Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009
[] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
----------- -----------
Commission file number: 333-148636
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RACE WORLD INTERNATIONAL, INC.
(Exact name of small business issuer as specified
in its charter)
Nevada 20-8720608
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
968 - 240 th Street V2Z 2Y3
Langley, British Columbia, Canada
(Address of principal (Zip Code)
executive offices)
------------------
Issuer's telephone number, including area code: (604) 539-9680
(Former name or former address, if changed since last report)Not Applicable
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
[X] Yes [ ] No
----------------------------------------------------------------------
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated
filer" and smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] (Do not Smaller reporting company [X]
check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as
Defined in Rule 12b-2 of the Exchange Act). [x] Yes [ ] No
As of September 30, 2009 the Issuer had 46,200,000 shares of common stock
issued and outstanding.
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RACE WORLD INTERNATIONAL, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009
TABLE OF CONTENTS
PART I
Item 1. Financial Statements
Balance Sheets as of Sept 30, 2009 and December 31, 2008 . . . . . . . . F-1
Statements of Operations for the Three Months and Nine Months Ended Sept
30, 2009 and Sept 30, 2008 and from Inception (Dec 29,2006) to
Sept 30, 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .F-2
Statement of Stockholders' Equity . . . . . . . . . . . . . . . . . . . .F-3
Statements of Cash Flows for the Three Months and Nine Months Ended Sept
30, 2009 and Sept 30, 2008 and from Inception(Dec 29, 2006) to
Sept 30, 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . .F-5
Item 2. Management's Discussion and Analysis or Plan of Operation . .6
Item 3. Quantitative and Qualitative Disclosures about Market Risk. .13
Item 4. Controls and Procedures . . . . . . . . . . . . . . . . . . .13
PART II
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . .14
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds. .14
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . .14
Item 4. Submission of Matters to a Vote of Security Holders . . . . .14
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . .14
Item 6. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . .14
RACE WORLD INTERNATIONAL, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
Race World International, Inc.
(a development stage company)
Balance Sheet
As At As At
September 30 December 31
2009 2008
(UNAUDITED) (AUDITED)
---------------------------------------------------------------------
ASSETS
---------------------------------------------------------------------
CURRENT
Cash $ 4,637 $ 24,194
Other current assets
Prepaid Expenses - 5,833
Refundable Taxes 4,861 5,105
------------ -------------
Total Current Assets 9,498 35,132
PROPERTY AND EQUIPMENT (Note 4)
Race Vehicle 83,125 90,250
------------ -------------
Total Assets $ 92,623 $ 125,382
============ =============
---------------------------------------------------------------------
LIABILITIES
---------------------------------------------------------------------
Current
Accounts payable and $ 27,680 $ 20,708
accrued liabilities ------------ -------------
---------------------------------------------------------------------
STOCKHOLDERS? EQUITY
---------------------------------------------------------------------
Common stock, $.001 par value
Authorized: 200,000,000 shares
Issued: 46,200,000 shares 46,200 46,200
Preferred stock,$.001 par value
Authorized: 20,000,000 shares
Issued: Nil
Additional paid-in capital 215,631 215,631
Deficit accumulated during the
development stage (196,888) (157,157)
------------ -------------
Total stockholders? equity 65,943 104,674
------------ -------------
Total liabilities and stockholders?
Equity $ 92,623 $ 125,382
============ =============
GOING CONCERN (Note 1)
The accompanying notes are an integral part of these financial statements.
APPROVED BY THE DIRECTORS:
/s/Evan Williams
----------------
Evan William
Director
/s/ Solomon Nordine
-------------------
Solomon Nordine
Director
.F-1.
Race World International, Inc.
(a development stage company)
Statements of Operations
(Unaudited)
For the Three For the Three For the Nine For the Nine Period From
Months Ended Months Ended Months Ended Months Ended Dec 29, 2006
Sept 30, 2009 Sept 30, 2008 Sept 30,2009 Sept 30,2008 (inception) to
Sept 30, 2009
--------------------------------------------------------------------------------------------------
REVENUE
Interest Revenue $ - $ 750 $ 21 $ 6,475 $ 11,449
Operating Revenue - - 2,581 - 2,581
============= ============= =============== ============= ============
Total Revenue - 750 2,602 6,475 14,030
===========================================================================
EXPENSES
Advertising
& Promotion - 4,718 238 19,718 20,761
Bank Charges 66 50 225 200 656
Depreciation 2,375 2,375 7,125 2,375 11,875
Foreign Currency
Loss/Gain (1,111) - (2,012) - 3,059
Listing and Share
Transfer fees 4,267 12,724 19,170 12,899 31,749
Management fees - 14,152 7,342 35,152 52,702
Professional fees 1,133 8,411 7,284 25,635 69,893
Rent - 2,948 2,564 7,823 12,939
Travel - 1,887 397 6,887 7,284
============= ============= ============== ============= =============
Total Expenses 6,730 47,265 42,333 110,689 210,918
============================================================================
NET LOSS $ (6,730) $ (46,515) $ (39,731) $(104,214) $(196,888)
============= ============= ============== ============= =============
Loss per share $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.00)
(Note 2(f)) ============= ============= ============== ============= =============
Weighted average
number of shares
outstanding 46,200,000 46,036,957 46,200,000 45,946,154 40,213,618
============= ============= ============== ============= =============
---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
.F-2.
