UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, 2010

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

For the transition period from _____ to ______

Commission file number 000-50468

Modern City Entertainment Inc.

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

Washington		98-0206033
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1815 Griffin Road, Suite 207 Ft. Lauderdale, FL. 33004		33322
(Address of principal executive offices)

(Former Address of principal executive offices)

(305) 970-4898

(Issuer’s telephone number)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act

Common stock, par value $0.0001 per share

(Title of Class)

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

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o
Non-accelerated filer o		Small Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act. Yes  No [X]

The aggregate market value of voting stock held by non-affiliates of the registrant on December 31, 2010 was approximately was approximately $230,520 based upon the price at which the common shares were purchased by the Company from existing shareholders in May 2008.

As of March 12, 2011, there were 23,051,993 shares of the Company’s common stock issued and outstanding.

Documents Incorporated by Reference: None

Transitional Small Business Disclosure Format (Check one): Yes No

-1-

TABLE OF CONTENTS

PART I
Item 1. Description of Business	4
Item 2. Description of Property	4
Item 3. Legal Proceedings	4

PART II
Item 5. Market for Common Equity and Related Stockholder Matters	5
Item 6. Selected Financial Data	5
Item 7. Management’s Discussion and Analysis or Plan of Operation	5
Item 7A. Quantitative and Qualitative Disclosure About Market Risk	7
Item 8. Financial Statements	8

PART III
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	25
Item 9A. Controls and Procedures	25
Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act	28
Item 11. Executive Compensation	29
Item 12. Security Ownership of Certain Beneficial Owners and Management and related Stockholder Matters	30
Item 13. Certain Relationships and Related Transactions	30
Item 14. Principal Accountant Fees and Services	31
Item 15. Exhibits	31

-2-

EXPLANATORY NOTE

This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about our industry, management beliefs, and assumptions made by management. Words such as “anticipates,” “expects,” “intends,” “plans,” ”believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results and outcomes may differ materially from what is expressed or forecasted in any such forward-looking statements.

Unless otherwise noted, references in this Form 10-K to “MCE” the “Company,” “we,” “our” or “us” means Modern City Entertainment, Inc., a Washington corporation.

FORWARD LOOKING STATEMENTS

There are statements in this registration statement that are not historical facts. These “forward-looking statements” can be identified by use of terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions. You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. For a discussion of these risks, you should read this entire Registration Statement carefully. Although management believes that the assumptions underlying the forward looking statements included in this Registration Statement are reasonable, they do not guarantee our future performance, and actual results could differ from those contemplated by these forward looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this Registration Statement will in fact transpire. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We do not undertake any obligation to update or revise any forward-looking statements.

-3-

PART I

Item 1. Description of Business

Modern City Entertainment Inc. (formerly Azul Studios International Inc.) (the “Company”) was incorporated on September 23, 1996 under the laws of the state of Texas. In July 1999 the Company changed its jurisdiction to the State of Washington through a merger agreement with Realty Technologies Inc. (RTI). That business was subsequently renamed to Equinta Corp and the business was sold. The Company then changed the name of the Company to eCourier Corps Inc. (ECC) and commenced the development of a business model in the courier business which was subsequently abandoned. In December 2004, the Board of Directors of the Company were presented with a business plan and opportunity to acquire all right, title and interest to a business plan by the name of Azul Studios. In April 2004 the Board of Directors revised and approved the business plan, and commenced operations with limited success under the name “Azul Studios International Inc.”

On February 28, 2007, Modern City Entertainment Inc. (formerly Azul Studios International Inc.) entered into an agreement for the acquisition of Modern City Entertainment LLC (“MCE”), a Miami based development stage independent movie Company, which is in the business of acquiring, producing and distributing feature films internationally. The Company currently has the rights to six screenplays and is in the process of securing financing for the development of its first production. On February 28, 2007, a shareholder of the Company entered into an agreement with the unit holders of MCE, whereby that shareholder tendered 19,071,546 of the common shares held in the Company to be held in trust for the unit holders of MCE in exchange for the transfer of 99% of the issued and outstanding units of MCE to the Company. This transaction was accounted for as a reverse acquisition. The shares were issued December 12, 2007.

The initial screenplay being developed is a movie called “Padre Pio The Signs of Heaven” which is a real life journey through the life, beliefs and miraculous events in the life of Padre Pio. It is management’s intention to produce this using the highest quality of effects to capture the compelling realism of his life and thereby capture the imagination of audiences worldwide.

Reports to Security Holders

The public may read and copy any materials filed by us with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. The public may obtain information on the operation of the SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. We will be an electronic filer and the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC which may be viewed at http://www.sec.gov/ .

Item 2. Description of Property

The following table sets forth information relating to each of the Company's offices as of December 31, 2010. The total net book value of the Company's premises and equipment (furniture, fixtures and equipment) at December 31, 2010 was $844.

PRINCIPAL BUSINESS OFFICE

Modern City Entertainment Inc.

1815 Griffin Road, Suite 207

Ft. Lauderdale, FL. 33004

Item 3. Legal Proceedings

The Company is not a party to any legal proceedings, and no such proceedings are known to be contemplated. No director, officer or affiliate of the Company, and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is known to be a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

-4-

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

No public trading market exists for the Company's securities. No assurance can be given that an active trading market will develop in the foreseeable future. No dividends have been paid to date and the Company's Board of Directors does not anticipate paying dividends in the foreseeable future.

As of December 31, 2010, the Company had 23,051,993 shares of common stock outstanding, par value $0.0001, held by approximately 490 shareholders of record.

During the year ended December 31, 2009, the Company purchased 11,766,466 shares of its outstanding common stock from 15 existing shareholders. The Company did not issue any unregistered securities during the year.

On July 21, 2007, the Company issued 2,073,600 shares at a price of $0.25 per share to accredited investors within the US pursuant to a Regulation 506 exemption from Registration.

On August 20, 2007, the Company issued 256,200 shares at a price of $1.00 per share to accredited investors within the US pursuant to a Regulation 506 exemption from Registration,

On February 28, 2007, a shareholder of the Company entered into an agreement with the unit holders of MCE, whereby that shareholder tendered 19,071,546 of the common shares held in the Company to be held in trust for the unit holders of MCE in exchange for the transfer of 99% of the issued and outstanding units of MCE to the Company. This transaction was accounted for as a reverse acquisition. The shares were issued December 12, 2007.

