UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





(Mark
One)





x QUARTERLY REPORT
UNDER SECTION 13 OR 15 (D) OF THE SECURITIES AND EXCHANGE ACT OF
1934





For the
quarterly period ended September 30, 2010





o TRANSITION REPORT
UNDER SECTION 13 OR 15 (D) OF THE EXCHANGE ACT





For the
transition period from __________ to __________





COMMISSION FILE
NUMBER:  333-150462





The Empire Sports &
Entertainment Holdings Co.


(Name of
Registrant as specified in its charter)





Nevada
              26-0657736(State
      or other jurisdiction of
              (I.R.S.
      Employerincorporation
      of organization)
              Identification
      No.)





110
Greene Street, Suite 403, New York, New York 10012


(Address
of principal executive office)





(212)
208-4472


(Registrant’s
telephone number)





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





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





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





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





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





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.  22,135,805 shares of common
stock are issued and outstanding as of November 12, 2010.








THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


FORM
10-Q


FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2010





TABLE
OF CONTENTS


Page No.PART
      I. - FINANCIAL INFORMATIONItem
      1.
                Financial
      statementsConsolidated
      Condensed Balance Sheets as of September 30, 2010 (Unaudited) and December
      31, 2009
                F-2Consolidated
      Condensed Statements of Operations for the Three Months Ended September
      30, 2010 and for the Period from February 10, 2010 (Inception) to
      September 30, 2010 (Unaudited)
                F-3Consolidated
      Condensed Statement of Cash Flows for the Period from February 10, 2010
      (Inception) to September 30, 2010 (Unaudited)
                F-4Notes
      to Unaudited Consolidated Condensed Financial Statements
                F-5Item
      2.
                Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                17Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk.
                26Item
      4.
                Controls
      and Procedures.
                26PART
      II - OTHER INFORMATIONItem
      1.
                Legal
      Proceedings.
                27Item
      1A.
                Risk
      Factors.
                27Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds.
                27Item
      3.
                Default
      upon Senior Securities.
                27Item
      4.
                (Removed
      and Reserved)
                27Item
      5.
                Other
      Information.
                27Item
      6.
                Exhibits.
                27










THE
EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY
 CONSOLIDATED
CONDENSED BALANCE SHEETS
 
 September 30,
                        
                        
                        December 31,2010
                        
                        
                        2009(Unaudited)
                        
                        
                        (see
      Note 1)ASSETSCURRENT
      ASSETS:Cash
      and cash equivalents
                        
                        $
                        1,449,696
                        
                        
                        $
                        -Restricted
      cash - current portion
                        
                        
                        560,000
                        
                        
                        
                        -Accounts
      and note receivable
                        
                        
                        40,000
                        
                        
                        
                        -Advances
      and other receivables
                        
                        
                        390,812
                        
                        
                        
                        15,386Prepaid
      expenses - current portion
                        
                        
                        24,209
                        
                        
                        
                        -Total
      Current Assets
                        
                        
                        2,464,717
                        
                        
                        
                        15,386OTHER
      ASSETS:Restricted
      cash - long term portion
                        
                        
                        500,000
                        
                        
                        
                        -Property
      and equipment, net
                        
                        
                        32,078
                        
                        
                        
                        -Prepaid
      expenses - long term portion
                        
                        
                        305,000
                        
                        
                        
                        -Advances
      - net of current portion
                        
                        
                        57,796
                        
                        
                        
                        -Deposits
                        
                        
                        44,469
                        
                        
                        
                        -Total
      Other Assets - Net
                        
                        
                        939,343
                        
                        
                        
                        -Total
      Assets
                        
                        $
                        3,404,060
                        
                        
                        $
                        15,386LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIES:Accounts
      payable and accrued expenses
                        
                        $
                        105,917
                        
                        
                        $
                        -Convertible
      promissory note - related party
                        
                        
                        198,935
                        
                        
                        
                        -Loan
      payable - related party
                        
                        
                        -
                        
                        
                        
                        30,435Due
      to related party
                        
                        
                        -
                        
                        
                        
                        15,502Total
      Liabilities
                        
                        
                        304,852
                        
                        
                        
                        45,937Commitments
      and ContingenciesSTOCKHOLDERS'
      EQUITY:Preferred
      stock ($.0001 Par Value; 50,000,000 Shares Authorized; None Issued and
      Outstanding)
                        
                        
                        -
                        
                        
                        
                        -Common
      stock ($.0001 Par Value; 500,000,000 Shares Authorized; 22,135,805 shares
      issued and outstanding)
                        
                        
                        2,213Additional
      paid-in capital
                        
                        
                        4,600,511
                        
                        
                        
                        22,500Accumulated
      deficit
                        
                        
                        (1,503,516
                        )
                        
                        
                        (53,051
                        )Total
      Stockholders' Equity
                        
                        
                        3,099,208
                        
                        
                        
                        (30,551
                        )Total
      Liabilities and Stockholders' Equity
                        
                        $
                        3,404,060
                        
                        
                        $
                        15,386
 
 See
accompanying notes to unaudited consolidated condensed financial
statements.
  F-2
 
 THE
EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY
 CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
 
 For the Period fromThree Months Ended
                    
                    
                    February 10, 2010 (Inception)September 30, 2010
                    
                    
                    to September 30, 2010(Unaudited)
                    
                    
                    (Unaudited)Net
      revenues
                    
                    $
                    74,000
                    
                    
                    $
                    288,584Operating
      expenses:Cost
      of revenues
                    
                    
                    9,000
                    
                    
                    
                    144,332Sales
      and marketing expenses
                    
                    
                    8,098
                    
                    
                    
                    117,783Live
      events expenses
                    
                    
                    121,112
                    
                    
                    
                    323,478Compensation
      and related taxes
                    
                    
                    308,140
                    
                    
                    
                    428,973Consulting
      fees
                    
                    
                    47,502
                    
                    
                    
                    313,093General
      and administrative expenses
                    
                    
                    223,176
                    
                    
                    
                    397,959Total
      operating expenses
                    
                    
                    717,028
                    
                    
                    
                    1,725,618Loss
      from operations
                    
                    
                    (643,028
                    )
                    
                    
                    (1,437,034
                    )Other
      (expense) income:Interest
      expense, net of interest income of $2,761
                    
                    
                    (13,431
                    )
                    
                    
                    (13,431
                    )Net
      loss
                    
                    $
                    (656,459
                    )
                    
                    $
                    (1,450,465
                    )NET
      LOSS PER COMMON SHARE:Basic
      and Diluted
                    
                    $
                    (0.03
                    )
                    
                    $
                    (0.08
                    )WEIGHTED
      AVERAGE COMMON SHARESOUTSTANDING
      - Basic and Diluted
                    
                    
                    21,115,768
                    
                    
                    
                    17,348,763
 
 See
accompanying notes to unaudited consolidated  condensed financial
statements.
  F-3
 
 THE
EMPIRE SPORTS AND ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY
 CONSOLIDATED
CONDENSED STATEMENT OF CASH FLOWS
 FOR THE
PERIOD FROM FEBRUARY 10, 2010 (INCEPTION) TO SEPTEMBER 30, 2010
 (Unaudited)
 
 CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                        
                        $
                        (1,450,465
                        )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
                        
                        
                        4,799Amortization
      of promotional advances
                        
                        
                        28,632Contributed
      officer services
                        
                        
                        90,000Common
      stock issued for services
                        
                        
                        252,000Stock-based
      compensation
                        
                        
                        186,667Changes
      in operating assets and liabilities:Restricted
      cash - current portion
                        
                        
                        (560,000
                        )Accounts
      receivable
                        
                        
                        (15,000
                        )Advances
      and other receivables
                        
                        
                        (461,851
                        )Prepaid
      expenses
                        
                        
                        (329,209
                        )Other
      assets
                        
                        
                        (44,469
                        )Restricted
      cash - long term portion
                        
                        
                        (500,000
                        )Accounts
      payable and accrued expenses
                        
                        
                        105,917NET
      CASH USED IN  OPERATING ACTIVITIES
                        
                        
                        (2,692,979
                        )CASH
      FLOWS FROM INVESTING ACTIVITIES:Investment
      in note receivable
                        
                        
                        (25,000
                        )Purchase
      of property and equipment
                        
                        
                        (36,877
                        )NET
      CASH USED IN INVESTING ACTIVITIES
                        
                        
                        (61,877
                        )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from issuance of common stock to founders
                        
                        
                        1,205Proceeds
      from sale of common stock, net of issuance cost
                        
                        
                        3,690,349Proceeds
      from loan payable
                        
                        
                        160,000Proceeds
      from note payable - related party
                        
                        
                        468,500Principal
      repayments on note payable
                        
                        
                        (100,000
                        )Payments
      on related party advances
                        
                        
                        (178,866
                        )Proceeds
      from related party advances
                        
                        
                        163,364NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                        
                        
                        4,204,552NET
      INCREASE IN CASH AND CASH EQUIVALENTS
                        
                        
                        1,449,696CASH
      AND CASH EQUIVALENTS- beginning of period
                        
                        
                        -CASH
      AND CASH EQUIVALENTS- end of period
                        
                        $
                        1,449,696SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW  INFORMATION:Cash
      paid for:Interest
                        
                        $
                        -Income
      taxes
                        
                        $
                        -SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:Issuance
      of common stock for payment of loans payable
                        
                        $
                        360,000Carrying
      value of assumed assets, liabilities and certain promotion rights
      agreement from Golden Empire, LLC
                        
                        $
                        (30,551
                        )
 
 See
accompanying notes to unaudited consolidated condensed financial
statements.
  F-4


THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


NOTES TO
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


September 30,
2010





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Organization





The
Empire Sports & Entertainment Holdings Co. (the “Company”), formerly Excel
Global, Inc. (the “Shell”), was incorporated under the laws of the State of
Nevada on August 2, 2007. The Company operated as a web-based service provider
and consulting company.  In September 2010, the Company changed its name to
The Empire Sports & Entertainment Holdings Co.





