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EX-31.1 - CERTIFICATION - CannLabs, Inc.speedsport_10k-ex3101.htm
EXCEL - IDEA: XBRL DOCUMENT - CannLabs, Inc.Financial_Report.xls
EX-32.2 - CERTIFICATION - CannLabs, Inc.speedsport_10k-ex3202.htm
EX-32.1 - CERTIFICATION - CannLabs, Inc.speedsport_10k-ex3201.htm
EX-31.2 - CERTIFICATION - CannLabs, Inc.speedsport_10k-ex3102.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

 

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

 

For the fiscal year ended December 31, 2013

OR

 

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

 

For the transition period from to

 

Commission file number: 333-155318

 

SPEEDSPORT BRANDING, INC.

(Exact name of Registrant as specified in its charter)

 

Nevada   20-4168979
(State or other jurisdiction of incorporation or
organization)
  (I.R.S. Employer Identification No.)
     

111 Sunrise Center Dr.

Thomasville, NC

  27360
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number: (336) 210-6410

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 

Yes o No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. 

Yes o No x

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained herein, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o Accelerated filer o
Non-accelerated filer o Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes o No x

 

As of June 30, 2013, the aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $ 912,186 based on 4,560,932 shares held by non-affiliates valued at the last price at which the Company sold its shares ($0.20 per share of common stock).  

 

On April 11, 2014, we had 16,827,505, shares of common stock issued and outstanding. 

 

 
 

 

TABLE OF CONTENTS

TO ANNUAL REPORT ON FORM 10-K

FOR YEAR ENDED DECEMBER 31, 2013

 

 

PART I   Page
ITEM 1. BUSINESS 1
ITEM 1A. RISK FACTORS 8
ITEM 1B. UNRESOLVED STAFF COMMENTS 13
ITEM 2. PROPERTIES 13
ITEM 3. LEGAL PROCEEDINGS 13
ITEM 4. MINE SAFETY DISCLOSURES 13
     
PART II    
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 13
ITEM 6. SELECTED FINANCIAL DATA 14
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 14
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 19
ITEM 8. FINANCIAL STATEMENTS 19
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES 19
ITEM 9A(T). CONTROLS AND PROCEDURES 19
ITEM 9B. OTHER INFORMATION 20
     
PART III    
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 21
ITEM 11. EXECUTIVE COMPENSATION 23
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 23
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 25
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 25
ITEM 15. EXHIBITS 26
     
SIGNATURES 27

 

 

 
 

 

CAUTION REGARDING FORWARD-LOOKING INFORMATION

 

This report contains forward-looking statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Forward-looking statements usually contain the words “estimate,” “anticipate,” “believe,” “expect,” or similar expressions, and are subject to numerous known and unknown risks and uncertainties. In evaluating such statements, prospective investors should carefully review various risks and uncertainties identified in this Report, including the matters set forth under the captions “Risk Factors” and in the Company’s other SEC filings. These risks and uncertainties could cause the Company’s actual results to differ materially from those indicated in the forward-looking statements.

 

Although forward-looking statements in this annual report on Form 10-K reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risks Relating to Our Business” below, as well as those discussed elsewhere in this annual report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this annual report on Form 10-K. We file reports with the Securities and Exchange Commission (“SEC”). You can read and copy any materials we file with the SEC at the SEC’s Public Reference Room, 100 F. Street, NE, Washington, D.C. 20549 on official business days during the hours of 10 a.m. to 3 p.m. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including the Company.

 

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this annual report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this annual report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

 

ITEM 1.  BUSINESS

 

BUSINESS

BUSINESS OF THE COMPANY

 

Background

We are a development stage company operating as a small motorsports organization which was organized in 2006 to participate in the TUDOR United Sports Car Championship Racing series (“TUDOR”) sanctioned events (formerly known as the Grand-Am Rolex Series) in Grand Touring Daytona (“GTD”) based road racing events. The TUDOR United Sport Car Championship Racing series was established in 1999 to organize, sanction, and sponsor professionally race prepared “Sports Car” automobile road racing in North America. We participate in the “Rolex Series GTD” events using Rolex Series GTD (Grand Touring) race-prepared production based automobiles. We participated in four road racing events in 2006, five in 2007, nine races in 2008 and in no races thereafter.

 

We have utilized leased race cars to participate in the racing events we have scheduled. In December of 2008, we purchased a racecar from P-1, Inc. (“P-1“) as an alternative to leasing. Kevin P. O’Connell, who is our majority shareholder, is also the majority shareholder of P-1, Inc.

 

 In 2012, we attended and provided consulting services at TUDOR United Sports Car Racing series road racing events at Road America in Elk Harte Lake, Wisconsin and in the inaugural Brickyard Grand Prix at Indianapolis Motor Speedway. We received associated sponsorship and consulting income from marketing partners and clients for both events in 2012.

 

In 2013, we acquired a 2012 Ford BOSS Mustang R (the "Mustang R") from Rick Ware Racing. We issued a total of 1,000,000 shares of our common stock as consideration for the transaction at a value of $200,000.

 

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In 2013, we sold our Porsche 997 Cup Car back to a related party, P-1, Inc., for consideration consisting of 708,333 shares of our common stock valued at $141,666. In that transaction, the shares we had originally issued to acquire the vehicle totaling 708,333, were returned to us and the shares subsequently cancelled.

 

If we choose to enter a TUDOR United Sports Car Racing event in 2014, we will determine whether to lease a racecar or to use the Mustang R. If we choose to lease a racecar, we may lease it from independent vendors or from a related party, such as P-1.

 

We expect the majority of our revenue to be derived from the sale to sponsors of advertising space on each vehicle we enter in a TUDOR United Sports Car Racing event and from winning a share of the “cash purses” that are provided by the TUDOR United Sports Car Racing series event sponsors. Secondarily, we expect to utilize our race cars to provide marketing and public corporate branding services to clients desiring to use our cars and equipment to market their product or service by having our vehicles promote their brand by carrying their logo. Our ability to attract sponsors will, in part, be dependent upon the success of our racecars in the races we may decide to enter. We believe that if we win, or finish within the top 10 finishing places in a race, our ability to attract sponsors will be enhanced. Further, our past record of sporadic "Top 10" finishing places has diminished our ability to attract sponsors.

 

We have conducted limited operations to date and our operations will continue to be limited until such time as we are able to obtain additional funds to carry out our business plans. 

 

The Company had limited revenues in 2013 and 2012 from a small client base. During the year ended December 31, 2013, 96% of total revenues were consulting fees from related parties. The remaining 4% represented winnings from races. By comparison, during the year ended December 31, 2012, 47% of revenues were consulting fees from related parties and the remaining 53% related to consulting and sponsorship fees from non-related companies.

 

 

TUDOR United Sports Car Championship Racing

The TUDOR United Sports Car Championship Racing (formerly known as the Grand-Am Rolex Series) ("TUDOR") is not an affiliate, partner or sponsor of our Company. TUDOR is a separate and distinct entity from our Company and the only formal contract(s) that we have with the organization is the contractual entry forms that we must submit to be entered into a racing event, and the annual driver and crew member fees that we must submit as a prerequisite to our admission and entry into scheduled TUDOR events. We are dependent on TUDOR and their events as a platform for us to showcase the brands of our potential customers.

 

As the primary series in which we compete, TUDOR mandates, manages and monitors the qualifications of participants at every TUDOR sanctioned event. In addition to filing ownership forms with TUDOR, to participate in a TUDOR sanctioned event, each car must be driven by a driver who has motorsports experience and all cars must undergo a TUDOR technical inspection. Prior to qualifying at each race, all of the participating cars must undergo a pre-race technical inspection by the TUDOR officials. Several participating race cars are also selected to undergo a further technical inspection at the conclusion of each race to ensure the selected cars participated within all of the TUDOR technical guidelines during the race. TUDOR specifications exist for the entire race car (including aerodynamic elements such as length of spoilers and air dams, engine characteristics, fuel, chassis setup, shocks, tires, etc.) and typically vary by manufacturer (such as Porsche, Ferarri, GM, Ford, Dodge, Aston Martin, Mazda, BMW, etc.). These specifications can change between races as TUDOR attempts to maintain equality of competition between race teams and manufacturers. Teams, drivers and owners that are caught violating TUDOR guidelines typically receive penalties ranging from economic fines to loss of owner and driver points, to suspensions from future TUDOR sanctioned events.