Item 6. Selected Financial Data

Not required for smaller reporting Companies

Item 7. Management’s Discussion and Analysis or Plan of Operation

The following is a discussion and analysis of the Company's financial position and results of operation and should be read in conjunction with the information set forth under Item 1 – Description of Business and the consolidated financial statement and notes thereto appearing elsewhere in this report. Certain statements contained in this Annual Report on Form 10-K, including without limitation, statements containing the words "believes," "anticipates," "estimates," "expects," and words of similar import, constitute "forward looking statements." You should not place undue reliance on these forward looking statements. Our actual results could differ materially from those anticipated in these forward looking statements for many reasons, including the risks faced by us described in the Annual Report and in other documents we file with the Securities and Exchange Commission.

GENERAL

The Company is in the process of building upon the developing business of its newly acquired subsidiary Modern City Entertainment LLC. The Company is currently seeking equity financing in order to fund production of the Company’s initial screen play called Padre Pio, Signs of Heaven. To date, no operating revenues have been generated. The Company's operations to date have consumed substantial amounts of cash. The Company's negative cash flow from operations is expected to continue and to accelerate in the foreseeable future as the Company develops its initial production.

The Company was in the development stage through December 31, 2007, however during 2008 the Company commenced certain film production activities and paid certain expenditures related to costs associated with actual filming. Due to the commencement of these activities, the Company no longer considers itself in the development stage despite not earning revenues. Revenue for the film industry are generally not recognized until after certain distribution or licensing arrangements are executed, a process that may take a significant amount of time to complete even after a film project has been concluded and is ready for distribution.

-5-

During the year ended December 31, 2007 and to date, the primary source of capital has been loans from existing shareholders, and equity sales. Upon the acquisition of Modern City Entertainment LLC, on February 28, 2007, the Company’s consolidated cash balance was increased to $757,906 comprised of the cash balance in the Company’s subsidiary Company. Since that time, the Company has made equity sales of $518,400 at $0.25 per share and an additional $256,200 sold at $1.00 per share. It is management’s intention to secure additional equity financings by way of further private placements of the Company’s common stock.

The Company's continued existence as a going concern is ultimately dependent upon its ability to secure funding on an ongoing basis. The Company will be seeking investment capital for the development of its initial screenplay, and the marketing of that screenplay once complete. There can be no assurance that such additional funding will be available on acceptable terms, if at all.

YEAR ENDED DECEMBER 31, 2009 COMPARED TO DECEMBER 31, 2010

The Company incurred a loss from operations of $67,289 compared to a loss of $28,150 in the previous fiscal year. Current year expenditures represent expenditures related to general and administrative costs and salary. The increase in the current year loss compared with 2009 is primarily due to the decrease in interest income and corresponding decrease in cash equivalents.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2010 the Company had a working capital balance of $308,140. This is the result of the acquisition of Modern City Entertainment LLC, and subsequent equity financings.

The primary source of capital has been equity sales in prior years..

Critical Accounting Policies

Accounting Policies and Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions.

As such, in accordance with the use of accounting principles generally accepted in the United States of America, our actual realized results may differ from management’s initial estimates as reported. A summary of significant accounting policies are detailed in notes to the financial statements which are an integral component of this filing.

Revenue Recognition

The Company recognizes revenue in accordance with the Securities and Exchange Commission, Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition” (“SAB No. 104”). SAB 104 clarifies application of generally accepted accounting principles related to revenue transactions. The Company also follows the guidance in FASB Accounting Standards Codification (ASC) Topic 605-25, Revenue Arrangements with Multiple Deliverables (formally "EITF Issue No. 00-08-1"), in arrangements with multiple deliverables.

The Company recognizes revenues when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured.

The Company receives revenue for consulting services, video streaming services, equipment sales and leasing, installation, and maintenance agreements. Sales and leasing agreement terms generally are for one year, and are renewable year to year thereafter. Revenue for consulting services is recognized as the services are provided to customers. For upfront payments and licensing fees related to contract research or technology, the Company determines if these payments and fees represent the culmination of a separate earnings process or if they should be deferred and recognized as revenue as earned over the life of the related agreement. Milestone payments are recognized as revenue upon achievement of contract-specified events and when there are no remaining performance obligations. Revenues from monthly video streaming agreements, as well as equipment maintenance, are recorded when earned. Operating equipment lease revenues are recorded as they become due from customers. Revenues from equipment sales and installation are recognized when equipment delivery and installation have occurred, and when collectability is reasonably assured.

-6-

In certain cases, the Company enters into agreements with customers that involve the delivery of more than one product or service. Revenue for such arrangements is allocated to the separate units of accounting using the relative fair value method in accordance with ASC Topic No. 605-25. The delivered item(s) is considered a separate unit of accounting if all of the following criteria are met: (1) the delivered item(s) has value to the customer on a standalone basis, (2) there is objective and reliable evidence of the fair value of the undelivered item(s) and (3) if the arrangement includes a general right of return, delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the vendor. If all the conditions above are met and there is objective and reliable evidence of fair value for all units of accounting in an arrangement, the arrangement consideration is allocated to the separate units of accounting based on their relative fair values.

Explicit return rights are not offered to customers; however, the Company may accept returns in limited circumstances. There have been no returns through December 31, 2010. Therefore, a sales return allowance has not been established since management believes returns will be insignificant.

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

We do not hold any derivative instruments and do not engage in any hedging activities.

-7-

Item 8. Financial Statements

MODERN CITY ENTERTAINMENT, INC.

REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2010 and 2009

-8-

MALCOLM L. POLLARD, Inc.

4845 W. LAKE ROAD, # 119

ERIE, PA 16505

(814)838-8258 FAX (814838-8452

Report of Independent Registered Public Accounting Firm

Board of Directors

Modern City Entertainment, Inc.

Fort Lauderdale, Florida

We have audited the accompanying consolidated balance sheets of Modern City Entertainment, Inc. and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of operations, changes in stockholders’ deficiency, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

The Company has not generated significant revenues or profits to date. This factor, among others, raises substantial doubt about its ability to continue as a going concern. The Company’s continuation as a going concern depends upon its ability to generate sufficient cash flow to conduct its operations and its ability to obtain additional sources of capital and financing. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2010 , the results of its operations, changes in stockholders’ equity, and its cash flows for the year ended December 31, 2010, in conformity with U.S. generally accepted accounting standards.

Malcolm L. Pollard, Inc.