On
September 29, 2010, the Company entered into a Share Exchange Agreement (the
“Exchange Agreement”) with The Empire Sports & Entertainment, Co., a
privately held Nevada corporation (“Empire”), and the shareholders of Empire
(the “Empire Shareholders”). Upon closing of the transaction contemplated under
the Exchange Agreement (the “Exchange”), the Empire Shareholders transferred all
of the issued and outstanding capital stock of Empire to the Company in exchange
for shares of common stock of the Company.  Such Exchange caused
Empire to become a wholly-owned subsidiary of the Company.





At the
closing of the Exchange, each share of Empire’s common stock issued and
outstanding immediately prior to the closing of the Exchange was exchanged for
the right to receive one share of the Company’s common stock. Accordingly, an
aggregate of 19,602,000 shares of the Company’s common stock were issued to the
Empire Shareholders.  Additionally, pursuant to the Agreement of
Conveyance, Transfer of Assets and Assumption of Obligations (the “Conveyance
Agreement”), the Company’s former officers and directors cancelled
17,596,603 of the Company’s common stock they owned. Such shares were
administratively cancelled subsequent to the Exchange pursuant to the Conveyance
Agreement (see below). After giving effect to the cancellation of shares, the
Company had a total of 2,513,805 shares of common stock outstanding immediately
prior to Closing. After the Closing, the Company had a total of 22,115,805
shares of common stock outstanding, with the Empire Shareholders owning 89% of
the total issued and outstanding shares of the Company's common
stock.





On
October 8, 2010, the Company entered into a series of agreements with the
purpose of transferring certain of the residual assets and liabilities which
were owned by the Shell with which the Company did a reverse merger on September
29, 2010. The agreements transferred certain assets and liabilities in
connection with a website business to the former shareholders of the Shell in
exchange for 17,596,603 shares of the Company's common
stock.  Management believes that the fair value of the shares received
for those assets and liabilities was not material. The shares were cancelled
immediately upon receipt.





Prior to
the Exchange, the Company was a shell company with no business
operations.





The
Exchange is being accounted for as a reverse-merger and recapitalization. Empire
is the acquirer for financial reporting purposes and the Company is the acquired
company. Consequently, the assets and liabilities and the operations that will
be reflected in the historical financial statements prior to the Exchange will
be those of Empire and will be recorded at the historical cost basis of Empire,
and the consolidated financial statements after completion of the Exchange will
include the assets and liabilities of the Company and Empire, historical
operations of Empire and operations of the Company from the closing date of the
Exchange.


F-5





THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


NOTES TO
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


September 30,
2010





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Empire
was incorporated in Nevada on February 10, 2010 to succeed to the business of
its predecessor company, Golden Empire, LLC (“Golden Empire”), which was formed
and commenced operations on November 30, 2009. The audited consolidated
condensed balance sheet presented as of December 31, 2009, represents the
accounts of Golden Empire. Empire is principally engaged in the production and
promotion of music and sporting events. The Company assumed all assets,
liabilities and certain promotion rights agreements entered into by Golden
Empire at carrying value of ($30,551) which approximated fair value on February
10, 2010. Golden Empire ceased operations on that date. The results of
operations for the period from January 1, 2010 to February 9, 2010 of Golden
Empire were not material. As a result of the Exchange, Empire became a
wholly-owned subsidiary of the Company and the Company succeeded to the business
of Empire as its sole line of business.





Basis of
presentation





The
consolidated condensed financial statements are prepared in accordance with
generally accepted accounting principles in the United States of America ("US
GAAP") and present the financial statements of the Company and its wholly-owned
subsidiary. All significant intercompany transactions and balances have been
eliminated in consolidation. All adjustments (consisting of normal
recurring items) necessary to present fairly the Company's financial position as
of September 30, 2010, and the results of operations and cash flows for the
period from February 10, 2010 (inception) to September 30, 2010 have been
included. The results of operations for the period from February 10, 2010
(inception) to September 30, 2010 are not necessarily indicative of the results
to be expected for the full year. The accounting policies and procedures
employed in the preparation of these consolidated financial statements have been
derived from the audited financial statements of the predecessor company for the
period ended December 31, 2009, which are contained in Form 8-K as filed with
the Securities and Exchange Commission on October 5, 2010.





Use of
estimates





In
preparing the consolidated financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the consolidated balance sheet, and revenues and
expenses for the period then ended.  Actual results may differ
significantly from those estimates. Significant estimates made by management
include, but are not limited to, the useful life of property and equipment, the
fair values of certain promotional contracts and the assumptions used to
calculate fair value of options granted and common stock issued for
services.





Cash andcashequivalents





The
Company considers all highly liquid investments purchased with a maturity of
three months or less when acquired to be cash equivalents. The Company places
its cash with a high credit quality financial institution. The Company’s account
at this institution is insured by the Federal Deposit Insurance Corporation
("FDIC") up to $250,000. For the period from February 10, 2010 (inception) to
September 30, 2010, the Company has reached bank balances exceeding the FDIC
insurance limit. To reduce its risk associated with the failure of such
financial institution, the Company evaluates at least annually the rating of the
financial institution in which it holds deposits.





Fair value of financial
instruments





The
Company adopted Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”,
for assets and liabilities measured at fair value on a recurring basis. ASC 820
establishes a common definition for fair value to be applied to existing US GAAP
that require the use of fair value measurements which establishes a framework
for measuring fair value and expands disclosure about such fair value
measurements.


F-6





THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


NOTES TO
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


September 30,
2010





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





ASC 820
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date. Additionally, ASC 820 requires the use of valuation
techniques that maximize the use of observable inputs and minimize the use of
unobservable inputs. These inputs are prioritized below:




Level 1:
            Observable
      inputs such as quoted market prices in active markets for identical assets
      or liabilitiesLevel 2:
            Observable
      market-based inputs or unobservable inputs that are corroborated by market
      dataLevel 3:
            Unobservable
      inputs for which there is little or no market data, which require the use
      of the reporting entity’s own
assumptions.




Fair
value measurements are applied with respect to our nonfinancial assets and
liabilities measured on a nonrecurring basis, which consists of assets,
liabilities and certain promotion rights agreement assumed by the Company from
Golden Empire. The valuation of the assumed assets, liabilities and certain
promotion rights agreement are classified as a Level 3 measurement, because it
was based on significant unobservable inputs and involved management judgment
and assumptions. Significant unobservable inputs include future cash flows to be
generated from these promotion rights agreements and the terms of the related
party liabilities such as the rate and repayment terms. In determining the fair
value of the assumed assets, liabilities and certain promotion rights agreement,
the Company determined that the carrying amount for such assets and liabilities
(including promotion rights agreements) approximates fair value.





The
following tables present the assets and liabilities that are measured and
recognized at fair value on a nonrecurring basis classified under the
appropriate level of the fair value hierarchy as of the date of transfer on
February10, 2010:




Level 1
                    
                    
                    Level 2
                    
                    
                    Level 3
                    
                    
                    TotalAssets:Advances
      receivable (including promotion rights agreements)
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    15,386
                    
                    
                    $
                    15,386


Liabilities:Note
      payable
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    30,435
                    
                    
                    $
                    30,435Due
      to related party
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    15,502
                    
                    
                    $
                    15,502





Cash and
cash equivalents include certificates of deposit that are considered to be
highly liquid and easily tradable as of September 30, 2010. These securities are
valued using inputs observable in active markets for identical securities and
are therefore classified as Level 1 within our fair value
hierarchy.





The
carrying amounts reported in the balance sheet for cash, restricted cash,
accounts receivable, accounts payable and accrued expenses, due to related party
approximate their estimated fair market value based on the short-term maturity
of these instruments. The carrying amount of the note payable - related party at
September 30, 2010 approximates its respective fair value based on the Company’s
incremental borrowing rate. The Company did not identify any other assets
or liabilities that are required to be presented on the consolidated balance
sheets at fair value in accordance with the accounting guidance.




ASC
825-10 “Financial Instruments”, allows entities to voluntarily choose to measure
certain financial assets and liabilities at fair value (fair value option). The
fair value option may be elected on an instrument-by-instrument basis and is
irrevocable, unless a new election date occurs. If the fair value option is
elected for an instrument, unrealized gains and losses for that instrument
should be reported in earnings at each subsequent reporting date. The Company
did not elect to apply the fair value option to any outstanding
instruments.


