BUSINESS DEVELOPMENT

MotorSports Emporium, Inc. (the "Company") was incorporated as Ten Stix Inc. on January 10, 1996 under the laws of the State of Colorado to engage in the design, development and marketing of unique card games and other gaming products for the gaming industry.

During February 2004, the officers and directors of the Company formed Ten Stix Gaming, Inc., on behalf of the Company.

On August 10, 2004, Ten Stix, Inc. changed its domicile from Colorado to Nevada.

On August 26, 2004, the Company issued a total of 400,000 restricted shares of common stock valued at $1,200. 200,000 shares were issued to each of Tony A. Cranford and Thomas E. Sawyer in consideration and exchange for 1,100,000 shares of common stock of Ten Stix Gaming, Inc., a Colorado corporation, thereby making Ten Stix Gaming, Inc., a wholly owned subsidiary of the Company.

On October 20, 2004, Ten Stix, Inc., announced that the Company is evaluating multiple opportunities in the motor sports industry that could provide a new direction for the company.

On October 22, 2004, Ten Stix, Inc., announced that the Company is seeking acquisition candidates with successful Internet or retail based operations in the motorsports industry.

On November 10, 2004, the Company formed a wholly owned subsidiary, Scottsdale Diecast, Inc. in Arizona.

The Company, through its wholly owned subsidiary, Scottsdale Diecast, entered into an Asset Purchase Agreement (the "Agreement") with ScaleCars, effective as of November 23, 2004, which acquisition closed on November 24, 2004. Pursuant to the terms of the Agreement, the Company acquired all of the business assets of ScaleCars, in consideration of (a) $166,919.89, evidenced by a Promissory Note executed by Scottsdale Diecast in favor of ScaleCars and (b) 4,900,000 restricted common shares of the Company.

On November 30, 2004, the Company amended its Articles of Incorporation to change its name to MotorSports Emporium, Inc. in order to bring the name of the Company in line with its new business focus, targeting motor sports enthusiasts.

On December 7, 2004, the Company announced that as a result of that change of its name the stock-trading symbol has been changed to "MSEP."

On December 20, 2004, the Company entered into an Assignment Agreement and General Release with Thomas A. Sawyer, Tony Cranford and Ten Stix Gaming, Inc., a wholly-owned subsidiary of the Company.

On December 21, 2004, the Company announced that the Company had completed the divestiture of all interest in Ten Stix Gaming, Inc., and the gaming related business, to Messrs. Thomas Sawyer and Tony Cranford. Pursuant to the terms of the Assignment Agreement and General Release, in consideration of the assignment of 100% of the issued and outstanding common stock of Ten Stix Gaming, Inc., by the Company to Messrs. Sawyer and Cranford, with the exception of the provision of the Management Severance Agreement which provides for the execution of Consulting Agreements with Mr. Sawyer and Mr. Cranford, under which Mr. Sawyer and Mr. Cranford were contractually entitled to receive an aggregate of $60,000 for consulting services, Ten Stix Gaming, Inc., Mr. Sawyer and Mr. Cranford, released the Company, its assigns, officers, directors, attorneys, agents, consultants, representatives, principals, predecessors and successors in interest, from any and all claims, demands, obligations pursuant to any agreement, liabilities, or causes of action of any nature whatsoever that Ten

Stix Gaming, Inc., Mr. Sawyer and Mr. Cranford may now have or hereinafter acquire against the Company, including without limitation the payment of any deferred and unpaid accrued salaries, compensation, loans to and on behalf of the Company, reimbursement and/or any other claims. With the disposition of all the common stock of Ten Stix Gaming, Inc., the Company completely divested itself of any interest in Ten Stix Gaming, Inc., and the gaming related business. The transaction was completed on December 20, 2004.

The Company's principal executive offices are located at 16055 N. Dial Blvd., Suite 5, Scottsdale, Arizona 85260. Its telephone number is (480) 596-4002 and its facsimile number is (480) 556-0831.

The Company has generated limited revenues and has incurred substantial selling, general and administrative expenses. The Company's auditors, HJ & Associates, LLC, have expressed doubt about the Company's ability to continue as a going concern, as evidenced in the auditor's report to the Financial Statements. See "Part II. Item 7. Financial Statements."

