,000



-December 23, 2008 - Common stock issued inpayment of due to stockholder


9,651



97



2,655



-



-



2,752



-January, February and March, 2009 - Commonstock sold for cash


57,000



570



284,430



-



-



285,000



-January 2, 2009 - Common stock issued inconnection with consulting agreement


10,000



100



24,900



-



-



25,000



-May 11, 2009 - Common stock issued inconnection with land purchase


630,735



6,307



3,147,368



-



-



3,153,675



-April, May and June, 2009 - Common


44,000



440



219,560



-



-



220,000



-stock sold for cashNet loss attributable to noncontrollinginterest since acquisition


-



-



-



-



-



-



(84,210
)Net loss attributable to controlling interest


-



-



-



-



(1,829,239
)


(1,829,239
)

$Balance at June 30, 2009


13,464,366



134,644



9,601,629



-



(2,746,014
)


6,990,259



1,357,761September 15, 2009 - Common stock issued inconnection with consulting agreement


15,000



150



74,850



-



-



75,000



-July, August and September, 2009 - Commonstock sold for cash


60,000



600



299,400



-



-



300,000



-
 
 F-5
 
 October 21, 2009 - Common stock issued forShawanga land contract


779,093



7,791



3,887,676



-



-



3,895,467



-November 9, 2009 - Common stock issued forShawanga land purchase anti-dilution rights


70,000



700



349,300



-



-



350,000



-November 9, 2009 - Common stock issued inconnection for services


20,000



200



99,800



-



-



100,000



-November 9, 2009 - Common stock issued forsettlement of note payable


132,000



1,320



328,680



-



-



330,000



-October, November and December, 2009 - Commonstock sold for cash


242,186



2,422



511,509



(198,961
)


-



314,970



-December, 2009 - Collections of stocksubscriptions


-







-



125,961



-



125,961



-January 19, 2010 - Common stock issued forpayment on shareholder loan


25,000



250



62,250



-



-



62,500January 21, 2010 - Common stock issued forpayment on due to stockholder


150,000



1,500



373,500



-



-



375,000January, 2010 - Collections of stock







73,000



-



73,000subscriptions


-







-March 15, 2010 - Common stock issued forpayment on shareholder loan


20,000



200



49,800



-



-



50,000March 16, 2009 - Common stock issued forShawanga land purchase anti-dilution rights


208,613



2,086



519,446



-



-



521,532April and May, 2010 - Common stock sold for cash


430,000



4,300



361,200



-



-



365,500April 1, 2010 - Common stock issued forsettlement of accounts payable


40,000



400



40,600



-



-



41,000April 21, 2010 - Common stock issued inconnection for services


61,200



612



75,888



-



-



76,500April 21, 2010 - Common stock issued forpayment on shareholder loan


5,900



59



7,906



-



-



7,965May 12, 2010 - Common stock issued forShawanga land purchase anti-dilution rights


500,000



5,000



545,000



-



-



550,000May 21, 2010 - Common stock issued forpayment on due to stockholder


77,353



774



72,710



-



-



73,484May 28, 2010 - Warrants granted for services


-







11,610











11,610June 8, 2010 - Common stock issued forsettlement of accounts payable


200,000



2,000



168,000



-



-



170,000June 28, 2010 - Common stock issued inconnection for services


99,118



991



83,260



-



-



84,251Net loss attributable to noncontrolling interest















(19,583
)Net loss attributable to controlling interest


-



-



-



-



(2,104,372
)


(2,104,372
)Balance at June 30, 2010


16,599,829


$
165,999


$
17,524,014


$
-


$
(4,850,386
)

$
12,839,627


$
1,338,178
 See notes to financial statements
 F-6
 ROTATE BLACK, INC. AND  SUBSIDIARY
 CONSOLIDATED  STATEMENT OF CASH FLOWS
 Year EndJune 30,2010


2009CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(2,104,372
)

$
(1,829,239
)Adjustments to reconcile net loss to net cashused in operating activities:Stock-based compensation


347,361



766,570Write-off of investment in joint venture


139,782Write-off of intangible assets


374,265



-Write-off of deferred expenses


-



233,960Depreciation and amortization


33,146



16,496Loss on settlement of accounts payable


19,142



-Noncontrolling interest


(19,583
)


(84,210
)Changes in assets and liabilities:


-



-Accounts receivable - other


-



3719Prepaid expenses


26,503



17,094Unbilled development advances


(262,185
)


(805,187
)Accounts payable and accrued expenses


761,283



697,007Due to affiliate


138,993



-Derivative liability


220,050



-Contingent liability


62,000



-Deferred revenues


2,543



13,261Net cash used in operating activities


(261,072
)


(970,529
)CASH FLOWS FROM INVESTING ACTIVITIESInvestment in BevSystems and increase indeferred acquisition costs (net ofthe issuance of common stock of $57,009


-



(228,151
)Purchases of fixed assets (net of notes payable of $2,975,000and $600,000 in 2010 of $20,800 in 2009)


(695,366
)


(44,875
)Security deposit


-



(3,600
)Investment in joint venture


-



(3,660
)Increase in deferred development costs


(31,631
)


(14,806
)Increase in deferred financing fee


(25,000
)


-Net cash used in investing activities


(751,997
)


(295,092
)CASH FLOWS FROM FINANCING ACTIVITIESIncrease (decrease) in loan payable - stockholder


(150,374
)


722,033Proceeds from sales of  common stock


1,179,431



562,000Payment of note payable


(25,000
)


-Payments of note payable - truck


(5,213
)


(2,959
)Net cash provided by financing activities


998,844



1,281,074Net increase (decrease) in cash


(14,225
)


15,453Cash, beginning of period


15,453



-Cash, end of period

$
1,228


$
15,453Noncash TransactionAcquisition of Gaming, Dayton and India





$
3,952,319Deposit on land (net of shares issued and to be issued)