F-7





THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


NOTES TO
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


September 30,
2010





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Restricted
cash





The
Company considers cash that is held as a compensating balance for letter of
credit arrangements and cash held in escrow as restricted cash. At
September 30, 2010, restricted cash current and long-term portion was
$560,000 and $500,000, respectively, and was held primarily in certificates
of depositto be used as security in accordance with the terms of the
employment agreements with the Company’s Chief Executive Officer and Executive
Vice President.  The Letter of Credit may be reduced after six months,
and after each six month period thereafter, in increments of $250,000.
Restricted cash long-term portion represents the amount that may be reduced
after 1 year.





Accountsreceivable





The
Company has a policy of reserving for accounts receivable based on its best
estimate of the amount of probable credit losses in its existing accounts
receivable.  The Company periodically reviews its accounts receivable
to determine whether an allowance is necessary based on an analysis of past due
accounts and other factors that may indicate that the realization of an
account may be in doubt.  Account balances deemed to be uncollectible
are charged to bad debt expense after all means of collection have been
exhausted and the potential for recovery is considered remote.  The
Company did not consider it necessary to record any allowance for doubtful
accounts for the period from February 10, 2010 (inception) to September 30,
2010.





Property and
equipment





Property
and equipment are carried at cost. The cost of repairs and maintenance is
expensed as incurred; major replacements and improvements are
capitalized.  When assets are retired or disposed of, the cost and
accumulated depreciation are removed from the accounts, and any resulting gains
or losses are included in income in the year of disposition.  The
Company examines the possibility of decreases in the value of fixed assets when
events or changes in circumstances reflect the fact that their recorded value
may not be recoverable. Depreciation is calculated on a straight-line basis over
the estimated useful life of the assets, generally one to five
years.





Impairment oflong-livedassets





Long-lived
assets of the Company are reviewed for impairment whenever events or
circumstances indicate that the carrying amount of assets may not be
recoverable.  The Company recognizes an impairment loss when the sum of
expected undiscounted future cash flows is less than the carrying amount of the
asset. The amount of impairment is measured as the difference between the
asset’s estimated fair value and its book value. The Company did not consider it
necessary to record any impairment charges for the period from February 10, 2010
(inception) to September 30, 2010.





Income
taxes





Income
taxes are accounted for under the asset and liability method as prescribed by
ASC Topic 740: “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities, and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Deferred tax
assets are reduced by a valuation allowance, when in the Company's opinion it is
likely that some portion or the entire deferred tax asset will not be
realized.


F-8





THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


NOTES TO
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


September 30,
2010





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Pursuant
to ASC Topic 740-10 related to the accounting for uncertainty in income taxes,
the evaluation of a tax position is a two-step process. The first step is to
determine whether it is more likely than not that a tax position will be
sustained upon examination, including the resolution of any related appeals or
litigation based on the technical merits of that position. The second step is to
measure a tax position that meets the more-likely-than-not threshold to
determine the amount of benefit to be recognized in the consolidated financial
statements. A tax position is measured at the largest amount of benefit that is
greater than 50% likelihood of being realized upon ultimate settlement. Tax
positions that previously failed to meet the more-likely-than-not recognition
threshold should be recognized in the first subsequent period in which the
threshold is met. Previously recognized tax positions that no longer meet the
more-likely-than-not criteria should be de-recognized in the first subsequent
financial reporting period in which the threshold is no longer met.





The
accounting standard also provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosures and
transition.  The Company's U.S. Federal and state income tax returns
for the tax year 2009 are open and management continually evaluates expiring
statutes of limitations, audits, proposed settlements, changes in tax law and
new authoritative rulings. The adoption had no effect on the Company’s
consolidated financial statements.





The
Company accounts for potential interest and penalties on tax matters as a
component of the income tax provision.





Revenue
recognition





The
Company records revenue when persuasive evidence of an arrangement exists,
services have been rendered or product delivery has occurred, the sales price to
the customer is fixed or determinable, and collectability is reasonably
assured.





The
Company, in accordance with ASC Topic 605-45 “Revenue Recognition – Principal
Agent Considerations” reports revenues for transactions in which it is the
primary obligor on a gross basis and revenues in which it acts as an agent on
and earns a fixed percentage of the sale on a net basis, net of related costs.
Credits or refunds are recognized when they are determinable and
estimable.





The
Company earns revenue primarily from live event ticket sales, sponsorship,
advertising, concession fees, promoter fees, television rights fee and pay per
view fees for events broadcast on television or cable.





The
following policies reflect specific criteria for the various revenue streams of
the Company:





·
            Revenue
      from ticket sales is recognized when the event occurs. Advance ticket
      sales and event-related revenues for future events are deferred until
      earned, which is generally once the events are conducted. The recognition
      of event-related expenses is matched with the recognition of event-related
      revenues.





·
            Revenue
      from sponsorship, advertising, television/cable distribution agreements
      and promoter/service agreements is recognized in accordance with the
      contract terms, which are generally at the time events
    occur.





·
            Revenue
      from the sale of products is recognized at the point of sale at the live
      event concession stands.


F-9





THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


NOTES TO
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


September 30,
2010





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Cost of revenue and prepaid
expenses





Costs
related to live events are recognized when the event occurs. Event costs paid
prior to an event are capitalized to prepaid expenses and then charged to
expense at the time of the event. Cost of other revenue streams are recognized
at the time the related revenues are realized. Prepaid expenses – current
portion of $24,209 at September 30, 2010 consist primarily of costs paid for
future events which will occur within a year. Prepaid expenses – long-term
portion of $305,000 at September 30, 2010 consist primarily of costs paid for
future events which will occur after 1 year.





Advances and other
receivables




Advances
receivable represent cash paid in advance to athletes for their
training. The Company has the right to offset the advances against the
amount payable to such athletes for their future sporting events. The amounts
advanced under such arrangements are short-term in nature which totaled $203,346
as of September 30, 2010. Promotional advances represents signing bonuses paid
to athletes upon signing the promotional agreements with the Company. 
Promotional advances are amortized over the terms of the promotional agreements,
generally from three to four years. As of September 30, 2010, promotional
advances - current and long-term portion amounted to $34,572 and $57,796,
respectively, and is included in the accompanying consolidated condensed balance
sheet under advances and other receivables. For the period from February 10,
2010 (inception) to September 30, 2010, amortization of these promotional
advances amounted to $28,632 which has been included in live events expenses on
the accompanying consolidated statement of operations. Also included in this
caption was a receivable for a participation guarantee of $152,500 at September
30, 2010.




Concentrations ofcreditrisk andmajorcustomers




Financial
instruments which potentially subject the Company to concentrations of credit
risk consist principally of cash and cash equivalents and accounts receivable.
Management believes the financial risks associated with these financial
instruments are not material. The Company places its cash with high credit
quality financial institutions. The Company maintains its cash in bank deposit
accounts that, at times, may exceed Federally insured limits.




For the
period from February 10, 2010 (inception) to September 30, 2010, two customers
accounted for 53% of net revenues.





Advertising





Advertising
is expensed as incurred and is included in sales and marketing expenses on the
accompanying statement of operations.  Such expenses for the period
from February 10, 2010 (inception) to September 30, 2010 totaled $27,843. Such
expenses for the three month period ended September 30, 2010 totaled
$7,098.





Netloss percommonshare





Net loss
per common share is calculated in accordance with ASC Topic 260: Earnings Per
Share (“ASC 260”). Basic loss per share is computed by dividing net loss by the
weighted average number of shares of common stock outstanding during the period.
The computation of diluted net loss per share does not include dilutive common
stock equivalents in the weighted average shares outstanding as they would be
anti-dilutive. As of September 30, 2010, there were 2,800,000 stock options and
331,558 shares equivalent issuable pursuant to embedded conversion features
which could potentially dilute future earnings per share.


F-10





THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


NOTES TO
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


September 30,
2010





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





The
following table sets forth the computation of basic and diluted loss per
share:




Three month
                              period ended
                              September 30, 2010
                            
                            
                            For the Period from
                              February 10, 2010 to
                              September 30, 2010Numerator:Net
      loss
                            
                            $
                            (656,459
                            )
                            
                            $
                            (1,450,465
                            )Denominator:Denominator
      for basic loss per share(weighted-average
      shares)
                            
                            
                            21,115,768
                            
                            
                            
                            17,348,763Denominator
      for dilutive loss per share(adjusted
      weighted-average)
                            
                            
                            21,115,768
                            
                            
                            
                            17,348,763Basic
      and diluted loss per share
                            
                            $
                            (0.03
                            )
                            
                            $
                            (0.08
                            )





Stock-based
compensation





Stock-based
compensation is accounted for based on the requirements of the Share-Based
Payment Topic of ASC 718 which requires recognition in the consolidated
financial statements of the cost of employee and director services received in
exchange for an award of equity instruments over the period the employee or
director is required to perform the services in exchange for the award
(presumptively, the vesting period). The ASC also requires measurement of the
cost of employee and director services received in exchange for an award based
on the grant-date fair value of the award.


