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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 18pt"><B>UNITED
STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
</B></FONT><B>Washington, D.C. 20549</B></P>

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<P STYLE="font: 18pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM 8-K</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CURRENT REPORT<BR>
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Date of Report (Date of earliest event reported):&nbsp;
March 15, 2012</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 18pt"><B><U>NANOTECH
ENTERTAINMENT, INC.<BR>
</U></B></FONT>(Exact name of registrant as specified in its charter)</P>

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    <TD STYLE="width: 32%; text-autospace: none; text-align: center">Nevada</TD>
    <TD STYLE="width: 2%; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 32%; text-autospace: none; text-align: center">333-149184</TD>
    <TD STYLE="width: 2%; text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 32%; text-autospace: none; text-align: center">20-1379559</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none; text-align: center">(State of Incorporation)</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">(Commission File No.)</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">(Tax ID No.)</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">3838 Raymert Drive, Suite 3</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Las Vegas, NV 89121<BR>
(Address of principal executive offices)</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Registrant&rsquo;s Telephone Number, including
area code: (702) 518-7410</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Former name or former address, if changed
since last report)</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Check the appropriate box below if the Form
8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions
(see General Instruction A.2. below).</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Wingdings">&uml;</FONT>
Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Wingdings">&uml;</FONT>
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Wingdings">&uml;</FONT>
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Wingdings">&uml;</FONT>
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR240.13e -4(c)).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 5.06. Corporate Governance and
Management &ndash; Operating Company Information</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">NanoTech Entertainment has never been a
shell company as defined in rule 12b-2 of the exchange act. As noted in the initial Balance Sheet reported with the company&rsquo;s
initial 10K filings and included below, the company has had significant operations and substantial assets other than cash and cash
equivalents since its inception, and throughout all reporting periods. In the company&rsquo;s June 30, 2008 10-K, September 30,
2008 10-Q, December 31, 2008 10-Q and March 31, 2009 10-Q the check box reporting the company&rsquo;s shell status was marked incorrectly.
Those same filings show through the financial statements assets other than cash or cash equivalents, show revenues from operations
and discuss at length the company&rsquo;s ongoing operations, clearly indicating that the company was not a shell company. The
company is not, and has never been a shell company. All subsequent 10-Q and 10-K filings have properly indicated that the company
is not a shell company.</P>

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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0in"><B>ALDAR GROUP, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(A Development Stage Company)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">BALANCE SHEETS</P>

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<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><I>&nbsp;</I></TD><TD NOWRAP STYLE="font-weight: bold"><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-decoration: none; text-align: center"><I>June 30,</I></TD><TD NOWRAP STYLE="font-weight: bold"><I>&nbsp;</I></TD><TD NOWRAP STYLE="font-weight: bold"><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>June 30,</I></TD><TD NOWRAP STYLE="font-weight: bold"><I>&nbsp;</I></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><I>&nbsp;</I></TD><TD NOWRAP STYLE="font-weight: bold"><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>2008</I></TD><TD NOWRAP STYLE="font-weight: bold"><I>&nbsp;</I></TD><TD NOWRAP STYLE="font-weight: bold"><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>2007</I></TD><TD NOWRAP STYLE="font-weight: bold"><I>&nbsp;</I></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center"><B>ASSETS</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><B>Current Assets:</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%; padding-left: 9pt">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">470</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">710</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts receivable (Note 9)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,459</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">376</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">645</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,863</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Deposits (Note 8)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,200</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7,574</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,149</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><B>Property and Equipment (Note 2):</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Horses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34,512</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,012</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Office furniture</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,200</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total property and equipment</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,712</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42,212</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Less: Accumulated depreciation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(15,863</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(8,520</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net property and equipment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">20,849</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">33,692</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><B>Other Assets:</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Stallion syndicates, net of accumulated amortisation (Note 2)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">6,071</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7,929</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><B>Total Assets</B></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">34,494</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">45,770</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center"><B>LIABILITIES AND STOCKHOLDERS' DEFICIT</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><B>Current Liabilities:</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts payable - trade</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">45,475</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">18,423</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts payable - related party (Note 3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49,193</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">39,082</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt; padding-bottom: 1pt">Notes payable - related party (Note 3)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">6,715</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total current liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">101,383</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">57,505</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD><B>Long-term Liabilities:</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Notes payable - related parties (Note 3)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">121,383</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">57,505</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left"><B>Stockholders<SUP>&rsquo;</SUP> Deficit (Note 4):</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Common stock, $.001 share par&nbsp;value, 75,000,000 shares authorized, 4,533,000 and 4,425,000 shares issued and outstanding at June 30, 2008 and 2007, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,533</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,425</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Additional paid-in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">238,977</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">212,085</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Deficit accumulated during the development stage</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(330,399</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(228,245</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total stockholders' deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(86,889</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(11,735</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><B>Total Liabilities and Stockholders&rsquo; Deficit</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">34,494</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">45,770</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="letter-spacing: 0pt"><I>See
notes to audited financial statements</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<!-- Field: Page; Sequence: 3; Value: 2 -->
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>ALDAR. GROUP, INC</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(A Development Stage Company)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">STATEMENTS OF OPERATIONS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<!-- Field: Rule-Page --><DIV ALIGN="CENTER" STYLE="margin-top: 3pt; margin-bottom: 3pt"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 100%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>July 15,</I></TD><TD NOWRAP><I>&nbsp;</I></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>2004</I></TD><TD NOWRAP><I>&nbsp;</I></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>Year</I></TD><TD NOWRAP><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>Year</I></TD><TD NOWRAP><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>(Inception)</I></TD><TD NOWRAP><I>&nbsp;</I></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>Ended</I></TD><TD NOWRAP><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>Ended</I></TD><TD NOWRAP><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>to</I></TD><TD NOWRAP><I>&nbsp;</I></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>June 30,</I></TD><TD NOWRAP><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>June 30,</I></TD><TD NOWRAP><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>June 30,</I></TD><TD NOWRAP><I>&nbsp;</I></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center"><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>2008</I></TD><TD NOWRAP><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>2007</I></TD><TD NOWRAP><I>&nbsp;</I></TD><TD NOWRAP><I>&nbsp;</I></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center"><I>2008</I></TD><TD NOWRAP><I>&nbsp;</I></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><B>Income</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 55%; text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Race winnings</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">10,613</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">376</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">10,989</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Breeding sales</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,200</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total Income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,813</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">376</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,189</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><B>Operating Expenses</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Boarding fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,254</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,169</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,132</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Training fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,201</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,729</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,930</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Depreciation &amp; amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,346</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,043</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,937</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Breeding fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Consulting expense - related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,154</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,304</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">106,647</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Consulting expense - other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">897</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27,397</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Other general and administrative expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">50,913</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,089</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">109,843</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">Total Operating Expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">123,765</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">132,834</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">352,386</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><B>Other Income (Expenses)</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Interest expense - related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(215</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(215</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Loss on sale of assets (Note 2)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(355</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(355</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Insurance proceeds (Note 9)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Other income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">368</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">368</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt">Total Other Income (Expenses)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,798</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,798</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><B>Net Loss Before Provision for Income Taxes</B></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(102,154</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(132,458</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(330,399</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt"><B>Provision for Income Taxes</B></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">-</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt"><B>Net Loss</B></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(102,154</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(132,458</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(330,399</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt"><B>Net Loss Per Basic and Diluted
    Share</B></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(0,02</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">$</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">(0,03</TD><TD STYLE="text-align: left; padding-bottom: 1pt">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in; padding-bottom: 1pt"><B>Weighted Average Number of Common Shares Outstanding</B></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">4,517,339</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">3,920,278</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>See notes to audited financial statements</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Item 9. Financial Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">NanoTech Entertainment has recently changed
Audit firms, as noted in its most recent 8K filings, and is working with its new Auditors in an effort to create and file all past
due SEC required filings. The Audit firm has agreed to complete the work based on a payment plan that will allow NanoTech to work
within a schedule to complete the audits within 90 days of funding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">NanoTech Entertainment has identified a
group of investors that is willing to work with the firm in order to meet its financial obligations with the new Audit firm and
raise $35,000 required to complete the audits through a convertible debenture that will carry a 10% APR for a two year period and
the option to convert at a 30% discounted rate. In an effort to identify NanoTech&rsquo;s status and requirements, the basic information
regarding 2010 and 2011 financial information is being filed in this 8K form. Given the budget for the completion of Audits, NanoTech
anticipates the ability to file all past due financial forms within 60 days.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">NanoTech Entertainment is filing these interim financial statements
in an effort to provide investors with an insight into the financial status of the company until such time as the completion of
the reviews by the company&rsquo;s accounting firm, adjustments have been applied and reports reviewed and approved by the company&rsquo;s
new auditing firm. The information contained within shall form the basis for the following forms:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">10K for the period ending June 30, 2010</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">10Q for the period ending September 30,
2010</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">10Q for the period ending December 31, 2010</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">10Q for the period ending March 31, 2011</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">10K for the period ending June 30, 2011</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">10Q for the period ending September 30,
2011</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">10Q for the period ending December 31, 2011</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">9.1 &ndash; Financial Information Forming
Basis for 10Q for period ending September 30, 2011</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All readers of this document and any document
incorporated by reference herein are advised that this document and documents incorporated by reference into this document contain
forward-looking statements and statements of historical facts. Forward-looking statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially for those indicated by the forward-looking statements. Examples of forward-looking
statements include, but are not limited to (i) revenue projections, income (loss), earnings (loss) per share, capital expenditures,
dividends, capital structure and other financial items, (ii) statements of the plans and objectives of the Company or its management
or Board of Directors, including the introduction of new products, or estimates or predictions with regards to customers, suppliers,
competitors or regulatory authorities, (iii) statements of future performance, and (iv) statements of assumptions underlying other
statements about the Company or its business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This document and all documents incorporated
herein by reference also identify factors which could cause actual results to differ materially from those indicated by the forward-looking
statements. Please refer to &ldquo;Management's Discussion and Analysis of Financial Condition and Results of Operations&rdquo;
and &ldquo;Risk Factors.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The cautions outlined made in this statement
and elsewhere in this document should not be construed as complete or exhaustive. In many cases, we cannot predict factors which
could cause results to differ materially from those indicated by the forward-looking statements. Additionally, many items or factors
that could cause actual results to differ materially from forward-looking statements are beyond our ability to control. The Company
will not undertake an obligation to further update or change any forward-looking statement, whether as a result of new information,
future developments, or otherwise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">PART I &mdash; FINANCIAL INFORMATION</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-indent: -45.35pt">ITEM 1. FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The accompanying unaudited financial statements have been prepared
in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and
Exchange Commission (&quot;SEC&quot;), and should be read in conjunction with the audited financial statements and notes thereto
contained in the Company's June 30, 2011 Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have
been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be
expected for the full year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Balance Sheet</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">September 30,</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="font-style: italic">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-style: italic; text-align: center">(unaudited)</TD><TD NOWRAP STYLE="font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Current assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 85%; text-indent: -0.1in; padding-left: 16.2pt">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">460</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 16.2pt">Inventory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,924</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Prepaid royalties</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,384</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Property and equipment (Note B)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,961</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Less: accumulated depreciation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,961</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Net property and equipment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">52,384</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">LIABILITIES AND STOCKHOLDERS&rsquo; DEFICIT&nbsp;LIABILITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Current liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Accounts payable and Accrued Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">387,378</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Cash drawn in excess of bank balance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Accounts Payable Related Parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">422,904</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Accrued Salaries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,623,876</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Notes Payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,144</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Notes Payable &ndash; Related Parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">101,563</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Convertible Notes Payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">591,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 16.2pt">Convertible Notes Payable &ndash; Related Parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48,700</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 16.2pt">Discount on Convertible Debt</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(194,370</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Total liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,014,695</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">STOCKHOLDERS&rsquo; DEFICIT</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">Common stock, $.001 par value, 75,000,000 shares authorized, 15,910,000&nbsp; as of September 30, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,910</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Additional paid-in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,695,432</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Deficit accumulated during the development stage</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,673,653</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Total stockholders&rsquo; deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,962,311</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Total liabilities and stockholders&rsquo; deficit</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">52,384</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part
of these financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<!-- Field: Page; Sequence: 7; Value: 2 -->
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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Statements of Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>(unaudited)</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Three Months Ending<BR> September 30, 2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Revenues:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 85%; text-align: left; padding-left: 9pt">Sales, net</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Less: costs of goods sold</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Gross profit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Operating Expenses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">General and Administration Expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,956</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Depreciation Expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Payroll Expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Professional Fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Rent Expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">43,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other Income (Expenses)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(33,680</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Net loss before income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(192,636</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Provision for income taxes</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net loss available to common stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(192,636</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part
of these financial statements.<B> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Statement of Cash Flows</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>(unaudited)</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Three Months Ended</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">September 30, 2011</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash flows from operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 85%; text-align: left; text-indent: -0.1in; padding-left: 0.35in">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(192,636</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Adjustments to reconcile net loss to net cash used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Depreciation expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Amortization of debt discount</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Common stock issued for finder fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Common stock issued for services</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Amortization of services prepaid with common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Interest on debt converted to common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Loss on disposal of fixed assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Changes in operating assets and liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Decrease in accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Decrease (increase) in inventory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Decrease in prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Decrease in prepaid expenses &ndash; related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Increase in prepaid royalties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Increase in accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">35,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Increase in accrued liabilities &ndash; related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Increase in accrued interest, convertible debentures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,680</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Increase in accrued interest, notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Increase in accrued interest, notes payable &ndash; related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,087</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Increase in royalties payable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Net cash used in operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(9,583</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Cash flows from financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Increase (decrease) in cash drawn in excess of bank balance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Proceeds from issuance of convertible debentures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Proceeds from issuance of common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Proceeds from notes payable &ndash; related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.35in">Repayment of notes payable &ndash; related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.35in">Proceeds from notes payable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Net cash provided by financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in">Increase (decrease) in cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">417</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in">Cash, beginning of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">43</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in">Cash, end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">460</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Notes to Unaudited Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Three Months Ended September 30, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>A.</B></TD><TD><B>ORGANIZATION</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">NanoTech Entertainment, Inc.