Erie, Pennsylvania

March 18, 2011

-9-

MODERN CITY ENTERTAINMENT INC.
Consolidated Balance Sheets
December 31, 2010 and 2009

	2010			2009
ASSETS
Current Assets
Cash	$	329,080			$	430,959
Total current assets		329,080				430,959

Property & equipment, net of accumulated
depreciation		506				844
Prepaid production costs		40,000				96,363

Total Assets	$	369,586			$	527,736

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable and accrued expenses	$	20,940			$	111,801
Total current liabilities		20,940				111,801

Stockholders’ Equity
Preferred Stock, $0.0001 par value
20,000,000 shares authorized; none issued						-
Common stock, $0.0001 par value; 50,000,000 shares authorized and 23,051,993 and 23,051,993 issued and outstanding respectively		2,298				2,298
Additional paid-in capital		1,057,762				1,057,762
Accumulated Deficit		(170,006	)			(102,717	)
Deficit accumulated during the development stage		(541,408	)			(541,408	)
Total stockholders’ equity		348,646				415,935

Total Liabilities and Stockholders’ Equity	$	369,586			$	527,736

The accompanying notes are an integral part of these financial statements

-10-

MODERN CITY ENTERTAINMENT INC.
Consolidated Statements of Operations
For the Years Ended December 31, 2010 and 2009

	2010			2009
Revenues	$	-		$	-

Expenses
Payroll expenses	$	39,307		$	47,202
Professional fees		11,062			16,480
Services and fees expense		12,059			75
Travel, meals and entertainment		3,253			9,686
Depreciation expense		338			340
Telephone		2,322			6,476
Other expenses		878			2
Total expenses	$	69,219		$	80,261

Other Income (Expense)
Interest	$	1,930		$	52,111
Total other income		1,930			52,111

Net Loss	$	(67,289	)	$	(28,150	)

Loss per share –basic and diluted	$	(.00	)	$	(0.00

Weighted average number of shares outstanding-basic and diluted		23,051,993			23,051,993

The accompanying notes are an integral part of these financial statements

-11-

MODERN CITY ENTERTAINMENT, INC.

Consolidated Statements of Cash Flows

For the years ended December 31, 2010 and 2009

	Years ended
	December 31,
		2010		2009
Cash flows used in operating activities
Net loss	$	(67,289	)	$	(28,150	)
Add items not involving cash:
Depreciation		338			340
Accounts payable and accrued expenses		(90,861	)		(28,633	)
Net cash used in operating activities		(157,812	)		(56,443	)
Cash flows provided by investing activities
Prepaid production costs		56,363			-
Net cash provided by investing activities		56,363			-
Cash flows provided by financing activities
Increase (decrease) in amount due to related party		-			-
Purchase of outstanding common stock		-			-
Payment of stockholders loans payable		-			-
Cash flows (used in) provided by financing activities		-			-
(Decrease) in cash during the period		(101,449	)		(56,443	)
Cash, beginning of the period		430,529			486,972
Cash, end of the period	$	329,080			430,529
Supplementary disclosure of cash flow information
Cash paid for:
Interest	$			$	-

-12-

MODERN CITY ENTERTAINMENT, INC.

Consolidated Statements of Stockholders’ Equity

For the years ended December 31, 2010 and 2009

							Deficit
							Accumulated
							During the
					Additional		Development
	Common Stock				Paid-in		Stage			Accumulated
	Number		Par Value		Capital		(Note 1)			Deficit			Total
Balance, December 31, 2008		23,051,993	$	2,298	$	1,057,762	$	(541,408	)	$	(74,567	)	$	444,085
Net loss for the year ended December 31, 2009		-		-		-		-			(28,150	)		(28,150	)

Balance, December 31, 2009		23,051,993	$	2,298	$	1,057,762	$	(541,408	)	$	(102,717	)	$	415,935
Net loss for the year ended December 31, 2010		-		-		-		-			(67,289	)		(67,289	)

Balance, December 31, 2010		23,051,993	$	2,298	$	1,057,762	$	(541,408	)	$	(170,006	)	$	348,646

The accompanying notes are an integral part of these financial statements

-13-

MODERN CITY ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2010 and 2009

Note 1 Nature and Continuance of Operations

Modern City Entertainment, Inc. (formerly Azul Studios International Inc.) (the “Company”) was incorporated on September 23, 1996 under the laws of the State of Texas as Alvin Consulting Inc. On July 15, 1999, the stockholders of the Company approved a merger with a newly incorporated company in the State of Washington and the surviving company, Realty Technologies Inc., operates under the laws of the State of Washington. On August 12, 1999 stockholders of the Company approved an amendment to the articles of the Company changing its name to Equinta Corp. On April 10, 2000, the stockholders of the Company approved a change to the articles of the Company changing its name to Courier Corps Inc. On May 16, 2000, the stockholders the Company approved a change in the name of the Company to eCourierCorps Inc. On March 12, 2004, the Company changed its name to Azul Studios International Inc. and adopted a business plan to develop a group of boutique hotels catering to the professional photographers and film artists. In July 2004 the Company incorporated Azul Studios Properties S.L., in Barcelona, Spain, a wholly-owned subsidiary. The Company also incorporated a wholly-owned corporation, Azul Media Inc., in the State of Washington on March 8, 2005. The Company intended to develop a group of professional photographic studios in select locales around the world. On June 29, 2006, the Company sold all of the issued and outstanding shares of its wholly-owned subsidiary, Azul Studios Property, S.L.. On February 28, 2007, the Company agreed to acquire Modern City Entertainment LLC (“MCE”), a Miami based development stage independent movie company, which is in the business of acquiring, producing and distributing feature films internationally. Currently the Company has no revenue.

On April 27, 2007, the Company changed its name to Modern City Entertainment, Inc.

The Company was a development stage company as defined under Statement of Financial Accounting Standards (“FAS”) No. 7 through the year ended December 31, 2007. Prior to April 1, 2000, the Company developed and sold the rights to a web based internet application in the real estate industry. During 2008, the company commenced incurring production costs related to the production of the aforementioned screenplay.

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At December 31, 2010, the Company had not yet achieved profitable operations, has accumulated losses of approximately $700,000 since its recapitalization, and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available.

BASIS OF PRESENTATION

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates.

-14-

MODERN CITY ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2010 and 2009

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. At December 31, 2010 and December 31, 2009, the Company had cash equivalents in the amount of approximately $330,000, and $487,000, respectively, all in low risk investments.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains cash balances at one financial institution, which is t insured by the Federal Deposit Insurance Corporation (“FDIC”). The FDIC insured institution insures up to $250,000 on account balances. The amounts that are not insured by FDIC limitations are held in short-term liquid securities. As of December 31, 2010 and 2009 there were approximately $330,000 and $487,000, respectively of cash and cash equivalents held by the Company.The company has not experienced any losses in such accounts.