Pursuant
to ASC Topic 505-50, for share-based payments to consultants and other
third-parties, compensation expense is determined at the “measurement date.” The
expense is recognized over the vesting period of the award. Until the
measurement date is reached, the total amount of compensation expense remains
uncertain. The Company initially records compensation expense based on the fair
value of the award at the reporting date. The awards to consultants and other
third-parties are then marked to market at each subsequent reporting
date.





Related
parties





Parties
are considered to be related to the Company if the parties, directly or
indirectly, through one or more intermediaries, control, are controlled by, or
are under common control with the Company. Related parties also include
principal owners of the Company, its management, members of the immediate
families of principal owners of the Company and its management and other parties
with which the Company may deal if one party controls or can significantly
influence the management or operating policies of the other to an extent that
one of the transacting parties might be prevented from fully pursuing its own
separate interests. The Company discloses all related party transactions. All
transactions are recorded at the fair value of the goods or services exchanged.
Property purchased from a related party is recorded at the cost to the related
party and any payment to or on behalf of the related party in excess of the cost
is reflected as a distribution to related party.





Recentaccountingpronouncements





In June
2009, the FASB issued ASC Topic 810-10, “Amendments to FASB Interpretation No.
46(R)”. This updated guidance requires a qualitative approach to identifying a
controlling financial interest in a variable interest entity (“VIE”), and
requires ongoing assessment of whether an entity is a VIE and whether an
interest in a VIE makes the holder the primary beneficiary of the VIE. ASC Topic
810-10 is effective for annual reporting periods beginning after November 15,
2009. The adoption of ASC Topic 810-10 did not have a material impact on the
consolidated results of operations and financial condition.


F-11





THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


NOTES TO
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


September 30,
2010





NOTE 1 –
ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)





In
January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures about Fair
Value Measurements” an amendment to ASC Topic 820, “Fair Value Measurements and
Disclosures.”  This amendment requires an entity to: (i) disclose
separately the amounts of significant transfers in and out of Level 1 and Level
2 fair value measurements and describe the reasons for the transfers and (ii)
present separate information for Level 3 activity pertaining to gross purchases,
sales, issuances and settlements.  ASU No. 2010-06 is effective for the
Company’s interim and annual reporting beginning after December 15, 2009, with
one new disclosure effective after December 15, 2010. The adoption of ASU No.
2010-06 did not have a material impact on the Company’s consolidated results of
operations and financial condition.




In July
2010, the FASB issued ASU No. 2010-20, "Receivables (Topic 310): Disclosures
about the Credit Quality of Financing
Receivables and the Allowance for Credit Losses". ASU 2010-20 requires
additional disclosures about the credit quality of a company’s
loans and the allowance for loan losses held against those loans. Companies will
need to disaggregate new and existing disclosures
based on how it develops its allowance for loan losses and how it manages credit
exposures. Additional disclosure is also required
about the credit quality indicators of loans by class at the end of the
reporting period, the aging of past due loans, information about
troubled debt restructurings, and significant purchases and sales of loans
during the reporting period by class. The new guidance
is effective for interim- and annual periods beginning after December 15,
2010. Management anticipates that the adoption of these additional
disclosures will not have a material effect on the Company’s financial
position or results of operations.




Other
accounting standards that have been issued or proposed by the FASB that do not
require adoption until a future date are not expected to have a material impact
on the consolidated financial statements upon adoption.





NOTE 2 –
ACCOUNTS AND NOTE
RECEIVABLE





On June
28, 2010, the Company issued a demand promissory note of $25,000 to an unrelated
party. The note is due on demand and bears interest at 6% per annum. The
Borrower shall have the option of paying the principal sum to the Company in
advance in full or in part at any time and from time to time without premium or
penalty. Accrued interest receivable on this note receivable amounted to $375 as
of September 30, 2010 and is included in other receivables.





At
September 30, 2010, there were accounts receivable in the amount of
approximately $15,000 from one customer.





NOTE 3 –
RELATED PARTY
TRANSACTIONS





Note
payable - related party





Between
December 2009 and June 2010, one of the Company’s Directors provided loans of
$498,935 to the Company. For the period from December 2009 to June 30, 2010,
these loans were noninterest bearing and were due on demand. On June 30, 2010,
the Company issued 333,333 shares of its common stock valued at $0.60 in payment
of $200,000 of such loans and issued an unsecured demand promissory note in the
amount of $298,935 for the balance of the obligation. This promissory note shall
accrue interest at the annual rate of five percent (5%) and shall be payable on
the earlier of (i) on demand by the lender upon thirty (30) days prior written
notice to the Company or (ii) the two-year anniversary of the date of this
promissory note (the “Maturity Date”). On September 1, 2010, the Company made a
payment of $100,000 towards this promissory note. In September 2010, the Company
issued a demand convertible promissory note (the “convertible promissory note”)
for the balance of this promissory note and such prior note is deemed canceled
and null and void. This convertible promissory note shall accrue interest
at the annual rate of five percent (5%) and shall be payable on the earlier of
(i) on demand by the lender upon thirty (30) days prior written notice to the
Company or (ii) the two-year anniversary of the date of this promissory note
(the “Maturity Date”). This convertible promissory note including interest shall
be convertible into shares of the Company’s common stock at a fixed conversion
price per share equal to $0.60 at the option of the lender. The Company
evaluated whether the convertible note was considered to have an embedded
beneficial conversion feature and has concluded that there is no beneficial
conversion feature since the fixed conversion price of $0.60 is equal to the
fair value of the Company’s common stock based on recent sales of the Company’s
common stock in a private placement. Accrued interest on this convertible note
payable amounted to $3,320 as of September 30, 2010 and is included in accrued
expenses.


F-12





THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


NOTES TO
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


September 30,
2010





Office
rent





The
Company is sharing its office space pursuant to an informal sublease on a month
to month basis with an affiliated company for which the Company’s President is a
director. For the period from February 10, 2010 (inception) to September 30,
2010, the Company was reimbursed a portion of the leasehold improvements cost of
$2,700, a portion of the security deposit of $10,000, and rent of $10,626 from
such affiliated company.





NOTE 4–
STOCKHOLDERS’
EQUITY





Common
Stock





On
February 10, 2010, the Company granted an aggregate of 12,090,000 restricted
shares of common stock to the founders of the Company pursuant to common stock
subscription agreements. The Company received gross proceeds of $1,205 and a
subscription receivable of $4 from such issuance of shares of the Company's
common stock. The Company valued these common shares at par value.





Between
January 2010 and June 2010, one of the Company’s directors loaned $468,500 to
the Company. On June 30, 2010, the Company issued 333,333 shares in connection
with the conversion of $200,000 of this loan payable. The fair value of such
shares issued amounted to $200,000 or $0.60 per share based on recent sales of
the Company’s common stock in a private placement.





Between
February 2010 and June 2010, two unrelated parties loaned an aggregate amount of
$160,000 to the Company. On June 30, 2010, the Company issued 266,667 shares in
connection with the conversion of these loans payable for a total amount of
$160,000. The fair value of such shares issued amounted to $160,000 or $0.60 per
share based on recent sales of the Company’s common stock in a private
placement.





In June
2010, the Company issued an aggregate of 400,000 shares of the Company’s common
stock to four persons for consulting services rendered. The Company valued these
common shares at the fair market value on the date of grant at $0.60 per share
or $240,000 based on the recent sales of the Company’s common stock in a private
placement which has been recognized as consulting expense for the period from
February 10, 2010 (inception) to September 30, 2010.





Between
June 2010 and August 2010, the Company issued 6,512,000 shares of common stock
at $0.60 per share pursuant to a private placement which generated net proceeds
of approximately $3,690,000. In connection with these private placements, the
Company paid in cash private placement commissions of approximately $163,350,
legal fees of $50,000 and related private placements fees of
$3,470.





On
September 22, 2010, prior to the Exchange, the Company’s Board of Directors
declared a dividend of an additional 1.51380043 shares of the Company’s common
stock on each share outstanding on September 26, 2010.  Except as
otherwise noted, all share amounts referenced hereunder have been adjusted to
reflect the number of the Company’s shares of common stock on a post-dividend
basis.


F-13





THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


NOTES TO
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


September 30,
2010





NOTE 4 –
STOCKHOLDERS’ EQUITY
(continued)





At the
closing of the Exchange, each share of Empire’s common stock issued and
outstanding immediately prior to the closing of the Exchange was exchanged for
the right to receive one share of the Company’s common stock. Accordingly, an
aggregate of 19,602,000 shares of the Company’s common stock were issued to the
Empire Shareholders. Additionally, pursuant to the Agreement of Conveyance,
Transfer of Assets and Assumption of Obligations (the “Conveyance Agreement”),
the Company’s former officers and directors cancelled 17,596,603 of the
Company’s common stock they owned. Such shares were administratively cancelled
subsequent to the Exchange pursuant to the Conveyance Agreement (see Note 1).
After giving effect to the cancellation of shares, the Company had a total of
2,513,805 shares of common stock outstanding immediately prior to Closing. After
the Closing, the Company had a total of 22,115,805 shares of common stock
outstanding, with the Empire Shareholders owning 89% of the total issued and
outstanding shares of the Company's common stock.