Race World International, Inc.
(a development stage company)
Statement of Stockholders? Equity
(Unaudited)
For the Period from Dec 29, 2006 (inception) to September 30, 2009
-----------------------------------------------------------------------------
Common stock
-------------- Deficit Acc. Total
Number Amount Additional During Devel- Stockholders
Of Shares Paid-in opment Stage Equity
Capital
--------- -------- ----------- --------------- -------------
Issue of Common 19,700,000 $ 19,700 $ 78,800 $ - $ 98,500
Stock for cash
On organization
Of the Company
Issue of Common 26,200,000 $ 26,200 $ 107,131 $ - $133,331
Stock for cash
Net loss for
Period - - - $ (21,508) $ (21,508)
--------- -------- ----------- --------------- -------------
Balance 45,900,000 $45,900 $ 185,931 $ (21,508) $ 210,323
December 31,
2007
Issue of Common 300,000 300 29,700 - 30,000
Stock for cash
Net loss for
Period - - - (135,649) (135,649)
--------- --------- ---------- --------------- -------------
Balance
December 31,
2008 46,200,000 $46,200 $ 215,631 $(157,157) $ 104,674
Net loss for
Period - - - (39,731) (39,731)
---------- -------- ----------- --------------- -------------
Balance
September 30,
2009 46,200,000 $46,200 $ 215,631 $(196,888) $ 64,943
========== ======== =========== =============== =============
The accompanying notes are an integral part of these financial statements.
.F-3.
Race World International, Inc.
(a development stage company)
Statement of Cash Flows
(Unaudited)
For the Three For the Three For the Nine For the Nine Period from
Months Ended Months Ended Months Ended Months Ended Dec 29,2006
Sept 30,2009 Sept 30, 2008 Sept 30,2009 Sept 30,2008 (inception) to
Sept 30, 2009
----------------------------------------------------------------------------------------------
CASH FLOWS (USED IN)
PROVIDED BY:
OPERATING ACTIVITIES
Net loss $ (6,730) $ (46,515) $ (39,731) $(104,214) $ (196,888)
Items not affecting
Cash:
Depreciation 2,375 2,375 7,125 2,375 11,875
Changes in Operating
Assets and Liabilities:
Decrease (Increase)
in prepaid expenses
and accrued assets 833 - 5,833 5,000 -
Increase (Decrease) in
accounts payable
and accrued
liabilities (5,336) 5,471 6,973 (3,712) 27,681
Increase in accrued
interest receivable - 338 - 387 -
Decrease (Increase)
in Refundable
Taxes (203) (1,706) 243 (5,331) (4,862)
----------- ---------- ----------- ---------- -----------
(9,061) (40,037) (19,557) (105,495) (162,194)
=========== ========== =========== ========== ===========
INVESTING ACTIVITIES
Promissory note
Receivable
(Note 3) - 130,000 - 175,000 -
Purchase of
property and
equipment - (95,000) - (95,000) (95,000)
----------- ---------- ----------- ----------- -----------
- 35,000 - 80,000 (95,000)
=========== ========== =========== =========== ===========
FINANCING ACTIVITIES
Common stock
issued for cash: - 30,000 - 30,000 261,831
----------- ---------- ----------- ----------- -----------
INCREASE
(DECREASE) IN CASH (9,061) (24,963) (19,557) 4,505 4,637
CASH, beginning 13,698 5,916 24,194 26,374 -
----------- ---------- ----------- ----------- -----------
CASH, ending $ 4,637 $ 30,879 $ 4,637 $ 30,879 $ 4,637
=========== ========== =========== =========== ===========
SUPPLEMENTAL
INFORMATION
Cash paid during
the year to:
Interest $ - $ - $ - $ - $ -
Income taxes $ - $ - $ - $ - $ -
-----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
.F-4.
RACE WORLD INTERNATIONAL, INC.
(a development stage company)
September 30, 2009
1. 0RGANIZATION AND DEVELOPMENT STAGE ACTIVITIES
The Company was incorporated under the laws of the State of Nevada on Dec 29,
2006. The company purpose in the Articles of Incorporation is to engage in
any lawful activity or activities in the State of Nevada and throughout the
world. As of September 30, 2009, the Company is considered to be in the
development stage as the Company is devoting substantially all of its effort to
establishing its new business and the Company has not generated revenues from
its business activities. The Company has no cash flows from operations. The
Company is currently seeking additional funds through future debt or equity
financing to offset future cash flow deficiencies. Such financing may not be
available or may not be available on reasonable terms. The resolution of this
going concern issue is dependent on the realization of management?s plans. If
management is unsuccessful in raising future debt or equity financing, the
Company will be required to liquidate assets and curtail or possibly cease
operations.
2 . SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States. Because a
precise determination of many assets and liabilities is dependent on future
events, the preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful judgment.