ACCOUNTS RECEIVABLE

The Company conducts business and extends credit based on the evaluation of its customers' financial condition. Exposure to losses on receivables is expected to vary by customer due to the financial condition of each customer. The Company monitors credit losses and maintains allowances for anticipated losses considered necessary under the circumstances. Recoveries of accounts previously written off are recognized as income in the periods in which the recoveries are made. The Company had no accounts receivable at December 31, 2010 and 2009.

IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

The Company accounts for the impairment of long-lived assets in accordance with ASC Topic 360, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” (“ACS Topic 360”) requires write-downs to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount.

If the long-lived assets are identified as being planned for disposal or sale, they would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. As of December 31, 2010 this does not apply.

GOODWILL AND OTHER INTANGIBLE ASSETS

ASC Topic 350, “Intangibles – Goodwill and Other statement addresses financial accounting and reporting for acquired goodwill and other intangible assets. It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements.

Goodwill and intangible assets with indefinite useful lives are not amortized. Intangible assets with finite useful lives are amortized generally on a straight-line basis over the periods benefited, with a weighted average useful life of 15 years.

-15-

MODERN CITY ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2010 and 2009

In performing this assessment, management uses the income approach and the similar transactions method of the market approach to develop the fair value of the acquisition in order to assess its potential impairment of goodwill. The income approach is based on a discounted cash flow model which relies on a number of factors, including operating results, business plans, economic projections and anticipated future cash flows. Rates used to discount future cash flows are dependent upon interest rates and the cost of capital at a point in time. The similar transactions method is a market approach methodology in which the fair value of a business is estimated by analyzing the prices at which companies similar to the subject, which are used as guidelines, have sold in controlling interest transactions (mergers and acquisitions). Target companies are compared to the subject company, and multiples paid in transactions are analyzed and applied to subject company data, resulting in value indications. Comparability can be affected by, among other things, the product or service produced or sold, geographic markets served, competitive position, profitability, growth expectations, size, risk perception, and capital structure. There are inherent uncertainties related to these factors and management’s judgment in applying them to the analysis of goodwill impairment. It is possible that assumptions underlying the impairment analysis will change in such a manner that impairment in value may occur in the future.

REVENUE RECOGNITION

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Expenditures for major betterments and additions are capitalized, while replacement, maintenance and repairs, which do not extend the lives of the respective assets, are currently charged to expense. Any gain or loss on disposition of assets is recognized currently in the statement of income.

-16-

MODERN CITY ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2010 and 2009

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or

from future earnings or cash flows.

EARNINGS (LOSS) PER SHARE

Earnings (loss) per share is computed in accordance with ASC Topic 260, "Earnings per Share". Basic earnings (loss) per share is computed by dividing net income (loss), after deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. The outstanding warrants for the years ended December, 31, 2010 and 2009, are anti-dilutive and therefore are not included in earnings (loss) per share.

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company applies ASC Topic 718 “Share-Based Payments” (“ASC Topic 718”) to share-based compensation, which requires the measurement of the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Compensation cost is recognized when the event occurs. The Black-Scholes option-pricing model is used to estimate the fair value of options granted.

For the years ended December 31, 2010 and 2009, the Company did not grant any stock options.

NON-EMPLOYEE STOCK BASED COMPENSATION

The cost of stock based compensation awards issued to non-employees for services are recorded, in accordance with ASC Topic 505- 50 “Equity-Based Payments to Non-Employees,” at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines.

COMMON STOCK PURCHASE WARRANTS

The Company accounts for common stock purchase warrants in accordance ASC Topic 815 “Derivatives and Hedging”. The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the company), or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).

-17-

MODERN CITY ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2010 and 2009

INCOME TAXES

Deferred income taxes are provided based on the provisions of ASC Topic 740, "Accounting for Income Taxes", to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company adopted the provisions of ASC Topic 740; "Accounting For Uncertainty In Income Taxes-An Interpretation Of ASC Topic 740 ("Topic 740"). Topic 740 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At December 31, 2010 and 2009, the Company did not record any liabilities for uncertain tax positions.

operations, or cash flows.

NOTE 2 - RECENT ISSUED ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

Accounting Standards Codification

In June 2009, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (the “Codification”). This standard replaces SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, and establishes only two levels of U.S. generally accepted accounting principles (“GAAP”), authoritative and nonauthoritative. The FASB ASC has become the source of authoritative, nongovernmental GAAP, except for rules and interpretive releases of the SEC, which are sources of authoritative GAAP for SEC registrants. All other nongrandfathered, non-SEC accounting literature not included in the Codification will become nonauthoritative. This standard is effective for financial statements for interim or annual reporting periods ending after September 15, 2009. The adoption of the Codification changed the Company’s references to GAAP accounting standards but did not impact the Company’s results of operations, financial position or liquidity.

Participating Securities Granted in Share-Based Transactions

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 260, Earnings Per Share (formerly FASB Staff Position (“FSP”) Emerging Issues Task Force (“EITF”) 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities). The new guidance clarifies that non-vested share-based payment awards that entitle their holders to receive nonforfeitable dividends or dividend equivalents before vesting should be considered participating securities and included in basic earnings per share. The Company’s adoption of the new accounting standard did not have a material effect on previously issued or current earnings per share.

-18-

MODERN CITY ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2010 and 2009

Business Combinations and Noncontrolling Interests

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 805, Business Combinations (formerly SFAS No. 141(R), Business Combinations). The new standard applies to all transactions or other events in which an entity obtains control of one or more businesses. Additionally, the new standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement date for all assets acquired and liabilities assumed; and requires the acquirer to disclose additional information needed to evaluate and understand the nature and financial effect of the business combination. The Company’s adoption of the new accounting standard did not have a material effect on the Company’s consolidated financial statements.

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 810, Consolidations (formerly SFAS 160, Noncontrolling Interests in Consolidated Financial Statements). The new accounting standard establishes accounting and reporting standards for the noncontrolling interest (or minority interests) in a subsidiary and for the deconsolidation of a subsidiary by requiring all noncontrolling interests in subsidiaries be reported in the same way, as equity in the consolidated financial statements. As such, this guidance has eliminated the diversity in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. The Company’s adoption of this new accounting standard did not have a material effect on the Company’s consolidated financial statements.

Fair Value Measurement and Disclosure

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) (formerly FASB FSP No 157-2, Effective Date of FASB Statement No. 157), which delayed the effective date for disclosing all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value on a recurring basis (at least annually). This standard did not have a material impact on the Company’s consolidated financial statements.

