PART I - FINANCIAL INFORMATION

RACE WORLD INTERNATIONAL, INC.

(a development stage company)

(unaudited)

BALANCE SHEET

The accompanying notes are an integral part of these financial statements.

RACE WORLD INTERNATIONAL, INC.

(a development stage company)

(unaudited)

STATEMENT OF OPERATIONS

The accompanying notes are an integral part of these financial statements.

RACE WORLD INTERNATIONAL, INC.

(a development stage company)

(unaudited)

STATEMENT OF STOCKHOLDERS’ EQUITY

The accompanying notes are an integral part of these financial statements.

RACE WORLD INTERNATIONAL, INC.

(a development stage company)

(unaudited)

STATEMENT OF CASH FLOWS

The accompanying notes are an integral part of these financial statements.

RACE WORLD INTERNATIONAL, INC.

(a development stage company)

(unaudited)

MARCH 31, 2011

1.

ORGANIZATION AND DEVELOPMENT STAGE ACTIVITIES

The company was incorporated under the laws of the State of Nevada on December 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.  The Company has no cash flows from operations.  The Company is currently exploring possible mergers/acquisitions of operating entities.  Such mergers/acquisitions 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 merging/acquiring operating entities, 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 purchases 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)

Financial instruments

The Company’s financial instruments consist of cash, refundable taxes, due to Directors/Officers, 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.

RACE WORLD INTERNATIONAL, INC.

(a development stage company)

(unaudited)

MARCH 31, 2011

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

(e)

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.

(f)

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.

(g)

Recent accounting pronouncements

In December 2010, the FASB issued ASU 2010-28 which amends “Intangibles- Goodwill and Other”(Topic 350).  The ASU modifies Step 1 of the goodwill impairment test for reporting units with zero or   negative carrying amounts.  For those reporting entities, they are required to perform Step 2 of the goodwill   impairment test if it is more likely than not   that a goodwill impairment exists.  An entity should consider   whether there are any adverse qualitative factors indicating that impairment may exist.  The qualitative   factors are consistent with the existing guidance in Topic 350, which requires that goodwill of a reporting   unit be tested for impairment between annual tests if an event occurs or circumstances changes that would   more likely than not reduce the fair value of a reporting unit below its carrying amount.  ASU 2010-  28 is effective for fiscal years, and interim periods within those years beginning after December 15, 2010.    The adoption of this guidance did not have a material impact on the Company’s financial position or results   of operation.

In December 2010, the FASB issued ASU 2010-29 which address diversity in practice about the interpretation of the proforma revenue and earnings disclosure requirements for business combinations (Topic 805).  This ASU specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only.  This ASU also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  ASU 2010-29 is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010.  Early adoption is permitted.  The adoption of this guidance did not have a material impact on the Company’s financial position or results of operation.

RACE WORLD INTERNATIONAL, INC.

(a development stage company)

(unaudited)

MARCH 31, 2011

3.   

PROMISSORY NOTE RECEIVABLE – RELATED PARTY

On August 15th, 2007 the Company issued a note receivable in the amount of $205,000 which pays monthly interest 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 former President’s spouse.

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 the company 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 the company 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 the company 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 the company 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 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 June 30, 2008 a demand of $35,000 was made on the remaining $185,000 note, reducing it to its June 30, 2008 balance of $150,000.  The $35,000 payment was made on behalf of the company by JPI to reduce the shareholder’s loan account.  Interest payments due April to June 2008 were also made through payments on behalf of the company 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 the company by JPI to reduce the shareholder’s loan account, while the other $95,000 payment was made on behalf of the company 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 the company 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 the company by JPI to reduce the shareholder’s loan account.  Interest payments were also made through payments on behalf of the company by JPI to reduce the shareholder’s loan account.    

RACE WORLD INTERNATIONAL, INC.

(a development stage company)

(unaudited)

MARCH 31, 2011

4.

STOCKHOLDER’S EQUITY

Common stock offering:

On December 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 common shares 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.

5.

RELATED PARTY TRANSACTIONS

a)

On January 1, 2008 a management agreement was entered into with JPI, a company controlled by the spouse of the former President, and all management fees (2011 - Nil; 2010 - $14,770) relate to this agreement.

b)

On July 1, 2008, JPI, a company controlled by the spouse of the former President, sold its Formula Atlantic Racing Car to the company, 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.

c)

Professional fees include amounts attributed to S N Ventures Inc. (2011 - Nil; 2010 - $12,037), a company controlled by the former Treasurer.

d)

Rental charges are paid on a month-to-month basis to JPI, a company controlled by the spouse of

    the former President, (2011 - Nil; 2010 - $1,477).

e)

Listing and Stock Transfer Fees include amounts attributed to U N Holdings Inc. (2011 - Nil; 2010 - $2,905), a company controlled by the former Treasurer’s brother.

6.

INCOME TAXES

Deferred tax assets:

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 March 31, 2011 operating loss carry-forwards for income tax purposes to be approximately $7,608 and its cumulative losses from inception to be $397,880.

ITEM 2.  Management Discussion and Analysis of Financial Condition and Results of Operations.  