BUSINESS OF ISSUER

The Company, its wholly owned subsidiary ScaleCars.com, and the Company's operating divisions, DriversDigs.com, PitStopStudios.com and Quadriga MotorSports are in the motor sports industry targeting motor sports enthusiasts who participate in automobile restoration, automobile racing, the collection of die cast collectibles and other motor sports-related ventures. The Company sells die cast automobiles, race related apparel, automotive art and has the exclusive rights to manufacture and sell GS610(TM) Maximum Performance Brake Fluid(TM). With exception of the brake fluid, items are sold in their retail storefront and on line through various web sites including eBay(R). The GS610(TM) Maximum Performance Brake Fluid(TM) will be sold both online and through national retail specialty shops.

Scalecars.com was formed in late 1999 by former Ferrari Challenge Driver, Ron Adams who drove the #64 Ferrari 360 Modena in the North American Ferrari Challenge Series. Scalecars.com has a retail location at 16055 North Dial Blvd, Suite 5 in Scottsdale, Arizona and maintains an inventory of over 2,400 die cast car models from the early Deuce Coupe to the Ferrari Enzo, as well as racing related clothing and driver signature series.

DriversDigs, an operational division of the Company, sells autographed authentic apparel including racing suits, helmets, gloves and shoes worn by professional race car drivers.

PitStopStudios is another working division of the Company that sells automotive related pictures, lithographs, drawings and race related artwork.

Quadriga MotorSports is the Company's newest division and specializes in high performance automotive parts and accessories. Under the Quadriga brand, the Company has an exclusive license to manufacture and sell GS610(TM) Maximum Performance Brake Fluid(TM).

PRODUCTS AND SERVICES

The Company sells die cast replica cars, motor sports apparel and novelty items through its subsidiary ScaleCars.com. The DriversDigs division of the Company sells and promotes authentic memorabilia owned and autographed by racing drivers. The Company also has an exclusive license to manufacture and distribute a high quality performance brake fluid - GSs610(TM) Maximum Performance Brake Fluid(TM).

The Company's efforts in 2005 focused on securing third-party manufacturing contracts and developing a sales and distribution infrastructure for the brake fluid product.

MARKETING AND DISTRIBUTION

The Company markets its diecast and collectible products through its retail storefront that is open to the general public, via the Internet and through email campaigns to opt-in customers and interested parties. The Company also participates in vender events to include car shows, auctions and special venues.

The Company has a large distribution channel of existing customers and newly registered participants to receive a quarterly product catalog and special email campaign to showcase sales and offers.

The Company intends to market its GS610(TM) Master Performance Brake Fluid(TM) product line through racing sponsorships and internet advertising beginning in 2006. The Company also intends to distribute its high performance brake fluid product line through automotive and other retail outlets.

MARKETING STRATEGY

Currently the Company is engaged in sponsoring several high profile racing drivers who display the Company's subsidiaries and operational divisions' logos on their race uniforms, helmets and/or racing cars. Additionally, the Company has participated in in-kind sponsorship within NASCAR and IRL sanctioned racing series. Additionally, the Company has utilized television, magazine, newspaper and radio marketing for its specific industry. Moving forward, the Company plans to enhance its marketing via the Internet and continue with television and magazine advertising.

STRATEGIC ALLIANCES

None.

COMPETITIVE BUSINESS CONDITIONS

The Company competes with other automobile and sports-related collectible and memorabilia businesses. The Company also competes with certain collectible manufacturers that sell their products directly to consumers. The Company believes that its competitive strength lies in its relationships with key drivers and other individuals in the motorsports industry. However, the Company is smaller and has fewer capital resources than many of its competitors.

RAW MATERIALS AND SUPPLIES

The Company is a reseller of its collectible products and is not dependent on raw material or supply agreements for those products. With respect to its brake fluid business, the Company outsources all manufacturing and packaging to third-party suppliers. While the Company has sole source arrangements for certain facets of its brake fluid production, it attempts to minimize this risk by engaging only large, well-established suppliers.

DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS

The Company believes that the diversity of the products and services it offers helps alleviate the dependence on any one customer or limited group of customers. Through the widespread use of the Company's products and services in the motor sports industries, the Company will continue to increase its customer base.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

The company owns a ten-year exclusive license to manufacture and distribute GSs610(TM) Maximum Performance Brake Fluid(TM). The Company owns no patents, franchises, royalty agreements or registered trademarks and is not a party to any labor contracts.

EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS

The Company's common stock is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the "1934 Act"). As a result of such registration, the Company is subject to Regulation 14A of the "1934 Act", which regulates proxy solicitations. Section 14(a) requires all companies with securities registered pursuant to Section 12(g) thereof to comply with the rules and regulations of the Commission regarding proxy solicitations, as outlined in Regulation 14A. Matters submitted to stockholders of the Company at a special or annual meeting thereof or pursuant to a written consent will require the Company to provide its stockholders with the information outlined in Schedules 14A or 14C of Regulation 14; preliminary copies of this information must be submitted

to the Commission at least 10 days prior to the date that definitive copies of this information are forwarded to stockholders.

The Company is also required to file annual reports on Form 10-KSB and quarterly reports on Form 10-QSB with the Commission on a regular basis, and will be required to disclose certain events in a timely manner, (e.g. changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and bankruptcy) in a Current Report on Form 8-K.

Since the Company outsources the manufacturing, packaging and fulfillment of its brake fluid product line, management is of the opinion that the Company has no exposure to or from environmental laws and regulations (federal, state or local).

Aside from required compliance with federal and state securities laws, regulations and rules, and federal, state and local tax laws, regulations and rules, the Company is not aware of any other governmental regulations now in existence or that may arise in the future that would have an effect on the business of the Company.

CERTAIN BUSINESS RISKS

The risks and uncertainties described below are not the only ones facing the Company and there may be additional risks that are not presently known or are currently deemed immaterial. All of these risks may impair business operations.

RISK THAT THE COMPANY'S COMMON STOCK MAY BE DEEMED A "PENNY STOCK"

The Company's common stock may be deemed to be a "penny stock" as that term is defined in Rule 3a51-1 of the 1934 Act. Penny stocks are stocks (i) with a price of less than five dollars per share; (ii) that are not traded on a "recognized" national exchange; (iii) whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must still meet requirement (i) above); or (iv) of an issuer with net tangible assets of less than US$2,000,000 (if the issuer has been in continuous operation for at least three years) or US$5,000,000 (if in continuous operation for less than three years), or with average annual revenues of less than US$6,000,000 for the last three years.

A principal exclusion from the definition of a penny stock is an equity security that has a price of five dollars ($5.00) of more, excluding any broker or dealer commissions, markups or markdowns. As of the date of this report the Company's common stock has a price less than $5.00.

If the Company's Common Stock is at any time deemed a penny stock, section 15(g) and Rule 3a51-1 of the 1934 Act would require broker-dealers dealing in the Company's Common Stock to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor's account. Potential investors in the Company's common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be "penny stock."

Moreover, Rule 15g-9 of the 1934 Act requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for investors in the Company's common stock to resell their shares to third parties or to otherwise dispose of them.

COMPETITION

To the Company's knowledge, there are no publicly held competitors; however, Speedgear and Exoticcar are privately held companies that sell items that compete with the offerings of the Company. The die cast car manufacturing business is extremely competitive which is why the Company is a product reseller. Since the Company is extremely diverse with the products it sells, the Company has become selective in purchasing from manufacturers and is able to secure better pricing. There is no guarantee, however, that these opportunities will continue in the future and there is no guarantee that one of the Company's competitors may not be able to secure a greater share of the market through pricing.

VOLATILE AND LIMITED MARKET FOR COMMON STOCK

As of December 31, 2005, the Company's common stock was quoted on the "Bulletin Board" under the symbol "MSEP.OB." "OTC" or "Over The Counter" securities are issued by companies that either choose not to, or are unable to, meet the standards for listing on the NASDAQ or a national stock exchange. OTC equity securities can be quoted on the Pink Sheets Electronic Quotation Service, or, if the companies meet the SEC reporting requirements and eligibility requirements established by the NASD, such equity securities may be quoted on the NASD OTC Bulletin Board Service.