In April 2009, the FASB issued new guidance for determining when a transaction is not orderly and for estimating fair value when there has been a significant decrease in the volume and level of activity for an asset or liability. The new guidance, which is now part of ASC 820 (formerly FSP 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly), requires disclosure of the inputs and valuation techniques used, as well as any changes in valuation techniques and inputs used during the period, to measure fair value in interim and annual periods. In addition, the presentation of the fair value hierarchy is required to be presented by major security type as described in ASC 320, Investments — Debt and Equity Securities. The provisions of the new standard were effective for interim periods ending after June 15, 2009. The adoption of the new standard on April 1, 2009 did not have a material effect on the Company’s consolidated financial statements.

In April 2009, the Company adopted a new accounting standard included in ASC 820, (formerly FSP 107-1 and Accounting Principles Board (“APB”) 28-1, Interim Disclosures about Fair Value of Financial Instruments). The new standard requires disclosures of the fair value of financial instruments for interim reporting periods of publicly

traded companies in addition to the annual disclosure required at year-end. The provisions of the new standard were effective for the interim periods ending after June 15, 2009. The Company’s adoption of this new accounting standard did not have a material effect on the Company’s consolidated financial statements.

In August 2009, the FASB issued new guidance relating to the accounting for the fair value measurement of liabilities. The new guidance, which is now part of ASC 820, provides clarification that in certain circumstances in which a quoted price in an active market for the identical liability is not available, a company is required to measure fair value using one or more of the following valuation techniques: the quoted price of the identical liability when traded as an asset, the quoted prices for similar liabilities or similar liabilities when traded as assets, or another valuation technique that is consistent with the principles of fair value measurements. The new guidance clarifies that a company is not required to include an adjustment for restrictions that prevent the transfer of the liability and if an adjustment is applied to the quoted price used in a valuation technique, the result is a Level 2 or 3 fair value measurement. The new guidance is effective for interim and annual periods beginning after August 27, 2009. The Company’s adoption of the new guidance did not have a material effect on the Company’s consolidated financial statements.

-19-

MODERN CITY ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2010 and 2009

Derivative Instruments and Hedging Activities

Effective January 1, 2009, the Company adopted a new accounting standard included in ASC 815, Derivatives and Hedging (SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133). The new accounting standard requires enhanced disclosures about an entity’s derivative and hedging activities and is effective for fiscal years and interim periods beginning after November 15, 2008. Since the new accounting standard only required additional disclosure, the adoption did not impact the Company’s consolidated financial statements.

Other-Than-Temporary Impairments

In April 2009, the FASB issued new guidance for the accounting for other-than-temporary impairments. Under the new guidance, which is part of ASC 320, Investments — Debt and Equity Securities (formerly FSP 115-2 and 124-2, Recognition and Presentation of Other-Than-Temporary Impairments), an other-than-temporary impairment is recognized when an entity has the intent to sell a debt security or when it is more likely than not that an entity will be required to sell the debt security before its anticipated recovery in value. The new guidance does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities and is effective for interim and annual reporting periods ending after June 15, 2009. The Company’s adoption of the new guidance did not have a material effect on the Company’s consolidated financial statements.

Subsequent Events

In May 2009, the FASB issued new guidance for subsequent events. The new guidance, which is part of ASC 855, Subsequent Events (formerly SFAS No. 165, Subsequent Events) is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Specifically, this guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The new guidance is effective for fiscal years and interim periods ended after June 15, 2009 and will be applied prospectively. The Company’s adoption of the new guidance did not have a material effect on the Company’s consolidated financial statements. The Company evaluated subsequent events through the date the accompanying financial statements were issued, which was April 14, 2010

Accounting Standards Not Yet Effective

Accounting for the Transfers of Financial Assets

In June 2009, the FASB issued new guidance relating to the accounting for transfers of financial assets. The new guidance, which was issued as SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment

to SFAS No. 140, was adopted into Codification in December 2009 through the issuance of Accounting Standards Updated (“ASU”) 2009-16. The new standard eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. The new guidance is effective for fiscal years beginning after November 15, 2009. The Company adopted the new guidance in 2010 with no material impact on the Company’s consolidated financial statements.

-20-

MODERN CITY ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2010 and 2009

Accounting for Variable Interest Entities

In June 2009, the FASB issued revised guidance on the accounting for variable interest entities. The revised guidance, which was issued as SFAS No. 167, Amending FASB Interpretation No. 46(R), was adopted into Codification in December 2009 through the issuance of ASU 2009-17. The revised guidance amends FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities, in determining whether an enterprise has a controlling financial interest in a variable interest entity. This determination identifies the primary beneficiary of a variable interest entity as the enterprise that has both the power to direct the activities of a variable interest entity that most significantly impacts the entity’s economic performance, and the obligation to absorb losses or the right to receive benefits of the entity that could potentially be significant to the variable interest entity. The revised guidance requires ongoing reassessments of whether an enterprise is the primary beneficiary and eliminates the quantitative approach previously required for determining the primary beneficiary. The Company does not expect that the provisions of the new guidance will have a material effect on its consolidated financial statements.

Revenue Recognition

In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements. The new standard changes the requirements for establishing separate units of accounting in a multiple element arrangement and requires the allocation of arrangement consideration to each deliverable based on the relative selling price. The selling price for each deliverable is based on vendor-specific objective evidence (“VSOE”) if available, third-party evidence if VSOE is not available, or estimated selling price if neither VSOE or third-party evidence is available. ASU 2009-13 is effective for revenue arrangements entered into in fiscal years beginning on or after June 15, 2010. The Company does not expect that the provisions of the new guidance will have a material effect on its consolidated financial statements.

In October 2009, the FASB issued Accounting Standards Update No. 2009-14, "Certain Revenue Arrangements That Include Software Elements" ("ASU No. 2009-14"). ASU No. 2009-14 amends guidance included within ASC Topic 985-605 to exclude tangible products containing software components and non-software components that function together to deliver the product’s essential functionality. Entities that sell joint hardware and software products that meet this scope exception will be required to follow the guidance of ASU No. 2009-13. ASU No. 2009-14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption and retrospective application are also permitted. The company is currently evaluating the impact of adopting the provisions of ASU No. 2009-14.

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

-21-

MODERN CITY ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2010 and 2009

NOTE 3 -INCOME TAXES

As at December 31, 2010, the Company has accumulated non-capital losses totaling approximately $1,600,000, which are available to reduce taxable income in future taxation years. These losses expire beginning in 2017. The potential benefit of these losses, if any, has not been recorded in the financial statements. The losses are available to offset future income. The net operating loss carryfowards will expire in various years through 2028 subject to limitations of Section 382 of the Internal Revenue Code, as amended. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, because in the opinion of management based upon the earning history of the Company, it is more likely than not that the benefits will not be realized.