$
1,421,532


$
7,049,142Issuance of common stock in payment of due to stockholder

$
572,949Issuance of common stock in payment of note payable

$
330,000Issuance of common stock in payment of accounts payable

$
211,000
 See notes to financial statements
 F-7
 
 Rotate Black, Inc. and Subsidiary
 Notes to Consolidated Financial Statements
  1.  ORGANIZATION AND OPERATIONS
  Rotate Black, Inc. (Company) was incorporated in Nevada on August 2, 2006 to be the successor by merger of BevSystems International, Inc. and BevSystems International Ltd. (BevSystems) under a plan of reorganization (Plan), effective August 15, 2008, as approved by the United States Bankruptcy Court in Tampa, Florida. Under the terms of the Plan, BevSystems merged into the Company with the Company as the survivor.
  On March 31, 2004, BevSystems filed under Chapter 7 of the Bankruptcy Code and, on April 15, 2006, filed a plan of reorganization under Chapter 11 of the Bankruptcy Code. The Plan provided for the Company to: (1) purchase the intangible assets of BevSystems, (2) pay creditors opting out of the common stock settlement, (3) pay all legal and other cost of the Plan (4) issue 200,000 shares of common stock of the Company (10%) to the balance of the creditors and issue 1,800,000 shares of common stock of the Company (90%) to Rotate Black, LLC (RBL), an entity substantially owned by an officer of the Company and family members. The Company was also required to provide an escrow fund for future operations of $200,000. All outstanding equity shares of BevSystems were cancelled. All requirements under the Plan have been met.
  The shares issued to the creditors were valued at $.285, per share, the value of the shares issued to the 90% stockholder for their purchase price of $513,079.
  The aggregate purchase price, including the shares issued to the creditors, consisted of the following:
  Purchase of intangible assets of Bevsystems

$
175,000Cash payments to creditors


10,000Shares issued to creditors


57,009Legal and other expenses


132,256Cash Escrow


200,000$
574,265
  The Company recorded the purchase of BevSystems under the purchase method of accounting and allocated the aggregate purchase price, as follows:
 
 Cash in escrow

$
200,000Intangible assets


374,265$
574,265
 
 Prior to August 15, 2008, all activity prior thereto has been charged to operations. On April 1, 2010,the Company commenced operations under the Big Easy management agreement and is no longer a development stage company.
  F-8
 
 Acquisitions
 
 In October 2008, the Company acquired: (1) 75% of the outstanding common stock of Rotate Black-Gaming, Inc., (Gaming), (2) all of the assets of a casino development in Dayton, Nevada (Dayton) and (3) a 50% joint venture interest in Rotate Black India Pvt Ltd. (India) in exchange for 5,312,000, 1,096,180 and 1,680,000 shares of common stock of the Company, respectively, from RBL.
 
 The acquisitions have been recorded at the carrying amounts on RBL of the assets and liabilities acquired as of the date of acquisition, as RBL is under common control with the Company. The statement of operations has been presented as if the acquisition had occurred at the beginning of the reporting of the acquisition and all prior periods from inception.
 
 Gaming
 
 The purchase price of Gaming of $4,325,913 has been allocated as follows:
 
 Development advances

$
1,411,511Other current assets


3,992Land


556,000Contract rights


5,767,884Accounts payable and accrued expenses


(1,229,570
)Loan payable - stockholder


(1,411,941
)Note payable


(268,000
)Deferred revenue


(33,817
)Deficit


971,8255,767,884Less:  Noncontrolling interest


(1,441,971
)$
4,325,913
  Gaming is under contract to develop and manage a world-class destination casino resort in Sullivan County, New York. Gaming has acquired the property and completed all design layouts.
 
 On July 1, 2010, the Company has entered in to an agreement to sell all of its shares in RBG (Note 20)
 
 Dayton
  The purchase price of Dayton of $219,154 has been allocated to deferred expenses and includes predevelopment expenses as of the date acquired. The Company plans to develop a casino in Dayton Nevada. During the year ended June 30, 2009, the Company entered into a cancellable agreement to purchase land in Dayton for this casino project and in September 2009 cancelled the land purchase agreement due to excessive land preparation costs on this property and the declining market in Dayton.
 
 As of June 30, 2009, the Dayton casino development project is on hold and the Company has written-off the deferred expenses of $233,960.
 
 India
 
 The purchase price of India of $136,121 has been allocated to investment in joint venture and includes all the investment of RBL as of the date acquired. Although the Company has identified potential properties for acquisition, it does not anticipate an acquisition until new Indian gaming laws are solidified and, therefore, has written-off the investment expense of $136,121.
 
 F-9
 
 Big Easy Gaming Vessel
 
 On May 28, 2010, the Company, RBL and an officer of the Company formed Rotate Black MS, LLC (RBMS), a limited liability company, to own, develop and manage the operations of a dockside casino in Gulfport, Mississippi.
  2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Consolidated Financial Statements
 
 The accompanying consolidated financial statements include all of the accounts of the Company and the subsidiary.
  The Company records adjustments to noncontrolling interest for the allocable portion of income or loss that the noncontrollling interest holders are entitled based upon their portion of certain of the subsidiaries that they own. Distributions to holders of noncontrolling interests are adjusted to the respective noncontrolling interest holders’ balance.
 
 The Company suspends allocation of losses to noncontrolling interest holders when the noncontrolling interest balance for a particular noncontrolling interest holder is reduced to zero. Any excess loss above the noncontrolling interest holders’ balance is not charged to noncontrolling interest as the noncontrolling interest holders have no obligation to fund such losses.
 
 Investments in 50% or less owned entities without controlling influence by the Company are accounted for using the equity method.  Under the equity method, the Company recognizes its ownership share of the income and losses of the equity entity.
 