 

After passing the TUDOR technical inspection, a racecar has one attempt to achieve one of the top qualifying speeds of all the cars in order to qualify for an event. The fastest qualifying speed is awarded the pole position for the respective race. The pole position starts on the inside of the front row and leads the rest of the qualifying field to the “green flag” indicating the beginning of each race. Drivers and team owners covet the pole position due to the notoriety received by the respective pole winner sponsors.

 

After the pole position, the next race cars earn their starting spots according to the fastest qualifying speeds.

 

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TUDOR United Sports Car Championship Racing

The TUDOR United Sports Car Championship Racing Series was established in 1999 to return stability to major league sports car road racing in North America. In 2013, rebranded the TUDOR United Sports Car Racing series (from Grand Am Rolex Sports Car Series), the sanctioning body’s headquarters are located in Daytona Beach, Fla. on the same corporate campus that is also home to NASCAR, International Speedway Corporation (“ISC”) and Daytona International Speedway.  TUDOR operates as a wholly owned subsidiary of NASCAR, with common investors and board members. Among the Company’s investors and executives are several of the key people behind NASCAR, but the TUDOR offers an entirely different product that features production based sports car racing on widely known road and street course circuits and in major markets throughout North America.

 

According to the TUDOR, sports car racing in North America endured tough and uncertain times for the majority of the 1990s. Sports car racing’s decline during this period could basically be traced to uncontrolled technology and its related costs. TUDOR has addressed technology cost concerns with affordability rules and cost containment policies that are devised to enhance competition at the overall team personnel and driver level. 

 

The TUDOR series premier racing events are branded independently with corporate partners and will be in its inaugural season under the new brand in 2014. The series, under its former name, had established itself as one of the most diversified professional road racing championships in North America.

 

A division within the Rolex Series of racing events sanctioned by TUDOR is the Grand-Am GTD Series (the “GTD Series”). The category of racecars designated by TUDOR United Sports Car Championship Racing for competition in the GT Series is the “Daytona GTD” class of sports cars. The Daytona GTD sports cars are based upon factory production models of certain automobile manufacturers, but are customized at the factory or at approved private engineering firms so that they may be used for racing in the TUDOR GTD Series. We intend to participate in the Daytona GTD Series using exclusively newly formed GTD Class sports cars.

 

In September of 2012, TUDOR announced that it will be merging with the American Le Mans Series ("ALMS"), which had been TUDOR's (formerly Grand-Am Rolex Series) TUDOR's main US competitor since Grand Am's inception. TUDOR and Grand Am fully merged in 2014 under one series name of the “TUDOR United Sports Car Championship Series". The newly branded series has registered the series name with the International Motor Sports Association (“IMSA”). The ALMS name (along with the ALMS association with the 24 Hours of Le Mans) has been terminated. In addition the manufacturer supported P1 prototype class of racing cars has been eliminated. Further, the name “Grand Am” will no longer be utilized.

 

Under TUDOR, the Prototype class will consist of Daytona Prototypes (DP’s), LMP2 prototype cars, LMPC prototype cars and the progressive DeltaWing race car (including a new closed-cockpit version). The former ALMS GT class will be renamed GT Le Mans (“GTLM”), while GT Daytona (“GTD”) will combine the current Grand-Am GT class and the former ALMS' GTC cars. The Prototype Challenge (“LMPC”) and GX classes will both carry over unchanged from Grand-Am and ALMS, respectively. The lead Prototype class combines Grand-Am's Daytona Prototype class with the former ALMS' P2 and DeltaWing cars. PC will be retained from the former ALMS, as will GTLM which will consist of the cars from the former ALMS GT class.

 

GTD combines the Grand-Am's GT class and the former ALMS' GTC class. GX is retained from the Grand-Am structure.

 

IMSA has been retained as the sanctioning body for TUDOR.

 

We believe the combined series will create more opportunities for obtaining sponsors as the new series is intended to have more comprehensive media and television coverage. In addition, the fan following should increase with inclusion of a combination of races including the Rolex 24 at Daytona, , the "24 Hours of Lemans" and the "12 Hours of Sebring" races being added to the annual schedule.

 

Grand Touring “GT” Daytona Class

The regulations covering the technical specifications of TUDOR Series GTD Class cars are designed to provide for fair competition amongst racing participants. We believe the regulations for the newly combined series will be basically the same. The regulations include the weight of vehicle, engine size, engine RPM limits, tire size, etc. For example, engines must between 390 to 450 horsepower, and the vehicle must have minimum weight ranging from 2,500 to 2,700 lbs. Maximum speed for GTD Class racecars is 180 mph. Examples of sports cars that participate in TUDOR United Championship Sports Car Racing Series are Porsche GT3 Cup, ,, Dodge Viper, Chevrolet Corvette, Chevrolet Camaro GT-R, Mazda RX-8, , Ferrari 458 Italia, Maserati, Nissan, Ford BOSS Mustang, Audi R8 and the BMW M3 coupes.

 

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Daytona Prototypes Class

A Daytona Prototype is a racecar specifically designed and built for the TUDOR United Sports Car Racing’s highest level of car, having a higher maximum speed and different racing characteristics than the GTD, GTLM or other Prototype classes. We do not participate in any racing utilizing any other vehicles than GTD.

 

Racing

All classes of racecars, the Daytona Prototypes, Prototypes and the GTLM and GTD classes participate in the same TUDOR Series’ events. They do so in a multiclass format that enables spectators in person or on television, and the media covering the event, to follow the action with multiple easy-to-distinguish classes of race cars—Daytona Prototypes, Prototypes, GTD and GTLM classes. The TUDOR race events are held at some of the world’s most prestigious race course venues, including Daytona, Long Beach, CA, Road Atlanta, and Watkins Glen, and have become an annual attraction at some of the newest racing venues such as Circuit of the Americas in Austin, Texas. . The TUDOR United Sports Car Racing has also instituted racing events known as “Stadium Road Racing” on the road course layouts at stadium tracks such as Homestead-Miami Speedway, Phoenix International Raceway and Kansas Speedway.

 

The TUDOR series of races feature a challenging mix of endurance and sprint races, including a 24-hour endurance race, a six-hour “Enduro” and several 400 kilometer and 250-mile sprint races. Teams of drivers are required for each event in which we participate. Drivers alternate driving the racecar for various periods of time during the race. The shorter events require two drivers per car, while three-driver teams are common in the six- and nine-hour races, and three- to five-driver squads are the usual for the Rolex 24 at Daytona. Driver changes during pit stops always factor into the strategy at each race.

 

Drivers

Our drivers are from diverse driving backgrounds and have experience in oval track racing and road course racing.  In certain endurance races that require in excess of nine hours to complete, we have hired a driver, or multiple drivers. Kevin P. O’Connell, the controlling person of our majority shareholders, has been one of the many drivers in all of the races in which we have participated. In all races in the TUDOR United Sports Car Racing there is more than one driver required in each event.

 

Typical driver fees range from $2,500 per event to as much as $15,000 per event depending on the experience and success of a particular driver. Through December 31, 2013 we have not paid fees to drivers in any of the sprint races (races under 250 miles) that we entered as those drivers volunteered their services to gain experience and publicity for their careers as professional race car drivers. We have paid drivers fees of up to $3,000 per driver for endurance races (in excess of 250 miles) such as the Rolex 24 at Daytona. We have had to limit any driver fees we have paid due to our small operating budget.

 

Pit Crews

Our pit crews have experience and backgrounds working for other motorsports racing teams.  We have had volunteers for all of our crew members in all of the events in which we have participated. None of our pit crew members have been paid, as they volunteered their services to gain experience and publicity for their careers as professional pit crew members. In 2014, we intend to use volunteer crew members whenever possible.

 

For paid pit crew members, the typical fees can range from $300 per event to as much as $1,500 per event, depending on the experience and previous success of the crew member.

 

Crew member’s responsibilities can include pit preparation, tire preparation, transporter driving, pit stop duties, food preparation and race car detail and driver support.

 

Company History

In January of 2006, Kevin P. O’Connell, one of our founding shareholders, and the controlling party of the shareholders who control a majority of our outstanding common shares, initiated a new business to market and compete in the Grand American Rolex Series featuring sports cars and road racing.  The Company was formed as Speedsport Branding, LLC, a California limited liability company (“LLC”), on February 6, 2006. 