(&ldquo;NEI&rdquo;) was incorporated under the laws of the state of Nevada on November 13, 2007. The Company operates as a virtual
manufacturer, developing technology and games, and then licensing such products to third parties for manufacturing and ultimate
distribution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><B>DEVELOPMENT STAGE COMPANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company is considered to
be in the development stage as defined in Statement of Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) Topic No. 915. The Company&rsquo;s efforts have been devoted primarily to raising capital, borrowing funds and attempting
to implement its planned, principal activities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>B.</B></TD><TD><B>SIGNIFICANT ACCOUNTING POLICIES</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left"><B>USE OF ESTIMATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The preparation of the Company&rsquo;s
financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The Company&rsquo;s periodic filings with the Securities and Exchange Commission include, where
applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future
operations of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: left"><B>CASH AND CASH EQUIVALENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Cash and cash equivalents include
cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception,
which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant
risk of loss in value. The Company&rsquo;s cash balance totaled $460 as of September 30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Notes to Unaudited Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Three Months Ended September 30, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>B.</B></TD><TD><B>SIGNIFICANT ACCOUNTING POLICIES (CONT&rsquo;D)</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: left"><B>INVENTORY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company&rsquo;s inventory
is stated at the lower of cost or market using the FIFO costing method. Inventory on hand totaled $11,924 at September 30, 2011
and consisted components and finished goods gaming equipment available and ready for sale.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: left"><B>PROPERTY AND EQUIPMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company&rsquo;s property
and equipment is comprised of office and computer equipment, which are stated at cost. Depreciation is calculated over the estimated
useful lives ranging from 3 to 7 years using the straight &ndash; line method. The Company is in the development stage and has
only acquired $2,961 in fixed assets since inception, which had accumulated depreciation of $2,961 at September 30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: left"><B>REVENUE RECOGNITION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Revenues for gaming equipment
sales are recognized when risks associated with ownership have passed to unaffiliated customers, and when all criteria of ASB Topic
No. 605 (SAB Topic 13) have been met. Typically, this occurs when finished products are shipped.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Notes to Unaudited Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Three Months Ended September 30, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>B.</B></TD><TD><B>SIGNIFICANT ACCOUNTING POLICIES (CONT&rsquo;D)</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: left"><B>RECENTLY-ISSUED ACCOUNTING PRONOUNCEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">In June 2009 the FASB established
the Accounting Standards Codification (&quot;Codification&quot; or &quot;ASC&quot;) as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with
generally accepted accounting principles in the United States (&quot;GAAP&quot;). Rules and interpretive releases of the Securities
and Exchange Commission (&quot;SEC&quot;) issued under authority of federal securities laws are also sources of GAAP for SEC registrants.
Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial
statements. The ASC does change the way the guidance is organized and presented.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Statement of Financial Accounting
Standards (&quot;SFAS&quot;) SFAS No. 165 (ASC Topic 855), <I>&quot;Subsequent Events,&quot;</I> SFAS No. 166 (ASC Topic 810),
<I>&quot;Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140,&quot;</I> SFAS No. 167 (ASC Topic
810), <I>&quot;Amendments to FASB Interpretation No. 46(R),&quot; </I>and SFAS No. 168 (ASC Topic 105), <I>&quot;The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162,&quot;</I>
were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial
statements would not have been significant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Accounting Standards Update (&quot;ASU&quot;)
ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC Topic 605),
<I>Multiple-Deliverable Revenue Arrangements</I>, ASU No. 2009-14 (ASC Topic 985), <I>Certain Revenue Arrangements that include
Software Elements</I>, and various other ASU's No. 2009-2 through ASU No. 2010-18 which contain technical corrections to existing
guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability
to the Company or their effect on the financial statements would not have been significant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>C.</B></TD><TD STYLE="text-align: justify"><B>RELATED PARTY TRANSACTIONS</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company pays rent expense
to one founder pursuant to long-term rent agreements (see Note N) for the use of property for business purposes. The amounts incurred
by the Company and paid to the related parties for rent for the period ended September 30, 2011 totaled $43,500. This amount has
been recorded in selling, general and administrative expenses for the same period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Notes to Unaudited Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Three Months Ended September 30, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>C.</B></TD><TD STYLE="text-align: justify"><B>RELATED PARTY TRANSACTIONS (CONT&rsquo;D)</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Several of the Company&rsquo;s
current and former officers and their affiliates have provided funding in the form of notes payable, totaling $101,563. The notes
carry interest rates ranging from 14% to 20%, resulting in interest expense of $4,291 for the period ended September 30, 2011.
The notes are due on demand and therefore classified as current liabilities. Interest has not been imputed due to its immaterial
impact on the financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company has employment agreements
with one if its remaining founders, David Foley, who, as part of the employment agreement has provided the gaming properties and
intellectual property being used by the company for the core of its product offerings.. The Annual salary has been adjusted and
is payable in the form of $210,000 in cash and 2,250,000 in stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The salaries have been accrued
and will be paid as cash flows allow. Interest has not been imputed due to its immaterial impact on the financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company has incurred liabilities
in the ordinary course of business with several individuals and entities affiliated with the Company. These amounts totaled $45,421
at September 30, 2011. Interest has not been imputed due to its immaterial impact on the financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>D.</B></TD><TD STYLE="text-align: justify"><B>NOTES PAYABLE</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company has originated the
following notes payable with unaffiliated entities and individuals:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="width: 65%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Principal</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Interest <BR>September 30,</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 54%; text-align: center">Note 1, 10% interest, due April 30, 2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 20%; text-align: right">250,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 20%; text-align: right">6,250</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">Note 2, 20% interest, due on demand</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center; padding-bottom: 1pt">Note 3, 20% interest, due on demand</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">250</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">Totals</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">280,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,750</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The notes are interest payments
only, with principal and accrued interest payable upon maturity or demand, as indicated above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Notes to Unaudited Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Three Months Ended September 30, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>E.</B></TD><TD STYLE="text-align: justify"><B>STOCKHOLDERS&rsquo; DEFICIT</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has authorized 75,000,000 shares
of common stock with a par value of $.001, and no preferred stock. As of September 30, 2011 the total shares issued and outstanding
was 15,910,000. No additional share issuances occurred during the quarter ended September 30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>F.</B></TD><TD STYLE="text-align: justify"><B>CONVERTIBLE DEBENTURES</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">During period ending September
30, 2011, the Company issued convertible debentures bearing interest of 30% with terms of two to three years.&nbsp;&nbsp;The debenture
principle and accrued interest may be converted into shares of the Company&rsquo;s common stock at a conversion price at a discount
of up to 60% of the three lowest closing bid prices during the ten days prior to conversion.&nbsp;&nbsp;During the period ended
September 30, 2011, the Company issued debentures totaling $10,000 (convertible into potentially 428,995 shares of common stock
based on a conversion rate on September 30, 2011). The fair market value of the stock on the convertible debenture issuance dates
was $.04</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Notes to Unaudited Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Three Months Ended September 30, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>F.</B></TD><TD STYLE="text-align: justify"><B>n/a</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>G.</B></TD><TD STYLE="text-align: justify"><B>INCOME TAXES</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company recognizes the tax
effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported
for tax purposes. Deferred taxes are provided in the financial statements under ASC Topic No. 740 to give effect to the resulting
temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up
costs based on the income taxes expected to be payable in future years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>H.</B></TD><TD STYLE="text-align: justify"><B>GOING CONCERN CONSIDERATIONS</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company&rsquo;s financial
statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. During the
period ended September 30, 2011, the Company incurred net losses totaling $192,636 resulting in an accumulated deficit of $4,673,653
at September 30, 2011. These conditions raise substantial doubt about the Company&rsquo;s ability to continue as a going concern.
The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. The
Company's ability to meet its ongoing financial requirements is dependent on management being able to obtain additional equity
and/or debt financing, the realization of which is not assured.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>I.</B></TD><TD STYLE="text-align: justify"><B>ROYALTIES</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company has entered into
several licensing agreements whereby the Company licenses certain gaming software from various developers. The Company is responsible
for paying royalties to the developers based on product sales. In the event that no product is sold, the Company is also required
to pay a minimum royalty in order to maintain exclusivity (i.e., the developer cannot license the same software to the Company's
competitors). Certain developers also require prepayment of royalties that are either offset by future sales, or expire at the
end of a calendar year - at which point they are expensed. No sales of the licensed products had occurred during the period ending
September 30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>J.</B></TD><TD STYLE="text-align: justify"><B>SUBSEQUENT EVENTS</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">n/a</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>K.</B></TD><TD STYLE="text-align: justify"><B>SUBSEQUENT EVENTS (CONT&rsquo;D)</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">n/a</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Notes to Unaudited Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Three Months Ended September 30, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>N.</B></TD><TD><B>COMMITMENTS AND CONTINGENCIES</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><FONT STYLE="color: black">The
Company has previously entered into a rental contracts with one of the founders for use of storage facilities, offices, development
labs, and utilities for the Company&rsquo;s operations, production, research and development, sales, and marketing. The Contract
requires $16,400 in monthly payments (plus other related minimal costs) to over the Contracts&rsquo; extended term of December
1, 2007 through November 30, 2013. The Contracts are cancellable with a 15-day advance notice only if all security interest has
been removed and there are no liens on the properties for loans to the Company in effect. </FONT> The amounts incurred by the Company
and paid for rent for the periods ended September 30, 2011 totaled $43,500. This amount has been recorded in selling, general and
administrative expenses for the same period (see Note C). <FONT STYLE="color: black">Future minimum rental payments for the remaining
life of the Contracts are as follow:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">Year Ended June 30,&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 30%; font: 10pt Times New Roman, Times, Serif; margin-left: 1in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: right; padding-bottom: 1pt">2012</TD><TD STYLE="width: 5%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 2%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 30%; border-bottom: Black 1pt solid; text-align: right">87,000</TD><TD STYLE="width: 2%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right; padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">87,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in"><B><U>Item 9 Changes In and Disagreements
with Accountants on Accounting and Financial Disclosure</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">None. &nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 9A. &ndash;Controls and Procedures</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Disclosure Controls and Procedures</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the supervision and with the participation
of our management, including our principal executive and financial officer, we have conducted an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, the board of directors, concluded
as of the evaluation date that our disclosure controls and procedures are effective such that the material information required
to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms relating to our company, &nbsp;and was made known to us by others within those entities,
particularly during the period when this report was being prepared. It has been determined that the company must set aside appropriate
funds each quarter in order to ensure timely payments to auditors and subsequent timely filings. We have since been delisted to
the Pink Sheets due to our inability to timely file our reports under the Securities Exchange Act of 1934, we have replaced certain
officers of the Company which were responsible for our budgets and filings, and have identified and hired the appropriate staff
and outside consultants that will enable us to meet future filing requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Management&rsquo;s Annual Report on
Internal Control Over Financial Reporting.</U> &nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The management of the Company is responsible
for establishing and maintaining adequate internal control over financial reporting. The internal control process has been designed,
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
the Company&rsquo;s financial statements for external reporting purposes in accordance with accounting principles generally accepted
in the United States of America.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management conducted an assessment of the
effectiveness of the Company&rsquo;s internal control over financial reporting as of September 30, 2011, including (i) the control
environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring, based on the
framework in<I> Internal Control &ndash; Integrated Framework,</I> issued by the Committee of Sponsoring Organizations of the Treadway
Commission (&ldquo;COSO&rdquo;). As of September 30, 2011, management has determined that the Company&rsquo;s internal control
over financial reporting as of September 30, 2011 was effective.<B> &nbsp;</B>We are only limited by the lack of funding in order
to meet the ongoing SEC reporting obligations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our internal control over financial reporting
includes policies and procedures that pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail,
transactions and dispositions of assets; and provide reasonable assurances that: (1) transactions are recorded as necessary to
permit preparation of financial statements in accordance with accounting principles generally accepted in the United States; (2)
receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company;
and (3) unauthorized acquisitions, use, or disposition of the Company&rsquo;s assets that could have a material effect on the Company&rsquo;s
financial statements are prevented or timely detected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparations and presentations. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Changes in Internal Control Over Financial
Reporting.</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There were no significant changes in our
internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 9B. Other Information</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">No items required to be reported on Form
8-K during the fourth quarter of the year covered by this report were not previously reported on Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;<B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PART III</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 10. Directors, Executive Officers,
and Corporate Governance.</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Set forth below is the name and age of
each individual who was a director or executive officer of NanoTech Entertainment, Inc. as of September 30, 2011, together with
all positions and offices of the Company held by each and the term of office and the period during which each has served:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 95%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD NOWRAP STYLE="width: 17%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">NAME</TD>
    <TD NOWRAP STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 10%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">AGE</TD>
    <TD NOWRAP STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 35%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">POSITION</TD>
    <TD NOWRAP STYLE="width: 1%; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 35%; border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">DATES SERVED</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">David R. Foley</TD>
    <TD>&nbsp;</TD>
    <TD>45</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: left">President, Treasurer, Secretary and Director</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: left">November 2010 to January 2012</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Biographical Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following paragraphs set forth brief biographical information
for the aforementioned director and executive officer:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>David R. Foley - President, Secretary,
Treasurer, and Director</B> - David R. Foley is an entrepreneur with an extensive background in software and hardware development.
He has designed and patented several award-winning games and innovative technology in the past 20 years. David began his career
in software development where he modernized the front office of the Boston Celtics, designing and building automated systems for
all facets of the team&rsquo;s operations from Press Management to Scouting, as well as helping implement a digital scoring system.
Software that he and a college friend had developed was sold to Ashton Tate to become a core part of dBase IV. He built Foley Hi-Tech
Systems, a video game development studio that developed games for the Sega Genesis and Super Nintendo and delivered multi-million
dollar selling games including hits like SpiderMan vs. Kingpin, Taz-Mania and Urban Strike to publishers including Sega and Electronic
Arts. Foley also founded HyperWare, and built a product line of hardware and software products for the Arcade Industry. Foley was
asked to speak at several trade shows on behalf of Intel to help push the ArcadePC initiative, for which Foley had developed several
key pieces of technology. Foley also designed and built the Sega Tournament Network connecting players from around the world to
compete on the Sega hit arcade game, Daytona 2. Foley became the VP of Engineering at Quantum3D, and helped grow the Arcade Division
to several million dollars in sales. Foley designed the patented Quicksilver II and Graphite systems which were used by major arcade
industry companies including Atari, Midway and Sega. Foley invented the UltraCade multi-game system, acquired the rights to the
IP and founded UltraCade Technologies. UltraCade Technologies released a home version of its flagship product, branded as Arcade
Legends and sold through retail outlets such as Hammacher Schlemmer, Costco and SkyMall catalog. Foley's innovative designs won
him two consecutive industries awards for Innovation of the Year in 2005 and 2006. In 2005 Foley was named #48 in the Entrepreneur
Magazines Hot 100 issue. Foley branched into the casino gaming market creating, designing, developing and licensing unique game
concepts to Bally Technologies and others. His first casino gaming design, Peek-A-Boo video poker, won the 2007 Most Innovative
Game award from Bally Technologies. David has been interviewed on several national media outlets including NBC &amp; ESPN. He continues
to design and patent ground breaking games and technology leading NanoTech's development staff.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Compliance with Section 16(a) of the Exchange Act</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Because we do not have a class of equity
securities registered pursuant to Section 12 of the Exchange Act, our executive officers, directors and persons who beneficially
own more than 10% of our common stock are not required to file initial reports of ownership and reports of changes in ownership
with the SEC under Section 16(a) of the Exchange Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Audit Committee and Audit Committee Financial Expert Disclosure</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s Board of Directors
does not have a separately designated audit committee or an &ldquo;audit committee financial expert.&rdquo; Audit committee functions
are performed by our Board of Directors. None of our directors is deemed independent. All directors also hold positions as our
officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures
for the receipt, retention and treatment of complaints regarding accounting, internal controls, and auditing matters; (3) establishing
procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4)
engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Board of Directors does not have an
audit committee financial expert at this time due to the fact that the Company has only limited operations and no revenues. &nbsp;We
believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our limited operations,
we believe the services of a financial expert are not warranted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Code of Ethics</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have adopted a corporate code of ethics.