The financial statements have, in management?s opinion, been properly
prepared within reasonable limits of materiality and within the framework of
the accounting policies summarized below:
a .Cash and cash equivalents
The Company considers all short-term investments, including investments in
certificates of deposit, with a maturity date at purchase of three months
or less to be cash equivalents.
b .Revenue recognition
Revenue is recognized on the sale and transfer of goods and
Services.
c .Foreign currencies
The functional currency of the Company is the United States dollar.
Transactions in foreign currencies are translated into United States dollars
at the rates in effect on the transaction date. Exchange gains or losses
arising on translation or settlement of foreign currency denomination
monetary items are included in the statement of operations.
d .Property and equipment
Property and equipment are recorded at cost and are depreciated using the
straight-line method over their estimated useful lives as follows:
Asset Rate
------- ------
Race Vehicle 10 years
The cost of maintenance and repairs are expensed as incurred.
e .Financial instruments
The Company?s financial instruments consist of cash, refundable taxes, and
accounts payable and accrued liabilities.
Management is of the opinion that the Company is not subject to significant
interest, currency or credit risks on the financial instruments included in
these financial statements. The fair market values of these financial
instruments approximate their carrying values.
f .Income taxes
The Company follows the asset and liability method of accounting for income
taxes. Under this method, current taxes are recognized for the estimated
income taxes payable for the current period.
Deferred income taxes are provided based on the estimated future tax effects
of temporary differences between financial statement carrying amounts of
assets and liabilities and their respective tax bases as well as the benefit
of losses available to be carried forward to future years for tax purposes.
Deferred tax assets and liabilities are measured using enacted tax rates that
are expected to apply to taxable income in the years in which those temporary
differences are expected to be covered or settled. The effect of deferred tax
assets and liabilities of a change in tax rates is recognized in operations
in the period that includes the enactment date. A valuation allowance is
recorded for deferred tax assets when it is more likely than not that such
deferred tax assets will not be realized.
g .Loss per share
Basic loss per share is computed by dividing loss for the period available to
common stockholders by the weighted average number of common stock
outstanding during the period.
h .Recent accounting pronouncements
In September 2006, the FASB issued FASB Statement No. 157. This statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. This statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board
having previously concluded in those accounting pronouncements that fair
value is a relevant measurement attribute. Accordingly, this statement does
not require any new fair value measurements. However, for some entities, the
application of the statement will change current practice. This statement is
effective for financial statements for fiscal years beginning after November
15, 2007.
In February 2008, the FASB issued FASB Staff Position (FSP FIN) No. 157-2
which extended the effective date for certain nonfinancial assets and
nonfinancial liabilities to fiscal years beginning after November 15, 2008.
The adoption of the portions of SFAS No. 157 that were not postponed by
(FSP FIN) No. 157-2 did not have a material impact on the financial
statements. The Company does not expect the adoption of the postponed
portions of SFAS No. 157 to have a material impact on the Company?s
financial statements.
In February 2007, the Financial Accounting Standards Board (FASB)issued
SFAS No. 159, "The Fair Value Option for Financial Assets and
Financial Liabilities - Including an Amendment of FASB Statement No. 115".This
statement permits entities to choose to measure many financial instruments
and certain other items at fair value. Most of the provisions of SFAS No. 159
apply only to entities that elect the fair value option. However, the
amendment to SFAS No. 115 "Accounting for Certain Investments in Debt and
Equity Securities" applies to all entities with available-for-sale and
trading securities. SFAS No. 159 became effective for the year beginning
January 1, 2008. There was no material impact on the company financial
statements upon adoption of SFAS 159.
In December 2007, the FASB issued Statement No. 14 (revised 2007), Business
Combinations ("Statement 141 (R)". Statement 141 (R) changes the accounting
for and reporting of business combination transactions. Statement 141 (R) is
effective for fiscal years beginning after December 15, 2008. The adoption
of this statement is not expected to have a material effect on the Company's
financial statements.
In December 2007, the FASB issued Statement No. 160, Accounting and Reporting
for Noncontrolling Interests in Consolidated Financial Statement, an
amendment of ARB No. 51 ("Statement 160"). Statement 160 clarifies the
classification of noncontrolling interests in consolidated statements of
financial position and the accounting for and the reporting of transaction
between the reporting entity and holders of such noncontrolling interest.
Statement 160 is effective for the first annual reporting period beginning
after December 15, 2008. The adoption of this statement is not expected to
have a material effect on the Company's financial statements.
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities", an amendment of SFAS No. 133. SFAS 161
applies to all derivative instruments and non-derivative instruments that are
designated and qualify as hedging instruments pursuant to paragraphs 37 and
42 of SFAS 133 and related hedged items accounted for under SFAS 133. SFAS
161 requires entities to provide greater transparency through additional
disclosures about how and why an entity uses derivative instruments, how
derivative instruments and related hedged items are accounted for under SFAS
133 and its related interpretations, and how derivative instruments and
related hedged items affect an entity's financial position, results of
operations, and cash flows. SFAS 161 is effective as of the beginning of an
entity's first fiscal year that begins after November 15, 2008. The Company
does not expect SFAS 161 to have a material impact on its results of
operations or financial position.