 

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Mr. O'Connell was the managing member of General Pacific Partners, LLC ("GPP"), the managing member of LLC. In addition, Mr. O'Connell was the managing member of Revete Capital Partners, LLC (“RCP") and Billington Brown Acceptance, LLC ("BBA"). GPP, RCP and BBA together hold a majority of our issued and outstanding common shares. The Company operated as an LLC until June 3, 2008 when it was merged (the “Merger”) into Speedsport Branding, Inc. a Nevada corporation. Speedsport Branding, Inc. was incorporated under the laws of the State of Nevada on January 10, 2006. Prior to the merger, Speedsport Branding, Inc. had no business operations, other than maintaining its good standing as a Nevada corporation. Prior to the Merger, Speedsport Branding, Inc. had 10,125,000 common shares issued and outstanding. Pursuant to the Merger, 4,412,650 shares of common stock were issued to the holders of promissory notes of the LLC, including a total of 1,287,149 shares issued to GPP, RCP and BBA in exchange for $230,661 of promissory notes owed by us. Subsequent to the merger, all of our operations have been conducted by Speedsport Branding, Inc.

 

The reason for the Merger was to create possible liquidity for the shareholders of our Company. From inception through March 2012, our offices were located at 6141 Quail Valley Ct. Riverside, CA. 92507, which was leased to us at no cost from Riverside Acceptance, LLC , a company in which Mr. O'Connell owned fifty percent of the economic interests. On April 1, 2012, we relocated our offices to 111 Sunrise Center Drive Thomasville, NC 27360. We do not pay rent in respect of this property at this time.

 

In 2012, we attended and provided consulting services at the United Sports Car Racing Series road racing events at Road America in Elk Harte Lake, Wisconsin and in the inaugural Brickyard Grand Prix at Indianapolis Motor Speedway. We received associated sponsorship and consulting income from marketing partners and clients for both events in 2012. In 2013, we did not participated in any racing event. We did provide various types of consulting services to various companies. These services consisted of event management and driver recruitment and search for upcoming racing events.

 

We had limited revenues in 2013 and 2012 from a small client base. During the year ended December 31, 2013, we earned revenue from four companies, of which two were related to us. Three customers accounted for 43% (related party), 39% and 14% of total 2012 revenue, respectively. Revenue in 2013 included lease income from the lease of a vehicle to a related party. Our related party income was received from RC-1, Inc. Kevin O’Connell, our majority shareholder is the majority shareholder for RC-1, Inc.

 

Our ability to enter racing events in 2014 and thereafter will be dependent upon our ability to raise capital and attract sponsors. There can be no assurance that we will be able raise capital or to enter any racing events in 2014 or thereafter.

 

In January 2013, , we decided to modify our business model and enter the United Sports Car Racing GTD class races using only leased GT-Daytona Class sports cars that would be made available to us on a per race event basis.

 

Since 2007, we have had the option to lease our race cars from P-1, Inc. , a company which was formed and founded by Kevin P. O'Connell, our controlling shareholder. We maintain that ability to lease from P-1, Inc. for any TUDOR events, but reserve the ability to lease from other vendors as well. We are not the only customer of P-1 and P-1 does offer to lease its vehicles to other qualified teams and competitors.  We may lease our race car to other teams in the same series or other drivers in the same series for certain events.

 

Our lease agreement with P-1 provides that we pay P-1 $7,500 per sprint race events, events which are considered less than 3 hours in duration, and $15,000 for endurance events of 12 hours or longer in which we lease a P-1 owned racecar. Additionally, we must pay for all transportation, storage, repairs, supplies, fuel, labor, permits and licensing and reimburse P-1 for any crash damage that may be sustained in a race. In certain events, we, the lessee may be required to purchase insurance to cover a total loss of the competition vehicle. Insurance for these vehicles can be as much as $20,000 per event with stated deductibles, and is based on the length of the race and the relative track speeds. The full replacement value of this type of race vehicle could be as much $250,000. To date, we have not been required and have elected not to purchase this total loss insurance. In certain events, insurance for total loss is required to be obtained by us for the race vehicle for the benefit of the lessor.

 

We believe that the $7,500 leasing fee for sprint race events and $15,000 for endurance events is equivalent to, or more advantageous to us, than might otherwise be available to us from other lessors of GT Class sports cars. We derive this opinion from evaluating other market comparables in the United Sports Car Racing sports car industry.

 

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We use temporary high quality vinyl graphics to display sponsors information on leased racecars. This methodology is considered to be the industry standard and can be easily removed or changed to meet customer demands.

 

We believe that, in certain racing events, leasing, rather than owning, sports cars, has certain advantages to us, such as:

 

·If the TUDOR United Sports Car Racing institutes new rules requiring upgrading of the racecar specifications, no capital will be needed by us for the upgrading or purchase of new racecars;
·No capital expenditures for new technologies is required of us for competition
·No need to invest Company capital in an illiquid and depreciating vehicle.

 

Previously, we leased a racecar from P-1, specifically a factory Porsche 997 GT-3 TUDOR United Sports Car Racing version and entered and competed in the following United Sports Car Racing events: Virginia International Raceway, Mazda Raceway Laguna Seca in northern California, Watkins Glen International 6 Hours of the Glen, Circuit Gilles Villeneuve in Montreal, and the Sunchaser 1000 at Miller Motorsports Park in Utah. P-1, Inc. is still an option for leasing race cars for us for certain makes like Porsche and Ford specifically.

 

Additionally, we leased the same racecar and also entered and competed in the following United Sports Car Racing events: the Rolex 24 Hour at Daytona International, Mexico City, Mexico, Mazda Raceway Laguna Seca in northern California, Watkins Glen International for the 6 Hours of the Glen, Circuit Gilles Villeneuve in Montreal, New Jersey Motorsports Park and the Sunchaser 1000 at Miller Motorsports Park in Utah.

 

We did not enter any events in 2010, 2011 or 2013.  We attended and provided consulting services at events in 2012 and will have a limited schedule in 2014.

 

We did not lease any race cars from P-1 in 2010 or 2013 but did lease in 2011 for testing events which are considered non-racing events. In 2013, we did not incur a race car leasing fee for either United Sports Car Racing events.

 

For 2014, we will decide whether we should lease race cars from P-1 or other vendors or enter our own vehicle depending on certain factors such as track size, event attendance and driver specifications.

 

Business Strategy

Although many of the motorsports events we enter have winning or top placing cash purses, we do not intend to rely on the cash purses we may receive. We believe based on our observation of the racing industry’s most successful current teams competing in NASCAR, American LeMans Series, the Indy Racing League and the United Sports Car Racing series, that the majority of our revenue will be received from sponsorships from businesses that have an interest in creating greater awareness of their corporate brand through securing advertising space on our competition vehicles.  We have attracted limited sponsorship to date and there can be no assurance that we will be able to attract new or repeat sponsors in the future.

 

Sponsorship

In the TUDOR United Sports Car Racing series, the GTD spec race cars have a certain portion of the vehicle that are available for the placement or corporate logos or the images of products or services. In the TUDORGTD series, the vehicle's front hood is designated for logo placement with the exception of a ten inch by ten inch square area that is left for the series assigned competition number. Both sides of the race car from the front quarter panel, to the door, to the rear quarter panel are available for corporate logos with the exception of a twenty inch by twenty inch portion of the lower door that is left open for the series assigned competition number. The rear deck lid of the car is also available for corporate logos. In comparison to other domestic and international series such as NASCAR, the Indy Car Series or Formula One, the GTD series in TUDOR United Sports Car Racing has on average more placement space on the car than these respective series due to the design of the GTD cars and the lack of series contingency sponsors that take up much of the space of certain competing series cars.

 

Potential sponsors in the TUDOR GTD series are regional, national, and international companies with an interest in promoting and marketing in North America and to a lesser degree internationally. To date, the Company has raced in events in the eastern and western United States, Mexico and Canada. We offer sponsors the ability to have their logos, names or other identifying marks such as images displayed on our equipment with our drivers acting as professional spokes people. There are three levels of sponsorship available to our clients: Primary sponsors, Secondary sponsors and In-Kind sponsors.

 

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Primary Sponsor

A Primary Sponsor will have the largest sponsor’s logo appearing on a race car and the car will be named as the Primary Sponsor's car in the race programs and other promotional literature concerning the particular race event. For example, if the Primary Sponsor is the XYZ Company, the race car would be referred to as “the #27 XYZ Company Car.” The logo will generally cover 75% of the available advertising space on the car. The car will be referred to in all media coverage as the Primary Sponsor’s car. We estimate that the fee for being a Primary Sponsor will be $75,000 per event and may vary depending on the series contemplated and the "Hospitality" services requested. "Hospitality" services include the attendance and use of the race car at a sponsor's non-race event. Hospitality services are provided at additional cost for a Primary Sponsor.