We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full,
fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting
of code violations; and provide accountability for adherence to the code.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 11. &nbsp;Executive Compensation</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(a) A majority of the Intellectual Property
was acquired by the Company in the form of an employment agreement whereby one of the original founders, David R. Foley, assigned
the rights to his substantial intellectual property po4rtfolio in return for the compensation outlined in his employment agreement.&nbsp;
To date, Mr. Foley has not been compensated under the terms of his agreement.&nbsp;The Company intends on offering stock in lieu
of the past due compensation, and paying the compensation moving forward. There is currently accrued compensation due as of September
30, 2011 totaling $1,605,876.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(b) There are no annuity, pension, or retirement
benefits proposed to be paid to officers, directors, or employees of the Corporation in the event of retirement at normal retirement
date pursuant to any presently existing plan provided or contributed to by the Corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(c) The currently are employment agreements
with one of the founders of the Company. The terms of these employment agreements are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">David R. Foley&rsquo;s current compensation through calendar year-end
2012 is $210,000 USD per annum. Currently, Mr. Foley&rsquo;s salary is accruing on a monthly basis.</FONT></TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Director Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Directors of the Company do not receive compensation at
this time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 12 - Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth the beneficial
ownership of the Company's officers, directors, and persons who own more than five percent of the Company's common stock as of
September 30, 2011. Under relevant provisions of the Exchange Act, a person is deemed to be a &quot;beneficial owner&quot; of a
security if he or she has or shares the power to vote or direct the voting of the security or the power to dispose or direct the
disposition of the security. A person is also deemed to be a beneficial owner of any securities of which that person has the right
to acquire beneficial ownership in 60 days. More than one person may be deemed to be a beneficial owner of the same securities.
The percentage ownership of each stockholder is calculated based on 15,910,000 total outstanding shares of our common stock as
of September 30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Amount and Nature of Beneficial Ownership
as of September 30, 2011:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="width: 93%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name of Individual</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom"># Shares Beneficially Owned</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom"># of Class of Common <BR>Stock (1)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: right; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%; text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Robert Dekett</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">President, Treasurer, Secretary and Director</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">PO Box 50729</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Henderson, Nevada 89016</P></TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="width: 12%; text-align: right; vertical-align: top">3,000,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="width: 12%; text-align: right; vertical-align: top">18.9</TD><TD STYLE="width: 1%; text-align: right; vertical-align: top">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Ted D. Campbell II</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Chief Compliance Officer</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">PO Box 240</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Jenks, Oklahoma 74037</P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">0</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">0.00</TD><TD STYLE="text-align: right; vertical-align: top">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>David R. Foley</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">311 Santa Rosa Drive</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Los Gatos, California 95032</P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">3,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">18.9</TD><TD STYLE="text-align: right; vertical-align: top">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Greenleaf Forum Investments</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Kevin Murphy, President</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">1174 Manitou Drive NW</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Fox Island, WA 98333</P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">1,300,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">8.2</TD><TD STYLE="text-align: right; vertical-align: top">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">T<B>akashi and Keiko Yoshida</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">59 Preston Road</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Woodside, CA 94062</P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">1,000,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">6.3</TD><TD STYLE="text-align: right; vertical-align: top">%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: justify">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left"><P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Alan Tolson</B></P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Skiddaw View Sandale</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Bolton Gate, Cumbria CA5 1DE</P> <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">UK</P></TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">1,500,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD><TD STYLE="text-align: right; vertical-align: top">9.4</TD><TD STYLE="text-align: right; vertical-align: top">%</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 13 &ndash; Certain Relationships
and Related Transactions, Director Independence</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company pays rent expense to one founder
for the use of property for business purposes. The amounts to be paid to the Company&rsquo;s founder for rent for the period ended
September 30, 2011 totaled $43,500. These amounts have been recorded in selling, general and administrative expenses for the same
periods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 14 &ndash; Principal Accountant
Fees and Services</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Audit Fees:</U> All fees billed for
each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's
annual financial statements and the review of interim financial statements or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements for those fiscal years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2010-2011:&#9;$35,000</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2009: $40,000</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2008:&#9;$ 8,800</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Audit-Related Fees</U>: All fees billed
in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related
to the performance of the audit or review of the registrant's financial statements and are not reported under Item 9(e)(f1) of
Schedule 14A.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2010-2011: $14,500</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2009: $1,750</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2008:&#9; $ 0</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Tax Fees</U>: The aggregate fees billed
in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice,
and tax planning:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2010-2011: $0</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2009: $ 3,000</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1.1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2008: $ 0</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>All Other Fees</U>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">2010-2011: $0</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2009:&#9; $ 0</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2008: $ 0</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;(5) &nbsp;&nbsp;Our audit committee's
pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee
pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(6) &nbsp;&nbsp;The percentage of hours
expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed
to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>



<P STYLE="margin: 0"></P>

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<P STYLE="margin: 0"></P>

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PART IV</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 15 &ndash; Exhibits, Financial
Statement Schedules</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following exhibits are included with this filing:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="RIGHT" STYLE="font: 10pt Times New Roman, Times, Serif; width: 95%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 12%; text-autospace: none; font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">Exhibit
    No.:</FONT></TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 87%; text-autospace: none; font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">Description:</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">3.1(i)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">Articles of Incorporation and amendments thereto <SUP>(1) and
    (2)</SUP></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">3.1(ii)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">Bylaws <SUP>(1)</SUP></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">14</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">Code of Ethics <SUP>(1)</SUP></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">31.1</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">Section 302 Certification by Principal Executive Officer and
    Principal Financial and Accounting Officer <SUP>(1)</SUP></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">32.1</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt; font-weight: normal">Section 906 Certification by </FONT>Principal
    Executive Officer and Principal Financial and Accounting Officer <SUP>(1)</SUP></TD></TR>
</TABLE><BR STYLE="clear: both">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(1)</TD><TD STYLE="text-align: justify">Filed with the Securities and Exchange Commission on February 12, 2008 as an exhibit numbered as
indicated above, to the Registrant&rsquo;s registration statement on Form S-1 (file no. 333-149184 which exhibit is incorporated
herein by reference.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(2)</TD><TD STYLE="text-align: justify">Amendment to the Article of Incorporation filed with the Securities and Exchange Commission on
Form 8-K on May 7, 2009 which exhibit is incorporated herein by reference.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">9.1 &ndash; Financial Information Forming
Basis for 10Q for period ending December 31, 2011.</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING
STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All readers of this document and any document
incorporated by reference herein are advised that this document and documents incorporated by reference into this document contain
forward-looking statements and statements of historical facts. Forward-looking statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially for those indicated by the forward-looking statements. Examples of forward-looking
statements include, but are not limited to (i) revenue projections, income (loss), earnings (loss) per share, capital expenditures,
dividends, capital structure and other financial items, (ii) statements of the plans and objectives of the Company or its management
or Board of Directors, including the introduction of new products, or estimates or predictions with regards to customers, suppliers,
competitors or regulatory authorities, (iii) statements of future performance, and (iv) statements of assumptions underlying other
statements about the Company or its business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">This document and all documents incorporated
herein by reference also identify factors which could cause actual results to differ materially from those indicated by the forward-looking
statements. Please refer to &ldquo;Management's Discussion and Analysis of Financial Condition and Results of Operations&rdquo;
and &ldquo;Risk Factors.&rdquo;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The cautions outlined made in this statement
and elsewhere in this document should not be construed as complete or exhaustive. In many cases, we cannot predict factors which
could cause results to differ materially from those indicated by the forward-looking statements. Additionally, many items or factors
that could cause actual results to differ materially from forward-looking statements are beyond our ability to control. The Company
will not undertake an obligation to further update or change any forward-looking statement, whether as a result of new information,
future developments, or otherwise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-weight: normal">&nbsp;</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">PART I &mdash; FINANCIAL INFORMATION</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-indent: -45.35pt">&nbsp;</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 45.35pt; text-indent: -45.35pt">ITEM 1. FINANCIAL STATEMENTS</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The accompanying unaudited financial statements have been prepared
in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and
Exchange Commission (&quot;SEC&quot;), and should be read in conjunction with the audited financial statements and notes thereto
contained in the Company's June 30, 2011 Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have
been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be
expected for the full year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Balance Sheet</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">December 31,</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-style: italic">&nbsp;</TD><TD STYLE="font-style: italic">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-style: italic; text-align: center">(unaudited)</TD><TD STYLE="font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Current assets:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 85%; padding-left: 9pt">Cash</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">212</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Inventory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,924</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Prepaid royalties</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,137</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Property and equipment (Note B)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,961</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Less: accumulated depreciation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,961</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net property and equipment</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">52,137</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">LIABILITIES AND STOCKHOLDERS&rsquo; DEFICIT&nbsp;LIABILITIES</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Current liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts payable and Accrued Expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">388,170</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Cash drawn in excess of bank balance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Accounts Payable Related Parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">462, 329</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Accrued Salaries</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,694,376</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Notes Payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33,144</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Notes Payable &ndash; Related Parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">101,563</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Convertible Notes Payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">597,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Convertible Notes Payable &ndash; Related Parties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">48,700</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Discount on Convertible Debt</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(197,670</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,127,612</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">STOCKHOLDERS&rsquo; DEFICIT</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -9.35pt; padding-left: 9.35pt">Common stock, $.001 par value, 75,000,000 shares authorized, 15,910,000 &nbsp;as of September 30, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,910</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Additional paid-in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,700,932</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Deficit accumulated during the development stage</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,792,317</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Total stockholders&rsquo; deficit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,075,475</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total liabilities and stockholders&rsquo; deficit</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">52,137</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part
of these financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Statements of Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>(unaudited)</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">Three Months Ending<BR>
 December 31, 2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Revenues:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 85%; text-align: left; padding-left: 9pt">Sales, net</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Less: costs of goods sold</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Gross profit</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Operating Expenses:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">General and Administration Expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,188</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Depreciation Expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Payroll Expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">70,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Professional Fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Rent Expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">43,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other Income (Expenses)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(34,068</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Net loss before income taxes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(156,255</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Provision for income taxes</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net loss available to common stockholders</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(156,255</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part
of these financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Statement of Cash Flows</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>(unaudited)</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">Three Months Ended</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center">December 31, 2011</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Cash flows from operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 85%; text-align: left; padding-left: 18pt">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(156,255</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9.35pt; padding-left: 9.35pt">Adjustments to reconcile net loss to net cash used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Depreciation expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 18pt">Amortization of debt discount</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Common stock issued for finder fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 18pt">Common stock issued for services</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Amortization of services prepaid with common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 18pt">Interest on debt converted to common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Loss on disposal of fixed assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Changes in operating assets and liabilities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Decrease in accounts receivable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 18pt">Decrease (increase) in inventory</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Decrease in prepaid expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 18pt">Decrease in prepaid expenses &ndash; related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Increase in prepaid royalties</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 18pt">Increase in accounts payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Increase in accrued liabilities &ndash; related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 18pt">Increase in accrued interest, convertible debentures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34,068</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Increase in accrued interest, notes payable</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 18pt">Increase in accrued interest, notes payable &ndash; related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,087</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Increase in royalties payable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net cash used in operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(15,748</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Cash flows from financing activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Increase (decrease) in cash drawn in excess of bank balance</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 18pt">Proceeds from issuance of convertible debentures</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Proceeds from issuance of common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 18pt">Proceeds from notes payable &ndash; related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 18pt">Repayment of notes payable &ndash; related party</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 18pt">Proceeds from notes payable</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net cash provided by financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">15,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Increase (decrease) in cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(248</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Cash, beginning of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">460</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Cash, end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">212</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>Notes to Unaudited
Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Three Months Ended December 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>D.</B></TD><TD><B>ORGANIZATION</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">NanoTech Entertainment, Inc.
(&ldquo;NEI&rdquo;) was incorporated under the laws of the state of Nevada on November 13,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">2007. The Company operates as
a virtual manufacturer, developing technology and games, and then licensing</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">such products to third parties
for manufacturing and ultimate distribution.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><B>DEVELOPMENT STAGE COMPANY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company is considered to
be in the development stage as defined in Statement of Financial Accounting</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Standards Board (FASB) Accounting
Standards Codification (ASC) Topic No. 915. The Company&rsquo;s efforts have</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">been devoted primarily to raising
capital, borrowing funds and attempting to implement its planned, principal</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">activities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>E.</B></TD><TD><B>SIGNIFICANT ACCOUNTING POLICIES</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left"><B>USE OF ESTIMATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The preparation of the Company&rsquo;s
financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The Company&rsquo;s periodic filings with the Securities and Exchange Commission include, where
applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future
operations of the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: left"><B>CASH AND CASH EQUIVALENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Cash and cash equivalents include
cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception,
which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant
risk of loss in value. The Company&rsquo;s cash balance totaled $212 as of December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>Notes to Unaudited
Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>Three Months Ended December 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>C.</B></TD><TD><B>SIGNIFICANT ACCOUNTING POLICIES (CONT&rsquo;D)</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: left"><B>INVENTORY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company&rsquo;s inventory
is stated at the lower of cost or market using the FIFO costing method. Inventory on hand totaled $11,924 at December 31, 2011
and consisted components and finished goods gaming equipment available and ready for sale.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: left"><B>PROPERTY AND EQUIPMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company&rsquo;s property
and equipment is comprised of office and computer equipment, which are stated at cost. Depreciation is calculated over the estimated
useful lives ranging from 3 to 7 years using the straight &ndash; line method. The Company is in the development stage and has
only acquired $2,961 in fixed assets since inception, which had accumulated depreciation of $2,961 at December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: left"><B>REVENUE RECOGNITION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Revenues for gaming equipment
sales are recognized when risks associated with ownership have passed to unaffiliated customers, and when all criteria of ASB Topic
No. 605 (SAB Topic 13) have been met. Typically, this occurs when finished products are shipped.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>Notes to Unaudited Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><B>Three Months Ended December 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>G.</B></TD><TD><B>SIGNIFICANT ACCOUNTING POLICIES (CONT&rsquo;D)</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><B>RECENTLY-ISSUED ACCOUNTING
PRONOUNCEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">In June 2009 the FASB established
the Accounting Standards Codification (&quot;Codification&quot; or &quot;ASC&quot;) as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with
generally accepted accounting principles in the United States (&quot;GAAP&quot;). Rules and interpretive releases of the Securities
and Exchange Commission (&quot;SEC&quot;) issued under authority of federal securities laws are also sources of GAAP for SEC registrants.
Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial
statements. The ASC does change the way the guidance is organized and presented.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Statement of Financial Accounting
Standards (&quot;SFAS&quot;) SFAS No. 165 (ASC Topic 855), <I>&quot;Subsequent Events,&quot;</I> SFAS No. 166 (ASC Topic 810),
<I>&quot;Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140,&quot;</I> SFAS No. 167 (ASC Topic
810), <I>&quot;Amendments to FASB Interpretation No. 46(R),&quot; </I>and SFAS No. 168 (ASC Topic 105), <I>&quot;The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162,&quot;</I>
were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial
statements would not have been significant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Accounting Standards Update (&quot;ASU&quot;)
ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC Topic 605),
<I>Multiple-Deliverable Revenue Arrangements</I>, ASU No. 2009-14 (ASC Topic 985), <I>Certain Revenue Arrangements that include
Software Elements</I>, and various other ASU's No. 2009-2 through ASU No. 2010-18 which contain technical corrections to existing
guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability
to the Company or their effect on the financial statements would not have been significant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>F.</B></TD><TD STYLE="text-align: justify"><B>RELATED PARTY TRANSACTIONS</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company pays rent expense
to one founder pursuant to long-term rent agreements (see Note N) for the use of property for business purposes. The amounts incurred
by the Company and paid to the related parties for rent for the period ended December 31, 2011 totaled $43,500. This amount has
been recorded in selling, general and administrative expenses for the same period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Notes to Unaudited Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Three Months Ended December 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>H.</B></TD><TD STYLE="text-align: justify"><B>RELATED PARTY TRANSACTIONS (CONT&rsquo;D)</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Several of the Company&rsquo;s
current and former officers and their affiliates have provided funding in the form of notes payable, totaling $101,563. The notes
carry interest rates ranging from 14% to 20%, resulting in interest expense of $4,291 for the period ended December 31, 2011. The
notes are due on demand and therefore classified as current liabilities. Interest has not been imputed due to its immaterial impact
on the financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company has employment agreements
with one if its remaining founders, David Foley, who, as part of the employment agreement has provided the gaming properties and
intellectual property being used by the company for the core of its product offerings.. The Annual salary has been adjusted and
is payable in the form of $210,000 in cash and 2,250,000 in stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The salaries have been accrued
and will be paid as cash flows allow. Interest has not been imputed due to its immaterial impact on the financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company has incurred liabilities
in the ordinary course of business with several individuals and entities affiliated with the Company. These amounts totaled $39,424.49
at December 31, 2011. Interest has not been imputed due to its immaterial impact on the financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>I.</B></TD><TD STYLE="text-align: justify"><B>NOTES PAYABLE</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company has originated the
following notes payable with unaffiliated entities and individuals:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="width: 65%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Principal</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">Interest<BR> December,</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 54%; text-align: center">Note 1, 10% interest, due April 30, 2011</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 20%; text-align: right">250,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 20%; text-align: right">6,250</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">Note 2, 20% interest, due on demand</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,250</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center">Note 3, 20% interest, due on demand</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">250</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center; padding-bottom: 2.5pt">Totals</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">280,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,750</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The notes are interest payments
only, with principal and accrued interest payable upon maturity or demand, as indicated above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Notes to Unaudited Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Three Months Ended December 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>J.</B></TD><TD STYLE="text-align: justify"><B>STOCKHOLDERS&rsquo; DEFICIT</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has authorized 75,000,000 shares
of common stock with a par value of $.001, and no preferred stock. As of September 30, 2011 the total shares issued and outstanding
was 15,910,000. No additional share issuances occurred during the quarter ended December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>K.</B></TD><TD STYLE="text-align: justify"><B>CONVERTIBLE DEBENTURES</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">During period ending December
31, 2011, the Company issued convertible debentures bearing interest of 30% with terms of two to three years.&nbsp;&nbsp;The debenture
principle and accrued interest may be converted into shares of the Company&rsquo;s common stock at a conversion price at a discount
of up to 60% of the three lowest closing bid prices during the ten days prior to conversion.&nbsp;&nbsp;During the period ended
December 31, 2011, the Company issued debentures totaling $15,000 (convertible into potentially 693,008 shares of common stock
based on a conversion rate on December 31, 2011). The fair market value of the stock on the convertible debenture issuance dates
was $.04</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 45pt"><B>Notes to Unaudited
Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Three Months Ended December 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>H.</B></TD><TD STYLE="text-align: justify"><B>n/a</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>I.</B></TD><TD STYLE="text-align: justify"><B>INCOME TAXES</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company recognizes the tax
effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported
for tax purposes. Deferred taxes are provided in the financial statements under ASC Topic No. 740 to give effect to the resulting
temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up
costs based on the income taxes expected to be payable in future years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>L.</B></TD><TD STYLE="text-align: justify"><B>GOING CONCERN CONSIDERATIONS</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company&rsquo;s financial
statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. During the
period ended December 31, 2011, the Company incurred net losses totaling $156,255 resulting in an accumulated deficit of $4,792,317
at December 31, 2011. These conditions raise substantial doubt about the Company&rsquo;s ability to continue as a going concern.
The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. The
Company's ability to meet its ongoing financial requirements is dependent on management being able to obtain additional equity
and/or debt financing, the realization of which is not assured.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>M.</B></TD><TD STYLE="text-align: justify"><B>ROYALTIES</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company has entered into
several licensing agreements whereby the Company licenses certain gaming software from various developers. The Company is responsible
for paying royalties to the developers based on product sales. In the event that no product is sold, the Company is also required
to pay a minimum royalty in order to maintain exclusivity (i.e., the developer cannot license the same software to the Company's
competitors). Certain developers also require prepayment of royalties that are either offset by future sales, or expire at the
end of a calendar year - at which point they are expensed. No sales of the licensed products had occurred during the period ending
September 30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>N.</B></TD><TD STYLE="text-align: justify"><B>SUBSEQUENT EVENTS</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">n/a</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><B>O.</B></TD><TD STYLE="text-align: justify"><B>SUBSEQUENT EVENTS (CONT&rsquo;D)</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">n/a</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NanoTech Entertainment, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(A Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 45pt"><B>Notes to Unaudited
Financial Statements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Three Months Ended December 31, 2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in"><B>N. COMMITMENTS AND CONTINGENCIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><FONT STYLE="color: black">The
Company has previously entered into a rental contracts with one of the founders for use of storage facilities, offices, development
labs, and utilities for the Company&rsquo;s operations, production, research and development, sales, and marketing. The Contract
requires $16,400 in monthly payments (plus other related minimal costs) to over the Contracts&rsquo; extended term of December
1, 2007 through November 30, 2013. The Contracts are cancellable with a 15-day advance notice only if all security interest has
been removed and there are no liens on the properties for loans to the Company in effect. </FONT> The amounts incurred by the Company
and paid for rent for the periods ended December 31, 2011 totaled $43,500. This amount has been recorded in selling, general and
administrative expenses for the same period (see Note C). <FONT STYLE="color: black">Future minimum rental payments for the remaining
life of the Contracts are as follow:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">Year Ended June 30,&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 30%; font: 10pt Times New Roman, Times, Serif; margin-left: 1in">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: right; padding-bottom: 1pt">2012</TD><TD STYLE="width: 5%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 2%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 30%; border-bottom: Black 1pt solid; text-align: right">87,000</TD><TD STYLE="width: 2%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: right; padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">87,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in"><B><U>Item 9 Changes In and Disagreements
with Accountants on Accounting and Financial Disclosure</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">None. &nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 9A. &ndash;Controls and Procedures</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Disclosure Controls and Procedures</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the supervision and with the participation
of our management, including our principal executive and financial officer, we have conducted an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, the board of directors, concluded
as of the evaluation date that our disclosure controls and procedures are effective such that the material information required
to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms relating to our company, &nbsp;and was made known to us by others within those entities,
particularly during the period when this report was being prepared. It has been determined that the company must set aside appropriate
funds each quarter in order to ensure timely payments to auditors and subsequent timely filings. We have since been delisted to
the Pink Sheets due to our inability to timely file our reports under the Securities Exchange Act of 1934, we have replaced certain
officers of the Company which were responsible for our budgets and filings, and have identified and hired the appropriate staff
and outside consultants that will enable us to meet future filing requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Management&rsquo;s Annual Report on
Internal Control Over Financial Reporting.</U> &nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The management of the Company is responsible
for establishing and maintaining adequate internal control over financial reporting. The internal control process has been designed,
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
the Company&rsquo;s financial statements for external reporting purposes in accordance with accounting principles generally accepted
in the United States of America.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Management conducted an assessment of the
effectiveness of the Company&rsquo;s internal control over financial reporting as of December 31, 2011, including (i) the control
environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring, based on the
framework in<I> Internal Control &ndash; Integrated Framework,</I> issued by the Committee of Sponsoring Organizations of the Treadway
Commission (&ldquo;COSO&rdquo;). As of September 30, 2011, management has determined that the Company&rsquo;s internal control
over financial reporting as of December 31, 2011 was effective.<B> &nbsp;</B>We are only limited by the lack of funding in order
to meet the ongoing SEC reporting obligations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our internal control over financial reporting
includes policies and procedures that pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail,
transactions and dispositions of assets; and provide reasonable assurances that: (1) transactions are recorded as necessary to
permit preparation of financial statements in accordance with accounting principles generally accepted in the United States; (2)
receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company;
and (3) unauthorized acquisitions, use, or disposition of the Company&rsquo;s assets that could have a material effect on the Company&rsquo;s
financial statements are prevented or timely detected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparations and presentations. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Changes in Internal Control Over Financial
Reporting.</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There were no significant changes in our
internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 9B. Other Information</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">No items required to be reported on Form
8-K during the fourth quarter of the year covered by this report were not previously reported on Form 8-K.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PART III</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 10. Directors, Executive Officers,
and Corporate Governance.</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Set forth below is the name and age of
each individual who was a director or executive officer of NanoTech Entertainment, Inc. as of December 31, 2011, together with
all positions and offices of the Company held by each and the term of office and the period during which each has served:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 96%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="width: 14%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">NAME</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 10%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">AGE</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 44%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">POSITION</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 29%; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">DATES SERVED</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>David R. Foley</TD>
    <TD>&nbsp;</TD>
    <TD>45</TD>
    <TD>&nbsp;</TD>
    <TD>President, Treasurer, Secretary and Director</TD>
    <TD>&nbsp;</TD>
    <TD>November 2010 to January 2012</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Biographical Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following paragraphs set forth brief biographical information
for the aforementioned director and executive officer:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>David R. Foley - President, Secretary,
Treasurer, and Director</B> - David R. Foley is an entrepreneur with an extensive background in software and hardware development.
He has designed and patented several award-winning games and innovative technology in the past 20 years. David began his career
in software development where he modernized the front office of the Boston Celtics, designing and building automated systems for
all facets of the team&rsquo;s operations from Press Management to Scouting, as well as helping implement a digital scoring system.
Software that he and a college friend had developed was sold to Ashton Tate to become a core part of dBase IV. He built Foley Hi-Tech
Systems, a video game development studio that developed games for the Sega Genesis and Super Nintendo and delivered multi-million
dollar selling games including hits like SpiderMan vs. Kingpin, Taz-Mania and Urban Strike to publishers including Sega and Electronic
Arts. Foley also founded HyperWare, and built a product line of hardware and software products for the Arcade Industry. Foley was
asked to speak at several trade shows on behalf of Intel to help push the ArcadePC initiative, for which Foley had developed several
key pieces of technology. Foley also designed and built the Sega Tournament Network connecting players from around the world to
compete on the Sega hit arcade game, Daytona 2. Foley became the VP of Engineering at Quantum3D, and helped grow the Arcade Division
to several million dollars in sales. Foley designed the patented Quicksilver II and Graphite systems which were used by major arcade
industry companies including Atari, Midway and Sega. Foley invented the UltraCade multi-game system, acquired the rights to the
IP and founded UltraCade Technologies. UltraCade Technologies released a home version of its flagship product, branded as Arcade
Legends and sold through retail outlets such as Hammacher Schlemmer, Costco and SkyMall catalog. Foley's innovative designs won
him two consecutive industries awards for Innovation of the Year in 2005 and 2006. In 2005 Foley was named #48 in the Entrepreneur
Magazines Hot 100 issue. Foley branched into the casino gaming market creating, designing, developing and licensing unique game
concepts to Bally Technologies and others. His first casino gaming design, Peek-A-Boo video poker, won the 2007 Most Innovative
Game award from Bally Technologies. David has been interviewed on several national media outlets including NBC &amp; ESPN. He continues
to design and patent ground breaking games and technology leading NanoTech's development staff.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Compliance with Section 16(a) of the Exchange Act</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Because we do not have a class of equity
securities registered pursuant to Section 12 of the Exchange Act, our executive officers, directors and persons who beneficially
own more than 10% of our common stock are not required to file initial reports of ownership and reports of changes in ownership
with the SEC under Section 16(a) of the Exchange Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Audit Committee and Audit Committee Financial Expert Disclosure</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&rsquo;s Board of Directors
does not have a separately designated audit committee or an &ldquo;audit committee financial expert.&rdquo; Audit committee functions
are performed by our Board of Directors. None of our directors is deemed independent. All directors also hold positions as our
officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures
for the receipt, retention and treatment of complaints regarding accounting, internal controls, and auditing matters; (3) establishing
procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4)
engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Board of Directors does not have an
audit committee financial expert at this time due to the fact that the Company has only limited operations and no revenues. &nbsp;We
believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our limited operations,
we believe the services of a financial expert are not warranted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Code of Ethics</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have adopted a corporate code of ethics.