The Company adopted ASC 740 which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between Consolidated Financial Statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant.

The Tax Reform Act of 1986 imposed substantial restrictions on the utilization of net operating losses and tax credits in the event of an "ownership change", as defined by the Internal Revenue Code. Federal and state net operating losses are subject to limitations as a result of these restrictions. The Company experienced a substantial change in ownership exceeding 50%. As a result, the Company's ability to utilize its net operating losses against future income has been significantly reduced.

The following table summarizes the significant components of the Company’s future tax assets:

	2010			2009
Future tax assets
Non-capital loss carry-forward	$	598,378		$	580,378
Valuation allowance for deferred tax asset		(598,378	)		(580,378	)
	$	-		$	-

The amount taken into income as future tax assets must reflect that portion of the income tax loss carry-forwards that is more likely-than-not to be realized from future operations. The Company has chosen to provide an allowance of 100% against all available income tax loss carry-forwards, regardless of their time of expiry.

In assessing the amount of deferred tax asset to be recognized, management considers whether it is more likely than not that some of the losses will be used in the future. Management expects that they will not have benefit in the future. Accordingly, a full valuation allowance has been established.

NOTE 4– FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments consist primarily of cash, cash equivalents, and marketable securities. account receivable, accounts payable, accrued expenses, and debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and/or

-22-

MODERN CITY ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2010 and 2009

approximate market interest rates of these instruments. The estimated fair value is not necessarily indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows.

The Company adopted Statement of ASC Topic 820 Fair Value Measurements (“ACS Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

The three-level hierarchy for fair value measurements is defined as follows:

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets;

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable or the asset or liability other than quoted prices, either directly or indirectly including inputs in markets that are not considered to be active;

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement

Assets measured at fair value on a recurring basis are summarized below:

			Fair value measurement at reporting date using
Description	December 31, 2010			Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets
Cash and Cash Equivalents:
Money market	$	329,080		$ 329,080	—	—

No other than temporary impairments were recognized for the years ended December 31, 2010 and 2009

Note 5 Property and Equipment

The Company’s property and equipment are as follows as of December 31:

	2010
			Accumulated
	Cost		Depreciation		Net
Computer equipment	$	1,690	$	1,184	$	506

	2009
			Accumulated
	Cost		Depreciation		Net
Computer equipment	$	1,690	$	846	$	844

Depreciation expense for the year ended December 31, 2010 and 2009 was $338 and $340, respectively.

-23-

MODERN CITY ENTERTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2010 and 2009

Note 6 Capital Stock

Reverse Split

Effective December 30, 2005, the Company reverse split its issued common stock on the basis of one new share for two old shares and the Articles of Incorporation of the Company was amended to reduce the authorized shares of common stock of the Company from 100,000,000 to 50,000,000. The number of shares referred to in these financial statements has been restated wherever applicable to give retroactive effect to the reverse stock split.

The retroactive restatement of the issued common shares is required by the Securities and Exchange Commission’s Staff Accounting Bulletin, Topic 4c.

Stock Option Plan and Stock-based Compensation

In June 2003, the Board of Directors approved a stock option plan for the Company which provides for allocation of options to purchase up to 375,000 common shares of the Company. The Board of Directors also approved the issuance of options to a director to acquire up to 125,000 common shares of the Company at $0.50 per share. The options have a term of ten years expiring in June 2013.

In March 2004, the Board of Directors approved the issuance of options to a director of the Company to acquire up to 125,000 shares of common stock at $0.50 per share. The options vest over a period of two years evenly every 3 months from the date of issuance and once vested may be exercised at any time up to ten years expiring in March, 2014. At March 31, 2006, these options were all exercisable.

In June 12, 2007, the Company approved the adoption of a 2007 employee and director stock option plan for the issuance of up to 2,100,000 options to acquire common stock of the Company at a price of $0.25 per share. The Company further approved the issuance of 1,000,000 options out of the 2,100,000 to acquire stock, to certain officers, directors and consultants of the Company at the price of $0.25 per share.

The Company recorded compensation expense on the granting of stock options to employees. The Company calculated the value of stock options issued by determining the fair value of the options using fair value option pricing models.

The Company granted no warrants or stock options during the years ended December 31, 2010 and 2009 and no options or warrants were exercised.

Note 7 Going Concern Issues

The accompanying Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern. However, the Company has period end losses from operations for the years ended December 31, 2010 and 2009. The Company has an accumulated net loss of $711,414. Further, the Company has inadequate working capital to maintain or develop its operations, and is dependent upon funds from private investors and the support of certain stockholders.

These factors raise substantial doubt about the ability of the Company to continue as a going concern. The Condensed Consolidated Financial Statements do not include any adjustments that might result from the outcome of these uncertainties. In this regard, Management is planning to raise any necessary additional funds through loans and additional sales of its common stock. There is no assurance that the Company will be successful in raising additional capital.

The Company's ability to meet its obligations and continue as a going concern is dependent upon its ability to obtain additional financing, and the achievement of profitable operations. The Company cannot reasonably be expected to earn revenue in the exploration stage of operations. Although the Company plans to pursue additional financing, there can be no assurance that the Company will be able to secure financing when needed or to obtain such financing on terms satisfactory to the Company, if at all.

-24-

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

On March 15, 2010, Larry O'Donnell, CPA, P.C ("Larry O'Donnell") was appointed as the independent auditor for Modern City Entertainment, Inc. (the "Company") commencing with the year ending December 31, 2009, and Kramer Weisman and Associates, LLP ("KWA") were dismissed as the independent auditors for the Company as of March 15, 2010.

The report of KWA on the financial statements for December 31, 2008 as published on November 15, 2009 did not contain any adverse opinion or disclaimer of opinion or was qualified or modified as to uncertainty, audit scope or accounting principles except that KWA’s report on the financial statements for the years ended December 31, 2008 and December 31, 2007 contained an explanatory paragraph indicating that substantial doubt exists about the Company’s ability to continue as a going concern.

During the Company's two most recent fiscal years and any subsequent interim period through the date of dismissal, there were no disagreements with KWA on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of KWA, would have caused it to make reference to the subject matter of the disagreements in connection with its report.

On December 14, 2010, Larry O'Donnell, CPA, P.A., its independent public accountant resigned due to Larry O'Donnell's license being revoked by the PCAOB.

Larry O'Donnell, CPA, P.A.'s reports on our financial statements as of and for the fiscal year ended December 31, 2009 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except that its report contained a going concern qualification as to the ability of us to continue.