In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally
Accepted Accounting Principles." SFAS 162 will provide framework for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. generally accepted accounting
principles (GAAP) for nongovernmental entities. SFAS 162 will be effective 60
days following the Securities and Exchange Commission's approval of the
Public Company Accounting Oversight Board (PCAOB) amendments to AU Section
411. The Company does not expect the adoption of SFAS 162 will have a
material impact on its financial condition or results of operation.
In October 2008, the FASB issued FSP No. 157-3, Determining the Fair Value of a
Financial Asset When the Market for that Asset is Not Active (FST 157-3),
which clarifies the application of SFAS 157 in an inactive market. FSP 157-3
explains that when relevant and observable market information is not available
to determine the measurement of an asset?s fair value, management must use
their judgment about the assumptions a market participant would use in pricing
the asset in a current sale transaction. Appropriate risk adjustments that a
market participant would use must also be taken into account when determining
the fair value. Application of this guidance should be accounted for as a
change in estimate and FSP 157-3 was effective upon issuance. Upon adoption of
FSP 157-3, there was no material impact on the Company?s financial statements.
In June 2009, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 168 (SFAS No. 168), The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles?a replacement of FASB Statement No. 162. The FASB
Accounting Standards Codification (Codification) will be the single source of
authoritative nongovernmental U.S. generally accepted accounting principles
(GAAP). Rules and interpretive releases of the Securities and Exchange
Commission (SEC) under authority of federal securities laws are also sources
of authoritative GAAP for SEC registrants. SFAS No. 168 is effective for
interim and annual periods ending after September 15, 2009. The Codification
does not change GAAP and will not have a material impact on the Company?s
financial statements.
3 .PROMISSORY NOTE RECEIVABLE ? RELATED PARTY
The August 15 th, 2007 note receivable pays monthly interest only of 0.5% per
month and carries an effective annual interest rate of 6.17%. The capital of
$205,000 is payable upon demand and is due from JPI Project Management Inc.,
a related company. JPI is owned solely by the President?s spouse. Payment is
due on the 15 th of the following month and the first payment is due September
15 th.
On December 31, 2007 a demand of $10,000 was made on the original $205,000
note, reducing it to its ending December 31, 2007 balance of $195,000. The
$10,000 payment was made on behalf of RWI by JPI to reduce the shareholder?s
loan account. Interest payments due from September to December 2007 were also
made through payments on behalf of RWI by JPI to reduce the outstanding
shareholder?s loan.
On March 31, 2008 a demand of $10,000 was made on the original $205,000 note,
reducing it to its ending March 31, 2008 balance of $185,000. The $10,000
payment was made on behalf of RWI by JPI to reduce the shareholder?s loan
account. Interest payments due from January to March 2008 were also made
through payments on behalf of RWI by JPI to reduce the outstanding
shareholder?s loan.
On June 30, 2008 a demand of $35,000 was made on the remaining $185,000 note,
reducing it to its ending June 30, 2008 balance of $150,000. The $35,000
payment was made on behalf of RWI by JPI to reduce the shareholder?s loan
account. Interest payments due April to June 2008 were also made through
payments on behalf of RWI by JPI to reduce the outstanding shareholder?s
loan.
On July 1, 2008 a demand of $100,000 was made on the remaining $150,000 note,
reducing it to its July 1, 2008 balance of $50,000. A $5,000 payment was made
on behalf of RWI by JPI to reduce the shareholder?s loan account, while the
other $95,000 payment was made on behalf of RWI for the purchase of a 1988
Formula Atlantic Swift DB4 race car, spare parts, and team support vehicle.
The $95,000 purchase price was subjected to an appraisal by an approved auto
specialist.
On September 30, 2008 a demand of $30,000 was made on the remaining $50,000
note, reducing it to its September 30, 2008 balance of $20,000. The $20,000
payment was made on behalf of RWI by JPI to reduce the shareholder?s loan
account.
On December 31, 2008 a demand of $20,000 was made on the remaining $20,000 note
for payment in full. The $20,000 payment was made on behalf of RWI by JPI to
reduce the shareholder?s loan account. Interest payments were also made
through payments on behalf of RWI by JPI to reduce the shareholder?s loan
account.
4.Property and Equipment
2009 2008
------- --------
Race Vehicle $ 95,000 $ 95,000
Accumulated Depreciation (11,875) (4,750)
------- --------
$ 83,125 $ 90,250
======= ========
The company does not carry storage or operating insurance on the Race
Vehicle.
5.Stockholders? Equity:
Common Stock Offerings:
On Dec 29, 2006, the Company completed a private placement
offering of 19,700,000 common shares to its officers and
directors for $98,500.
On August 9, 2007, the Company completed a private placement
offering of 26,200,000 to its remaining founders for $133,331.
On August 19, 2008, the Company completed a private placement
Offering of 300,000 common shares to new subscribers for net
proceeds of $30,000.
6. RELATED PARTY TRANSACTIONS
a.On August 15, 2007, the Company advanced $205,000 to JPI, a company
controlled by the wife of the Company president as detailed in Note 3 above.
b.Included in accounts payable and accrued liabilities is $17,573 owing to the
president of the Company.
c.On January 1, 2008 a management agreement was entered into with JPI and all
management fees (2009 - $7,342; 2008 - $35,152) relate to this agreement.