The market price of the Company's Common Stock has been and is likely to continue to be highly volatile and subject to wide fluctuations due to various factors, many of which may be beyond the Company's control, including: annual variations in operating results; announcements of technological innovations or new products by the Company or its competitors; and changes in financial estimates and recommendations by securities analysts. In addition, there have been large price and volume fluctuations in the stock market, which have affected the market prices of securities of many small companies, often unrelated to the operating performance of such companies. These broad market fluctuations, as well as general economic and political conditions, may adversely affect the market price of the Company's Common Stock. In the past, volatility in the market price of a company's securities has often led to securities class action litigation. Such litigation could result in substantial costs and diversion of the Company's attention and resources, which could have a material adverse effect on the Company's business, financial condition and operating results.

DEPENDENCE ON KEY EMPLOYEES AND NEED FOR ADDITIONAL MANAGEMENT AND PERSONNEL

The Company is heavily dependent on the ability of David Keaveney who has contributed essential technical and management experience. The loss of his services would have a material adverse effect on the Company's business. However, his interests are closely aligned with those of the Company. There can be no assurance that the Company will be able to employ qualified persons on acceptable terms to replace him should his services become unavailable.

In the event of future growth in administration, marketing, manufacturing and customer support functions, the Company may have to increase the depth and experience of its management team by adding new members. The Company's success will depend to a large degree upon the active participation of its key officers and employees, as well as, the continued service of its key management personnel and its ability to identify, hire and retain additional qualified personnel. There can be no assurance that the Company will be able to recruit such qualified personnel to enable it to conduct its proposed business successfully.

RISKS ASSOCIATED WITH SIGNIFICANT FLUCTUATIONS IN ANNUAL OPERATING RESULTS

The Company could experience significant fluctuations in future annual operating results that may be caused by many factors, including the timing of introductions or enhancements to its products by the Company or its competitors; market acceptance of such newly introduced or upgraded products; the pace of development of the market for the Company's products; changes in strategy; the success of or costs associated with acquisitions, joint ventures or other strategic relationships; changes in key personnel; seasonal trends; changes in the level of operating expenses to support projected growth; and general economic conditions.

RISKS ASSOCIATED WITH DELAYS IN INTRODUCTION OF NEW SERVICES AND PRODUCTS

The Company's future success depends in part on the Company's ability to develop and enhance the Company's products. There are significant technical risks in the development of new products or enhanced versions of existing products. There can be no assurance that the Company will be successful in achieving any of the following: effectively using new technologies; adapting the Company's products to emerging industry standards; developing, introducing and marketing product enhancements; or developing, introducing and marketing new products. The Company may also experience difficulties that could delay or prevent the development, introduction or marketing of these products. Additionally, these new products may not adequately meet the requirements of the marketplace or achieve market acceptance. If the Company is unable to develop and introduce enhanced or new products quickly enough to respond to market or customer requirements, or if they do not achieve market acceptance, the Company's business, financial condition and operating results will be materially adversely affected.

RISKS ASSOCIATED WITH DEPENDENCE ON INTELLECTUAL PROPERTY RIGHTS

The Company presently holds no intellectual property rights. The Company intends to seek copyright and trademark protection of its trade names and products. The Company's success and ability to compete are dependent to a degree on the Company's name and product recognition. Accordingly, the Company will primarily rely on copyright, trade secret and trademark law to protect its product and brand names of products or under which the Company conducts its business. Effective trademark protection may not be available for the Company's trademarks. There can be no assurance that the Company will be able to secure significant protection for the Company's trademarks.

The Company's competitors or others may adopt product or service names similar to the Company's, thereby impeding the Company's ability to build brand identity and possibly leading to customer confusion. The Company's inability to adequately protect its product, brand, trade names and trademarks would have a material adverse effect on the Company's business, financial condition and operating results. Despite any precautions the Company takes, a third party may be able to copy or otherwise obtain and use the Company's software or other proprietary information without authorization or to develop similar software independently.