Safe Harbor Statement

This report on Form 10-Q contains certain forward-looking statements.  All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues.  Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors.  These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements.  The following discusses our financial condition and results of operations based upon our consolidated financial statements which have been prepared in conformity with accounting principles generally accepted in the United States.  It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.

The following discussion should be read in conjunction with our consolidated financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q.  The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.

Overview

We were 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.

Liquidity and Capital Resources

As of March 31, 2011, we had cash and cash equivalents of $nil and a working capital deficiency of $143,548.  As of March 31, 2011 our accumulated deficit was $405,379.  For the three months ended, March 31, 2011 our net loss was $7,608 compared to $39,326 during the same period in 2010.  This decrease was due mostly to lower management and professional fees.

Our loss was funded by proceeds from shareholder loans.  During the three months ended March 31, 2011, we raised in net proceeds $nil through financing activities and our cash position was unchanged at $nil.  

We used net cash of $nil in operating activities for the three months ended March 31, 2011 compared to net cash of $1,796 in operating activities for the same period in 2010.  We did not use any money in investing activities for the three months ended March 31, 2011 nor did we use any money for investing activities during the same period in 2010.  

During the three months ended March 31, 2011 our monthly cash requirement was approximately $nil, compared to approximately $599 for the same period in 2010.

These financial statements have been prepared on the assumption that we are a going concern, meaning we will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations.  Different bases of measurement may be appropriate when a company is not expected to continue operations for the foreseeable future.  Our continuation as a going concern is dependent upon our ability to attain profitable operations and generate funds there-from, and/or raise equity capital or borrowings sufficient to meet current and future obligations.  Management plans to raise equity financings over the next twelve months to finance operations.  There is no guarantee that we will be able to complete any of these objectives.  We have incurred losses from operations since inception and at March 31, 2011, have a working capital deficiency and an accumulated deficit that creates substantial doubt about our ability to continue as a going concern.

Results of Operations for the three months ended March 31, 2011 compared to the three months ended March 31, 2010 and from inception to March 31, 2011.

Limited Revenues

Since our inception on December 29, 2006 to March 31, 2011, we have earned limited revenue of $14,073.  As of March 31, 2011, we have an accumulated deficit of $405,379 and we did not earn any revenues during the three months ending on March 31, 2011.  At this time, our ability to generate any significant revenues continues to be uncertain.  Our financial statements contain an additional explanatory paragraph in Note 2, which identifies issues that raise substantial doubt about our ability to continue as a going concern.  Our financial statements do not include any adjustment that might result from the outcome of this uncertainty.

Net Loss

We incurred a net loss of $7,608 for the three months ended March 31, 2011, compared to a net loss of $39,326 for the same period in 2010.  This decrease in net loss is mostly due to lower management and professional fees.  From inception on December 29, 2006 to March 31, 2011, we have incurred a net loss of $405,379.  Our basic and diluted loss per share was $0.00 for the three months ended March 31, 2011, and $0.00 for the same period in 2010.  

Expenses

Our total operating expenses decreased from $39,326 to $7,608 for the three months ended March 31, 2011 compared to the same period in 2010.  This decrease in expenses is mostly due to lower management and professional fees.  Since our inception on December 29, 2006 to March 31, 2011, we have incurred total operating expenses of $411,076.

Our management fees decreased $14,770 from $14,770 to $nil for the three months ended March 31, 2011 compared to the same period in 2010.  This decrease was due to the fact that we did not make any payments to our management.  Since our inception on December 29, 2006 until March 31, 2011 we have spent $92,276 on management fees.

Our professional fees, consisting primarily of legal, accounting and auditing fees, decreased by $9,977 to $5,637 for the three months ended March 31, 2011 from $15,614 for the same period in 2010, mainly due to decreased legal and auditing services provided in the three month periods ended March 31, 2011.  Since our inception on December 29, 2006 until March 31, 2011 we have spent $177,728 on professional fees.

Our listing and share transfer fees decreased $6,272 from $6,272 to $nil for the three months ended March 31, 2011 compared to the same period in 2010.  Since our inception on December 29, 2006 until March 31, 2011 we have spent $48,127 on listing and share transfer fees.

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position.  The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Off-Balance Sheet Arrangements

As of March 31, 2011, we had no off-balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 3.  Quantitative and Qualitative Disclosure About Market Risks.

Not applicable.

ITEM 4.  Control and Procedures

Not applicable

ITEM 4T.  Control 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 March 31, 2011, 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 March 31, 2011, 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 March 31, 2011, 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.

PART II – OTHER INFORMATION

ITEM 1.  Legal Proceedings.

As of May 12, 2011 there are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries are a party or of which any of our properties is the subject.  Also, our management is not aware of any legal proceedings contemplated by any governmental authority against us.

ITEM 2.  Unregistered Sales of Equity Securities.

None.

ITEM 3.  Defaults Upon Senior Securities.

None.

ITEM 4.  Submission of Matters to a Vote of Security Holders.

None.

ITEM 5.  Other Information.

None.

ITEM 6.  Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.