 All significant intercompany accounts and transactions have been eliminated in consolidation.
 
 Estimates
 
 The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates.
 
 Reclassifications
 
 Certain amounts for prior years have been reclassified to conform to 2010 financial statement presentation.
 
 Financial Instruments
 
 The Company considers the carrying amounts of financial instruments, including cash, accounts payable and accrued expenses to approximate their fair values because of their relatively short maturities.
 
 Property and Equipment
  Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method.
 
 Maintenance and repairs are charged to operating expenses as they are incurred. Improvements and betterments which extend the lives of the assets are capitalized. The cost and accumulated depreciation of assets retired or otherwise disposed of are relieved from the appropriate accounts and any profit or loss on the sale or disposition of such assets is credited or charged to income.
 
 F-10
 
 Contract Rights and Intangible Assets
 
 Contract rights and intangible assets are valued at cost and, if there is a finite life, will be amortized over their estimated useful lives of each asset as determined by management. Amortization will commence upon the placement of individual assets into service and the initial determination of the lives assigned to each. The Company expects this to occur for the Contract Right upon the effective date of the Development Agreement. As of June 30, 2010, all the Contract Rights had not commenced amortization.
 
 The Company will evaluate the carrying value of the intangible assets for impairment at least annually or upon the occurrence of an event which may indicate that the carrying amount may be greater than its fair value. If impaired, the Company will write-down such impairment. In addition, the useful life of the intangible assets will be evaluated by management at least annually or upon the occurrence of an event which may indicate that the useful life may have been definitive and the Company would have commenced amortization over such useful life.
  Contract Rights were valued based management’s forecast of expected future net cash flows, with revenues based on projected revenues under the Development and Management Agreements.
  Revenue Recognition
  Revenue is recognized when evidence of an arrangement exists, pricing is fixed and determinable, collection is reasonably assured and delivery or performance of service has occurred.
  Development advances are the funds advanced by the Company for necessary costs in advance of the facility loan for the Seneca Nation (Note 6) which include expenses for legal, engineering and architectural fees and have been capitalized. A development fee of 2.5% of total development costs will be paid to the Company for services rendered pursuant to the Development Agreement and are in addition to the amounts advanced to cover the development costs.
  The Development Advances and the development fee are being deferred and will be billed upon the closing of the financing.
  Share-Based Compensation
  The Company recognizes compensation expense for all share-based payment awards made to employees, directors and others based on the estimated fair values on the date of the grant. Common stock equivalents are valued using the Black-Scholes Option-Pricing Model using the market price of our common stock on the date of valuation, an expected dividend yield of zero, the remaining period or maturity date of the common stock equivalent and the expected volatility of our common stock.
 
 The Company had limited trading through March 31, 2010 and used recent sales of shares of common stock to value share-based compensation and other issuances of shares. Effective April 1, 2010, the Company began using the closing trading price.
 
 In accordance with EITF 96-18, the Company determines the fair value of the share-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measureable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either the date at which a commitment for performance to earn the equity instrument is reached or the date the performance is complete.
 
 The Company recognizes compensation expense for stock awards with service conditions on a straight-line basis over the requisite service period and are included in operations.
 
 Loss per Common Share
 
 Basic loss per share is calculated using the weighted-average number of common shares outstanding during each period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each period.
 
 For the years ended June 30, 2010 and 2009, there were no significant potentially dilutive securities.
 
 Basic loss per share has been retroactively restated to reflect the reverse stock split (Note 20).
 
 F-11
 
 Income Taxes
 
 Deferred income taxes have been provided for temporary differences between financial statement and income tax reporting under the liability method, using expected tax rates and laws that are expected to be in effect when the differences are expected to reverse. A valuation allowance is provided when realization is not considered more likely than not.
 
 The Company’s policy is to classify income tax assessments, if any, for interest in interest expense and for penalties in general and administrative expenses.
 
 Leases
 
 Rent expense is recognized on the straight-line basis over the term of the lease.
 
 Recent Accounting Pronouncements.
 
 In January 2010, the FASB issued ASU No. 2010-06, which is included in the Codification under ASC 820, Fair Value Measurements and Disclosures (ASC 820). This update requires the disclosure of transfers between the observable input categories and activity in the unobservable input category for fair value measurements. The guidance also requires disclosures about the inputs and valuation techniques used to measure fair value and become effective for interim and annual reporting periods beginning after December 15, 2009. The Company does not anticipate adoption of this update to have a material effect on the consolidated financial statements.
 
 In January 2010, the FASB issued Update No. 2010-02, Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope Clarification (“2010-02”), an update of ASC 810 the Consolidation. ASU 2010-02 clarifies the scope of ASC 810 with respect to decreases in ownership in a subsidiary to those of a: subsidiary or group of assets that are a business or nonprofit, a subsidiary that is transferred to an equity method investee or joint venture, and an exchange of a group of assets that constitutes a business or nonprofit activity to a non-controlling interest including an equity method investee or a joint venture. If an entity has previously adopted SFAS 160, the amendments in this update are effective beginning in the first interim or annual reporting period on or after December 15, 2009. The Company does not anticipate adoption of this update to have a material effect on the consolidated financial statements.
 
 Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.
  3. GOING CONCERN
 
 The financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses since inception, resulting in an accumulated deficit of $4,850,386 and negative working capital of $6,956,061 as of June 30, 2010 and further losses are anticipated. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations arising from normal business operations when they come due. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue.
 
 The Company’s plans to resolve these issues includes the commencement of management fees from the Big Easy Management Agreement and other future sources of revenue. Until these occur in sufficient amounts, the Company plans to sell unregistered stock to investors and borrow from its principle stockholder to continue operations.
 