Policing unauthorized use of the Company's products are made especially difficult by the global nature of the Internet and the difficulty in controlling the ultimate destination or security of products or other data. The laws of other countries may afford the Company little or no effective protection for the Company's intellectual property.

RISKS ASSOCIATED WITH ENTERING NEW MARKETS

One element of the Company's strategy is to leverage the Company's brand names of products that the Company provides. No assurance can be given that the Company will be able to compete successfully in any such new markets. There can be no assurance that the Company's marketing efforts or the Company's pursuit of any new opportunities will be successful. If the Company's efforts are not successful, the Company could realize less than expected earnings, which, in turn, could result in a decrease in the market value of the Company's Common Stock. Furthermore, such efforts may divert management attention or inefficiently utilize the Company's resources.

SUBSTANTIAL DOUBT THAT THE COMPANY CAN CONTINUE AS A GOING CONCERN

The Company expects to continue to incur significant capital expenses in pursuing its business plan to market its products and expand its product line, while obtaining additional financing through stock offerings or other feasible financing alternatives. In order for the Company to continue its operations at its existing levels, the Company will require significant additional funds over the next twelve months. Therefore, the Company is dependent on funds raised through equity or debt offerings. Additional financing may not be available on terms favorable to the Company, or at all. If these funds are not available the Company may not be able to execute its business plan or take advantage of business opportunities. The ability of the Company to obtain such additional financing and to achieve its operating goals is uncertain. In the event that the Company does not obtain additional capital or is not able to increase cash flow through the increase of sales, there is a substantial doubt of its being able to continue as a going concern.

FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING

No assurance can be given that the Company will be able to conduct its marketing and product development programs as planned or that change in the Company's marketing and product development plans or other changes affecting the Company's operating expenses will not result in the expenditure of such proceeds before such time. Contingencies may arise that require the Company to obtain additional funding before that time. The Company's future capital requirements will depend on many factors, including continued product development programs, the magnitude of these programs, the time and expense involved in obtaining new customers, competing technological and market developments, the establishment of additional collaborative arrangements, the costs involved in filing and prosecuting and enforcing copyright and trademark claims, establishing marketing programs and conducting commercialization activities and arrangements for new products and services.

SUBSTANTIAL FUTURE SALES OF STOCK; DILUTION

There may be substantial sales of the Company stock, common or preferred as a result of stock option exercises, stock bonuses, public and/or private sales of the Company stock.. Sales of substantial amounts of stock could have a material dilutive effect on stockholders. Additionally, it may be necessary to offer warrants or options to obtain strategic relationships or to raise additional capital. All of these issuances will dilute the holdings of existing stockholders, thereby reducing such holder's percentage ownership.

NO DIVIDENDS

The Company anticipates that it will use any funds available to finance its growth and that it will not pay cash dividends to stockholders in the foreseeable future.

HISTORY OF LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY

As of December 31, 2005, the Company had accumulated significant net losses. The development of the Company's products will require the commitment of substantial resources to increase its advertising, marketing and distribution of its existing products and to complete the testing, manufacturing, marketing and distribution of new products. These expenditures are expected to result in substantial and increasing losses over the next several months. There can be no assurance that the Company will not incur substantial and continuing net losses beyond the next six months or that the Company will ever reach profitability. Furthermore, there can be no assurance the Company's products will meet the expectations and effectiveness required to be competitive in the market place, that the Company will enter into arrangements for product development and commercialization, successfully market its products, or achieve customer acceptance.

REPORTS TO SECURITY HOLDERS

The public may view obtain copies of the Company's reports, as filed with the Securities and Exchange Commission, at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Information on the Public Reference Room is available by calling the SEC at 1-800-SEC-0330. Additionally, copies of the Company's reports are available and can be accessed and downloaded via the internet on the SEC's internet site at http://www.sec.gov/cgi-bin/srch-edgar, by simply typing in "MotorSports Emporium, Inc." Additional Company information is available on the Company's internet site at http://www.motorsportsemporium.com.

EMPLOYEES

As of December 31, 2005, the Company had 7 employees. No union or any other form of collective bargaining unit represents any employee. David W. Keaveney, the President, Chief Executive Officer and Chief Financial Officer, has an employment agreement with the Company.