 

Secondary Sponsor

A Secondary Sponsor will have the use of approximately 15% of the available advertising space on the race car. This is generally the front and rear bumpers and lower rear quarter panels. The fee for a Secondary Sponsor will be $35,000 per event and may vary depending on the series contemplated and hospitality requested.

 

In-Kind Sponsor

An In-Kind Sponsor has use of the remaining available advertising space apart from any of the series contingency sponsors. This is the lower rocker panels, the door-posts and certain parts of the front bumpers. In-Kind sponsors provide supplies, part of race purse monies, and incentive fees. An In-Kind sponsor provides good or services to us in return for displaying the sponsor’s logo on our racecars, equipment or apparel. The In-Kind sponsorship fees are based upon the value of the product or service that may be provided to us.

 

Facilities and Maintenance

Maintenance and race set up is an ongoing effort in auto racing. Mr. Montgomery, our Chief Executive Officer, manages the staff of independent technicians to maintain a regular schedule updates and changes to back up parts and various pit equipment needed at racing events. Since our race cars are leased, we spend less time on preparing our car for an actual race event.  Our owned and leased race cars are managed for racing from a facility in Thomasville, North Carolina. As required, we can contract with the principals of the facility to transport, prepare or modify our race cars for specialty or racing events.

 

Leased Race Cars

The race cars we lease come prepared for general racing but not "set up" for racing at certain specific race tracks. We retain independent technicians to adapt the driving characteristics of the racecar to the individual race in which we intend to compete. The race cars are adapted in accordance with the recommendations of our drivers and the data our staff has compiled based upon previous events held at the venue. We are responsible for any crash related damage to the car, but not for incidental damage such as engine and transmission problems.

 

Marketing

Our Company intends to hire a marketing and sales person to pursue the direct sales of sponsorships and branding awareness services. However, we will not be able to hire such a person until we have the financial resources to do so.

 

Competition

We principally compete with other racing teams and advertising and public relations companies that are much larger, well known, better established and have greater financial resources than us. We do not consider our team to be a factor in the overall racing industry. We compete for sponsorship dollars with other sports such as football, baseball, basketball, hockey, tennis and golf and with other live entertainment and popular recreational activities. Depending on our success in funding our operations, we intend on entering between two and eight events on an annual basis including various testing events with local associations. The events attended are dependent on our success in raising capital from sources other than our line of credit from General Pacific Partners, LLC.

 

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There is currently no limit to the number of cars that can enter, attempt to qualify, and compete in the United Sports Car Racing races. We face competition from auto manufacturer backed teams and other entries that have "Fortune 500" companies as primary sponsors. We also compete with auto manufacturing company backed teams have the full faith and credit of their manufacturers such as General Motors, Ford, Porsche, Mazda, Toyota, BMW and Ferrari. These teams have an advantage over us in that they have, among other things, better funding, more experienced management and personnel, "state of the art equipment", and more name recognition.

 

We believe TUDOR United Sports Car Racing takes into account private or new teams and have therefore designed their racing programs to accommodate numerous entries, and many more than are permitted in competing series. We are considered a developmental stage team and an event starting position is expected.

 

In certain events fan interest has declined, and as a result racing has not been as attractive to the television industry or event spectators, which has had an adverse effect on our business.

 

There can be no assurance that our vehicles will be competitive or qualify for each, or any, TUDOR United Sports Car Racing GTD Series sanctioned event entered. If we are not as successful competitively, we could have a more difficult time attracting and maintaining sponsors, drivers and crews which in turn could impact our ability to attract and maintain sponsorship. We will compete with well-established teams and there can be no assurance that we will be able to create or maintain a competitive position. In addition, there are relatively low barriers to entry into these markets and we expect to continue to face competition from new entrants into these same markets. There can be no assurance that we will be able to compete successfully in these markets.

 

Employees

As of March 31, 2014, we have no full-time employees. Our only employees consist of three management personnel, all of whom devote 25% or less of their time to our business affairs. We intend to hire full time employees when and if we have the financial resources to do so. Until such time as we are in a position to hire full time employees, we will hire independent contractors to perform work for us on an as needed basis. None of our employees are represented by a labor union or a collective bargaining agreement. We consider our relations with our Management employees to be good.

 

Property

We do not own any real property. Our offices are located at 111 Sunrise Center Dr. Thomasville, North Carolina 27360. We do not pay for the space we use. The property is owned by Richard S. Ware, a motorsports team owner.

 

ITEM 1A.  RISK FACTORS

 

RISK FACTORS

 

Risks Related To Our Business

An investment in our securities is extremely risky. You should carefully consider the following risks, in addition to the other information presented in this prospectus, before deciding to buy our securities. If any of the following risks actually materialize, our business and prospects could be seriously harmed and, as a result, the price and value of our securities could decline and you could lose all or part of your investment. The risks and uncertainties described below are intended to be the material risks that are specific to us and to our industry.

 

We have a limited operating history, with historical losses.

We have a short operating history and must be considered to be in the development stage. We have no history of earnings or profits and there is no assurance that we will operate profitably in the future. There is no meaningful historical financial data upon which to base planned operating expenses. As a result of this limited operating history, it is difficult to accurately forecast our potential revenue. We have accumulated a total loss of $1,496,512 from Inception (January 10, 2006) through December 31, 2013. We intend to use our own vehicle or leased, professionally race prepared sports Cars to market and promote the products and services of potential sponsor clients. We contemplate that we will further develop our racing operations and we will reinvest all profits, if any, into the Company.

 

Our existing principal stockholders exercise control of our Company.

Revete Capital Partners, LLC ("Revete"), General Pacific Partners, LLC, ("GPP"), Billington Brown Acceptance, LLC ("BBA"), P-1, Inc., and Specialty Rentals, Inc. together are the beneficial owners of approximately 65.9% of our issued and outstanding common stock. Revete, GPP and BBA have membership interests and economic interests that are held and determined by Kevin P. O'Connell. Mr. O'Connell is the majority shareholder of Specialty Rentals, Inc. and P-1, Inc.

 

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In addition, GPP has established a line of credit for our use of $450,000. The receipt of funds from this line of credit is subject to the approval of Mr. O'Connell. To date, $50,000 has been drawn on the line of credit, which has been repaid in full.  The terms of the line of credit contains annualized interest of 10%, quarterly interest payments payable by the Company on outstanding balances and sets a maximum quarterly draw down on the line of $100,000 per advance requested. Mr. O'Connell may have a conflict of interest should we determine to draw upon the line of credit. He will have to determine, as the Managing Member of GPP, whether it is in the best interest of GPP to approve or decline the "draw down” or, as our controlling shareholder, it is in our best interest to approve the draw down. In 2012, the Company elected to keep its Line of Credit with GPP active and available for draw down for operations.

 

In addition, Mr. O'Connell is the majority shareholder of P-1, Inc. the only company from which we have leased racecars. Mr. O'Connell may have a conflict of interest should we determine to continue to lease racecars from P-1. He will have to determine, as the CEO of P-1, whether it is in the best interest of P-1 to approve or decline providing a racecar for a specific event or, as our controlling shareholder, it is in our best interest to lease a racecar to us. In the event that we are unable to lease a vehicle for a specific event, we would either use our own vehicle or not be able to participate in the event.

 

Further, Mr. O’Connell will be able to determine the election of directors and all other matters subject to stockholder votes. This concentration of ownership may have the effect of delaying or preventing a change in control of the Company, even if this change in control would benefit stockholders.

 

We must enter into and maintain a good working relationship with the newly created United Sports Car Racing series.

To be successful, we must create and maintain a good working relationship with the sanctioning body of our racing events, the TUDOR United Sports Car Racing (“TUDOR”) series. Without a good relationship, TUDOR may at its sole discretion disallow our team from competing in any or all of their sanctioned events for an indefinite period of time. We do not have any continuing contractual relationship with TUDOR and may not be able to enter into any agreements to participate in racing events on terms acceptable to us.

 

We have previously leased our racecars from P-1, a company controlled by our controlling shareholder.

P-1, Inc. is a motorsports leasing company, and has leased race vehicles to our Company and has race vehicles available to other qualified teams and drivers. We have only leased racecars from P-1, a company whose majority shareholder is Kevin P. O’Connell.