 F-12
 
 4.  PROPERTY AND EQUIPMENT
 
 As of June 30, 2010 and 2009, property and equipment consisted of the following:
  2010


2009Gaming vessel

$
4,264,500


$
-Truck


39,761



39,761Furniture and fixtures


8,490



8,490Office equipment


23,290



17,4244,336,041



65,675Less accumulated depreciation


(49,642
)


(16,496
)$
4,286,399


$
49,179
  On June 10, 2010, the Company purchased The Big Easy, a gaming vessel for an aggregate purchase price of $4,264,500, payable: (a) by issuance of a secured note payable to the seller of $2,975,000 (the Secured Note), (b) issuance of an unsecured note payable to the seller of $600,000 (Unsecured Note), fees of 414,500 and cash of $275,000. The Secured Note is collateralized by the gaming vessel and both notes are guaranteed by an officer of the Company.The Secured Note is payable on June 11, 2011 and bears interest at 14.5%, per annum, payable $35,000, per month, commencing June 11, 2010. The Unsecured Note bears interest at 14.5%, per annum, and is payable monthly, in an amount equal to 2% of the monthly gross gaming revenue generated from operations, as defined, until June 2012 when all principal and interest are due. As of September 17, 2010, both notes are in default and the interest rate was increased to 20%, per annum.
 
 As required by the borrowing facility of RBMS, upon closing, RBI will sell the gaming vessel to
 RBMS, at a purchase price equal to the carrying value on RBI. RBI is required to use the proceeds to pay off the Secured Note and interest thereon, to allow RBMS to collateralize the gaming vessel under the borrowing facility.
 
 For the years ended June 30, 2010 and 2009, depreciation expense was $33,146 and 16,496, respectively.
  5.  INTANGIBLE ASSETS
  The intangible assets acquired under the Plan consisted of a license of patents, pending patents, trade secrets, know-how and other intangibles of Life O2 Oxygenated Water (Life O2), valued at $374,265, which were assigned to the Company under the Plan. The license grants the Company the exclusive worldwide (as defined), irrevocable, perpetual, royalty-free right to all the intangible assets for use in the production, marketing, distribution, sublicensing and sale of Life O2, subject to certain previously granted licenses, and only for human consumption. The Company has the right to assign the rights under the license to any corporate successor by way of merger, etc.
 
 The Company is entitled to sublicense, exclusively or not, or to subcontract the manufacture of products under the license. The existing License and Trademark Bottling Agreement has been cancelled and the Company is currently arranging another similar license and bottling arrangements.
  Prior to filing for reorganization, BevSystem had revenues and profits from Life O2. The Company anticipates sublicensing the license in territories worldwide. Based on management's estimate of cash flows expected from such a licensing arrangement, as compared to a similar distributor, management believes that the future cash flows are in excess of the value allocated to the license in the purchase price and has determined that there is no impairment of the Life O2 licenses and patents as of June 30, 2009
 
 As of the June 30, 2010, the Company has not arranged a similar license and bottling arrangement the Life O2 and the project is on hold. The Company has determined that the carrying amount has been impairment and wrote-off of the intangible assets.
 
 F-13
 
 6.  CONTRACT RIGHTS
 
 Contract rights consisted of the various rights acquired under the Development and Management Agreements acquired from RBL. It is composed of $2,520,000 in contacts rights acquired by RBL and $3,247,884 in draws from an asset-backed lending agreement used to finance the expenses associated with acquiring the Development and Management Agreements. In addition, $556,000 represents the cost of the land for the gambling facility which was transferred to the Seneca Nation without compensation by Gaming. The total contract rights as of June 30, 2010 were $6,323,884.
 
 In accordance with SFAS 142-3, in determining the useful life of the assets for amortization, the Company will consider the period of expected cash flows adjusted by the Company's expected use of the asset. The Company is not currently amortizing the contract rights as they are deemed to be inactive since they are not yet producing a cash flow.
 
 Management believes that when the financing of the gaming facility is in place, the Development Advances, $2,331,684 as of June 30, 2010, will be billed, the development fee will be billed, and the Company will commence profitable operations. At this point, the contract rights will be amortized over its useful life.
  Development Agreement
  On June 22, 2007, Gaming entered into a Development Agreement with the Seneca Nation of Indians (Nation), a Federally recognized Indian tribal government, to act as the Developer to provide managerial expertise and financial resources to assist the Nation in acquiring land and developing and constructing a gaming facility (Facility). The purpose of the Facility for the Nation is to provide employment and improve the social, economic, education, and health needs of its members; to increase its revenues and to enhance the Nation’s economic self-sufficiency.
  The Development Agreement commenced upon execution and continues through the date the Facility is open to the public and operational, until all obligations of the parties have expired, as defined, or until all obligations owed to the Company by the Nation have been satisfied, whichever is later; provided the agreement is not terminated by mutual agreement.
  Under the terms of the Development Agreement, the Company is responsible for arranging a limited recourse loan or other arrangements to finance the Facility in an aggregate principal amount of up to $350,000,000. The proceeds of the loan are to be used exclusively for the development, design, construction, furnishing and equipping of the Facility, for start-up and working capital and reimbursing the Company for development advances. Development advances are the funds advanced by the Company for necessary costs in advance of the facility loan. In accordance with the Development Agreement, development costs include the costs of the design, construction, furnishing and equipping of the Facility and such other costs incurred by the Company or by the Nation to advance the conclusion of the project, including consultant and attorney fees and costs. According to the Agreement, funds advanced as development costs, together with the development fee, will constitute the initial principal of the development loan and the funds advanced by the Company as developer will be reimbursed from the proceeds of the Facility Loan.
  The funds expended under the Development Loan are subject to authorization by a Business Board of the Nation and the financing will not exceed $350,000,000, exclusive of interest.
 
 A development fee of 2.5% of total development costs will be paid to the Company for services rendered pursuant to the Development Agreement and are in addition to the amounts advanced to cover the development costs.
 