Management fees for July 2009 to September 2009 have been waived.
d.JPI owned and operated a Formula Atlantic Racecar on behalf of RWI for
advertising purposes. The RWI team car was entered into five races between
April and September 2008. Advertising fees (2009 - $238; 2008 ? $19,718) relate
to the team car. Travel costs (2009 ? Nil; 2008 - $6,887) relate to these
trips.
e.On July 1, 2008, JPI sold its Formula Atlantic Racing Car to RWI, as well as
all spare parts, tools and the paddock support vehicle for a total of $95,000.
The purchase price was subjected to an appraisal by I.W.E. Rear Ends Only Ltd.,
an approved auto specialist.
f.Professional fees include amounts attributed to S N Ventures Inc. (2009 ?
$2,171; 2008 - $14,311), a company controlled by the Treasurer.
g.Rental charges are paid on a month-to-month basis to JPI (2009 - $2,564; 2008
- $7,823). Rental charges for July 2009 to September 2009 have been waived.
h.Listing and Stock Transfer Fees include amounts attributed to U N Holdings
Inc. (2009 - $7,678; 2008 - $2,000), a company controlled by the Treasurer?s
brother.
i.All operating revenues are attributed to rental fees of the race car to
to JPI (2009 - $2,581 ; 2008 Nil).
7.INCOME TAXES
----------------------------------------------------------------------------
Deferred tax assets and liabilities:
----------------------------------------------------------------------------
Deferred tax assets: September 30,2009
Property and equipment $ 4,037
Operating loss carry-forwards 62,905
Valuation allowance (66,942)
----------------------------------------------------------------------------
Net Deferred tax asset $ -
============================================================================
Management believes that it is not more likely than not that it will create
sufficient taxable income sufficient to realize its deferred tax assets. It
is reasonably possible these estimates could change due to future income and
the timing and manner of the reversal of deferred tax liabilities. Due to its
losses, the Company has no income tax expense.
The Company has computed its 2008 operating loss carry-forwards for income tax
purposes to be $171,407.
.F-5.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our financial
statements and attached notes. This discussion may contain forward-looking
statements that could involve risks and uncertainties.
Forward-looking Statements:
The statements contained in this 10-Q that are not historical fact are
"forward-looking statements," which can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "should,"
or "anticipates," the negatives thereof or other variations thereon or
comparable terminology, and include statements as to the intent, belief or
our current expectations with respect to the future operations, performance
or position. These forward-looking statements are estimates and predictions.
We cannot assure you that the future results indicated, whether expressed or
implied, will be achieved. While sometimes presented with numerical
specificity, these forward-looking statements are based upon a variety of
assumptions relating to our business, which, although currently considered
reasonable by us, may not be realized. Because of the number and range of the
assumptions underlying our forward-looking statements, many of which are
subject to significant uncertainties and contingencies beyond our reasonable
control, some of the assumptions inevitably will not materialize and
unanticipated events and circumstances may occur subsequent to the date of
this 10-Q. These forward-looking statements are based on current
information and expectation and we assume no obligation to update them at any
stage.
Therefore, our actual experience and results achieved during the period
covered by any particular forward-looking statement may differ substantially
from those anticipated. Consequently, the inclusion of forward-looking
statements should not be regarded as a representation by us or any other
person that these estimates will be realized, and actual results may vary
materially. We cannot assure that any of these expectations will be realized
or that any of the forward-looking statements contained herein will prove to
be accurate.
Description of Business:
History and Development
Race World International, Inc. was incorporated pursuant to the laws of the
State of Nevada on December 29, 2006 under the name Race World International,
Inc. Race World was formed to develop and operate a motorsports theme park.
Race World's current operations are summarized as follows:
-We have formed our Nevada Company
-Organized our head office in Langley, British Columbia
-Created an initial web-site and secured our relevant domain name
-Appointed our legal counsel to explore acceptance of our motor
sports theme park in Nevada
-Our President, Evan Williams, has viewed several potential
sites for development
-We purchased a Formula Atlantic race car for promotion and marketing
We have no current plans to begin developing Phases 2 through 5 until
financing is available. No financing is available at present. The following
summary illustrates an estimated time frame for completion of each Phase of
our development assuming financing becomes available:
Phase Financing Use Time Frame
Phase 2 $ 1,000,000 Feasibility Studies July 2008 - March 2010
Phase 3 $ 80,000,000 Land June 2009 - July 2010
Phase 4 $ 15,000,000 Racetracks January 2010 - September 2011
Phase 5 $ 40,000,000 Buildings & Equip. April 2010 - March 2012
Totals $136,000,000 July 2008 - March 2012
As we do not currently have financing for Phases 2 - 5, there is no guarantee
that this time frame will be met.
Phase 1 funding of approximately $231,831 was provided by our Founding
shareholders. This Phase 2 share offering will enable Race World to acquire
environmental, engineering, and market studies necessary for inclusion in its
business plan. These studies will also be required for future investors,
federal, state, and local authorities.
We anticipate our theme park complex will offer a wide range of activities.