In
September 2010, the Company issued 20,000 shares of the Company’s common stock
in connection with accounting services rendered. The Company valued these common
shares at the fair market value on the date of grant at $0.60 per share or
$12,000 based on the recent sales of the Company’s common stock in a private
placement which has been recognized as professional expense for the period from
February 10, 2010 (inception) to September 30, 2010.





Common Stock
Options





On
September 29, 2010, the Company’s Board of Directors and stockholders adopted
the 2010 Stock Incentive Plan (the “2010 Plan”). Under the 2010 Plan, options
may be granted which are intended to qualify as Incentive Stock Options under
Section 422 of the Internal Revenue Code of 1986 (the "Code") or which are not
intended to qualify as Incentive Stock Options thereunder. In addition, direct
grants of stock or restricted stock may be awarded.  The 2010
Plan has reserved 2,800,000 shares of common stock for issuance. Upon the
closing of the Exchange, the Company has outstanding options to purchase
2,800,000 shares of the Company’s common stock under the 2010 Plan which
represents an exchange of 2,800,000 options previously granted prior to the
reverse merger and recapitalization with similar terms as discussed
below.





On June
1, 2010, the Company granted an aggregate of 1,850,000 10-year options to
purchase shares of common stock at $0.60 per share which vests at the end of
three years to three officers of the Company. The 1,850,000 options were valued
on the grant date at $0.60 per option or a total of $1,110,000 using a
Black-Scholes option pricing model with the following assumptions: stock price
of $0.60 per share (based on recent sales of the Company’s common stock in a
private placement), volatility of 209% (estimated using volatilities of similar
companies), expected term of 6.5 years, and a risk free interest rate of 3.29%.
For the period from February 10, 2010 (inception) to September 30, 2010, the
Company recorded stock-based compensation expense of $123,333. For the three
months ended September 30, 2010, the Company recorded stock-based compensation
expense of $92,500. At September 30, 2010, there was $986,667 of total
unrecognized compensation expense related to non-vested option-based
compensation arrangements under the 2010 Plan.





On June
1, 2010, the Company granted an aggregate of 950,000 10-year options to purchase
shares of common stock at $0.60 per share which vests at the end of three years
to four consultants of the Company. The 950,000 options were valued on the grant
date at $0.60 per option or a total of $570,000 using a Black-Scholes option
pricing model with the following assumptions: stock price of $0.60 per share
(based on recent sales of the Company’s common stock in a private placement),
volatility of 209% (estimated using volatilities of similar companies), expected
term of ten years, and a risk free interest rate of 3.29%. For the period from
February 10, 2010 (inception) to September 30, 2010, the Company recorded
stock-based consulting expense of $63,334. For the three months ended September
30, 2010, the Company recorded stock-based consulting expense of
$47,500.


F-14





THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


NOTES TO
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


September 30,
2010





NOTE 4–
STOCKHOLDERS’ EQUITY
(continued)





A summary
of the stock options as of September 30, 2010 and changes during the period are
presented below:





Fortheperiod from February 10, 2010
                                        (inception) toSeptember 30, 2010Number of
                                        Options and
                                        Warrants
                                      
                                      
                                      Weighted Average
                                        Exercise Price
                                      
                                      
                                      Weighted Average
                                        Remaining
                                        Contractual Life
                                        (Years)Stock optionsBalance
      at beginning of period
                                      
                                      
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      
                                      -Granted
                                      
                                      
                                      2,800,000
                                      
                                      
                                      
                                      0.60
                                      
                                      
                                      
                                      9.67Exercised
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Forfeited
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Balance
      outstanding and expected to vest at end of period
                                      
                                      
                                      2,800,000
                                      
                                      
                                      $
                                      0.60
                                      
                                      
                                      
                                      9.67Options
      exercisable at end of period
                                      
                                      
                                      -
                                      
                                      
                                      $
                                      -Weighted
      average fair value of options granted during the period
                                      
                                      
                                      
                                      
                                      
                                      $
                                      0.60









NOTE 5 –
COMMITMENTS





In March
2010, the Company signed a five year lease agreement for office space which will
expire in March 2015. The lease requires the Company to pay a monthly base rent
of $5,129 plus a pro rata share of operating expenses. The base rent is subject
to annual increases beginning on April 1, 2011 as defined in the lease
agreement.





In May
2010, the Company entered into a 3 year employment agreement with one of its
founders and Chief Executive Officer (“CEO”) commencing on July 1, 2010. The CEO
receives a base salary of $500,000 per year, plus reimbursement of expenses and
shall participate in an incentive compensation plan to be established for an
annual bonus (“Bonus”). In addition, under the terms of the Employment Agreement
(the “Agreement”), the Company shall secure and post an irrevocable Letter of
Credit by May 31, 2010 in the amount of $1,500,000. This Letter of Credit may be
reduced after six months, and after each six month period thereafter, in
increments of $250,000. At any time base compensation or additional compensation
under this Agreement is not timely paid, or if the Company otherwise is in
material breach of the Agreement, the CEO shall be entitled to draw the full
remaining amount of the Letter of Credit. In June 2010, the Letter of Credit has
been posted by one of the Company’s directors and is expected to be replaced
with a Letter of Credit from the Company following the closing of the private
placement, including collateral in the amount of $1,500,000 as a temporary
accommodation to the Company and the CEO.





In August
2010, the Company replaced the Letter of Credit posted by its director. In
connection with the Agreement, the Company’s banking institution issued a 1-year
irrevocable standby Letter of Credit for the benefit of the CEO.  In August
2010, the Company opened an account with its banking institution in the amount
of $1,000,000 and pledged to the Letter of Credit.  This Letter of Credit
may be reduced after six months, and after each six month period thereafter, in
increments of $250,000. At any time base compensation or additional compensation
under the Agreement is not timely paid, or if the Company otherwise is in
material breach of this agreement, the CEO shall be entitled to draw the full
remaining amount of the Letter of Credit. The Company and the CEO have mutually
agreed to decrease the amount of the Letter of Credit to
$1,000,000.


F-15





THE
EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO. AND SUBSIDIARY


NOTES TO
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


September 30,
2010





NOTE 5 –
COMMITMENTS
(continued)





In August
2010, the Company entered into a three year employment agreement with one of its
founders, President and Chief Operating Officer (“COO”) commencing in August
2010. The COO receives a base salary of $180,000 per year, plus reimbursement of
expenses and shall be entitled to a bonus compensation which is determined by
the Company’s board of directors.





In
September 2010, the Company entered into a one year employment agreement with
the Company’s Executive Vice President (“EVP”) commencing on October 1, 2010.
EVP receives a base salary of $150,000 per year, plus reimbursement of expenses
and shall be entitled to a bonus compensation which is determined by the
Company’s board of directors. In addition, EVP is also entitled to receive stock
options to purchase 250,000 shares of the Company’s common stock at an exercise
price of $0.60 per share which vests at the end of three years. The Company
obtained a three month certificate of deposit to be used as a security in
accordance with the terms of this employment agreement. The 250,000 options were
valued on the grant date at $0.60 per option or a total of $150,000 using a
Black-Scholes option pricing model with the following assumptions: stock price
of $0.60 per share (based on recent sales of the Company’s common stock in a
private placement), volatility of 209% (estimated using volatilities of similar
companies), expected term of 6.5 years, and a risk free interest rate of
2.75%.





NOTE 6 –
SUBSEQUENT
EVENTS





In
November 2010, the Company issued promissory notes for a total of $18,000 to an
unrelated party. The notes are due on August 31, 2011 and bear interest at 4%
per annum. The Borrower shall have the option of paying the principal sum to the
Company prior to the due date without penalty.


F-16


ITEM
2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.





Forward-Looking
Statements




This
Report on Form 10-Q and other written and oral statements made from time to time
by us may contain so-called “forward-looking statements,” all of which are
subject to risks and uncertainties.  Forward-looking statements can be
identified by the use of words such as “expects,” “plans,” “will,” “forecasts,”
“projects,” “intends,” “estimates,” and other words of similar
meaning.  One can identify them by the fact that they do not relate
strictly to historical or current facts.  These statements are likely
to address our growth strategy, financial results and product and development
programs.  One must carefully consider any such statement and should
understand that many factors could cause actual results to differ from our
forward looking statements.  These factors may include inaccurate
assumptions and a broad variety of other risks and uncertainties, including some
that are known and some that are not.  No forward looking statement
can be guaranteed and actual future results may vary materially.




Information
regarding market and industry statistics contained in this Report is included
based on information available to us that we believe is accurate.  It
is generally based on industry and other publications that are not produced for
purposes of securities offerings or economic analysis.  We have not
reviewed or included data from all sources, and cannot assure investors of the
accuracy or completeness of the data included in this Report. Forecasts and
other forward-looking information obtained from these sources are subject to the
same qualifications and the additional uncertainties accompanying any estimates
of future market size, revenue and market acceptance of products and
services.  We do not assume any obligation to update any
forward-looking statement.  As a result, investors should not place
undue reliance on these forward-looking statements.