 

The disadvantage of leasing our cars through P-1 rather than other sources is that the configuration and technology of other race cars that are available from various lessor’s may be more advantageous to us to us than using only race cars available from P-1. This could adversely affect our competitiveness which could have a negative impact on potential sponsors and winning purses.

 

Our leased and owned racecars are subject to changes in technology and competitiveness.

In 2013, we acquired a United Sports Car Championship Series Ford BOSS Mustang R for $200,000 for which we issued 1,000,000 shares of our common stock at an estimated market value of $0.20 per share.

 

The race cars we lease from P-1, contain current technologies that may cease to be legal or competitive as the rules and regulations of TUDOR United Sports Car Racing are modified and technologies are updated. Additionally, governing sanctioning bodies are expected to regularly hold discussions with the manufacturers and competitors regarding implementing updated models and technologies that may have an adverse effect on our Company. To the extent that TUDOR United Sports Car Racing may change its rules and regulations so that our racecar and the race cars we lease from P-1 do not comply with the changed rules or regulations, our business will be adversely affected.

  

Our racing operations face competition for marketing and advertising dollars.

We compete for marketing and advertising dollars with other motorsports teams and with sports such as football, baseball, basketball, hockey, tennis and golf and with other entertainment and recreational activities. In the event that fan interest in motorsports declines, TUDOR United Sports Car Racing might not be as attractive to the potential sponsors, which could have an adverse effect on our operations.

 

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There can be no assurance that our team will be competitive or qualify for each, or any, TUDOR United Sports Car Racing sanctioned event entered. Qualification in TUDOR United Sports Car Racing races is only required in special events. If we are not as successful competitively, we could have a more difficult time attracting and maintaining sponsors, quality drivers and crews which in turn could impact our ability to attract marketing and advertising dollars. We will compete with well-established teams and there can be no assurance that we will be able to create or maintain a competitive position.

 

We may not be able to lease or obtain certain race cars as needed for specific events.

Our ability to compete in race events is contingent upon our ability to lease specific racing cars for various series when needed. Due to the limited production of the Porsche 997 GT-3 Cup car and other types of race vehicles in which we might choose to compete with, there can be no assurance that we will be able to obtain suitable race vehicles when needed or be able to negotiate a lease fee that we deem reasonable.

 

Beginning in 2007 and through September 2009, we leased our racecars from P-1, Inc. Our lease agreement requires us to pay a leasing fee of $7,500 for sprint races and $15,000 for endurance race in scheduled events in which we leased a race car. In 2014, we also intend to contract with outside vendors for race cars as needed.

 

The success of our operations will be dependent upon the success of our racing team.

Our ability to fully implement our business plan and the success of our operations will be dependent upon the success of our racing team. If our racing team fails to qualify for races or finishes poorly in races on a regular basis, the success of our operations will be adversely impacted. Generally, racing teams that fail to qualify cannot generate any purse revenue and may experience a reduction in fan interest and/or sponsorship appeal. We believe that if we win, or finish within the top 10 finishing places in a race, our ability to attract sponsors will be enhanced. Further, our past record of sporadic "Top 10" finishing places has diminished our ability to attract sponsors. We do not currently have any written employment or sponsorship arrangements with drivers or crew members.

 

In those TUDOR United Sports Car Racing events that we determined to enter, we have always qualified to race. However, we have finished poorly in these events and have not received any purse money if finishing positions fall outside of the top 10 places. A low finishing position for any event may or may not be a direct result of the team’s activities and efforts, and all racing teams in competition face the same uncertain results. There can be no assurance that we will win any purse money and the denomination of such purse money could have any effect upon our ability to fund our operations.

 

We may incur liability for personal injuries.

Racing events can be dangerous to participants and to spectators. We do not maintain insurance policies and we are fully liable for personal injuries sustained by, or death of, our personnel or spectators in the ordinary course of our business. In the event that damages for injuries sustained by our participants or spectators our financial condition, results of operations and cash flows would be adversely affected and could lead to the cessation of business.

 

We do not have total loss insurance for the racecars we lease or own.

Due to the high cost of property damage insurance, we have chosen not to carry total loss insurance for the racecars we lease or own. In the event of a loss occurrence, we may lose or be liable for as much as the total value of the racecar which is damaged. The loss could be as much as $250,000, which would be a material loss to us and could cause us to cease operations.

 

We have not had any regular sponsors since our Inception (January 10, 2006) and we may not be able to attract and maintain sponsors as our primary source of revenues.

A professional motorsports racing operation relies principally on three separate, but related, revenue sources for the funding of racing activities. They are sponsorship monies, race purse winnings and special race bonus opportunities. These additional opportunities would include certain accomplishments completed during a race event such as leading the most laps during an event but not winning the event. There can be no assurance that we will be able to attract or obtain any or all of these sources of revenue.

 

Since our racing operation and business model requires that our operations be funded through sponsorship dollars, our ability to attract sponsors to fund racing operations will be a significant factor in our success or failure. We have had no continual sponsors since our inception and there can be no assurance that we will be able to attract any sponsors.

 

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We will need additional financing, which may not be available.

Our future success will depend on our ability to raise additional funds and our ability to raise future sponsorship money, which includes attracting sponsors for our racing teams. No commitments to provide additional funds have been made by management and no agreements with sponsors have been entered into. Our ability to arrange financing in the future will depend in part upon the prevailing capital market conditions, as well as our business performance. There can be no assurance that we will be successful in our efforts to arrange additional financing on satisfactory terms. If additional financing is raised by the issuance of our shares, control of the Company may change and stockholders may suffer additional dilution. If adequate funds are not available, or are not available on acceptable terms, we may not be able to take advantage of opportunities, or otherwise respond to competitive pressures and remain in business.

 

We are dependent on our key personnel.

Our management is currently controlled and operated by Roy P. Montgomery, President, Timothy J. Koziol our Chief Financial Officer, and Ronnie E. Norwood, Chief Operations Officer, Secretary and Treasurer. Our success will depend in large part upon the continued services of these individuals. Mr. Montgomery presently devotes only 25% or less of his time to our business, Mr. Koziol presently devotes approximately 15% of his time to our business and Mr. Norwood presently devotes approximately 10% of his time to our business. Notwithstanding, the death or loss of the services of any one of them or of any one or more of our other key personnel could have a material adverse effect on our business, financial condition and results of operations. We do not have key man life insurance on these individuals. In addition, if one or more of our key employees resigns to join a competitor or to form a competing company, the loss of such personnel and any resulting loss of potential clients to any such competitor could have a material adverse effect on our business, financial condition and results of operations. In the event of the loss of any key personnel, there can be no assurance that we will be able to prevent the unauthorized disclosure or use of our technical knowledge, practices or procedures by such personnel.

 

We face significant racing competition.

We principally compete with other motorsports teams and advertising and public relations companies. In addition, there are relatively low barriers to entry into these markets and we expect to continue to face competition from new entrants into these same markets. There can be no assurance that we will be able to compete successfully in these markets.

 

Our business revenue generation model is unproven and could fail.

Our revenue model is new and evolving, and we cannot be certain that it will be successful. Our present revenue model is comprised of consulting to various parts of the industry and the use our racecars to provide marketing and public relations services to clients desiring to use our racecars to market their product or service by having our vehicles promote their brand by carrying their logo. Our ability to generate revenue depends, among other things, on our ability to achieve success with our management team’s limited time devoted to our business in the motorsports industry. The potential profitability of this business model is unproven for companies of our size. Accordingly, we cannot assure you that our business model will be successful or that we can sustain revenue growth or achieve or sustain profitability. If our business model is not successful we could be forced to curtail our operations.

 

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Our auditors have expressed substantial doubt as to whether our Company can continue as a going concern.

We have generated only limited revenues since our inception and have incurred substantial losses. We have had negative operating cash flow of approximately $1,496,512 since our Inception (January 10, 2006) to December 31, 2013. Our business plans estimate that we will need to raise $125,000 in additional capital to fund our operations through April 2015 and there can be no assurance that we will be able to raise any or all of the capital required. These factors indicate that we may be unable to continue as a going concern, particularly in the event that we cannot generate sufficient cash flow or raise sufficient capital to conduct our operations. Our financial statements do not include any adjustments to the value of our assets or the classification of our liabilities that might result if we would be unable to continue as a going concern.

 

We incur additional costs for being a small, public reporting company.