Rentals including automotive and related accessories, track rentals,
entertainment, and support services will also be offered. We
have also presented in this offering a brief overview of our future
development intentions. Any potential investor is cautioned that our
motorsports theme park may not be feasible. Any potential investor is asked
to read our list of risk factors in our S-1 registration statement filed with
the SEC. We will strive to establish long-term business relationships within
the race community.
There have been no public announcements of our development plans. We consider
it prudent, for the present time, to proceed with our environmental studies
and engineering reports as discreetly and privately as possible while
evaluating the land we wish to purchase. We will have no operating income
until we have completed Phase 2 through 5 funding and successfully developed
our motorsports theme park. We will commence operations as soon as Phase 5
construction is complete.
.6.
OUR PROPOSED LIST OF FUTURE RACE TRACKS, FACILITIES, AND SERVICES FOLLOWS:
ROAD COURSES
Race Track # 1 (RW1)
This automobile road course will offer track time rental and automobile
rentals ranging from the novice to Formula 1. Individuals, race teams, race
clubs, and auto manufacturers will be able to rent time on the track. The
course will be designed by race enthusiasts and professionals. It will be
not less than 8 kms and its special features will include:
a) Short circuit for club meets and use
b) Mid length national circuit
c) Long circuit set to international standards
d) Changing elevations on all circuits. This is a
particularly attractive feature for the experienced
racer.
e) Right and left hand turns
f) Allocated pit crew areas
g) Multi corner spectator viewing
Race Track # 2 (RW2)
This track will be a 1/4-mile drag strip built to NHRA and IHRA standards.
Race Track # 3 (RW3)
This track will be a go-kart road course featuring both left and right hand
turns, and will be the first track to be constructed. Individuals, clubs,
race teams, and kart manufacturers will be able to rent time on the track as
well as go-karts. We intend having a "long circuit" of not less than 1,500
meters in length and 9 meters in width . This will attract novice and
serious drivers alike and allow for both shifter and non-shifter karts.
Race Track # 4 (RW4)
This track will be a 3/8 mile semi banked oval track. Monster truck events
will be offered within the oval at specific times.
Portable grand stands will be in place.
Race Track # 5 (RW5)
This course will be an off road dirt track for ATV and off road use. There
will be a mud area for extreme 4WD trials.
Race Track # 6 (RW6)
This will be a dedicated super cross track built to AMA specifications.
PROPOSED FACILITIES
RWI materials for construction are conventional and entirely available
locally from a multiplicity of suppliers.
Club Houses
Each division of motorsports will have a type specific Club House. The size
and specifications will be dependent on expected spectator and customer use.
A full range of accessories and services will be available. We anticipate
each form of racing will generate specific needs in terms of equipment and
special skills by staff.
.7.
Grand Stands
We anticipate a blend of permanent and portable grand stands to accommodate
larger crowds dependent on the type of event venue. Each track will have
grand stands.
Observation Towers
We anticipate several to serve the dual functions of V.I.P. and spectator
pleasure and to assist track officials carry out duties as they relate to
safety and security measures.
Flood Lighting
The drag racing, go-kart, and 3/8th mile oval tracks will be flood lighted
for night use.
TYPICAL REVENUE PRODUCING TRANSACTION
As we are presently considering Phase 2 financing only, a breakdown of
typical anticipated future revenues is speculative only, and will not be
presented at this time.
STRATEGIC RELATIONSHIPS
Strategic Relationships will be a major part of our marketing plan in the
future. Clubs and automotive related organizations will play a key part
generating revenues. We anticipate a specific part of our marketing plan
will be committed to developing such contacts and relationships.
.8.
THE MARKET
RWI intends to offer our race enthusiast a geographically unique motorsports
adventure. Las Vegas has approximately 800,000 tourist's visits per month
averaged over the previous ten years. RWI will target initially 6,000 (0.75%)
tourists per month to its site.
The main market for the recreational sector are the permanent residents of
Nevada, California, and the tourists who visit Las Vegas. The market for the
professional sector is the worldwide community of motor racing teams.
Dependence upon a major customer is not a factor in RWI's business plan. The
following list highlights our customer base in order of anticipated
importance:
1. Tourist flow to Las Vegas.
2. Professional motor sport organizers, such as S.C.C.A. (Sports Car
Club of America).
3. Motor sports teams for testing and development.
4. Permanent local residents for go karting, drag racing, off
roading etc.
5. Commercial space leased to enterprises who wish to be located in
a motor sports theme park.
6. Residential clients who wish to live in a motor sports theme
park.
COMPETITION
RWI intends to offer motorsports adventures to the tourist market that are
presently only available in a limited or spasmodic manner. As previously
mentioned, there are no daily continuous competitive facilities in the Las
Vegas area. The one established complex nearby (Las Vegas Speedway) does not
cater to any of the motor sport activities that RWI will offer and
conversely, RWI does not intend to compete in any of the areas that the
speedway has traditionally offered. See "Risk Factors" in our S1 registration
statement for a discussion of potential future competition.