Recent
Events




We
believe that on September 29, 2010, we were a public shell company, as
defined by the Securities and Exchange Commission, without material assets or
activities. As a result, on October 4, 2010, we filed an amendment to our
Quarterly Report on Form 10-Q for the period ended June 30, 2010 in order to
indicate that we were a shell company.  On September 29, 2010, we
entered into the Exchange Agreement with The Empire Sports & Entertainment,
Co., a privately held Nevada corporation, and the shareholders of Empire (the
“Empire Shareholders”). Upon closing of the transaction contemplated under the
Exchange Agreement (the “Exchange”), the Empire Shareholders transferred all of
the issued and outstanding capital stock of Empire to the Company in exchange
for shares of common stock of the Company.  Such Exchange caused
Empire to become a wholly-owned subsidiary of the Company.  The
Exchange is being accounted for as a reverse-merger and recapitalization. Empire
is the acquirer for financial reporting purposes and the Company is the acquired
company. Consequently, the assets and liabilities and the operations that will
be reflected in the historical financial statements prior to the Exchange will
be those of Empire and will be recorded at the historical cost basis of Empire,
and the consolidated financial statements after completion of the Exchange will
include the assets and liabilities of the Company and Empire, historical
operations of Empire and operations of the Company from the closing date of the
Exchange.




Critical
Accounting Policies and Estimates





The
discussion and analysis of our financial condition and results of operations are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. On an
on-going basis, we evaluate our estimates based on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions. Significant estimates made by management include, but
are not limited to, the useful life of property and equipment, the fair values
of certain promotional contracts and the assumptions used to calculate fair
value of options granted and common stock issued for services.


17





A summary
of significant accounting policies is included in Note 1 to the audited
financial statements included for the period from November 30, 2009 (Inception)
to December 31, 2009 and notes thereto contained in Form 8-K as filed with the
Securities and Exchange Commission. Management believes that the application of
these policies on a consistent basis enables us to provide useful and reliable
financial information about the Company’s operating results and financial
condition.




Management
believes the following critical accounting policies affect the significant
judgments and estimates used in the preparation of the financial
statements.





Principles of
consolidation





The
consolidated condensed financial statements are prepared in accordance with
generally accepted accounting principles in the United States of America and
present the financial statements of the Company and our wholly-owned subsidiary.
All significant intercompany transactions and balances have been eliminated in
consolidation.





Revenue Recognition




We follow
the guidance of the Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 605-10-S99 “Revenue Recognition Overall – SEC
Materials”. We record revenue when persuasive evidence of an arrangement exists,
services have been rendered or product delivery has occurred, the sales price to
the customer is fixed or determinable, and collectability is reasonably
assured.




We, in
accordance with ASC Topic 605-45 “Revenue Recognition – Principal Agent
Considerations” report revenues for transactions in which it is the primary
obligor on a gross basis and revenues in which it acts as an agent on and earns
a fixed percentage of the sale on a net basis, net of related costs. Credits or
refunds are recognized when they are determinable and estimable.




We earn
revenue primarily from live event ticket sales, sponsorship, advertising,
concession fees, promoter fees, television rights fee and pay per view fees for
events broadcast on television or cable.





The
following policies reflect specific criteria for our various revenue
streams:




·
            Revenue
      from ticket sales is recognized when the event occurs. Advance ticket
      sales and event-related revenues for future events are deferred until
      earned, which is generally once the events are conducted. The recognition
      of event-related expenses is matched with the recognition of event-related
      revenues.




·
            Revenue
      from sponsorship, advertising, television/cable distribution agreements
      and promoter/service agreements is recognized in accordance with the
      contract terms, which are generally at the time events
    occur.




·
            Revenue
      from the sale of products is recognized at the point of sale at the live
      event concession stands.


18





Stock-Based
Compensation





Stock-based
compensation is accounted for based on the requirements of the Share-Based
Payment Topic of ASC 718 which requires recognition in the financial statements
of the cost of employee and director services received in exchange for an award
of equity instruments over the period the employee or director is required to
perform the services in exchange for the award (presumptively, the vesting
period). The FASB ASC also requires measurement of the cost of employee and
director services received in exchange for an award based on the grant-date fair
value of the award. Pursuant to ASC Topic 505-50, for share-based payments to
consultants and other third-parties, compensation expense is determined at the
“measurement date.” The expense is recognized over the vesting period of the
award. Until the measurement date is reached, the total amount of compensation
expense remains uncertain. We record compensation expense based on the fair
value of the award at the reporting date. The awards to consultants and other
third-parties are then revalued, or the total compensation is recalculated based
on the then current fair value, at each subsequent reporting date.





Accounts
Receivable





We have a
policy of reserving for questionable accounts based on its best estimate of the
amount of probable credit losses in its existing accounts
receivable.  We periodically review our accounts receivable to
determine whether an allowance is necessary based on an analysis of past due
accounts and other factors that may indicate that the realization of an account
may be in doubt.  Account balances deemed to be uncollectible are
charged to bad debt expense after all means of collection have been exhausted
and the potential for recovery is considered remote.





Property and
equipment





Property
and equipment are carried at cost. The cost of repairs and maintenance is
expensed as incurred; major replacements and improvements are
capitalized.  When assets are retired or disposed of, the cost and
accumulated depreciation are removed from the accounts, and any resulting gains
or losses are included in income in the year of disposition.  We
examine the possibility of decreases in the value of fixed assets when events or
changes in circumstances reflect the fact that their recorded value may not be
recoverable. Depreciation is calculated on a straight-line basis over the
estimated useful life of the assets, generally one to five years.





Long-Lived
Assets





We review
for impairment whenever events or circumstances indicate that the carrying
amount of assets may not be recoverable, pursuant to guidance established in ASC
360-10-35-15, “Impairment or Disposal of Long-Lived Assets”. We recognize an
impairment loss when the sum of expected undiscounted future cash flows is less
than the carrying amount of the asset. The amount of impairment is measured as
the difference between the asset’s estimated fair value and its book
value.




Results
of Operations




Our
business began on November 30, 2009.  Accordingly, no comparisons
exist for the prior period. We were incorporated in Nevada on February 10, 2010
to succeed to the business of the predecessor company, Golden Empire, LLC
(“Golden Empire”), which was formed and commenced operations on November 30,
2009. We assumed all assets, liabilities and certain promotion rights agreements
entered into by Golden Empire at carrying value which approximated fair value on
February 10, 2010. Golden Empire ceased operations on that date. The
results of operations for the period from January 1, 2010 to February 9, 2010 of
Golden Empire were not material.


19


For
the Period from February 10, 2010 (Inception) to September 30, 2010




Net
Revenues




Revenue
from live and televised events, consisting primarily of ticket sales, television
rights fee and sponsorship, was $288,584 for the period from February 10, 2010
(Inception) to September 30, 2010.




The
following table provides data regarding the source of our net revenues for the
period from February 10, 2010 (Inception) to September 30, 2010:


$
                  
                  
                  % of TotalLive
      events – ticket sales and related revenues
                  
                  $
                  154,195
                  
                  
                  
                  53
                  %Television
      rights fee
                  
                  
                  101,889
                  
                  
                  
                  35
                  %Advertising
      – sponsorships
                  
                  
                  32,500
                  
                  
                  
                  12
                  %Total
                  
                  $
                  288,584
                  
                  
                  
                  100
                  %




For the
period from February 10, 2010 (Inception) to September 30, 2010, we recognized
revenues from television rights fee and advisory fee from live events of
approximately $152,000 from one company that accounted for 53% of our total net
revenues.




Operating
Expenses




Total
operating expenses for the period from February 10, 2010 (Inception)
to September 30, 2010 were $1,725,618 and consisted of the
following:




Cost
      of revenues
                  
                  $
                  144,332Sales
      and marketing
                  
                  
                  117,783Live
      events expenses
                  
                  
                  323,478Compensation
      expense and related taxes
                  
                  
                  428,973Consulting
      fees
                  
                  
                  313,093General
      and administrative
                  
                  
                  397,959Total
                  
                  $
                  1,725,618





·
            Cost
      of revenues: Cost of revenues for live event production was $144,332 for
      the period from February 10, 2010 (Inception) to September 30, 2010. Live
      event production costs consist principally of fighters’ purses, production
      cost of live events, venue rental and related expenses. We expect cost of
      revenues for live events to increase for the remainder of our current
      fiscal year as we promote more
events.





·
            Sales
      and marketing: For the period from February 10, 2010 (Inception) to
      September 30, 2010, sales and marketing costs were $117,783. Sales and
      marketing expenses primarily consist of marketing, advertising and
      promotion expenses directly and indirectly related to live events.
      Indirect expenses consist of internet and print
    advertising.




·
            Live
      events expenses: For the period from February 10, 2010 (Inception) to
      September 30, 2010, live events operations expenses were $323,478. Live
      events operations expenses consist primarily of wages and consultants’
      fees related to day-to-day administration of the Company’s live events,
      fighter recruiting and signing
bonuses.




20





·
            Compensation
      expense and related taxes: Compensation expense includes salaries and
      stock-based compensations to our employees. For the period from February
      10, 2010 (Inception) to September 30, 2010, compensation expense and
      related taxes were $428,973 and were primarily attributable to contributed
      services provided by one of our officers valued at $90,000 and stock-based
      compensation expense of $123,333 which is attributable to stock options
      granted to our chief executive officer and two directors. Such increase is
      also due to the hiring of two executive employees and three additional
      support staff. We anticipate that compensation expense will increase
      during the remainder of our current fiscal year due to the hiring of
      additional employees in June 2010.