We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full,
fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting
of code violations; and provide accountability for adherence to the code.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 11. &nbsp;Executive Compensation</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(a) A majority of the Intellectual Property
was acquired by the Company in the form of an employment agreement whereby one of the original founders, David R. Foley, assigned
the rights to his substantial intellectual property po4rtfolio in return for the compensation outlined in his employment agreement.&nbsp;
To date, Mr. Foley has not been compensated under the terms of his agreement.&nbsp;The Company intends on offering stock in lieu
of the past due compensation, and paying the compensation moving forward. There is currently accrued compensation due as of December
31, 2011 totaling $1,658,376.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(b) There are no annuity, pension, or retirement
benefits proposed to be paid to officers, directors, or employees of the Corporation in the event of retirement at normal retirement
date pursuant to any presently existing plan provided or contributed to by the Corporation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(c) The currently are employment agreements
with one of the founders of the Company. The terms of these employment agreements are as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD STYLE="text-align: justify">David R. Foley&rsquo;s current compensation through calendar year-end 2012 is $210,000 USD per
annum. Currently, Mr. Foley&rsquo;s salary is accruing on a monthly basis.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Director Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Directors of the Company do not receive compensation at
this time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 12 - Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth the beneficial
ownership of the Company's officers, directors, and persons who own more than five percent of the Company's common stock as of
December 31, 2011. Under relevant provisions of the Exchange Act, a person is deemed to be a &quot;beneficial owner&quot; of a
security if he or she has or shares the power to vote or direct the voting of the security or the power to dispose or direct the
disposition of the security. A person is also deemed to be a beneficial owner of any securities of which that person has the right
to acquire beneficial ownership in 60 days. More than one person may be deemed to be a beneficial owner of the same securities.
The percentage ownership of each stockholder is calculated based on 15,910,000 total outstanding shares of our common stock as
of December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Amount and Nature of Beneficial Ownership
as of December 31, 2011:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 48%; text-autospace: none; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name of Individual</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 25%; text-autospace: none; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"># Shares Beneficially Owned</TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 25%; text-autospace: none; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"># of Class of Common<BR>
 Stock (1)</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-autospace: none; font-weight: bold">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; font-weight: bold">Robert Dekett</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">3,000,000</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">18.9%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">President, Treasurer, Secretary and Director</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>PO Box 50729</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">Henderson, Nevada 89016</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; font-weight: bold">Ted D. Campbell II</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">0</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">0.00%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">Chief Compliance Officer</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>PO Box 240</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">Jenks, Oklahoma 74037</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-autospace: none; font-weight: bold">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; font-weight: bold">David R. Foley</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">3,000,000</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">18.9%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>311 Santa Rosa Drive</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">Los Gatos, California 95032</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-autospace: none; font-weight: bold">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; font-weight: bold">Greenleaf Forum Investments</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">1,300,000</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">8.2%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">Kevin Murphy, President</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>1174 Manitou Drive NW</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">Fox Island, WA 98333</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">T<B>akashi and Keiko Yoshida</B></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">1,000,000</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">6.3%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>59 Preston Road</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">Woodside, CA 94062</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none; font-weight: bold">Alan Tolson</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">1,500,000</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">9.4%</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">Skiddaw View Sandale</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">Bolton Gate, Cumbria CA5 1DE</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-autospace: none">UK</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; text-align: center">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 13 &ndash; Certain Relationships
and Related Transactions, Director Independence</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company pays rent expense to one founder
for the use of property for business purposes. The amounts to be paid to the Company&rsquo;s founder for rent for the period ended
December 31, 2011 totaled $43,500. These amounts have been recorded in selling, general and administrative expenses for the same
periods.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 14 &ndash; Principal Accountant
Fees and Services</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Audit Fees:</U> All fees billed for
each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's
annual financial statements and the review of interim financial statements or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements for those fiscal years.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2010-2011:&#9;$35,000</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2009: $40,000</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2008:&#9;$ 8,800</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Audit-Related Fees</U>: All fees billed
in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related
to the performance of the audit or review of the registrant's financial statements and are not reported under Item 9(e)(f1) of
Schedule 14A.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2010-2011: $14,500</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2009: $1,750</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2008:&#9; $ 0</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Tax Fees</U>: The aggregate fees billed
in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice,
and tax planning:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2010-2011: $0</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2009: $ 3,000</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 1.1in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2008: $ 0</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>All Other Fees</U>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">2010-2011: $0</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2009:&#9; $ 0</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">2008: $ 0</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.55in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;(5) &nbsp;&nbsp;Our audit committee's
pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee
pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(6) &nbsp;&nbsp;The percentage of hours
expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed
to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PART IV</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>Item 15 &ndash; Exhibits, Financial
Statement Schedules</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following exhibits are included with this filing:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="RIGHT" STYLE="font: 10pt Times New Roman, Times, Serif; width: 95%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 12%; text-autospace: none; font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">Exhibit
    No.:</FONT></TD>
    <TD STYLE="width: 1%; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 87%; text-autospace: none; font-weight: bold; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">Description:</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">3.1(i)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">Articles of Incorporation and amendments thereto <SUP>(1) and
    (2)</SUP></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">3.1(ii)</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">Bylaws <SUP>(1)</SUP></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">14</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">Code of Ethics <SUP>(1)</SUP></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">31.1</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">Section 302 Certification by Principal Executive Officer and
    Principal Financial and Accounting Officer <SUP>(1)</SUP></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt">32.1</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="text-autospace: none"><FONT STYLE="font-size: 10pt; font-weight: normal">Section 906 Certification by </FONT>Principal
    Executive Officer and Principal Financial and Accounting Officer <SUP>(1)</SUP></TD></TR>
</TABLE>&nbsp;<BR STYLE="clear: both">
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(3)</TD><TD STYLE="text-align: justify">Filed with the Securities and Exchange Commission on February 12, 2008 as an exhibit numbered as
indicated above, to the Registrant&rsquo;s registration statement on Form S-1 (file no. 333-149184 which exhibit is incorporated
herein by reference.</TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in">(4)</TD><TD STYLE="text-align: justify">Amendment to the Article of Incorporation filed with the Securities and Exchange Commission on
Form 8-K on May 7, 2009 which exhibit is incorporated herein by reference.</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

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    <TD STYLE="width: 40%; text-autospace: none">&nbsp;</TD>
    <TD STYLE="width: 10%">&nbsp;</TD>
    <TD STYLE="width: 50%; text-autospace: none">NanoTech Entertainment, Inc.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; font-style: italic">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">Date: March 15, 2012</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none; font-style: italic; border-bottom: Black 1pt solid">/s/&nbsp; Bruce Bean</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none">By: Bruce Bean</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-autospace: none">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-autospace: none">Chairman</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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{"company-data": {"conformed-name": "NanoTech Entertainment, Inc.", "cik": "0001425905", "assigned-sic": "0200", "irs-number": "201379559", "state-of-incorporation": "NV", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "333-149184", "film-number": "12697932"}, "business-address": {"street1": "9360 W. FLAMINGO RD", "street2": "SUITE #110-158", "city": "LAS VEGAS", "state": "NV", "zip": "89147", "phone": "408 786 1015"}, "mail-address": {"street1": "9360 W. FLAMINGO RD", "street2": "SUITE #110-158", "city": "LAS VEGAS", "state": "NV", "zip": "89147"}, "former-company": {"former-conformed-name": "ALDAR GROUP, INC.", "date-changed": "20080201"}}
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): 
March 15, 2012
NANOTECH
ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Nevada
333-149184
20-1379559
(State of Incorporation)
(Commission File No.)
(Tax ID No.)
3838 Raymert Drive, Suite 3
Las Vegas, NV 89121
(Address of principal executive offices)
Registrant's Telephone Number, including
area code: (702) 518-7410
(Former name or former address, if changed
since last report)
Check the appropriate box below if the Form
8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions
(see General Instruction A.2. below).
¨
Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR240.13e -4(c)).
Item 5.06. Corporate Governance and
Management – Operating Company Information
NanoTech Entertainment has never been a
shell company as defined in rule 12b-2 of the exchange act. As noted in the initial Balance Sheet reported with the company's
initial 10K filings and included below, the company has had significant operations and substantial assets other than cash and cash
equivalents since its inception, and throughout all reporting periods. In the company's June 30, 2008 10-K, September 30,
2008 10-Q, December 31, 2008 10-Q and March 31, 2009 10-Q the check box reporting the company's shell status was marked incorrectly.
Those same filings show through the financial statements assets other than cash or cash equivalents, show revenues from operations
and discuss at length the company's ongoing operations, clearly indicating that the company was not a shell company. The
company is not, and has never been a shell company. All subsequent 10-Q and 10-K filings have properly indicated that the company
is not a shell company.
2
ALDAR GROUP, INC.
(A Development Stage Company)
BALANCE SHEETS
June 30,
June 30,
2008
2007
ASSETS
Current Assets:
Cash
$
470
$
710
Accounts receivable (Note 9)
6,459
376
Prepaid expenses
645
1,863
Deposits (Note 8)
-
1,200
Total current assets
7,574
4,149
Property and Equipment (Note 2):
Horses
34,512
40,012
Office furniture
2,200
2,200
Total property and equipment
36,712
42,212
Less: Accumulated depreciation
(15,863
)
(8,520
)
Net property and equipment
20,849
33,692
Other Assets:
Stallion syndicates, net of accumulated amortisation (Note 2)
6,071
7,929
Total Assets
$
34,494
$
45,770
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable - trade
$
45,475
$
18,423
Accounts payable - related party (Note 3)
49,193
39,082
Notes payable - related party (Note 3)
6,715
-
Total current liabilities
101,383
57,505
Long-term Liabilities:
Notes payable - related parties (Note 3)
20,000
-
Total liabilities
121,383
57,505
Stockholders
'
Deficit (Note 4):
Common stock, $.001 share par value, 75,000,000 shares authorized, 4,533,000 and 4,425,000 shares issued and outstanding at June 30, 2008 and 2007, respectively
4,533
4,425
Additional paid-in capital
238,977
212,085
Deficit accumulated during the development stage
(330,399
)
(228,245
)
Total stockholders' deficit
(86,889
)
(11,735
)
Total Liabilities and Stockholders' Deficit
$
34,494
$
45,770
See
notes to audited financial statements
3
ALDAR. GROUP, INC
(A Development Stage Company)
STATEMENTS OF OPERATIONS
July 15,
2004
Year
Year
(Inception)
Ended
Ended
to
June 30,
June 30,
June 30,
2008
2007
2008
Income
Race winnings
$
10,613
$
376
$
10,989
Breeding sales
6,200
-
6,200
Total Income
16,813
376
17,189
Operating Expenses
Boarding fees
35,254
25,169
66,132
Training fees
7,201
10,729
17,930
Depreciation & amortization
10,346
8,043
19,937
Breeding fees
-
4,500
4,500
Consulting expense - related party
19,154
30,304
106,647
Consulting expense - other
897
18,000
27,397
Other general and administrative expenses
50,913
36,089
109,843
Total Operating Expenses
123,765
132,834
352,386
Other Income (Expenses)
Interest expense - related party
(215
)
-
(215
)
Loss on sale of assets (Note 2)
(355
)
-
(355
)
Insurance proceeds (Note 9)
5,000
-
5,000
Other income
368
-
368
Total Other Income (Expenses)
4,798
-
4,798
Net Loss Before Provision for Income Taxes
(102,154
)
(132,458
)
(330,399
)
Provision for Income Taxes
-
-
-
Net Loss
$
(102,154
)
$
(132,458
)
$
(330,399
)
Net Loss Per Basic and Diluted
    Share
$
(0,02
)
$
(0,03
)
Weighted Average Number of Common Shares Outstanding
4,517,339
3,920,278
See notes to audited financial statements
4
Item 9. Financial Information
NanoTech Entertainment has recently changed
Audit firms, as noted in its most recent 8K filings, and is working with its new Auditors in an effort to create and file all past
due SEC required filings. The Audit firm has agreed to complete the work based on a payment plan that will allow NanoTech to work
within a schedule to complete the audits within 90 days of funding.
NanoTech Entertainment has identified a
group of investors that is willing to work with the firm in order to meet its financial obligations with the new Audit firm and
raise $35,000 required to complete the audits through a convertible debenture that will carry a 10% APR for a two year period and
the option to convert at a 30% discounted rate. In an effort to identify NanoTech's status and requirements, the basic information
regarding 2010 and 2011 financial information is being filed in this 8K form. Given the budget for the completion of Audits, NanoTech
anticipates the ability to file all past due financial forms within 60 days.
NanoTech Entertainment is filing these interim financial statements
in an effort to provide investors with an insight into the financial status of the company until such time as the completion of
the reviews by the company's accounting firm, adjustments have been applied and reports reviewed and approved by the company's
new auditing firm. The information contained within shall form the basis for the following forms:
10K for the period ending June 30, 2010
10Q for the period ending September 30,
2010
10Q for the period ending December 31, 2010
10Q for the period ending March 31, 2011
10K for the period ending June 30, 2011
10Q for the period ending September 30,
2011
10Q for the period ending December 31, 2011
9.1 – Financial Information Forming
Basis for 10Q for period ending September 30, 2011
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING
STATEMENTS
All readers of this document and any document
incorporated by reference herein are advised that this document and documents incorporated by reference into this document contain
forward-looking statements and statements of historical facts. Forward-looking statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially for those indicated by the forward-looking statements. Examples of forward-looking
statements include, but are not limited to (i) revenue projections, income (loss), earnings (loss) per share, capital expenditures,
dividends, capital structure and other financial items, (ii) statements of the plans and objectives of the Company or its management
or Board of Directors, including the introduction of new products, or estimates or predictions with regards to customers, suppliers,
competitors or regulatory authorities, (iii) statements of future performance, and (iv) statements of assumptions underlying other
statements about the Company or its business.
This document and all documents incorporated
herein by reference also identify factors which could cause actual results to differ materially from those indicated by the forward-looking
statements. Please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations"
and "Risk Factors."
The cautions outlined made in this statement
and elsewhere in this document should not be construed as complete or exhaustive. In many cases, we cannot predict factors which
could cause results to differ materially from those indicated by the forward-looking statements. Additionally, many items or factors
that could cause actual results to differ materially from forward-looking statements are beyond our ability to control. The Company
will not undertake an obligation to further update or change any forward-looking statement, whether as a result of new information,
future developments, or otherwise.
5
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared
in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and
Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto
contained in the Company's June 30, 2011 Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have
been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be
expected for the full year.
6
NanoTech Entertainment, Inc.
(A Development Stage Company)
Balance Sheet
September 30,
2011
(unaudited)
ASSETS
Current assets:
Cash
$
460
Inventory
11,924
Prepaid expenses
-
Prepaid royalties
40,000
Total current assets
52,384
Property and equipment (Note B)
2,961
Less: accumulated depreciation
(2,961
)
Net property and equipment
0
Total assets
$
52,384
LIABILITIES AND STOCKHOLDERS' DEFICIT LIABILITIES
Current liabilities:
Accounts payable and Accrued Expenses
$
387,378
Cash drawn in excess of bank balance
-
Accounts Payable Related Parties
422,904
Accrued Salaries
1,623,876
Notes Payable
33,144
Notes Payable – Related Parties
101,563
Convertible Notes Payable
591,500
Convertible Notes Payable – Related Parties
48,700
Discount on Convertible Debt
(194,370
)
Total liabilities
3,014,695
STOCKHOLDERS' DEFICIT
Common stock, $.001 par value, 75,000,000 shares authorized, 15,910,000  as of September 30, 2011
15,910
Additional paid-in capital
1,695,432
Deficit accumulated during the development stage
(4,673,653
)
Total stockholders' deficit
(2,962,311
)
Total liabilities and stockholders' deficit
$
52,384
The accompanying notes are an integral part
of these financial statements.