We are a fully reporting and publicly traded company. There are additional non-operating costs associated with being a public company. Additionally, we have a management team that is inexperienced in managing publicly traded companies.

 

RISKS ASSOCIATED WITH OUR COMMON STOCK

 

There is no active trading market for our common stock and if a market for our common stock does not develop, our investors will be unable to sell their shares.

There is currently no active trading market for our common stock and such a market may not develop or be sustained. Our common stock is quoted on the OTC Bulletin Board under the symbol SDSP. The OTC Bulletin Board is not a listing service or exchange, but is instead a dealer quotation service for subscribing members. If our common stock is not quoted on the OTC Bulletin Board or if a public market for our common stock does not develop, then investors may not be able to resell the shares of our common stock that they have purchased and may lose all of their investment. If we establish a trading market for our common stock, the market price of our common stock may be significantly affected by factors such as actual or anticipated fluctuations in our operation results, general market conditions and other factors. In addition, the stock market has from time to time experienced significant price and volume fluctuations that have particularly affected the market prices for the shares of developmental stage companies, which may materially adversely affect the market price of our common stock.

 

Because we do not intend to pay any dividends on our common shares, investors seeking dividend income or liquidity should not purchase shares in our Company.

We do not currently anticipate declaring and paying dividends to our shareholders in the near future. It is our current intention to apply net earnings, if any, in the foreseeable future to increasing our working capital. Prospective investors seeking or needing dividend income or liquidity should, therefore, not purchase our common stock. There can be no assurance that we will ever have sufficient earnings to declare and pay dividends to the holders of our shares, and in any event, a decision to declare and pay dividends is at the sole discretion of our board of directors, who currently do not intend to pay any dividends on our common shares for the foreseeable future.

 

Sales of a substantial number of shares of our common stock into the public market by the selling stockholders may result in significant downward pressure on the price of our common stock and may affect the ability of our stockholders to realize any trading price of our common stock when and if a trading market develops for our common stock.

Sales of a substantial number of shares of our common stock in the public market could cause a reduction in the market price of our common stock, when and if such market develops. Capital raised may require a registration statement to be filed with the SEC. As a result, a substantial number of our shares of common stock which have been issued may be available for immediate resale when and if a market develops for our common stock, which could have an adverse effect on the price of our common stock. As a result of any such decreases in price of our common stock, purchasers who acquire shares from the selling stockholders may lose some or all of their investment.

 

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Any significant downward pressure on the price of our common stock as the selling stockholders sell the shares of our common stock could encourage short sales by the selling stockholders or others. Any such short sales could place further downward pressure on the price of our common stock. 

 

Our stock is a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a stockholder's ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

 

ITEM 2.  DESCRIPTION OF PROPERTY

We do not own any real property. Our offices are located at 111 Sunrise City Dr. Thomasville, NC 27360. We do not pay for this office space at this time.

 

ITEM 3.  LEGAL PROCEEDINGS

No legal proceedings are currently pending or threatened to the best of our knowledge. We may be subject to, from time to time, various legal proceedings relating to claims arising out of our operations in the ordinary course of our business.

 

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

 

PART II

 

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Market Information

Our common stock qualified for quotation on the OTCBB on approximately June 1, 2011, under the symbol “SDSP”. No trades of our common stock occurred through the facilities of the OTCBB until December 10, 2012 and our stock has not traded since then.

 

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Dividends

While there are no restrictions that limit our ability to pay dividends, we have not paid, and do not currently intend to pay cash dividends on our common stock in the foreseeable future. Our policy is to retain all earnings, if any, to provide funds for operation and expansion of our business. The declaration of dividends, if any, will be subject to the discretion of our board of directors, which may consider such factors as our results of operations, financial condition, capital needs and acquisition strategy, among others.

 

Securities Authorized for Issuance under Equity Compensation Plans

As of December 31, 2013, we did not have any equity compensation plans in effect, although our board of directors may approve, from time to time, the issuance of equity compensation to our employees as additional compensation outside of an equity compensation plan.

 

Sales of Unregistered Securities

The following sets forth information regarding all sales of our unregistered securities during the past three years. All of these shares were exempt from registration under the Securities Act by reason of Section 4(2) of the Securities Act, or Regulation D promulgated there under, as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution of the securities, and appropriate legends were affixed to the share certificates and warrants issued in such transactions. All recipients had adequate access, through their relationships with us or otherwise, to information about us. Unless otherwise indicated, the issuances of the securities described below were affected without the involvement of underwriters.

 

On August 15th, 2011, the Company issued 82,500 shares of common stock to a non-affiliated shareholder in payment of services rendered valued at $16,500.

 

On August 15th, 2011, the Company sold 250,000 shares of common stock to a non-affiliated shareholder purchased at $0.20 per share for $50,000.

 

On August 17th, 2011, the Company issued 161,865 shares of common stock to a non-affiliated shareholder in payment of services rendered valued at $32,373.

 

On October 10th, 2011, the Company issued 15,600 shares of common stock to a non-affiliated shareholder in payment of services rendered valued at $19,500.

 

On June 10, 2013, the Company issued 1,000,000 shares of common stock in payment for the purchase price of $200,000 or $0.20 per share, for the acquisition of a Ford BOSS Mustang R.

 

 

ITEM 6.  SELECTED FINANCIAL DATA

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

 

 

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion and analysis of our results of operations and financial condition for the fiscal years ended December 31, 2013 and 2012 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this annual report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the “Risk Factors”, “Cautionary Notice Regarding Forward-Looking Statements” and “Description of Business” sections and elsewhere in this annual report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “predict,” and similar expressions to identify forward-looking statements. Although we believe the expectations expressed in these forward-looking statements are based on reasonable assumptions within the bound of our knowledge of our business, our actual results could differ materially from those discussed in these statements. Factors that could contribute to such differences include, but are not limited to, those discussed in the “Risk Factors” section of this report. We undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future.

 

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In addition to historical information, this Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, risks and uncertainties, including the risk factors set forth in Item 1A. above and the risk factors set forth in this Annual Report. Generally, the words “anticipate”, “expect”, “intend”, “believe” and similar expressions identify forward-looking statements. The forward-looking statements made in this Annual Report are made as of the filing date of this Annual Report with the SEC, and future events or circumstances could cause results that differ significantly from the forward-looking statements included here. Accordingly, we caution readers not to place undue reliance on these statements. We expressly disclaim any obligation to update or alter our forward-looking statements, whether, as a result of new information, future events or otherwise after the date of this document.

 

Plan of Operation 

 

Trends & Outlook

Long-term, we cannot predict the growth or decline of our revenues. If certain economic uncertainty related to advertising and branding in North America declines, our potential revenue would increase. Such a decline in economic uncertainty would be recognized through an increase in the overall marketing dollars in corporate and SME budgets. Our success criteria includes but is not limited to the series in which we compete and its reputation and overall media package. We believe our equipment and series currently satisfies the standards for an acceptable return on investment from sponsors and prospective customers. In the event the Company fails to satisfy these standards, certain potential customers would not establish a business relationship with us.

 

Operating Expenses

Our operating expenses are currently attributed to the regular operations of the Company. These expenses include, but are not limited to event fees, travel related expenses such as airline, lodging rental vehicles and consultants, as well as transportation, marketing, and administrative costs. These costs can vary depending on the event, its location and duration and the other series that may be part of the event.

 

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on our financial statements.

 

Significant Accounting Policies

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Accounts receivable

The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. Significant management judgment is required to determine the allowance for doubtful accounts. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired. At December 31, 2013 and 2012, the Company had no balance of accounts receivable and consequently no allowance for doubtful accounts.

 

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Long-Lived Assets

In accordance with FASB ASC 360, “Property, Plant, and Equipment” which establishes the accounting for impairment of long-lived tangible and intangible assets other than goodwill, the Company reviews for impairment when facts or circumstances indicate that the carrying value of long-lived assets to be held and used may not be recoverable. If such facts or circumstances are determined to exist, an estimate of the undiscounted future cash flows produced by the long-lived asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on various valuation techniques, including the discounted value of estimated future cash flows. The Company reports impairment cost as a charge to operations at the time it is identified. During the years ended December 31, 2013 and 2012 and during the period from January 10, 2006 (inception) to December 31, 2013, the Company determined that there was no impairment of long-lived assets.

 

Revenue recognition

Revenue from event consulting is recognized upon completion of the contracted services. Revenue from race sponsorships is recognized upon completion of the race for which the advertising was provided. Other revenue is recognized on an accrual basis as earned under contract terms.