During Modern City’s two most recent fiscal years, December 31, 2009 and 2008, and the subsequent period through the date of resignation, January 1, 2010 through December 14, 2010, there were no disagreements on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure which disagreement(s), if not resolved to the satisfaction of Larry O'Donnell, CPA, P.C., would have caused it to make reference to the

subject matter of the disagreement(s) in connection with its report as described in Item 304 (a)(1)(iv) of Regulation S-K.

On January 4, 2011 the board of directors of Modern City engaged the accounting firm of Malcolm L. Pollard, Inc. as principal accountants of Modern City’s for the fiscal year ended December 31, 2010. Modern City’s did not consult with Malcolm L. Pollard, Inc. during the most recent two fiscal years and the subsequent interim period preceding the engagement of Malcolm L. Pollard, Inc. on January 4, 2011 regarding the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on Modern City’s financial statements. Neither written nor oral advice was provided that was an important factor considered by Malcolm L. Pollard, Inc. in reaching a decision as to the accounting, auditing or financial reporting issue; or any matter that was the subject of a disagreement or event identified in response to paragraph (a)(1)(iv) of Item 304 of

Regulation S-K.

ITEM 9A. CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES

a) Evaluation of Disclosure Controls and Procedures

Our principal executive officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the last day of the fiscal period covered by this report, December 31, 2010. The term disclosure controls and procedures means our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

-25-

Our principal executive officer is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Our principal executive officer and our principal financial officer are required to base their assessment of the effectiveness of our internal control over financial reporting on a suitable, recognized control framework, such as the framework developed by the Committee of Sponsoring Organizations (COSO). The COSO framework, published in Internal Control-Integrated Framework, is known as the COSO Report. Our principal executive officer and our principal financial officer, have chosen the COSO framework on which to base their assessment.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

b) Management’s Report on Internal Control over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as required by the Sarbanes-Oxley Act. The Company's internal control over financial reporting is a process designed under the supervision of the Company's Principal Executive Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with U.S. generally accepted accounting principles (“US GAAP”).

As of December 31, 2010, management assessed the effectiveness of the Company's internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, management concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP as more fully described below. This assessment was due to the identification of control deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our disclosure controls and procedures and that were considered to be material weaknesses.

The matters involving internal controls over financial reporting and disclosure controls and procedures that were considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) inadequate segregation of duties consistent with control objectives; (2) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (3) ineffective controls over period end financial disclosure and reporting processes. The material weaknesses were subsequently reported to management and the Board of Directors, who concluded that the previously issued financial statements could no longer be relied upon.

Management is committed to improving our financial organization. As part of this commitment, we will i) create a new finance and accounting position that will allow for proper segregation of duties consistent with control objectives, and will increase our personnel resources and technical accounting expertise within the accounting function; and we will ii) prepare and implement appropriate written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

Management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result in proper segregation of duties and provide more checks and balances within the accounting department. Additional personnel will also be provided with the cross training needed to support the Company if personnel turnover within the department occurs.

We will also undertake the following actions: (i) implement procedures that will create more involvement from the Board in the overall financial reporting process by way of extensive monitoring and oversight as a mitigating control for our lack of segregation of duties, and (ii) establish an Audit Committee separate from the Board of Directors with persons of technical accounting expertise.

-26-

Management believes that the implementation of procedures to create more involvement from the Board by way of monitoring and oversight and the creation of a separate Audit Committee with persons of technical accounting expertise and knowledge will result in controls that mitigate our lack of segregation of duties and will also provide more checks and balances within the Company.

We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

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

There were no changes in our internal control over financial reporting that occurred during the last quarter of 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None

-27-

PART III

Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act

The following table sets forth the names and ages of, and all positions and offices held by, each of the Company’s directors and its executive officers. Also set forth are the dates the Company’s directors were initially elected to the Board of Directors , a summary of each identified person’s business experience during the last five years and any directorship(s) held in other companies with securities registered under Section 12 or subject to the requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended.

Directors and Executive Officers

Name	Age	Director Since	Positions
William Erfurth	46	April 27, 2007	President & Director
Frank Pierce	68	April 27, 2007	Director
Joe Sollecito	45	April 27, 2007	Director
Jerry Powers	45	March 31, 2009	Director

Mr. Bill Erfurth comes to filmmaking from a non-traditional background. From November, 1981 to the present, Mr. Erfurth has been affiliated with the Miami-Dade Police Department in Miami, Florida. Mr. Erfurth was promoted to Lieutenant in 1997 and assigned as Commander of The Tactical Narcotics Team (TNT). This unit became the most productive unit in the Miami-Dade Police Department’s history, and recognized nationally as one of the top units in the country. As leader of TNT, Mr. Erfurth was responsible for the supervision of 130 officers, and a multi-million dollar budget. Currently, Mr. Erfurth is assigned as the Commander of a Multi-Agency Violent Crime Task Force, (S.T.I.N.G.) Street Tactics Intervention Group. In 1995 Mr. Erfurth hosted a new radio show. The show, Copnet - the Police Radio Network became a nationally syndicated radio program, airing in 100 markets, and the first syndicated show of its kind to be hosted by active police officers. “Copnet” aired for nine years, winning three Achievements in Radio Awards. In 2001, while still working on the radio show, Mr. Erfurth, was approached by the Discovery Channel and the BBC to do an eight-part mini-series about the TNT police unit entitled The Real Miami Vice. On location filming with TNT lasted for four months. Upon completion of filming, Mr. Erfurth traveled to London to work with the editors on the final cut. The show still airs currently on both networks.In 2002, Mr. Erfurth became a Consultant and Technical Advisor for Bad Boys II. His Tactical Narcotics Team was featured in the movie. Mr. Erfurth served as Technical Advisor to Producer Jerry Bruckheimer, and Director Michael Bay. To this day, Mr. Erfurth maintains an active and regular association with Bruckheimer Films, Disney Studios, Sony Pictures, Warner Brothers, and Michael Bay Films, providing Consultant, Technical Advisor, and Research & Development services for major studio productions.

Mr. Frank Pierce Mr. Pierce enlisted in the United States Coast Guard in 1955 and was honorably discharged in 1959. After his military service Mr. Pierce was employed by the Miami Springs Police Department from 1959 to 1965. Later in 1965 Mr. Pierce joined the Miami-Dade Police Department and served there until June 30, 2001. Officially retired from Police duty now for the last five years, Mr. Pierce has become a successful Real Estate Investor and Venture Capitalist.