7
NanoTech Entertainment, Inc.
(A Development Stage Company)
Statements of Operations
(unaudited)
Three Months Ending
September 30, 2011
Revenues:
Sales, net
$
0
Less: costs of goods sold
(0
)
Gross profit
(0
)
Operating Expenses:
General and Administration Expense
9,956
Depreciation Expense
0
Payroll Expense
70,500
Professional Fees
35,000
Rent Expense
43,500
Other Income (Expenses)
Interest expense
(33,680
)
Net loss before income taxes
(192,636
)
Provision for income taxes
-
Net loss available to common stockholders
$
(192,636
)
The accompanying notes are an integral part
of these financial statements.
8
NanoTech Entertainment, Inc.
(A Development Stage Company)
Statement of Cash Flows
(unaudited)
Three Months Ended
September 30, 2011
Cash flows from operating activities:
Net loss
$
(192,636
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense
-
Amortization of debt discount
-
Common stock issued for finder fees
-
Common stock issued for services
-
Amortization of services prepaid with common stock
-
Interest on debt converted to common stock
-
Loss on disposal of fixed assets
-
Changes in operating assets and liabilities:
Decrease in accounts receivable
-
Decrease (increase) in inventory
-
Decrease in prepaid expenses
-
Decrease in prepaid expenses – related party
-
Increase in prepaid royalties
-
Increase in accounts payable
35,000
Increase in accrued liabilities – related party
43,500
Increase in accrued interest, convertible debentures
33,680
Increase in accrued interest, notes payable
6,250
Increase in accrued interest, notes payable – related party
3,087
Increase in royalties payable
-
Net cash used in operating activities
(9,583
)
Cash flows from financing activities:
Increase (decrease) in cash drawn in excess of bank balance
Proceeds from issuance of convertible debentures
10,000
Proceeds from issuance of common stock
-
Proceeds from notes payable – related party
-
Repayment of notes payable – related party
-
Proceeds from notes payable
-
Net cash provided by financing activities
10,000
Increase (decrease) in cash
417
Cash, beginning of period
43
Cash, end of period
$
460
9
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited Financial Statements
Three Months Ended September 30, 2011
A.
ORGANIZATION
NanoTech Entertainment, Inc.
("NEI") was incorporated under the laws of the state of Nevada on November 13, 2007. The Company operates as a virtual
manufacturer, developing technology and games, and then licensing such products to third parties for manufacturing and ultimate
distribution.
DEVELOPMENT STAGE COMPANY
The Company is considered to
be in the development stage as defined in Statement of Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) Topic No. 915. The Company's efforts have been devoted primarily to raising capital, borrowing funds and attempting
to implement its planned, principal activities.
B.
SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of the Company's
financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The Company's periodic filings with the Securities and Exchange Commission include, where
applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future
operations of the Company.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include
cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception,
which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant
risk of loss in value. The Company's cash balance totaled $460 as of September 30, 2011.
10
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited Financial Statements
Three Months Ended September 30, 2011
B.
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
INVENTORY
The Company's inventory
is stated at the lower of cost or market using the FIFO costing method. Inventory on hand totaled $11,924 at September 30, 2011
and consisted components and finished goods gaming equipment available and ready for sale.
PROPERTY AND EQUIPMENT
The Company's property
and equipment is comprised of office and computer equipment, which are stated at cost. Depreciation is calculated over the estimated
useful lives ranging from 3 to 7 years using the straight – line method. The Company is in the development stage and has
only acquired $2,961 in fixed assets since inception, which had accumulated depreciation of $2,961 at September 30, 2011.
REVENUE RECOGNITION
Revenues for gaming equipment
sales are recognized when risks associated with ownership have passed to unaffiliated customers, and when all criteria of ASB Topic
No. 605 (SAB Topic 13) have been met. Typically, this occurs when finished products are shipped.
11
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited Financial Statements
Three Months Ended September 30, 2011
B.
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
RECENTLY-ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2009 the FASB established
the Accounting Standards Codification ("Codification" or "ASC") as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with
generally accepted accounting principles in the United States ("GAAP"). Rules and interpretive releases of the Securities
and Exchange Commission ("SEC") issued under authority of federal securities laws are also sources of GAAP for SEC registrants.
Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial
statements. The ASC does change the way the guidance is organized and presented.
Statement of Financial Accounting
Standards ("SFAS") SFAS No. 165 (ASC Topic 855),
"Subsequent Events,"
SFAS No. 166 (ASC Topic 810),
"Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140,"
SFAS No. 167 (ASC Topic
810),
"Amendments to FASB Interpretation No. 46(R),"
and SFAS No. 168 (ASC Topic 105),
"The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162,"
were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial
statements would not have been significant.
Accounting Standards Update ("ASU")
ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC Topic 605),
Multiple-Deliverable Revenue Arrangements
, ASU No. 2009-14 (ASC Topic 985),
Certain Revenue Arrangements that include
Software Elements
, and various other ASU's No. 2009-2 through ASU No. 2010-18 which contain technical corrections to existing
guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability
to the Company or their effect on the financial statements would not have been significant.
C.
RELATED PARTY TRANSACTIONS
The Company pays rent expense
to one founder pursuant to long-term rent agreements (see Note N) for the use of property for business purposes. The amounts incurred
by the Company and paid to the related parties for rent for the period ended September 30, 2011 totaled $43,500. This amount has
been recorded in selling, general and administrative expenses for the same period.
12
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited Financial Statements
Three Months Ended September 30, 2011
C.
RELATED PARTY TRANSACTIONS (CONT'D)
Several of the Company's
current and former officers and their affiliates have provided funding in the form of notes payable, totaling $101,563. The notes
carry interest rates ranging from 14% to 20%, resulting in interest expense of $4,291 for the period ended September 30, 2011.
The notes are due on demand and therefore classified as current liabilities. Interest has not been imputed due to its immaterial
impact on the financial statements.
The Company has employment agreements
with one if its remaining founders, David Foley, who, as part of the employment agreement has provided the gaming properties and
intellectual property being used by the company for the core of its product offerings.. The Annual salary has been adjusted and
is payable in the form of $210,000 in cash and 2,250,000 in stock.
The salaries have been accrued
and will be paid as cash flows allow. Interest has not been imputed due to its immaterial impact on the financial statements.
The Company has incurred liabilities
in the ordinary course of business with several individuals and entities affiliated with the Company. These amounts totaled $45,421
at September 30, 2011. Interest has not been imputed due to its immaterial impact on the financial statements.
D.
NOTES PAYABLE
The Company has originated the
following notes payable with unaffiliated entities and individuals:
Principal
Interest
September 30,
2011
2011
Note 1, 10% interest, due April 30, 2011
$
250,000
$
6,250
Note 2, 20% interest, due on demand
25,000
1,250
Note 3, 20% interest, due on demand
5,000
250
Totals
280,000
$
7,750
The notes are interest payments
only, with principal and accrued interest payable upon maturity or demand, as indicated above.
13
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited Financial Statements
Three Months Ended September 30, 2011
E.
STOCKHOLDERS' DEFICIT
The Company has authorized 75,000,000 shares
of common stock with a par value of $.001, and no preferred stock. As of September 30, 2011 the total shares issued and outstanding
was 15,910,000. No additional share issuances occurred during the quarter ended September 30, 2011.
F.
CONVERTIBLE DEBENTURES
During period ending September
30, 2011, the Company issued convertible debentures bearing interest of 30% with terms of two to three years.  The debenture
principle and accrued interest may be converted into shares of the Company's common stock at a conversion price at a discount
of up to 60% of the three lowest closing bid prices during the ten days prior to conversion.  During the period ended
September 30, 2011, the Company issued debentures totaling $10,000 (convertible into potentially 428,995 shares of common stock
based on a conversion rate on September 30, 2011). The fair market value of the stock on the convertible debenture issuance dates
was $.04
14
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited Financial Statements
Three Months Ended September 30, 2011
F.
n/a
G.
INCOME TAXES
The Company recognizes the tax
effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported
for tax purposes. Deferred taxes are provided in the financial statements under ASC Topic No. 740 to give effect to the resulting
temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up
costs based on the income taxes expected to be payable in future years.
H.
GOING CONCERN CONSIDERATIONS
The Company's financial
statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. During the
period ended September 30, 2011, the Company incurred net losses totaling $192,636 resulting in an accumulated deficit of $4,673,653
at September 30, 2011. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. The
Company's ability to meet its ongoing financial requirements is dependent on management being able to obtain additional equity
and/or debt financing, the realization of which is not assured.
I.
ROYALTIES
The Company has entered into
several licensing agreements whereby the Company licenses certain gaming software from various developers. The Company is responsible
for paying royalties to the developers based on product sales. In the event that no product is sold, the Company is also required
to pay a minimum royalty in order to maintain exclusivity (i.e., the developer cannot license the same software to the Company's
competitors). Certain developers also require prepayment of royalties that are either offset by future sales, or expire at the
end of a calendar year - at which point they are expensed. No sales of the licensed products had occurred during the period ending
September 30, 2011.
J.
SUBSEQUENT EVENTS
n/a
K.
SUBSEQUENT EVENTS (CONT'D)
n/a
15
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited Financial Statements
Three Months Ended September 30, 2011
N.
COMMITMENTS AND CONTINGENCIES
The
Company has previously entered into a rental contracts with one of the founders for use of storage facilities, offices, development
labs, and utilities for the Company's operations, production, research and development, sales, and marketing. The Contract
requires $16,400 in monthly payments (plus other related minimal costs) to over the Contracts' extended term of December
1, 2007 through November 30, 2013. The Contracts are cancellable with a 15-day advance notice only if all security interest has
been removed and there are no liens on the properties for loans to the Company in effect.
The amounts incurred by the Company
and paid for rent for the periods ended September 30, 2011 totaled $43,500. This amount has been recorded in selling, general and
administrative expenses for the same period (see Note C).
Future minimum rental payments for the remaining
life of the Contracts are as follow:
Year Ended June 30,
2012
87,000
Total
$
87,000
16
Item 9 Changes In and Disagreements
with Accountants on Accounting and Financial Disclosure
None.
Item 9A. –Controls and Procedures
Disclosure Controls and Procedures
Under the supervision and with the participation
of our management, including our principal executive and financial officer, we have conducted an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, the board of directors, concluded
as of the evaluation date that our disclosure controls and procedures are effective such that the material information required
to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms relating to our company,  and was made known to us by others within those entities,
particularly during the period when this report was being prepared. It has been determined that the company must set aside appropriate
funds each quarter in order to ensure timely payments to auditors and subsequent timely filings. We have since been delisted to
the Pink Sheets due to our inability to timely file our reports under the Securities Exchange Act of 1934, we have replaced certain
officers of the Company which were responsible for our budgets and filings, and have identified and hired the appropriate staff
and outside consultants that will enable us to meet future filing requirements.
Management's Annual Report on
Internal Control Over Financial Reporting.
The management of the Company is responsible
for establishing and maintaining adequate internal control over financial reporting. The internal control process has been designed,
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
the Company's financial statements for external reporting purposes in accordance with accounting principles generally accepted
in the United States of America.
Management conducted an assessment of the
effectiveness of the Company's internal control over financial reporting as of September 30, 2011, including (i) the control
environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring, based on the
framework in
Internal Control – Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO"). As of September 30, 2011, management has determined that the Company's internal control
over financial reporting as of September 30, 2011 was effective.
We are only limited by the lack of funding in order
to meet the ongoing SEC reporting obligations.
Our internal control over financial reporting
includes policies and procedures that pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail,
transactions and dispositions of assets; and provide reasonable assurances that: (1) transactions are recorded as necessary to
permit preparation of financial statements in accordance with accounting principles generally accepted in the United States; (2)
receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company;
and (3) unauthorized acquisitions, use, or disposition of the Company's assets that could have a material effect on the Company's
financial statements are prevented or timely detected.
All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparations and presentations. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
17
Changes in Internal Control Over Financial
Reporting.
There were no significant changes in our
internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date.
Item 9B. Other Information
No items required to be reported on Form
8-K during the fourth quarter of the year covered by this report were not previously reported on Form 8-K.
18
PART III
Item 10. Directors, Executive Officers,
and Corporate Governance.
Set forth below is the name and age of
each individual who was a director or executive officer of NanoTech Entertainment, Inc. as of September 30, 2011, together with
all positions and offices of the Company held by each and the term of office and the period during which each has served:
NAME
AGE
POSITION
DATES SERVED
David R. Foley
45
President, Treasurer, Secretary and Director
November 2010 to January 2012
Biographical Information
The following paragraphs set forth brief biographical information
for the aforementioned director and executive officer:
David R. Foley - President, Secretary,
Treasurer, and Director
- David R. Foley is an entrepreneur with an extensive background in software and hardware development.
He has designed and patented several award-winning games and innovative technology in the past 20 years. David began his career
in software development where he modernized the front office of the Boston Celtics, designing and building automated systems for
all facets of the team's operations from Press Management to Scouting, as well as helping implement a digital scoring system.
Software that he and a college friend had developed was sold to Ashton Tate to become a core part of dBase IV. He built Foley Hi-Tech
Systems, a video game development studio that developed games for the Sega Genesis and Super Nintendo and delivered multi-million
dollar selling games including hits like SpiderMan vs. Kingpin, Taz-Mania and Urban Strike to publishers including Sega and Electronic
Arts. Foley also founded HyperWare, and built a product line of hardware and software products for the Arcade Industry. Foley was
asked to speak at several trade shows on behalf of Intel to help push the ArcadePC initiative, for which Foley had developed several
key pieces of technology. Foley also designed and built the Sega Tournament Network connecting players from around the world to
compete on the Sega hit arcade game, Daytona 2. Foley became the VP of Engineering at Quantum3D, and helped grow the Arcade Division
to several million dollars in sales. Foley designed the patented Quicksilver II and Graphite systems which were used by major arcade
industry companies including Atari, Midway and Sega. Foley invented the UltraCade multi-game system, acquired the rights to the
IP and founded UltraCade Technologies. UltraCade Technologies released a home version of its flagship product, branded as Arcade
Legends and sold through retail outlets such as Hammacher Schlemmer, Costco and SkyMall catalog. Foley's innovative designs won
him two consecutive industries awards for Innovation of the Year in 2005 and 2006. In 2005 Foley was named #48 in the Entrepreneur
Magazines Hot 100 issue. Foley branched into the casino gaming market creating, designing, developing and licensing unique game
concepts to Bally Technologies and others. His first casino gaming design, Peek-A-Boo video poker, won the 2007 Most Innovative
Game award from Bally Technologies. David has been interviewed on several national media outlets including NBC & ESPN. He continues
to design and patent ground breaking games and technology leading NanoTech's development staff.