·
            Consulting
      fees: For the period from February 10, 2010 (Inception) to September 30,
      2010, we incurred consulting fees of $313,093 which were primarily
      attributable with the issuance of our common stock for services rendered
      to consultants for investor relations and advisory services of $240,000
      and stock-based compensation expense of $63,337 which is attributable to
      stock options granted to four
consultants.




·
            General
      and administrative expenses: For the period from February 10, 2010
      (Inception) to September 30, 2010, general and administrative expenses
      were $397,959. For the period from February 10, 2010 (Inception) to
      September 30, 2010, general and administrative expenses consisted of the
      following:




Rent
                  
                  $
                  16,668Professional
      fees
                  
                  
                  114,823Telephone
                  
                  
                  8,398Travel/Entertainment
                  
                  
                  198,288Depreciation
                  
                  
                  4,799Other
      general and administrative
                  
                  
                  54,983$
                  397,959




Loss
from Operations




We
reported a loss from operations of $1,437,034 for the period from February 10,
2010 (Inception) to September 30, 2010.




Other
Income (Expenses)




Total
other income (expense) was ($13,431) for the period from February 10, 2010
(Inception) to September 30, 2010 and is primarily attributable to:





•           $2,761
of interest income on cash for the period from February 10, 2010 (Inception) to
September 30, 2010 attributable to our certificates of deposit.


•          
$16,192 in interest expense for the period from February 10, 2010 (Inception) to
September 30, 2010 in connection with the 5% note payable to a related
party.




Net
Loss




As a
result of these factors, we reported a net loss of $1,450,465 for the period
from February 10, 2010 (Inception) to September 30, 2010, which translates to
basic and diluted net loss per common share of $0.08.


21





For
the three months ended September 30, 2010




Net
Revenues




Revenue
from live and televised events, consisting primarily of ticket sales, television
rights fee and sponsorship, was $74,000 for the three months ended September 30,
2010.




The
following table provides data regarding the source of our net revenues for the
three months ended September 30, 2010:


$
                  
                  
                  % of TotalLive
      events – ticket sales and related revenues
                  
                  $
                  74,000
                  
                  
                  
                  100
                  %Total
                  
                  $
                  74,000
                  
                  
                  
                  100
                  %




For the
three months ended September 30, 2010, we recognized revenues of approximately
$50,000 of advisory fee from live events from one company that accounted for 68%
of our total net revenues.





Operating
Expenses





Total
operating expenses for the three months ended September 30, 2010 were
$717,028 and consisted of the following:





Cost
      of revenues
                  
                  $
                  9,000Sales
      and marketing
                  
                  
                  8,098Live
      events expenses
                  
                  
                  121,112Compensation
      expense and related taxes
                  
                  
                  308,140Consulting
      fees
                  
                  
                  47,502General
      and administrative
                  
                  
                  223,176Total
                  
                  $
                  717,028





·
            Cost
      of revenues: Cost of revenues for live event production was $9,000 for the
      three months ended September 30, 2010. Live event production costs consist
      principally of fighters’ purses, production cost of live events, venue
      rental and related expenses. We expect cost of revenues for live events to
      increase for the remainder of our current fiscal year as we promote more
      events.





·
            Sales
      and marketing: For the three months ended September 30, 2010, sales and
      marketing costs were $8,098. Sales and marketing expenses primarily
      consist of marketing, advertising and promotion expenses directly and
      indirectly related to live events. Indirect expenses consist of internet
      and print advertising.




·
            Live
      events expenses: For the three months ended September 30, 2010, live
      events operations expenses were $121,112. Live events operations expenses
      consist primarily of wages and consultants’ fees related to day-to-day
      administration of the Company’s live events, fighter recruiting and
      signing bonuses.




·
            Compensation
      expense and related taxes: Compensation expense includes salaries and
      stock-based compensations to our employees. For the three months ended
      September 30, 2010, compensation expense and related taxes were $308,140
      and were primarily due to the hiring of two executive employees and three
      additional support staff and stock-based compensation expense of $92,500
      which is attributable to stock options granted to our chief executive
      officer and two directors. We anticipate that compensation expense will
      increase during the remainder of our current fiscal year due to the hiring
      of additional employees in June
2010.


22


·
            Consulting
      fees: For the three months ended September 30, 2010, we incurred
      consulting fees of $47,502 which were primarily attributable to
      stock-based compensation expense related to stock options granted to four
      consultants.




·
            General
      and administrative expenses: For the three months ended September 30,
      2010, general and administrative expenses were $223,176. For the three
      months ended September 30, 2010, general and administrative expenses
      consisted of the following:




Rent
                  
                  $
                  11,626Professional
      fees
                  
                  
                  98,498Telephone
                  
                  
                  4,900Travel/Entertainment
                  
                  
                  74,426Depreciation
                  
                  
                  2,711Other
      general and administrative
                  
                  
                  31,015$
                  223,176




Loss
from Operations




We
reported a loss from operations of $643,028 for the three months ended September
30, 2010.




Other
Income (Expenses)




Total
other income (expense) was ($13,431) for the period from February 10, 2010
(Inception) to September 30, 2010 and is primarily attributable to:





•           $2,761
of interest income on cash for the period from February 10, 2010 (Inception) to
September 30, 2010 attributable to our certificates of deposit.


•          
$16,192 in interest expense for the period from February 10, 2010 (Inception) to
September 30, 2010 in connection with the 5% note payable to a related
party.





Net
Loss




As a
result of these factors, we reported a net loss of $656,459 for the three months
ended September 30, 2010, which translates to basic and diluted net loss per
common share of $0.03.




Liquidity
and Capital Resources




Liquidity
is the ability of a company to generate funds to support its current and future
operations, satisfy its obligations, and otherwise operate on an ongoing basis.
At September 30, 2010, we had a cash balance of $1,449,696 and a working capital
of $2,159,865. We have been funding our operations though the sale of our common
stock and proceeds from loans payable for operating capital purposes. For the
period from February 10, 2010 (Inception) to September 30, 2010, we sold
6,512,000 shares of common stock for net proceeds of $3,690,349.  Our
balance sheet at September 30, 2010 reflects a convertible note payable -
related party amounting to $198,935, which was to mature on the earlier of (i)
on demand by the lender upon thirty (30) days prior written notice to the
Company or (ii) the two-year anniversary of the date of this convertible
promissory note. This convertible note bears annual interest at 5% and is
unsecured.


23


Our net
revenues are not sufficient to fund our operating expenses.  At
September 30, 2010, we had a cash balance of $1,449,696 and a working capital of
$2,159,865. Between June 2010 and August 2010, Empire conducted private
placements pursuant to which it sold an aggregate of 6,512,000 shares of common
stock for net proceeds of $3,690,349, which we expect to utilize to fund our
operating expenses, pay our obligations, and grow our Company. We currently have
no material commitments for capital expenditures. We may be required to raise
additional funds, particularly if we are unable to generate positive cash flow
as a result of our operations.   We estimate that based on
current plans and assumptions, that our available cash will be sufficient to
satisfy our cash requirements under our present operating expectations, without
further financing, for up to 12 months. Other than working capital, we presently
have no other alternative source of working capital. We may not have sufficient
working capital to fund the expansion of our operations and to provide working
capital necessary for our ongoing operations and obligations after 12 months. We
may need to raise significant additional capital to fund our future operating
expenses, pay our obligations, and grow our Company. We do not anticipate we
will be profitable in 2010.  Therefore our future operations will be
dependent on our ability to secure additional financing.  Financing
transactions may include the issuance of equity or debt securities, obtaining
credit facilities, or other financing mechanisms. The trading price of our
common stock and a downturn in the U.S. equity and debt markets could make it
more difficult to obtain financing through the issuance of equity or debt
securities. Even if we are able to raise the funds required, it is possible that
we could incur unexpected costs and expenses, fail to collect significant
amounts owed to us, or experience unexpected cash requirements that would force
us to seek alternative financing. Furthermore, if we issue additional equity or
debt securities, stockholders may experience additional dilution or the new
equity securities may have rights, preferences or privileges senior to those of
existing holders of our common stock. The inability to obtain additional capital
may restrict our ability to grow and may reduce our ability to continue to
conduct business operations. If we are unable to obtain additional financing, we
will likely be required to curtail our marketing and development plans and
possibly cease our operations.





Operating
activities





Net cash
flows used in operating activities for the period from February 10, 2010
(Inception) to September 30, 2010 amounted to $2,692,979 and was primarily
attributable to our net losses of $1,450,465, offset by depreciation of $4,799,
amortization of promotional advances of $28,632, contributed officer
services of $90,000, common stock and stock-based compensations of $438,667 and
add-back of total changes in assets and liabilities of $1,804,612. These changes
in assets and liabilities is primarily attributable to an increase in restricted
cash – current and long-term portion for a total of $1,060,000 and an increase
in prepaid expenses and advances and other receivables of $791,060.





Investing
activities




Net cash
used in investing activities for the period from February 10, 2010 (Inception)
to September 30, 2010 was $61,877 and represented an investment in note
receivable of $25,000 and the purchase of property and equipment of
$36,877.