EMPLOYEES AND STRATEGIC ADVISORS
As of the date of this report, we have no full-time employees with the
exception of our four members of Executive Management and Board of
Directors. We will utilize outside consultants as required to offer our
services. These consultants be independent contractors
PATENTS, COPYRIGHTS, LOGOS, TRADEMARKS
RWI anticipates no need for patents. Logos will be trademarked and certain
concessions will be negotiated for essential services, but these are
considered minor in the overall scope of the business plan.
PROPERTY
Our executive offices are located at 968 - 240th Street, Langley, BC, Canada
V2Z 2Y3. Our telephone number is (604) 539-9680.
Upon the completion of Phase 2 financing and the appropriate environmental
and engineering studies, we will proceed to Phase 3 financing.
.9.
Should financing become available we will attempt to purchase property
suitable for our use.
SEASONALITY
We do not anticipate our business will be seasonal in nature as our proposed
location is warm and dry year round.
Critical Accounting Policies:
Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which require
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements, the
disclosure of contingent assets and liabilities, and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates. The critical accounting policies that affect our
more significant estimates and assumptions used in the preparation of our
financial statements are reviewed and any required adjustments are recorded
on a monthly basis.
Results of Operations:
Substantial positive and negative fluctuations can occur in our business due
to a variety of factors, including variations in the economy, and the
abilities to raise capital. As a result, net income and revenues in a
particular period may not be representative of full year results and may vary
significantly in this early stage of our operations. In addition results of
operations, may vary in the future, and will be materially affected by many
factors of a national and international nature, including economic and market
conditions, currency values, inflation, the availability of capital, the
level of volatility of interest rates, the valuation of security positions
and investments and legislative and regulatory developments. Our results of
operations also may be materially affected by competitive factors and our
ability to attract and retain highly skilled individuals.
Period Ended September 30, 2009:
We have not commenced operations and have had no operating revenues to date.
Much of our preliminary organization has been completed including establishing
our office premises and accounting system. During the last three months, our
focus has been on the following areas:
1. Our Chief Executive Officer, Evan Williams, has spoken with business
contacts, marketing agents, and land owners.
No land has been optioned or secured to date however discussions have been
held regarding specific parcels of land.
2. We have received our first promotional product.
3. We have continued engineering and race track design studies to ensure
the suitability of any future land purchase.
Comparison of Three Month Periods Ended September 30, 2009, and September 30,
2008
The major changes in specific accounts in our operating statement for the
three-month period ended September 30, 2009 as compared to the previous three
month period ended September 30, 2008 are as follows:
Acquisition of Assets
Prior to July 1, 2008, JPI owned and operated a Formula Atlantic race car on
behalf of RWI for advertising purposes. The RWI team car was entered into five
races between April and Sept 2008. On July 1, 2008, JPI sold its Formula
Atlantic Racing Car to RWI, as well as spare parts, tools, and the paddock
support vehicle for a total of $95,000. The purchase price was subjected to an
appraisal by I.W.E. Rear Ends Only Ltd., an approved auto specialist. RWI will
continue to use the vehicle for promotion and marketing of RWI at races,
exhibitions, and private showings.
Revenue
There was no operating revenue for the three month period ended September 30,
2009, or for the three months ended September 30, 2008.
Expenses
No advertising and promotion costs were incurred during the three months
ended September 30, 2009. Advertising and promotional costs of $4,718 were paid
for the three months ended September 30, 2008.
Depreciation of $2,375 was incurred on the Company?s acquired automotive
equipment during this three month period. Depreciation of 2,375 was incurred
during the three months ending September 30, 2008. Listing and share transfer
fees of $4,267 were also incurred in the three months ended June 30, 2009.
Listing and share transfer fees of $12,724 were paid during the three months
ending September 30, 2008.
Management fees incurred during the three months ended September 30, 2009 were
waived. Management fees of $14,152 were paid for the three months ended
September 30, 2008.
Rental fees were waived paid during the three-month period ended September
30, 2009. No travel costs were incurred during this period. During the three
months ended September 30, 2008, travel costs of $1,887 and rent of $2,948 were
paid.
The net loss for the three month period ended September 30, 2009 was $6,730 or
$0.00014 per share compared to a loss of $46,515 for the three months ended
September 30, 2008 a decrease of $39,785.
Comparison of Nine Month Periods Ended September 30, 2009, and September 30,
2008
The major changes in specific accounts in our operating statement for the
nine month period ended September 30, 2009 as compared to the previous nine
month period ended September 30, 2008 are as follows:
Revenue
Revenue for the nine month period ended September 30, 2009 was $2,602.
Previous year's revenue for the nine months ended September 30, 2008 was
$6,475.
Expenses
Advertising and promotion costs of $238 were incurred during the nine months
ended September 30, 2009. Advertising and promotional costs of $19,718 were
paid for the nine months ended September 30, 2008.
Depreciation of $7,125 was incurred on the Company?s acquired automotive
equipment during this nine month period. Depreciation of $2,375 was incurred
during the nine months ending September 30, 2008. Listing and share transfer
fees of $19,170 were also incurred in the nine months ended September 30, 2009.
Listing and share transfer fees of $12,899 were paid during the nine months
ending September 30, 2008.
Management fees of $7,342 were incurred during the nine months ended
September 30, 2009. Management fees of $35,152 were paid for the nine months
ended September 30, 2008.