Mr. Joe Sollecito enlisted in the United States Coast Guard Reserves in 1980 and served as a Hospital Corpsman/EMT until 1987. In 1987, Mr. Sollecito joined the Miami-Dade Fire Department. Mr. Sollecito founded United Sleep Diagnostics, Inc in January of 2000, a South Florida company specializing in the diagnosis and treatment of Sleep Disorders. Under his direction, United Sleep Diagnostics has grown from a small company performing ambulatory sleep testing, to currently one of the largest independent sleep testing companies in South Florida, with multiple freestanding and hospital-based facilities. Mr. Sollecito currently lives in South Florida where he divides his time as a Lieutenant for Miami Dade Fire Rescue, CEO of United Sleep Diagnostics, Real Estate Investor, and Board Executive for Modern City Entertainment LLC.

Publishing titan Jerry Powers founded Ocean Drive magazine in the early nineties, bringing the fashion industry to South Beach while spearheading the success of the regional magazine market. Throughout his many years in publishing, Powers launched a variety of titles for regional markets, including Vegas, Michigan Avenue and Atlanta Peach among countless others. Today, Powers’ focus has shifted from publishing to the entertainment industry with the launch of his new consulting and marketing firm, Power Play, based in Miami.

The directors named above will serve until the next annual meeting of the Company's stockholders. Thereafter, directors will be elected for one-year terms at the annual stockholders' meeting. Officers will hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently exists or is contemplated. There is no arrangement or understanding between the directors and officers of the Company and any other person pursuant to which any director or officer was or is to be selected as a director or officer. The officers will serve at will.

-28-

The directors and officers of the Company will devote such time to the Company's affairs on an "as needed" basis. As a result, the actual amount of time which they will devote to the Company's affairs is unknown and is likely to vary substantially from month to month.

Board of Directors Committees and Other Information

All Directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified. Officers are appointed by and serve at the discretion of the Board of Directors.

The Board of Directors currently has no committees. As and when required by law, it will establish Audit Committee and a Compensation Committee. The Audit Committee will oversee the actions taken by our independent auditors and review our internal financial and accounting controls and policies. The Compensation Committee will be responsible for determining salaries, incentives and other forms of compensation for our officers, employees and consultants and will administer our incentive compensation and benefit plans, subject to full board approval. The Audit Committee Charter and the Compensation Committee Charter asattached hereto as Exhibit to this filing. The functions of the Audit Committee and the Compensation Committee are currently performed by the Board of Directors.

Director Compensation

Our directors do not receive cash for their services. The Company does not provide additional compensation for committee participation or special assignments of the Board of Directors, but may enter into separate consulting agreements with individual directors at times.

Item 11. Executive Compensation

With the exception of Mr. Erfurth, who has an employment contract providing a monthly compensation of $3,000USD per month paid by the Company’s subsidiary Modern City Entertainment LLC. Executive officers of the Company currently do not receive any remuneration in their capacity as Company executive officers. The following table sets forth information concerning the compensation for services to the Company from businesses of which the Director or Executive officer exercised significant influence, for the years ended December 31, 2010 and 2009.

Summary Compensation Table

		Annual Compensation								Long Term Compensation Awards
Name and Principal Position	Fiscal Year	Accounting, administration and office expenses (1)		Legal Fees (2) $		Consulting Fees (1) $		Investor Relations Fees (1) $		Stock Options #		All Other compensations $
William Erfurth President
	2010		-		-		36,000*		-		-	-
	2009		-		-		36,000*				-	-

* Mr. Erfurth has agreed to defer his compensation until the Company begins to earn revenues.

-29-

Stock Options

The following table sets forth certain information with respect to stock options granted to the named officers and outstanding at December 31, 2010

Name		Options Granted	% of Total Options Granted to Employees in Fiscal Year 2004 vested by December 31, 2010	Exercise Price per share	Expiration Date
	None	None	None	None	None

Code of Ethics

We have adopted a code of ethics that applies to all of our executive officers, directors and employees. Code of ethics codifies the business and ethical principles that govern all aspects of our business. This document will be made available in print, free of charge, to any shareholder requesting a copy in writing from the Company. A copy of our code of ethics is filed herein.

Item 12. Security Ownership of Certain Beneficial Owners and Management and related Stockholder Matters

The following table sets forth, as of the date of this Form , the number of shares of Common Stock owned of record and beneficially by executive officers, directors and persons who hold 5.0% or more of the outstanding common Stock of the Company. Also included are the shares held by all executive officers and directors as a group.

Shareholders / Beneficial Owners/ Percentage	Number of Shares
Mr. Bill Erfurth (15.5%) – President – MCE		3,563,875
Mr. & Mrs. Kesselman (12.5%)		2,889,629
Mr. Ron Stone (9.2%)		2,123,061
Mr. William Lindsay (8.6%)		1,926,419
Mr. Christian Ramirez (9.2%)		2,119,061
Mr. Frank Pierce (10.4%)		2,408,023
Directors and executive officers as a group		5,971,898

Item 13. Certain Relationships and Related Transactions

During the years ended December 31, 2010 and 2009, no officer, director, or affiliate of the Company has or proposes to have any direct or indirect material interest in any asset proposed to be acquired by the Company through security holdings, contracts, options, or otherwise.

The Company has adopted a policy under which any consulting or finder's fee that may be paid to a third party or affiliate for consulting services to assist management in evaluating a prospective business opportunity would be paid in stock or in cash. Any such issuance of stock would be made on an ad hoc basis. Accordingly, the Company is unable to predict whether or in what amount such a stock issuance might be made.

-30-

Item 14. Principal Accountant Fees and Services

Audit and audit-Related Fees

For the year ended December 31, 2010, the Company's principal accountant billed $10,800 in fees for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-Q, plus accruals of $7,500.

For the year ended December 31, 2009, the Company's principal accountant billed $10,800 in fees for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-Q, plus accruals of $7,500.

Tax Fees

The Company's principal accountant did not bill for tax fees during the years ended December 31, 2010 and 2009.

All Other Fees

The Company's principal accountant did not bill any other fees during the years ended December 31, 2010 and 2009.

Percentage of Hours Expended

All hours expended on the principal accountant's engagement to audit the Company's financial statements for the most recent fiscal year were attributable to work performed by persons that are the principal accountant's full-time, permanent employees.

Item 15. Exhibits

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.

32.1	Certification of Chief Executive Officer Pusuant to Section 906 of the Sarbanes-Oxley Act.

-31-

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, thereunto duly authorized.

	Modern City Entertainment Inc.

Date: March 31, 2011	By:	/s/ William Erfurth
		William Erfurth
		President and Director

-32-

Modern City Entertainment Inc. 10-K