 As of June 30, 2010, unbilled Development Advances were $2,331,684, including $297,220 in interest in addition to $49,621 of developer fees, which have been deferred, are not subject to uncertainty with respect to collection upon closing of the financing. The Development Advances will be billed upon the closing of the financing.
 
 In October, 2007, as amended, Gaming acquired land in exchange for $556,000, payable $288,000 in cash and the issuance of a note in the amount of $268,000, payable on August 15, 2009, as extended, with interest payable at 18%, per annum. As of June 30, 2009, accrued interest payable on the loan of $70,116 was included in accounts payable and accrued expenses. The Company had not made the payment and had arranged to pay off the loan in monthly payments of $25,000. In August 2009, the Company made a payment of $25,000 against the note.
 
 F-14
 
 On November 1, 2009, the Company issued 132,000 shares of common stock in full repayment of the note payable of $243,000 and accrued interest thereon of $87,000, $2.50, per share. The number of shares and price per share are subject to adjustment for stock splits, dividends, exchanges and consideration received by stockholders in the event of an acquisition of the Company by another entity, and dependent on the performance of the stock prices, as defined. In addition, for one year and under certain conditions, the Company could be liable for certain market loss on these shares, as defined.
 
 As of June 30, 2010, the Company has accrued $220,000 for the potential issuance of 264,180 shares of common stock, valued at of $0.83, per share.
 
 On December 23, 2008, under the terms of the Development Agreement, the land was transferred to the Nation, without compensation, and the cost of the land has been included in Contract Rights.
 
 Management Agreement
 
 On June 14, 2008, Gaming entered into a Management Agreement with the Nation for an exclusive right and obligation to manage, operate and maintain the gaming facility to be developed in Sullivan County, New York, commencing on the effective date, as defined, and continuing for a period of seven years after the date on which gaming commences in the facility. The term will be automatically extended for a period of seven years unless terminated under the provisions of the agreement.
 
 Under the Management Agreement, the Nation will pay the Company a fee based on a percent of gaming revenues, as defined. As manager, the Company will conduct and direct all business and affairs in connection with the operation, management and maintenance of the Facility, including all commercial gaming business, sale of food, beverages, tobacco and gifts, hotels, parking, resorts, amusement or accommodation operations.
 
 Land Purchase
 
 On May 26, 2009, the Company entered into an agreement to acquire additional real property in Sullivan County, New York. The purchase price for the property was 1,409,828 shares of common stock of the Company, $1,750,000 in cash on escrow and $1,750,000 in cash upon closing. On May 11, 2009, the Company issued 630,735 shares of common stock and RBL transferred, on behalf of the Company, 779,093 shares of the Company’s common stock to the seller, both being held in escrow, as a deposit under the agreement. The shares were valued at $7,049,142, $5.00, per share.
 
 In October 2009, the Company issued 779,093 shares of common stock to RBL.
 
 On November 9, 2009, March 16, 2010 and May 21, 2010, the Company issued 70,000 (valued at $350,000, $5.00, per share), 208,613 (valued at $521,532, $2.5, per share) and 500,000 (valued at $550,000 $1.10, per share) shares of common stock in satisfaction of anti-dilution rights of the land purchase agreement.
  7. BIG EASY MANAGEMENT AGREEMENT
 
 On October 27, 2010, the Company entered into a management agreement (Big Easy Management Agreement), effective April 1, 2010 for a period of 99 years.  The Company, as manager, will manage all the operations, of the Big Easy gaming facility, including all gaming, food, beverages, gifts, hotels, parking, resorts, etc. The management fee is payable: (1) $200,000, per month, (2) then upon commencement of the gaming operations  $250,000, per month, and (3) then achieving certain earnings, as defined,  $300,000, per month.
  The Manager is entitled to appoint two directors out of the five directors on the RBMS Board of Directors.
 
 F-15
 
 8.  INVESTMENT IN JOINT VENTURE
 
 Investment in joint venture consisted of a 50% interest in India.  The financial statements of India are as follows:
 
 As of June 30, 2010, the balance sheet of India was as follows:
 
 Total Assets

$
NoneCapital Contribution


272,242Deficit


(272,242
)Total assets and liabilities

$
None
 
 For the period October 7, 2008 through June 30, 2010, the investment in India was inactive.
 
 As of December 31, 2009, the Company determined that the recovery of the carrying value of the investment in India was uncertain and wrote-off the investment in the joint venture of $136,121.
 
 As of June 30, 2010, the India casino development project is on hold.
  9. INVESTMENT IN RBMS
 
 As of June 30, 2010, RBMS is in the process of formation and on upon completion, the Company, RBL and an officer of the Company will own 46.6% of the voting interests. The Company has accounted for its investment in RBMS on the equity method as it does not meet all the control requirements to consolidate.
 
 As of June 30, 2010, the condensed balance sheet of RBMS was as follows:
 
 Development costs

$
1,150,018Due from RBI


138,994Stock subscriptions receivable


560,000Total Assets

$
1,849,012Current liabilities

$
174,012Members’ equity


1,675,000Total assets and liabilities

$
1,849,012
 
 On May 16, 2010, RBMS entered into a term sheet to borrow up to $15,000,000 for the Big Easy
 gaming facility, with interest at 15%, per annum, payable monthly over three years. The lender will receive a fee equal to a 40% interest in RBMS, subject to a reduction of 10%, if certain earnings are achieved, as defined. RBI has guaranteed the borrowing. The lender shall appoint two directors.
  10.  LEASE
 
 On August 8, 2008, the Company entered into a lease for office space, commencing on September 1, 2008 through August 31, 2011.  Rent is payable in advance, in annual installments. The initial year’s rent is $46,200, increasing as defined. The Company has an option to extend the lease for an additional three-year period.
 