Compliance with Section 16(a) of the Exchange Act
Because we do not have a class of equity
securities registered pursuant to Section 12 of the Exchange Act, our executive officers, directors and persons who beneficially
own more than 10% of our common stock are not required to file initial reports of ownership and reports of changes in ownership
with the SEC under Section 16(a) of the Exchange Act.
19
Audit Committee and Audit Committee Financial Expert Disclosure
The Company's Board of Directors
does not have a separately designated audit committee or an "audit committee financial expert." Audit committee functions
are performed by our Board of Directors. None of our directors is deemed independent. All directors also hold positions as our
officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures
for the receipt, retention and treatment of complaints regarding accounting, internal controls, and auditing matters; (3) establishing
procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4)
engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.
The Board of Directors does not have an
audit committee financial expert at this time due to the fact that the Company has only limited operations and no revenues.  We
believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our limited operations,
we believe the services of a financial expert are not warranted.
Code of Ethics
We have adopted a corporate code of ethics.
We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full,
fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting
of code violations; and provide accountability for adherence to the code.
Item 11.  Executive Compensation
(a) A majority of the Intellectual Property
was acquired by the Company in the form of an employment agreement whereby one of the original founders, David R. Foley, assigned
the rights to his substantial intellectual property po4rtfolio in return for the compensation outlined in his employment agreement. 
To date, Mr. Foley has not been compensated under the terms of his agreement. The Company intends on offering stock in lieu
of the past due compensation, and paying the compensation moving forward. There is currently accrued compensation due as of September
30, 2011 totaling $1,605,876.
(b) There are no annuity, pension, or retirement
benefits proposed to be paid to officers, directors, or employees of the Corporation in the event of retirement at normal retirement
date pursuant to any presently existing plan provided or contributed to by the Corporation.
(c) The currently are employment agreements
with one of the founders of the Company. The terms of these employment agreements are as follows:
·
David R. Foley's current compensation through calendar year-end
2012 is $210,000 USD per annum. Currently, Mr. Foley's salary is accruing on a monthly basis.
Director Compensation
The Directors of the Company do not receive compensation at
this time.
Item 12 - Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth the beneficial
ownership of the Company's officers, directors, and persons who own more than five percent of the Company's common stock as of
September 30, 2011. Under relevant provisions of the Exchange Act, a person is deemed to be a "beneficial owner" of a
security if he or she has or shares the power to vote or direct the voting of the security or the power to dispose or direct the
disposition of the security. A person is also deemed to be a beneficial owner of any securities of which that person has the right
to acquire beneficial ownership in 60 days. More than one person may be deemed to be a beneficial owner of the same securities.
The percentage ownership of each stockholder is calculated based on 15,910,000 total outstanding shares of our common stock as
of September 30, 2011.
Amount and Nature of Beneficial Ownership
as of September 30, 2011:
20
Name of Individual
# Shares Beneficially Owned
# of Class of Common
Stock (1)
Robert Dekett
President, Treasurer, Secretary and Director
PO Box 50729
Henderson, Nevada 89016
3,000,000
18.9
%
Ted D. Campbell II
Chief Compliance Officer
PO Box 240
Jenks, Oklahoma 74037
0
0.00
%
David R. Foley
311 Santa Rosa Drive
Los Gatos, California 95032
3,000,000
18.9
%
Greenleaf Forum Investments
Kevin Murphy, President
1174 Manitou Drive NW
Fox Island, WA 98333
1,300,000
8.2
%
T
akashi and Keiko Yoshida
59 Preston Road
Woodside, CA 94062
1,000,000
6.3
%
Alan Tolson
Skiddaw View Sandale
Bolton Gate, Cumbria CA5 1DE
UK
1,500,000
9.4
%
21
Item 13 – Certain Relationships
and Related Transactions, Director Independence
The Company pays rent expense to one founder
for the use of property for business purposes. The amounts to be paid to the Company's founder for rent for the period ended
September 30, 2011 totaled $43,500. These amounts have been recorded in selling, general and administrative expenses for the same
periods.
22
Item 14 – Principal Accountant
Fees and Services
Audit Fees:
All fees billed for
each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's
annual financial statements and the review of interim financial statements or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements for those fiscal years.
2010-2011:	$35,000
2009: $40,000
2008:	$ 8,800
Audit-Related Fees
: All fees billed
in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related
to the performance of the audit or review of the registrant's financial statements and are not reported under Item 9(e)(f1) of
Schedule 14A.
2010-2011: $14,500
2009: $1,750
2008:	 $ 0
Tax Fees
: The aggregate fees billed
in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice,
and tax planning:
2010-2011: $0
2009: $ 3,000
2008: $ 0
All Other Fees
:
2010-2011: $0
2009:	 $ 0
2008: $ 0
(5)   Our audit committee's
pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee
pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.
(6)   The percentage of hours
expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed
to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.
23
PART IV
Item 15 – Exhibits, Financial
Statement Schedules
The following exhibits are included with this filing:
Exhibit
    No.:
Description:
3.1(i)
Articles of Incorporation and amendments thereto
(1) and
    (2)
3.1(ii)
Bylaws
(1)
14
Code of Ethics
(1)
31.1
Section 302 Certification by Principal Executive Officer and
    Principal Financial and Accounting Officer
(1)
32.1
Section 906 Certification by
Principal
    Executive Officer and Principal Financial and Accounting Officer
(1)
(1)
Filed with the Securities and Exchange Commission on February 12, 2008 as an exhibit numbered as
indicated above, to the Registrant's registration statement on Form S-1 (file no. 333-149184 which exhibit is incorporated
herein by reference.
(2)
Amendment to the Article of Incorporation filed with the Securities and Exchange Commission on
Form 8-K on May 7, 2009 which exhibit is incorporated herein by reference.
24
9.1 – Financial Information Forming
Basis for 10Q for period ending December 31, 2011.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING
STATEMENTS
All readers of this document and any document
incorporated by reference herein are advised that this document and documents incorporated by reference into this document contain
forward-looking statements and statements of historical facts. Forward-looking statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially for those indicated by the forward-looking statements. Examples of forward-looking
statements include, but are not limited to (i) revenue projections, income (loss), earnings (loss) per share, capital expenditures,
dividends, capital structure and other financial items, (ii) statements of the plans and objectives of the Company or its management
or Board of Directors, including the introduction of new products, or estimates or predictions with regards to customers, suppliers,
competitors or regulatory authorities, (iii) statements of future performance, and (iv) statements of assumptions underlying other
statements about the Company or its business.
This document and all documents incorporated
herein by reference also identify factors which could cause actual results to differ materially from those indicated by the forward-looking
statements. Please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations"
and "Risk Factors."
The cautions outlined made in this statement
and elsewhere in this document should not be construed as complete or exhaustive. In many cases, we cannot predict factors which
could cause results to differ materially from those indicated by the forward-looking statements. Additionally, many items or factors
that could cause actual results to differ materially from forward-looking statements are beyond our ability to control. The Company
will not undertake an obligation to further update or change any forward-looking statement, whether as a result of new information,
future developments, or otherwise.
25
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared
in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and
Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto
contained in the Company's June 30, 2011 Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have
been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be
expected for the full year.
26
NanoTech Entertainment, Inc.
(A Development Stage Company)
Balance Sheet
December 31,
2011
(unaudited)
ASSETS
Current assets:
Cash
$
212
Inventory
11,924
Prepaid expenses
-
Prepaid royalties
40,000
Total current assets
52,137
Property and equipment (Note B)
2,961
Less: accumulated depreciation
(2,961
)
Net property and equipment
0
Total assets
$
52,137
LIABILITIES AND STOCKHOLDERS' DEFICIT LIABILITIES
Current liabilities:
Accounts payable and Accrued Expenses
$
388,170
Cash drawn in excess of bank balance
-
Accounts Payable Related Parties
462, 329
Accrued Salaries
1,694,376
Notes Payable
33,144
Notes Payable – Related Parties
101,563
Convertible Notes Payable
597,000
Convertible Notes Payable – Related Parties
48,700
Discount on Convertible Debt
(197,670
)
Total liabilities
3,127,612
STOCKHOLDERS' DEFICIT
Common stock, $.001 par value, 75,000,000 shares authorized, 15,910,000  as of September 30, 2011
15,910
Additional paid-in capital
1,700,932
Deficit accumulated during the development stage
(4,792,317
)
Total stockholders' deficit
(3,075,475
)
Total liabilities and stockholders' deficit
$
52,137
The accompanying notes are an integral part
of these financial statements.
27
NanoTech Entertainment, Inc.
(A Development Stage Company)
Statements of Operations
(unaudited)
Three Months Ending
December 31, 2011
Revenues:
Sales, net
$
0
Less: costs of goods sold
(0
)
Gross profit
(0
)
Operating Expenses:
General and Administration Expense
8,188
Depreciation Expense
0
Payroll Expense
70,500
Professional Fees
0
Rent Expense
43,500
Other Income (Expenses)
Interest expense
(34,068
)
Net loss before income taxes
(156,255
)
Provision for income taxes
-
Net loss available to common stockholders
$
(156,255
)
The accompanying notes are an integral part
of these financial statements.
28
NanoTech Entertainment, Inc.
(A Development Stage Company)
Statement of Cash Flows
(unaudited)
Three Months Ended
December 31, 2011
Cash flows from operating activities:
Net loss
$
(156,255
)
Adjustments to reconcile net loss to net cash used in operating activities:
-
Depreciation expense
-
Amortization of debt discount
-
Common stock issued for finder fees
-
Common stock issued for services
-
Amortization of services prepaid with common stock
-
Interest on debt converted to common stock
-
Loss on disposal of fixed assets
-
Changes in operating assets and liabilities:
Decrease in accounts receivable
-
Decrease (increase) in inventory
-
Decrease in prepaid expenses
-
Decrease in prepaid expenses – related party
-
Increase in prepaid royalties
-
Increase in accounts payable
-
Increase in accrued liabilities – related party
43,500
Increase in accrued interest, convertible debentures
34,068
Increase in accrued interest, notes payable
6,250
Increase in accrued interest, notes payable – related party
3,087
Increase in royalties payable
-
Net cash used in operating activities
(15,748
)
Cash flows from financing activities:
Increase (decrease) in cash drawn in excess of bank balance
Proceeds from issuance of convertible debentures
15,500
Proceeds from issuance of common stock
-
Proceeds from notes payable – related party
-
Repayment of notes payable – related party
-
Proceeds from notes payable
-
Net cash provided by financing activities
15,500
Increase (decrease) in cash
(248
)
Cash, beginning of period
460
Cash, end of period
$
212
29
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited
Financial Statements
Three Months Ended December 31, 2011
D.
ORGANIZATION
NanoTech Entertainment, Inc.
("NEI") was incorporated under the laws of the state of Nevada on November 13,
2007. The Company operates as
a virtual manufacturer, developing technology and games, and then licensing
such products to third parties
for manufacturing and ultimate distribution.
DEVELOPMENT STAGE COMPANY
The Company is considered to
be in the development stage as defined in Statement of Financial Accounting
Standards Board (FASB) Accounting
Standards Codification (ASC) Topic No. 915. The Company's efforts have
been devoted primarily to raising
capital, borrowing funds and attempting to implement its planned, principal
activities.
E.
SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of the Company's
financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The Company's periodic filings with the Securities and Exchange Commission include, where
applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future
operations of the Company.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include
cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception,
which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant
risk of loss in value. The Company's cash balance totaled $212 as of December 31, 2011.
30
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited
Financial Statements
Three Months Ended December 31, 2011
C.
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
INVENTORY
The Company's inventory
is stated at the lower of cost or market using the FIFO costing method. Inventory on hand totaled $11,924 at December 31, 2011
and consisted components and finished goods gaming equipment available and ready for sale.
PROPERTY AND EQUIPMENT
The Company's property
and equipment is comprised of office and computer equipment, which are stated at cost. Depreciation is calculated over the estimated
useful lives ranging from 3 to 7 years using the straight – line method. The Company is in the development stage and has
only acquired $2,961 in fixed assets since inception, which had accumulated depreciation of $2,961 at December 31, 2011.
REVENUE RECOGNITION
Revenues for gaming equipment
sales are recognized when risks associated with ownership have passed to unaffiliated customers, and when all criteria of ASB Topic
No. 605 (SAB Topic 13) have been met. Typically, this occurs when finished products are shipped.
31
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited Financial Statements
Three Months Ended December 31, 2011
G.
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
RECENTLY-ISSUED ACCOUNTING
PRONOUNCEMENTS
In June 2009 the FASB established
the Accounting Standards Codification ("Codification" or "ASC") as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with
generally accepted accounting principles in the United States ("GAAP"). Rules and interpretive releases of the Securities
and Exchange Commission ("SEC") issued under authority of federal securities laws are also sources of GAAP for SEC registrants.
Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial
statements. The ASC does change the way the guidance is organized and presented.
Statement of Financial Accounting
Standards ("SFAS") SFAS No. 165 (ASC Topic 855),
"Subsequent Events,"
SFAS No. 166 (ASC Topic 810),
"Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140,"
SFAS No. 167 (ASC Topic
810),
"Amendments to FASB Interpretation No. 46(R),"
and SFAS No. 168 (ASC Topic 105),
"The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162,"
were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial
statements would not have been significant.
Accounting Standards Update ("ASU")
ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC Topic 605),
Multiple-Deliverable Revenue Arrangements
, ASU No. 2009-14 (ASC Topic 985),
Certain Revenue Arrangements that include
Software Elements
, and various other ASU's No. 2009-2 through ASU No. 2010-18 which contain technical corrections to existing
guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability
to the Company or their effect on the financial statements would not have been significant.
F.
RELATED PARTY TRANSACTIONS
The Company pays rent expense
to one founder pursuant to long-term rent agreements (see Note N) for the use of property for business purposes. The amounts incurred
by the Company and paid to the related parties for rent for the period ended December 31, 2011 totaled $43,500. This amount has
been recorded in selling, general and administrative expenses for the same period.
32
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited Financial Statements
Three Months Ended December 31, 2011
H.
RELATED PARTY TRANSACTIONS (CONT'D)
Several of the Company's
current and former officers and their affiliates have provided funding in the form of notes payable, totaling $101,563. The notes
carry interest rates ranging from 14% to 20%, resulting in interest expense of $4,291 for the period ended December 31, 2011. The
notes are due on demand and therefore classified as current liabilities. Interest has not been imputed due to its immaterial impact
on the financial statements.