 

Income tax

The Company accounts for income taxes pursuant to FASB ASC 740 “Income Taxes”. Under FASB ASC 740, deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

FASB ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under FASB ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. At December 31, 2013 and 2012, there were no unrecognized tax benefits.

 

Stock based compensation

The Company accounts for employee and non-employee stock awards under FASB ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.

 

Year Ended December 31, 2013 as compared to the Year Ended December 31, 2012

 

Revenues

Total revenues were $84,600 for the year ended December 31, 2013, representing an decrease of $70,450 or 48 % compared to revenue $146,150 for the year ended December 31, 2012. The decrease in revenue is as a result of the decrease in the number of racing events the Company was able to attend during the 2013 racing season and post-merger of the two sports car series.

 

Revenues from related parties were $81,000 and $ 68,650, respectively, for the years ended December 31, 2013 and 2012. The increase of $12,350, or 18 %, is related to the Company providing companies owned by the majority shareholder with consulting services regarding their entry in the racing market. The amount charged for the services were comparable to the amount charged to non-related parties. There are no ongoing contracts with these companies.

 

16
 

 

Cost of Revenues

There were no costs of revenues in either the twelve months ending December 31, 2013 or the twelve months ending December 31, 2012.

 

Operating Expenses

Operating expenses for the year ended December 31, 2013 were $178,416 representing an increase of $5,797 as compared to $172,619 for the same period in 2012.

 

Depreciation

Depreciation expense of $36,667 is included in operating expenses for the twelve months ended December 31, 2013, representing an increase of $4,667 or 15 %, as compared to $32,000 for the same period in 2012.The increase in the period reflects the fact that we disposed of a vehicle with a $160,000 depreciable base cost and replaced it with another with a higher, $200,000 depreciable base cost. 

 

General and Administrative – Related Party

 

The Company incurred operating expenses with related parties in the amount of $39,620 for the year ended December 31, 2013 compared to $57,500 for the year ended December 31, 2012, a decrease of $17,880 or 31%. The services provided by the related parties were administrative consulting and test and development consulting. There are no ongoing contracts with these companies.

 

General and Administrative Expenses

 

General and administrative expense expenses were $102,129 for the twelve months ended December 31, 2013, compared to $83,119 during the twelve month ended December 31, 2012, and increase of $19,010, or 23%. The increase was due to an increase in legal expenses during the year ended December 31, 2013.

 

Expenses include primary support personnel and drivers registration and licenses required for entry in select sanctioned racing events, travel and lodging consisting of ground and air travel expenses, rental cars fees, local bus transportation and hotel expenses; marketing and promotion expenses, legal and accounting; engineers and related consultants, replacement parts, fuels, lubricants and tires; service of all of the Companies unsecured debt, and miscellaneous expenses consisting of specialty vinyl and lettering, apparel, an fees for testing.

 

 

Gain on asset sale

 

During the twelve months ended December 31. 2013, we recognize a gain of $16,301 on the sale of one of our vehicles to an unconnected third party. We made no such sale of fixed assets in the twelve months ended December 31, 2012.

 

Interest Expense

Interest expense for the twelve months ended December 31, 2013 was $ 1,216 broadly in line with the $1,306 for the same period in 2012.

 

Net Loss

The net loss for the twelve months ended December 31, 2013 was $79,031, representing an increase of $ 51,256 or 194% compared to a loss of $27,775 for the same period in 2012 due to the factors discussed above. 

 

Liquidity & Capital Resources

 

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a net loss of $79,031 and utilized cash in operating activities of $50,936 during the twelve months ended December 31, 2013. These matters raise substantial doubt about the Company’s ability to continue as a going concern. (See "Stockholder Matters" below.)

 

17
 

 

Cash Flows for the Year Ended December 31, 2013 compared to the Year Ended December 31, 2012

 

Operating activities

 

Operating activities for the twelve months ended December 31, 2013 used $50,936 in cash compared to $56,190 cash used in operations during the twelve months ended December 31, 2012. During the twelve months ended December 31, 2013, the Company incurred losses of $79,031 which were partially offset by net non-cash expenses of $19,766 and an increase in accounts payables and accruals of $7,739. By comparison, during the twelve months ended December 31, 2012 the Company incurred losses of $27,775 which was increased by net non-cash credits of $257, a reduction in accounts payable related party and accrued interest of $42,151 and only partially offset by an increase in accounts payable of $13,993.  

 

Investing activities

 

During the twelve months ended December 31, 2013 we generated $16,301 cash from investing activities through the sale of one of our vehicles. By comparison, during the twelve months ended December 31, 2012 we neither generated nor used funds in investing activities.

 

Financing Activities

 

Cash flows provided by financing activities for the year ended December 31, 2013 were $67,852 compared to $32,813 during the twelve months ended December 31, 2012. For both periods, the Company was largely financed by advances from related parties. The increase in funding from related parties in 2013 as compared to 2012 is reflected in the substantial increase balance of cash held at the end of 2013 as compared to 2012.  

 

Stockholder Matters

 

Management expects to raise $125,000 in capital through the issuance of debt and equity and believes it will be able to raise sufficient capital over the next twelve months to finance operations. However, there can be no assurances that the Company will be successful in this regard or will be able to eliminate its operating losses. The accompanying financial statements do not contain any adjustments which may be required as a result of this uncertainty.

 

For the next fiscal year, management estimates that the cost of operating the business will continue to require additional capital of up to One Hundred Twenty Five Thousand dollars ($125,000) consisting of: $5,000 for primary support personnel and drivers registration and licenses required for entry in select sanctioned racing events; $10,000 for travel and lodging consisting of ground and air travel expenses, rental cars fees, local bus transportation and hotel expenses; $3,000 for marketing and promotion; $20,000 for legal and accounting; $10,000 for engineers and consultants; $25,000 for replacement parts, $15,000 for fuels, lubricants and tires; $7,000 for event day racecar tractor and transporter rental; $15,000 for service of all of the Companies unsecured debt, and $15,000 in miscellaneous expenses consisting of specialty vinyl and lettering services and apparel for competition vehicles, crew members and drivers expenses; fees for utilization of tracks for testing, non- race day fuel and tires, potential marketing costs for sponsors admission fees credentials and hosting costs.

 

The Company intends to hold discussions with existing shareholders, new prospective shareholders and various lenders in pursuing the capital we need for the upcoming twelve months of operations.

 

Additionally, the Company may elect to draw down additional proceeds from its $450,000 line of credit with General Pacific Partners, LLC. There can be no assurance that we will be able to raise any additional equity or debt capital.

 

As of December 31, 2013 and 2012, there was no debt drawn on the line of credit.

 

Additionally, the Company may elect to draw down additional proceeds from its $450,000 line of credit with General Pacific Partners, LLC. There can be no assurance that we will be able to raise any additional equity or debt capital. As of December 31, 2013 and 2012, there was no debt drawn on the line of credit.

 

The Company has a line of credit with a bank for $9,600 , which is guaranteed by the majority shareholder.  Interest on the outstanding balance accrues at 13.75% per annum.  As of December 31, 2013 and 2012, the outstanding balance was $8,246 and $, 9,201 respectively.  

 

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The Company’s capital requirements consist of general working capital needs, scheduled principal and interest payments on debt when required, obligations, and capital expenditures. The Company’s capital resources consist primarily of cash generated from proceeds through the issuances of common stock. At December 31, 2013, the Company had $450,000 available on its line of credit.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Our consolidated financial statements and the notes thereto begin on page F-1 of this Annual Report.

 

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

 

On November 8, 2013, the Registrant was informed by its independent registered public accounting firm, Borgers & Cutler CPAs PLLC ("Borgers"), that the partner in charge of Registrants account, David Cutler, was separating from Borgers and forming a new auditing firm under the name "Cutler & Co. LLC. The Board of Directors determined that it was in the best interest of the Registrant to maintain continuity of the relationship between David Cutler and Registrant.  On November 8, 2013 the Board of Directors engaged Cutler & Co. LLC of Denver, Colorado as the Registrant’s new independent registered public accounting firm. 

 

The Board of Directors of the Registrant approved of the replacement of Borgers & Cutler CPAs PLLC., and the engagement of Cutler & Co. LLC as its independent auditor.