Financing
activities





Net cash
flows provided by financing activities was $4,204,552 for the period from
February 10, 2010 (Inception) to September 30, 2010. We received net proceeds
from sale of common stock of $3,690,349, proceeds from issuance of founders’
shares $1,205, proceeds from loan and note payable of $628,500, advances from a
related party of $163,364 and offset by payments on note payable and
related party advances of $278,866.





Contractual
Obligations





We have
certain fixed contractual obligations and commitments that include future
estimated payments. Changes in our business needs, cancellation provisions,
changing interest rates, and other factors may result in actual payments
differing from the estimates. We cannot provide certainty regarding the timing
and amounts of payments. We have presented below a summary of the most
significant assumptions used in our determination of amounts presented in the
tables, in order to assist in the review of this information within the context
of our consolidated financial position, results of operations, and cash
flows.


24


The
following table summarizes our contractual obligations as of September 30, 2010,
and the effect these obligations are expected to have on our liquidity and cash
flows in future periods:





Payments Due by PeriodTotal
                
                
                Less than 1
                  year
                
                
                1-3 Years
                
                
                3-5
                  Years
                
                
                5 Years
                  +Contractual
      Obligations:Operating
      lease
                
                $
                309,805
                
                
                $
                16,106
                
                
                $
                168,405
                
                
                $
                125,294
                
                
                $
                -Note
      payable – related party
                
                
                198,935
                
                
                
                198,935
                
                
                
                -
                
                
                
                -
                
                
                
                -Total
      Contractual Obligations
                
                $
                508,740
                
                
                $
                215,041
                
                
                $
                168,405
                
                
                $
                125,294
                
                
                $
                -





Off-Balance
Sheet Arrangements




Since our
inception, we have not engaged in any off-balance sheet arrangements, including
the use of structured finance, special purpose entities or variable interest
entities.





Recent
Accounting Pronouncements





In June
2009, the FASB issued ASC Topic 810-10, “Amendments to FASB Interpretation No.
46(R)”. This updated guidance requires a qualitative approach to identifying a
controlling financial interest in a variable interest entity (“VIE”), and
requires ongoing assessment of whether an entity is a VIE and whether an
interest in a VIE makes the holder the primary beneficiary of the VIE. It is
effective for annual reporting periods beginning after November 15, 2009. The
adoption of ASC Topic 810-10 did not have a material impact on the results of
operations and financial condition.





In
January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures about Fair
Value Measurements” an amendment to ASC Topic 820, “Fair Value Measurements and
Disclosures.”  This amendment requires an entity to: (i) disclose
separately the amounts of significant transfers in and out of Level 1 and Level
2 fair value measurements and describe the reasons for the transfers and (ii)
present separate information for Level 3 activity pertaining to gross purchases,
sales, issuances, and settlements.  ASU No. 2010-06 is effective for our
interim and annual reporting beginning after December 15, 2009, with one new
disclosure effective after December 15, 2010. The adoption of ASU No. 2010-06
did not have a material impact on the results of operations and financial
condition.




In July 2010,
the FASB issued ASU No. 2010-20, Receivables (Topic 310): Disclosures about the
Credit Quality of Financing Receivables and the Allowance for Credit Losses. ASU
2010-20 requires additional disclosures about the credit quality of a company’s
loans and the allowance for loan losses held against those loans. Companies will
need to disaggregate new and existing disclosures based on how it develops its
allowance for loan losses and how it manages credit exposures. Additional
disclosure is also required about the credit quality indicators of loans by
class at the end of the reporting period, the aging of past due loans,
information about troubled debt restructurings, and significant purchases and
sales of loans during the reporting period by class. The new guidance is
effective for interim- and annual periods beginning after December 15, 2010. We
anticipate that the adoption of these additional disclosures will not have a
material effect on our financial position or results of
operations




Other
accounting standards that have been issued or proposed by the FASB that do not
require adoption until a future date are not expected to have a material impact
on the financial statements upon adoption.


25





ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.





Not
required for smaller reporting companies.





ITEM
4.  CONTROLS AND PROCEDURES.





Disclosure
Controls and Procedures.





We
maintain “disclosure controls and procedures,” as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934
(the “Exchange Act”), that are designed to ensure that information required to
be disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified
in Securities and Exchange Commission rules and forms, and that such information
is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, to allow timely decisions regarding
required disclosure. In designing and evaluating our disclosure controls and
procedures, management recognized that disclosure controls and procedures, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the disclosure controls and
procedures are met. Additionally, in designing disclosure controls and
procedures, our management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible disclosure controls and
procedures. The design of any disclosure controls and procedures also is based
in part upon certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions.





With
respect to the quarterly period ended September 30, 2010, under the supervision
and with the participation of our management, we conducted an evaluation of the
effectiveness of the design and operations of our disclosure controls and
procedures. Based upon this evaluation, the Company’s management has concluded
that certain disclosure controls and procedures were not effective as of
September 30, 2010 due to the Company’s limited internal resources and lack of
ability to have multiple levels of transaction review.





Management
is in the process of determining how best to change our current system and
implement a more effective system to insure that information required to be
disclosed in this quarterly report on Form 10-Q has been recorded, processed,
summarized and reported accurately. Our management acknowledges the existence of
this problem, and intends to developed procedures to address them to the extent
possible given limitations in financial and manpower resources. While management
is working on a plan, no assurance can be made at this point that the
implementation of such controls and procedures will be completed in a timely
manner or that they will be adequate once implemented.





Changes
in Internal Controls.





There
have been no changes in the Company’s internal control over financial reporting
during the period from February 10, 2010 (Inception) to September 30, 2010 that
have materially affected, or are reasonably likely to materially affect, the
Company’s internal controls over financial reporting.


26





PART II -
OTHER INFORMATION





ITEM
1.  LEGAL PROCEEDINGS.





None.





ITEM 1A.
RISK FACTORS.





Not
required for smaller reporting companies.





ITEM
2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.





In
September 2010, we issued 20,000 shares of our common stock for accounting
services rendered. We valued these common shares at the fair market value on the
date of grant at $0.60 per share or $12,000. The shares were issued in a
transaction that was exempt from the registration requirements of the Securities
Act pursuant to Section 4(3), which exempts transactions by an issuer not
involving a public offering.





ITEM
3.  DEFAULTS UPON SENIOR SECURITIES.





None.





ITEM
4.  (REMOVED AND RESERVED).





ITEM
5.  OTHER INFORMATION.





None.





ITEM
6.                 EXHIBITS





2.1
                                  Share
      Exchange Agreement dated as of September 29, 2010, by and among The Empire
      Sports & Entertainment Holdings Co., The Empire Sports &
      Entertainment, Co. and the shareholders of The Empire Sports &
      Entertainment Co. (Incorporated by reference to the Company’s Current
      Report on Form 8-K filed with the SEC on October 5,
  2010)3.1
                                  Amended
      and Restated Articles of Incorporation (Incorporated by reference to
      Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC
      on October 4, 2010)3.2
                                  Amended
      and Rested Bylaws (Incorporated by reference to Exhibit 3.2 to the
      Company’s Current Report on Form 8-K filed with the SEC on October 4,
      2010)10.1**
                                  The
      Empire Sports & Entertainment Holdings Co. 2010 Equity Incentive Plan
      (Incorporated by reference to the Company’s Current Report on Form 8-K
      filed with the SEC on October 5, 2010)10.2**
                                  Form
      of 2010 Incentive Stock Option Agreement (Incorporated by reference to the
      Company’s Current Report on Form 8-K filed with the SEC on October 5,
      2010)10.3**
                                  Form
      of 2010 Non-Qualified Stock Option Agreement (Incorporated by reference to
      the Company’s Current Report on Form 8-K filed with the SEC on October 5,
      2010)10.4**
                                  Employment
      Agreement Shelly Finkel (Incorporated by reference to the Company’s
      Current Report on Form 8-K filed with the SEC on October 5,
      2010)




27





10.5
                        Agreement
      of Conveyance, Transfer and Assignment of Assets and Assumption of
      Obligations (Incorporated by reference to Exhibit
      10.1  (Incorporated by reference to the Company’s Current Report
      on Form 8-K filed with the SEC on October 12, 2010)10.6
                        Form
      of Stock Purchase Agreement, dated as of October 8, 2010 (Incorporated by
      reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
      filed with the SEC on October 12, 2010)21
                        List
      of Subsidiaries*31.1
                        Certification
      of the Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002*31.2
                        Certification
      of the Chief Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002*32.1
                        Certification
      of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002*32.2
                        Certification
      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of
2002*


* Filed
herein


**
Indicates a management contract or compensatory plan or
arrangement


28




SIGNATURES




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




THE
      EMPIRE SPORTS & ENTERTAINMENT HOLDINGS CO.Date:
      November 12, 2010
                  By:
                  /s/ Shelly FinkelShelly
      FinkelChief
      ExecutiveOfficer
                    (Principal
      Executive Officer)Date:
      November 12, 2010
                  By:
                  /s/ Adam WassermanAdam
      WassermanChief
      Financial Officer(Principal
      Financial and
                    Accounting
      Officer)




29