 As of June 30, 2010, $26,053 of the second year’s rent was included in accrued expenses.
  F-16
 
 11.  LOAN PAYABLE – STOCKHOLDER
 
 As of June 30, 2010, loan payable - stockholder primarily consisted of development advances incurred by RBL, a company under common control, on behalf of the Company and is payable on demand, with interest at 12%, per annum.
  12.  NOTE PAYABLE - TRUCK
 
 On September 10, 2008, the Company borrowed $20,800 to purchase a truck. The note is payable in 48 equal installments of $520, including interest at 9.19%, per annum, through September 10, 2012.
 
 As of June 30, 2010, minimum annual payments under the loan are,:
 
 2011

$
5,2932012


5,8002013


1,535$
12,628
  13.  COMMON STOCK
 
 On August 2, 2006, the Company issued 20 shares of common stock under a stock subscription receivable for $100 which was paid in August 2008.
 
 On August 2, 2006, the Company authorized 100,000,000, $0.01, par value, shares of common stock.
 
 On August 15, 2008, the Company issued 1,799,980 shares of common stock to RBL in payment of due to stockholder of $513,079, $.285, per share.
 
 On August 21, 2008, the Company issued an aggregate of 1,660,000 shares common stock to four officers and an employee of the Company as a one-time incentive in connection with their employment agreements.  The shares were valued at $473,100, $0.285, per share, the value of the shares issued on August 15, 2008, and were charged to operations.
 
 On August 27, 2008, the Company issued an aggregate of 922,000 shares of common stock to three individuals for services rendered. The shares were valued at $262,770 ($0.285, per share); the value of the shares issued August 15, 2008 and were charged to operations.
 
 On November 16, 2008 the Company entered into an agreement with a capital markets consultant in exchange for a finder’s fee equal to 10% of the capital the consultant may raise for the Company, payable 5% in cash and 5% in equity. In addition, in March 2009, the Company issued 20,000 shares of common stock as a commencement bonus, valued at $5,700.
 
 On December 23, 2008, the Company issued 9,657 shares of common stock to RBL in payment of due to stockholder, valued at $2,752, $.285, per share.
 
 In November and December 2008, the Company sold an aggregate of 22,800 shares of common stock to private investors for an aggregate of $57,000, $2.50, per share.
 
 On January 2, 2009, the Company issued 10,000 shares of common stock for legal services, valued at $25,000, $2.50, per share.
 
 In January, February and March 2009, the Company sold an aggregate of 57,000 shares of common stock to investors for $285,000, $5.00, per share.
 
 In April, May and June, 2009, the Company sold an aggregate of 44,000 shares of common stock to investors for $220,000, $5.00, per share.
 
 F-17
 
 In July, August and September, 2009, the Company sold an aggregate of 60,000 shares of common stock to investors for $300,000, $5.00, per share.
 
 On September 15, 2009, the Company issued to a consultant, 15,000 shares of common stock for services rendered, valued at $75,000, $5.00, per share.
  In November 2009, the Company issued to a consultant, 20,000 shares of common stock for professional services valued at $100,000, $5.00, per share.
 
 In November 2009, the Company sold 17,000 shares of common stock for $85,000, $5.00, per share to a private investor.
 
 On November 9, 2009, the Company issued 70,000 shares of common stock in satisfaction of anti-dilution rights of the land purchase agreement, which the Company has valued at $350,000, $5.00 per share.
 
 On November 9, 2009, the Company issued 150,000 shares of common stock to RBL as repayment of loan payable – stockholder of $350,000, $2.50, per share.
 
 In November 2009, the Company sold 133,180 shares of common stock for $199,694, $1.50 per share to an investor.
 
 In December 2009, the Company sold an aggregate of 92,000 shares of common stock to investors for $229,970, $2.50, per share.
 
 On January 19, 2010, the Company issued 25,000 shares of common stock to RBL as repayment of loan payable –stockholder of $62,500, $2.50, per share.
 
 On March 15, 2010, the Company issued 20,000 shares of common stock to RBL as repayment of loan payable –stockholder of $50,000, $2.50, per share.
 
 On March 16, 2010, the Company issued 208,612 shares of common stock in satisfaction of anti-dilution rights of the land purchase agreement, which the Company has valued at $521,532, $2.50, per share.
 
 On April 1, 2010 the Company issued 40,000 shares of common stock in payment of accounts payable of $41,000, $01.025, per share.
 
 On April 21, 2010, the Company issued to 61,200 shares of common stock for legal services, valued at $76,500, $1.25, per share.
 
 On April 26, 2010, the Company issued 5,900 shares of common stock to RBL as repayment of loan payable –stockholder of $7,965, $1.35, per share.
 
 On April 26, 2010, the Company sold in aggregate 320,000 shares of common stock to investors for $272,000, $0.85, per share.
 
 On May 12, 2010, the Company issued 500,000 shares of common stock in satisfaction of anti-dilution rights of the land purchase agreement valued at $550,000, $1.10, per share.
 
 On May 21, 2010, the Company sold 110,000 shares of common stock for $93,500, $.85, per share, to an investor.
 
 On May 21, 2010, the Company issued 77,352 shares of common stock for due shareholders valued at $73,485, $0.95, per share.
 
 On May 27, 2010 the Company issued 99,119 shares of common stock for legal services valued at $84,251, $0.85, per share.
 
 F-18
 
 On June 8, 2010 the Company issued 200,000 shares of common stock in payment for accounts payable. In accordance with the agreement, the vendor will sell the shares at an advantageous price and offset the liability of $202,000. At the time of issue, the Company's stock was trading at $0.85, per share and, as of June 30, 2010, the stock price was trading at $0.70 The Company has recorded a contingent liability of $62,000 as of June 30, 2010 to recognize the possibility of a loss on the settlement of the accounts payable.
 