Rent of $2,564 was paid during the nine month period ended September 30, 2009.
Travel costs of $397 were incurred during this period. During the nine months
ended September 30, 2008, travel costs of $6,887 and rent of $7,823 were paid.
The net loss for the nine month period ended September 30, 2009 was $39,731 or
$0.00085 per share compared to a loss of $104,214 for the nine months ended
September 30, 2008 a decrease of $64,483.
.10.
Off-Balance Sheet Arrangements:
We do not have any off balance sheet arrangements that are reasonably likely
to have a current or future effect on our financial condition, revenues,
results of operations, liquidity or capital expenditures.
Contractual Obligations:
We have no contractual obligations.
Liquidity Management:
Liquidity is the ability to meet current and future financial obligations
of a short-term nature. Our primary sources of funds will consist of
future revenues from our motorsports theme park. We will have no operating
revenues until the park has been developed and commences operations. During
the next twelve months, we will continue our efforts to advance to the point
of operations, however there is no assurance we will be able to proceed with
our plans. We will be required to issue additional share capital or secure debt
financing. Depending on market conditions, we may be required to pay high
rates of interest on such loans. Also, we do not believe we have enough cash
available to satisfy our requirements during the next twelve months, without
selling our automotive equipment. The Company has no agreement in place with
its shareholders or other persons to pay expenses on its behalf. Individual
shareholders are under no obligation to pay such expenses.
Operational Matters:
Over the next twelve months, we will continue to proceed with limited research
and continued engineering studies.
Our industry research will be ongoing. We will monitor other racetracks to
to compare our future plans with their strengths, weaknesses, and revenues.
We will maintain contact with our real estate agents which may facilitate our
future purchase of suitable land. We will continue to communicate with our
business contacts to monitor changes that may impact our business.
Our recruiting efforts will be to attract and contract with professionals
that may assist us in our future theme park development. We will also
recruit prospective employees and professionals to work within our company.
Employees, however, will only be hired as workload demands. As such we
cannot say at this time how many, if any, will be hired during the
next twelve months.
Our marketing efforts will remain extremely limited until land has been secured.
Primary Investing Activities: We do not anticipate any major investing
activities in the next twelve months. Neither do we expect any major
purchases or sales of plant and equipment.
Capital Resources and Primary Investing Activities: We do not anticipate any
major investing activities in the next twelve months. Neither do we expect
any major purchases or sales of land, construction of racetracks and
buildings, or equipment unless funds become available through successful
Phase 2 - 5 financing.
.11.
In addition to the other information set forth in this report, you should
carefully consider the factors discussed in "Risk Factors" in our S1
registration statement which could materially affect our business, financial
condition or future results. The risks described are not the only risks that
we face. Additional risks and uncertainties not currently known to us or
that we currently deem to be immaterial also may materially affect our
business, financial condition and/or operating results.
.12.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
Our Company's financial instruments are not materially impacted by
changes in interest rates.
ITEM 4. CONTROLS AND PROCEDURES
Management's Report on Internal Control over Financial Reporting. Our
Internal control over financial reporting is a process that, under the
supervision of and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, was designed to
provide reasonable assurances regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.
Our internal control over financial reporting includes those policies
and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect our transactions and
dispositions of our assets; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only
in accordance with authorizations of our management and our trustees;
and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of our
assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the
risk that our controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
As management, it is our responsibility to establish and maintain
adequate internal control over financial reporting. As of September 30,
2009, under the supervision and with the participation of our
management, including our Chief Executive Officer, we evaluated the
effectiveness of our internal control over financial reporting using
criteria established in Internal Control - Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission
("COSO"). Based on our evaluation, we concluded that the Company
maintained effective internal control over financial reporting as of
September 30, 2009, based on criteria established in the Internal Control ?
Integrated Framework issued by the COSO.
This quarterly report does not include an attestation report of the
company's registered public accounting firm regarding internal control
over financial reporting. Management's report was not subject to
attestation by the company's registered public accounting firm pursuant
to temporary rules of the Securities and Exchange Commission that
permit the company to provide only management's report in this
quarterly report.
Evaluation of disclosure controls and procedures. As of September 30, 2009,
the Company's chief executive officer and chief financial officer
conducted an evaluation regarding the effectiveness of the Company's
disclosure controls and procedures (as defined in Rules 13a-15(e) or
15d-15(e) under the Exchange Act. Based upon the evaluation of these
controls and procedures, our chief executive officer and chief
financial officer concluded that our disclosure controls and procedures
were effective as of the date of filing this annual report applicable
for the period covered by this report.
Changes in internal controls. During the period covered by this report,
no changes occurred in our internal control over financial reporting
that materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
.13.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
31.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports of Form 8-K
No reports were filed on Form 8-K during the third quarter of 2009.
SIGNATURES
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated:
SIGNATURE TITLE DATE
/s/ Evan Williams Chief Executive Officer, November 12, 2009
----------------- President, Director
Evan Williams
/s/ Solomon Nordine Chief Financial Officer, November 12, 2009
------------------- Treasurer, Director
Solomon Nordine
.14.