The Company has employment agreements
with one if its remaining founders, David Foley, who, as part of the employment agreement has provided the gaming properties and
intellectual property being used by the company for the core of its product offerings.. The Annual salary has been adjusted and
is payable in the form of $210,000 in cash and 2,250,000 in stock.
The salaries have been accrued
and will be paid as cash flows allow. Interest has not been imputed due to its immaterial impact on the financial statements.
The Company has incurred liabilities
in the ordinary course of business with several individuals and entities affiliated with the Company. These amounts totaled $39,424.49
at December 31, 2011. Interest has not been imputed due to its immaterial impact on the financial statements.
I.
NOTES PAYABLE
The Company has originated the
following notes payable with unaffiliated entities and individuals:
Principal
Interest
December,
2011
2011
Note 1, 10% interest, due April 30, 2011
$
250,000
$
6,250
Note 2, 20% interest, due on demand
25,000
1,250
Note 3, 20% interest, due on demand
5,000
250
Totals
280,000
$
7,750
The notes are interest payments
only, with principal and accrued interest payable upon maturity or demand, as indicated above.
33
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited Financial Statements
Three Months Ended December 31, 2011
J.
STOCKHOLDERS' DEFICIT
The Company has authorized 75,000,000 shares
of common stock with a par value of $.001, and no preferred stock. As of September 30, 2011 the total shares issued and outstanding
was 15,910,000. No additional share issuances occurred during the quarter ended December 31, 2011.
K.
CONVERTIBLE DEBENTURES
During period ending December
31, 2011, the Company issued convertible debentures bearing interest of 30% with terms of two to three years.  The debenture
principle and accrued interest may be converted into shares of the Company's common stock at a conversion price at a discount
of up to 60% of the three lowest closing bid prices during the ten days prior to conversion.  During the period ended
December 31, 2011, the Company issued debentures totaling $15,000 (convertible into potentially 693,008 shares of common stock
based on a conversion rate on December 31, 2011). The fair market value of the stock on the convertible debenture issuance dates
was $.04
34
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited
Financial Statements
Three Months Ended December 31, 2011
H.
n/a
I.
INCOME TAXES
The Company recognizes the tax
effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported
for tax purposes. Deferred taxes are provided in the financial statements under ASC Topic No. 740 to give effect to the resulting
temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up
costs based on the income taxes expected to be payable in future years.
L.
GOING CONCERN CONSIDERATIONS
The Company's financial
statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. During the
period ended December 31, 2011, the Company incurred net losses totaling $156,255 resulting in an accumulated deficit of $4,792,317
at December 31, 2011. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. The
Company's ability to meet its ongoing financial requirements is dependent on management being able to obtain additional equity
and/or debt financing, the realization of which is not assured.
M.
ROYALTIES
The Company has entered into
several licensing agreements whereby the Company licenses certain gaming software from various developers. The Company is responsible
for paying royalties to the developers based on product sales. In the event that no product is sold, the Company is also required
to pay a minimum royalty in order to maintain exclusivity (i.e., the developer cannot license the same software to the Company's
competitors). Certain developers also require prepayment of royalties that are either offset by future sales, or expire at the
end of a calendar year - at which point they are expensed. No sales of the licensed products had occurred during the period ending
September 30, 2011.
N.
SUBSEQUENT EVENTS
n/a
O.
SUBSEQUENT EVENTS (CONT'D)
n/a
35
NanoTech Entertainment, Inc.
(A Development Stage Company)
Notes to Unaudited
Financial Statements
Three Months Ended December 31, 2011
N. COMMITMENTS AND CONTINGENCIES
The
Company has previously entered into a rental contracts with one of the founders for use of storage facilities, offices, development
labs, and utilities for the Company's operations, production, research and development, sales, and marketing. The Contract
requires $16,400 in monthly payments (plus other related minimal costs) to over the Contracts' extended term of December
1, 2007 through November 30, 2013. The Contracts are cancellable with a 15-day advance notice only if all security interest has
been removed and there are no liens on the properties for loans to the Company in effect.
The amounts incurred by the Company
and paid for rent for the periods ended December 31, 2011 totaled $43,500. This amount has been recorded in selling, general and
administrative expenses for the same period (see Note C).
Future minimum rental payments for the remaining
life of the Contracts are as follow:
Year Ended June 30,
2012
87,000
Total
$
87,000
36
Item 9 Changes In and Disagreements
with Accountants on Accounting and Financial Disclosure
None.
Item 9A. –Controls and Procedures
Disclosure Controls and Procedures
Under the supervision and with the participation
of our management, including our principal executive and financial officer, we have conducted an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, the board of directors, concluded
as of the evaluation date that our disclosure controls and procedures are effective such that the material information required
to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms relating to our company,  and was made known to us by others within those entities,
particularly during the period when this report was being prepared. It has been determined that the company must set aside appropriate
funds each quarter in order to ensure timely payments to auditors and subsequent timely filings. We have since been delisted to
the Pink Sheets due to our inability to timely file our reports under the Securities Exchange Act of 1934, we have replaced certain
officers of the Company which were responsible for our budgets and filings, and have identified and hired the appropriate staff
and outside consultants that will enable us to meet future filing requirements.
Management's Annual Report on
Internal Control Over Financial Reporting.
The management of the Company is responsible
for establishing and maintaining adequate internal control over financial reporting. The internal control process has been designed,
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
the Company's financial statements for external reporting purposes in accordance with accounting principles generally accepted
in the United States of America.
Management conducted an assessment of the
effectiveness of the Company's internal control over financial reporting as of December 31, 2011, including (i) the control
environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring, based on the
framework in
Internal Control – Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO"). As of September 30, 2011, management has determined that the Company's internal control
over financial reporting as of December 31, 2011 was effective.
We are only limited by the lack of funding in order
to meet the ongoing SEC reporting obligations.
Our internal control over financial reporting
includes policies and procedures that pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail,
transactions and dispositions of assets; and provide reasonable assurances that: (1) transactions are recorded as necessary to
permit preparation of financial statements in accordance with accounting principles generally accepted in the United States; (2)
receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company;
and (3) unauthorized acquisitions, use, or disposition of the Company's assets that could have a material effect on the Company's
financial statements are prevented or timely detected.
All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparations and presentations. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
37
Changes in Internal Control Over Financial
Reporting.
There were no significant changes in our
internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date.
Item 9B. Other Information
No items required to be reported on Form
8-K during the fourth quarter of the year covered by this report were not previously reported on Form 8-K.
38
PART III
Item 10. Directors, Executive Officers,
and Corporate Governance.
Set forth below is the name and age of
each individual who was a director or executive officer of NanoTech Entertainment, Inc. as of December 31, 2011, together with
all positions and offices of the Company held by each and the term of office and the period during which each has served:
NAME
AGE
POSITION
DATES SERVED
David R. Foley
45
President, Treasurer, Secretary and Director
November 2010 to January 2012
Biographical Information
The following paragraphs set forth brief biographical information
for the aforementioned director and executive officer:
David R. Foley - President, Secretary,
Treasurer, and Director
- David R. Foley is an entrepreneur with an extensive background in software and hardware development.
He has designed and patented several award-winning games and innovative technology in the past 20 years. David began his career
in software development where he modernized the front office of the Boston Celtics, designing and building automated systems for
all facets of the team's operations from Press Management to Scouting, as well as helping implement a digital scoring system.
Software that he and a college friend had developed was sold to Ashton Tate to become a core part of dBase IV. He built Foley Hi-Tech
Systems, a video game development studio that developed games for the Sega Genesis and Super Nintendo and delivered multi-million
dollar selling games including hits like SpiderMan vs. Kingpin, Taz-Mania and Urban Strike to publishers including Sega and Electronic
Arts. Foley also founded HyperWare, and built a product line of hardware and software products for the Arcade Industry. Foley was
asked to speak at several trade shows on behalf of Intel to help push the ArcadePC initiative, for which Foley had developed several
key pieces of technology. Foley also designed and built the Sega Tournament Network connecting players from around the world to
compete on the Sega hit arcade game, Daytona 2. Foley became the VP of Engineering at Quantum3D, and helped grow the Arcade Division
to several million dollars in sales. Foley designed the patented Quicksilver II and Graphite systems which were used by major arcade
industry companies including Atari, Midway and Sega. Foley invented the UltraCade multi-game system, acquired the rights to the
IP and founded UltraCade Technologies. UltraCade Technologies released a home version of its flagship product, branded as Arcade
Legends and sold through retail outlets such as Hammacher Schlemmer, Costco and SkyMall catalog. Foley's innovative designs won
him two consecutive industries awards for Innovation of the Year in 2005 and 2006. In 2005 Foley was named #48 in the Entrepreneur
Magazines Hot 100 issue. Foley branched into the casino gaming market creating, designing, developing and licensing unique game
concepts to Bally Technologies and others. His first casino gaming design, Peek-A-Boo video poker, won the 2007 Most Innovative
Game award from Bally Technologies. David has been interviewed on several national media outlets including NBC & ESPN. He continues
to design and patent ground breaking games and technology leading NanoTech's development staff.
Compliance with Section 16(a) of the Exchange Act
Because we do not have a class of equity
securities registered pursuant to Section 12 of the Exchange Act, our executive officers, directors and persons who beneficially
own more than 10% of our common stock are not required to file initial reports of ownership and reports of changes in ownership
with the SEC under Section 16(a) of the Exchange Act.
39
Audit Committee and Audit Committee Financial Expert Disclosure
The Company's Board of Directors
does not have a separately designated audit committee or an "audit committee financial expert." Audit committee functions
are performed by our Board of Directors. None of our directors is deemed independent. All directors also hold positions as our
officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures
for the receipt, retention and treatment of complaints regarding accounting, internal controls, and auditing matters; (3) establishing
procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4)
engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.
The Board of Directors does not have an
audit committee financial expert at this time due to the fact that the Company has only limited operations and no revenues.  We
believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our limited operations,
we believe the services of a financial expert are not warranted.
Code of Ethics
We have adopted a corporate code of ethics.
We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full,
fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting
of code violations; and provide accountability for adherence to the code.
Item 11.  Executive Compensation
(a) A majority of the Intellectual Property
was acquired by the Company in the form of an employment agreement whereby one of the original founders, David R. Foley, assigned
the rights to his substantial intellectual property po4rtfolio in return for the compensation outlined in his employment agreement. 
To date, Mr. Foley has not been compensated under the terms of his agreement. The Company intends on offering stock in lieu
of the past due compensation, and paying the compensation moving forward. There is currently accrued compensation due as of December
31, 2011 totaling $1,658,376.
(b) There are no annuity, pension, or retirement
benefits proposed to be paid to officers, directors, or employees of the Corporation in the event of retirement at normal retirement
date pursuant to any presently existing plan provided or contributed to by the Corporation.
(c) The currently are employment agreements
with one of the founders of the Company. The terms of these employment agreements are as follows:
·
David R. Foley's current compensation through calendar year-end 2012 is $210,000 USD per
annum. Currently, Mr. Foley's salary is accruing on a monthly basis.
Director Compensation
The Directors of the Company do not receive compensation at
this time.
Item 12 - Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth the beneficial
ownership of the Company's officers, directors, and persons who own more than five percent of the Company's common stock as of
December 31, 2011. Under relevant provisions of the Exchange Act, a person is deemed to be a "beneficial owner" of a
security if he or she has or shares the power to vote or direct the voting of the security or the power to dispose or direct the
disposition of the security. A person is also deemed to be a beneficial owner of any securities of which that person has the right
to acquire beneficial ownership in 60 days. More than one person may be deemed to be a beneficial owner of the same securities.
The percentage ownership of each stockholder is calculated based on 15,910,000 total outstanding shares of our common stock as
of December 31, 2011.
40
Amount and Nature of Beneficial Ownership
as of December 31, 2011:
Name of Individual
# Shares Beneficially Owned
# of Class of Common
Stock (1)
Robert Dekett
3,000,000
18.9%
President, Treasurer, Secretary and Director
PO Box 50729
Henderson, Nevada 89016
Ted D. Campbell II
0
0.00%
Chief Compliance Officer
PO Box 240
Jenks, Oklahoma 74037
David R. Foley
3,000,000
18.9%
311 Santa Rosa Drive
Los Gatos, California 95032
Greenleaf Forum Investments
1,300,000
8.2%
Kevin Murphy, President
1174 Manitou Drive NW
Fox Island, WA 98333
T
akashi and Keiko Yoshida
1,000,000
6.3%
59 Preston Road
Woodside, CA 94062
Alan Tolson
1,500,000
9.4%
Skiddaw View Sandale
Bolton Gate, Cumbria CA5 1DE
UK
41
Item 13 – Certain Relationships
and Related Transactions, Director Independence
The Company pays rent expense to one founder
for the use of property for business purposes. The amounts to be paid to the Company's founder for rent for the period ended
December 31, 2011 totaled $43,500. These amounts have been recorded in selling, general and administrative expenses for the same
periods.
42
Item 14 – Principal Accountant
Fees and Services
Audit Fees:
All fees billed for
each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's
annual financial statements and the review of interim financial statements or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements for those fiscal years.
2010-2011:	$35,000
2009: $40,000
2008:	$ 8,800
Audit-Related Fees
: All fees billed
in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related
to the performance of the audit or review of the registrant's financial statements and are not reported under Item 9(e)(f1) of
Schedule 14A.
2010-2011: $14,500
2009: $1,750
2008:	 $ 0
Tax Fees
: The aggregate fees billed
in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice,
and tax planning:
2010-2011: $0
2009: $ 3,000
2008: $ 0
All Other Fees
:
2010-2011: $0
2009:	 $ 0
2008: $ 0
(5)   Our audit committee's
pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee
pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.
(6)   The percentage of hours
expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed
to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.
43
PART IV
Item 15 – Exhibits, Financial
Statement Schedules
The following exhibits are included with this filing:
Exhibit
    No.:
Description:
3.1(i)
Articles of Incorporation and amendments thereto
(1) and
    (2)
3.1(ii)
Bylaws
(1)
14
Code of Ethics
(1)
31.1
Section 302 Certification by Principal Executive Officer and
    Principal Financial and Accounting Officer
(1)
32.1
Section 906 Certification by
Principal
    Executive Officer and Principal Financial and Accounting Officer
(1)
(3)
Filed with the Securities and Exchange Commission on February 12, 2008 as an exhibit numbered as
indicated above, to the Registrant's registration statement on Form S-1 (file no. 333-149184 which exhibit is incorporated
herein by reference.
(4)
Amendment to the Article of Incorporation filed with the Securities and Exchange Commission on
Form 8-K on May 7, 2009 which exhibit is incorporated herein by reference.
44
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
NanoTech Entertainment, Inc.
Date: March 15, 2012
/s/  Bruce Bean
By: Bruce Bean
Chairman
45