 Warrants
 
 On May 28, 2010 the Company granted a warrant to purchase 20,000 shares of the Company's common stock to a consultant for services rendered. The warrant is exercisable at $0.85 and was valued at $11,610 using a Black-Scholes Option Pricing Model with the stock price on day of grant, $0.95, the risk free interest rate, 2.10% and the expected volatility of 69.81%.
 
 Share-based compensation
 
 For the year ended June 30, 2010, share-based compensation issued in exchange for consulting and legal services, consisting entirely of restricted stock awards and warrants was as follows:
 Number of

Shares


Fair

ValueLegal services


160,319


$
160,000Consulting agreement


35,000



175,000Consulting agreement - warrants






11,610Total


195,319


$
347,361
 These costs are included in stock-based compensation expense on the statement of operations and as an adjustment to reconcile net loss to net cash used in operating activities on the statement of cash flows.
 
 Reserved Shares
 
 As of June 30, 2010, the Company has reserved the following shares of its common stock:
 
 Legal services


160,000Warrants


20,000Note Payable


264,180444,180
  14.  NONCONTROLLING INTEREST
 
 Noncontrolling interest of RBG was as follows:
 
 2010


2009Beginning of the year

$
1,357,761


SNoncontrolling interest upon acquisition






1,441,971Loss allocable to noncontrolling interest


(19,583
)


(84,210
)End of the year

$
1,338,178


$
1,357,761
  15.  INCOME TAXES
 
 The Company and its subsidiary file separate tax returns as they are unable to file consolidated tax returns. The Company and its subsidiary have not filed income tax returns for the years ended June 30, 2010 and 2009 and anticipates no significant income tax expenses as a result of these filings.
 
 F-19
 
 As of June 30, 2010, management has evaluated and concluded that there are no significant uncertain tax positions requiring recognition in the Company’s consolidated financial statements.
 
 As of June 30, 2010, the Company has net operating loss carry forwards of approximately $2,995,000 to reduce future Federal and state taxable income through 2030.
 
 As of June 30, 2010, realization of the Company’s deferred tax assets of $1,489,000 were not considered more likely than not and, accordingly, a valuation allowance of $1489,000 has been provided.
 
 As of June 30, 2010 and 2009, components of deferred tax assets were as follows:
 2010


2009Write-off of investment of joint venture, intangible assets and deferred expenses

$
200,000


$
91,000Other


17,000



12,000Net operating loss


585,000



583,000802,000



686,000Allowance


(802,000
)


(686,000
)None


None
  For the years ended June 30, 2010 and 2009 deferred income tax expense consisted of the following:
 
 2010


2009Write-off of investment of joint venture, intangible assets and deferred expenses

$
292,000


$
91,000Other


29,000



12,000Net operating loss


1,168,000



583,0001,489,000



686,000Valuation allowance


(1,489,000
)


(686,000
)None


None
  16.  FINANCING ARRANGEMENT
 
 On October 26, 2009, the Company entered into an agreement with a placement agent (Agent) for a proposed offering (Offering) up to $12,500,000 of debt obligations or other financings, on a best-efforts basis.
 
 The Company will pay fees to the Agent, as follows:
 
 Nonrefundable retainer of $25,000, paid as of June 30, 2010, to be credited against expenses due of the Offering;
 
 6% of the maximum amount of any debt securities, including the face value of any committed line of credit, payable at closing;
 
 A warrant to purchase common shares of the Company equal to 3% of (1) the number of shares issued in an equity financing and (2) any maximum credit available in any debt obligation divided by the closing price of the Company's stock price on the day of closing, as defined. The warrant will be exercisable at the minimum exercise price of any warrants received by investors in the financing or, in the absence of any warrant issuance, the closing price for the common stock of the Company on the day of the closing for five years.
 
 F-20
 
 On April 26, 2010, in connection with the proposed secured and equity financing arrangement the Company entered into an agreement for legal services for $5,000 in cash and the issuance of 30,000 shares of common stock, payable upon signing and an additional $55,000 in cash from the proceeds of the secured financing arrangement and $35,000 from the proceeds of the equity financing arrangement.
  17. COMMITMENTS AND CONTINGENCIES
 
 The Company has guaranteed certain notes payable of RBL in the amount to $250,000.
 
 A complaint has been filed against the Company, RBL and others in the amount of $5,000,000 pursuant to the termination of a development agreement for Dayton. The company and RBL have filed a counterclaim for damages related to the project. Although the matter is in its early stages, the Company believes that the action is without merit and intends to defend itself against this action.
 
 The Company is exposed to various risks of loss related to theft, damage or destruction of assets, general liability and errors or omissions. The Company purchases commercial insurance to cover these risks and retains minimal risk through reduced deductibles. To mitigate certain risks, the Company also monitors the financial condition of the banking institutions, and cash in excess of operating needs are transferred to securities and other investments on a regular basis.
  18. PURCHASE OPPORTUNITIES
 
 On August 15, 2009, the Company entered into an agreement with Sage Gaming and Entertainment to acquire the purchase opportunities (Purchase Opportunities) of Big Easy Gaming vessel and Panama City International Casino. The parties have canceled the terms of the original agreement and currently revising the existing terms. The Purchase Opportunities include contact information, work product and due diligence to date on these certain casino properties.
  19.  ADOPTION OF ACCOUNTING POLICIES
 
 During the year ended June 30, 2010, the Company adopted the following accounting pronouncements without a material impact on the financial statements.
 
 In February 2010, the FASB issued ASU No. 2010-09, which is included in the Codification under ASC 855, “Subsequent Events” (ASC 85). This update removes the requirement for an SEC filer to disclose the date through which subsequent events have been evaluated and becomes effective upon issuance, February 24, 2010.
 
 In September 2009, the Financial Accounting Standards Board (FASB) issued ASU No. 2009-08, "Earnings Per Share - Amendments to Section 260-10-S99".  This Codification Update represents technical corrections to Topic 260-10-S99, "Earnings Per Share", based on EITF Topic D-53, "Computation of Earnings Per Share for a Period that Includes a Redemption or an Induced Conversion of a Portion of a Class of Preferred Stock" and EITF Topic D-42, "The Effect of the Calculation of Earnings Per Share For the Redemption or Induced Conversion of Preferred Stock". The Codification Update provides guidance regarding the definition of redemptions and conversions of equity-classified preferred stock instruments in relation to the calculation of earnings per share.
 
 In August 2009, the FASB issued ASU No. 2009-05, "Measuring Liabilities at Fair Value".  This ASU amends the "Fair Value Measurements and Disclosures" Topic of the Codification to provide further guidance on how to measure the fair value of a liability.  ASU No. 2009-05 is effective for the first reporting period beginning after issuance.
 
 In June 2009, the FASB issued Statement No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162” (SFAS 16”).  FAS 168 establishes the FASB Accounting Standards Codification (“Codification”) as the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied to rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under federal securities laws as authoritative GAAP for SEC registrants.
 
 F-21
 
 In April 2009, the FASB issued Staff Position No. 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (FSP FAS 107-1 and APB 28-1”), FSP FAS 107-1 and APB 28-1 amends SFAS 107, “Disclosures about Fair Value of Financial Instruments”, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements.  This FSP also amends APB Opinion No. 28, “Interim Financial Reporting”, to require those disclosures in summarized financial information at interim reporting periods.  FSP FAS 107-1 and APB 28-1 is effective for interim reporting periods ending after June 15, 2009 and does not require disclosures for earlier periods presented for comparative purposes at initial adoption.  In periods after initial adoption, the FSP requires comparative disclosures only for periods ending after initial adoption.
 
 Statement of Financial Accounting Standards No. 141(R), “Business Combinations” (SFAS 141), which replaced SFAS No. 141, “Business Combinations”, establishes principles and requirements for determining how an enterprise recognizes and measures the fair value of certain assets and liabilities acquired in a business combination, including non-controlling interests, contingent consideration and certain acquired contingencies.  SFAS 141(R) also requires acquisition-related transaction expenses and restructuring costs be expensed as incurred rather than capitalized as a component of the business combination.
 
 Financial Staff Position (FSP) 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies”, amended and clarified SFAS 141R to address application issues associated with initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination.
 
 In April, 2008, the FASB issued Statement of Financial Accounting Standards Staff Position 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB No. 142, “Goodwill and Other Intangible Assets”. FSP SFAS 142-3 is effective for financial statements issued for fiscal years beginning after December 31, 2008 and must be applied prospectively to intangible assets acquired after the effective date.
 
 FASB No. 160. “Non-controlling Interest in Consolidated Financial Statements – An Amendment of ARB No. 51” (SFAS 16), establishes accounting and reporting standards for the non-controlling interest in a subsidiary (previously referred to as minority interests).  SFAS 160 also requires that a retained non-controlling interest upon the deconsolidation of a subsidiary be initially measured at its fair value.  SFAS 160 also requires reporting any non-controlling interests as a separate component of stockholders’ equity and presenting any net income allocable to non-controlling interests and net income attributable to stockholders of the Company separately in its consolidated statements of income.
  20.  SUBSEQUENT EVENTS
 
 Sale of RBG
 
 On July 1, 2010, the Company and RBL entered into an agreement to sell 100% of the common stock of RBG to Catskill Gaming and Development, LLC (Catskill) for an aggregate consideration of $21,000,000 in cash and the assumption indebtedness of $6,300,000 payable as follows:
 
 (a)
$2,000,000 on or before the first anniversary of the date of the opening for business to the public of a gaming facility under a management agreement between Catskills, as manager, and the Seneca Nation of Indians,(b)
$2,000,000 on the second anniversary;(c)
$3,400,000 on the third anniversary;(d)
$3,400,000 on the fourth anniversary;(e)
$3,400,000 on the fifth anniversary;(f)
$3,400,000 on the sixth anniversary; and(g)
$3,400,000 on the seventh anniversary.
 
 The Company expects to close the transaction on or before December 31, 2010.
 
 F-22
 
 Financing Agreement
 
 On August 31, 2010, the Company into a placement agreement with Citadel Securities, LLC (Citadel), as its non-exclusive financial advisor, to provide certain financial advisory services in connection with the financing of its Big Easy casino development project. The Company will pay fees to Citadel, as follows:
  ●
4.00% of the gross proceeds of any equity financing received by the Company or its affiliates in connection with the development project induced to the Company by Citadel;
 ●
3.00% of the gross proceeds of any debt financing received by the Company or its affiliates in connection with the development project induced to the Company by Citadel;
 ●
2.00% of the gross proceeds of any equity or debt financing received by the Company or its affiliates in connection with the development project introduced to Citadel by the Company as not defined by the agreement;
 ●
1.00% of the gross proceeds of any equity financing received by the Company or its affiliates in connection with the development project introduced to Citadel by the Company as defined by the agreement.
 
 Reverse Stock Split
 
 On July 19, 2010, the Company amended its articles of incorporation, effective August 2, 2010, to affect a one-for-five reverse split by combining every five outstanding shares of common stock into one share of common stock, without a change to authorized shares or par value. All share and per share amounts have been retroactively restated.
 
 Issuance of Shares
 
 During August to October 2010, the Company issued an aggregate of 129,217 shares of common stock in payment for legal services rendered valued at $116,634, $0.85 to $1.25, per share.
 
 On September 28, 2010, the Company borrowed $10,000 from a stockholder and issued 15,000 shares of common stock as interest on the loan.