 

The Report of Borgers, on the financial statements of SpeedSport Branding, Inc. for the years ended December 31, 2012, nor subsequent interim periods contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles, except that the Registrant's audited financial statements contained in its Form 10-K for the year ended December 31, 2012 contained a going concern qualification in the registrant's audited financial statements. We have had no disagreements with Borgers, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Borgers' satisfaction would have caused them to make reference to the subject matter of the disagreement in connection with their reports on our financial statements.

 

There were no disagreements or other “reportable events” as that term is described in Item Item 304(a)(1)(iv) and Item 304(a)(1)(v), respectively, of Regulation S-K, occurring within the registrant’s two most recent fiscal years and the subsequent interim periods through the date of dismissal

 

On November 8, 2013 the registrant engaged Cutler & Co. LLC as its independent accountant. During the most recent fiscal year, since inception, and the interim periods preceding the engagement, the registrant has not consulted Cutler & Co.LLC regarding any of the matters set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of financial statements.

 

All internal controls over financial reporting, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention or overriding of controls. Therefore, even effective internal control over financial reporting can provide only reasonable, and not absolute, assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal controls over financial reporting may vary over time. Because of its inherent limitations, internal control over financial reporting may also fail to prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

 

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As of December 31, 2013, we carried out an evaluation, under the supervision and with the participation of our management, including Roy C. Montgomery, our Chief Executive Officer and Timothy J. Koziol, our Chief Financial Officer and principal financial officer, of the effectiveness of our internal control over financial reporting pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In making its assessment of internal control over financial reporting, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on this evaluation, our Chief Executive Officer and principal financial officer concluded that, as of December 31, 2013, our internal control over financial reporting was not effective due to the material weakness in our internal control over financial reporting identified below.

 

Disclosure Controls and Procedures.

As of December 31, 2013, we carried out an evaluation, under the supervision and with the participation of our management, including Roy C. Montgomery our Chief Executive Officer, and Timothy J. Koziol our Chief Financial Officer, and principal financial officer, of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act. Based upon the evaluation, our Chief Executive Officer and principal accounting officer concluded that, as of December 31, 2013, the disclosure controls and procedures were not effective due to the material weakness in our internal control over financial reporting identified below.

 

Management’s Discussion of Material Weakness

Management has identified the following groups of control deficiencies, each of which represents a material weakness in our internal control over financial reporting as of December 31, 2013:

 

·Due to our limited resources, our accounting records, policies and procedures were not adequately maintained or documented and our management has limited technical accounting knowledge.
·We did not maintain appropriate cash controls. As of December 31, 2013, we have not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on our bank accounts. However, the effects of poor cash controls were mitigated by the fact that we had limited transactions in our bank accounts.
·We are dependent on outside advisers for the preparation of our financial statements and these advisors are not sufficiently conversant with all our activities to be able to ensure they are reported on an accurate and timely basis.
·Our executives, directors and shareholders have business relationships requiring them to advise, manage and/or provide services to other businesses. We have engaged in transactions with some of these businesses. Due to the wide-ranging network of contacts and business relationships of our executives, directors and shareholders, we were not always able to devote sufficient resources to identify, monitor and report all transactions with such businesses in a timely manner.

 

Management of the Company takes very seriously the strength and reliability of the internal control environment of the Company. However, in view of the limited financial resources available as of December 31, 2013, the Company was unable to adequately address the control deficiencies.

 

Management acknowledges its responsibility for internal controls over financial reporting and, subject to available cash, will seek to improve those controls. In order to achieve compliance with Section 404 of the Act subject to available cash, we will perform the system and process documentation and evaluation needed to comply with Section 404, which is both costly and challenging.

 

Changes in Internal Control over Financial Reporting.

There have been no changes in our internal controls over financial reporting during the year ended December 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

Attestation Report of the Registered Public Accounting Firm

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  As a smaller reporting company, management’s report is not subject to attestation by our registered public accounting firm.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

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PART III

 

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Current Executive Officers and Directors

The following table sets forth information regarding the Company’s current executive officers and directors of the Company. The Board of Directors is comprised of only one class. Except as otherwise described below, all of the directors will serve until the next annual meeting of stockholders or until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. Also provided herein are brief descriptions of the business experience of each director and executive officer during the past five years, the specific experience, qualifications, attributes or skills that led to the conclusion that such person should serve as a director and an indication of directorships held by each director in other companies subject to the reporting requirements under the federal securities laws.

 

Name   Age   Position
Roy C. Montgomery     45   Chairman of the Board & CEO, Director

Timothy J. Koziol

 

53

 

Chief Financial Officer

Ronald E. Norwood   45   Chief Operating Officer, Secretary & Treasurer

 

Roy C. Montgomery— Presently through 2004, Mr. Montgomery has been involved in private equity and asset management firms with particular focus in equities management, structured investments, private and public financings, acquisitions and dispositions and corporate restructuring. He is the Chief Operations Officer of General Pacific Partners, LLC, a Southern California firm providing direct equity sponsorship and advisory services to public and private companies. During this period, Mr. Montgomery was involved in various motorsports organizations and served as the Technical Director and consultant to various racing companies in southern California. In 2004, Montgomery became a NASD securities licensed financial advisor and a representative of the Northwestern Mutual Financial Network. From 2004 to 1996 Montgomery entered into a partnership with his father Chester Montgomery developing a large Manufacturing Facility specializing in large Sub-Sea wellhead components and was named V.P. of Operations, directly involved with manufacturing, purchasing and engineering. From 1994 to 1993 after Montgomery Machine was sold, Montgomery founded a commercial service company servicing commercial kitchen equipment for some of the largest nationally recognized fast food chains in the United States. From 1993 to 1986 managed the early stage efforts of several large volume/large capacity sub-sea well head manufacturing facilities in Houston, Texas. Mr. Montgomery was responsible for QA/QC and the integration of ISO 1990/9002 QA/QC control systems, a nationally recognized standard of documented procedures and standards recognized by all international suppliers. Montgomery has completed training in Computer Science and Mechanical Engineering. Mr. Montgomery devotes approximately 25% of his time to our business.

 

Timothy J. Koziol – From 2003 to the present, Mr. Koziol has been an executive in environmental transportation industries in North America. He recently consulted on a multi-site Greenfield development of evaporative pond treatment facilities for the oil & gas industry in the Rocky Mountain area.  Prior, he began the restructuring and refinance of General Environmental Management’s predecessor company, HES. In the turnaround process, Mr. Koziol implemented accounting controls and systems to monitor the day-to-day financial position of the company, changed operational policies to improve efficiencies, and implemented new sales and marketing programs to increase revenue. Mr. Koziol drove the growth of GEM from $2 million to $35 million in 6 years through the development and growth of underutilized acquired assets.  Prior to joining GEM, Mr. Koziol was a principal of Fortress Funding, Inc., an asset based lending company, where he was responsible for business development and underwriting.  Mr. Koziol was also a principal in Global Vantage, Ltd., a private banking firm located in Newport Beach. Prior to his work in the financial services industry, Mr. Koziol managed a marketing consulting firm for national and regional clients. As a project manager Mr. Koziol built a division for Waste Management, Inc. in their hazardous waste arena in the Western Region.  He has a BA from Wheaton College in Speech Communications and a MA (Magma Cum Laude) from the Wheaton Graduate School in Mass Communications. Mr. Koziol dedicates 15% of his time to our business.

 

Ronald E. Norwood—Since 1985 Mr. Norwood has been a real estate owner, developer and property manager specializing in residential income and single family homes.  He is a founding principal of Norwood Properties and handles responsibilities for originating and sourcing potential properties, directing acquisitions and dispositions and managing a staff that oversees day to day management of all real property assets.  Mr. Norwood has completed classes in Business Administration and Real Estate at the University of Houston. Mr. Norwood devotes up to 10% of his time to our business.

 

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Involvement in Certain Legal Proceedings

None of our directors or executive officers has, during the past ten years:

 

(a)Had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
(b)Been convicted in a criminal proceeding or subject to a pending criminal proceeding;
(c)Been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or any federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities; and
(d)Been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 

Compliance with Section 16(a) of the Exchange Act

Based solely on review of the copies of such forms furnished to the Company, or written representations that no reports were required, the Company believes that for the year ended December 31, 2013 our directors and executive officers complied with Section 16(a) filing requirements applicable to them.

 

Code of Ethics

On December 15, 2010, we adopted a code of ethics that applies to our officers, directors and employees, including our chief executive officer, senior executive officers, principal accounting officer, and other senior financial officers.  A copy of our code of ethics will also be provided to any person without charge, upon written request sent to us at our offices located 111 Sunrise City Dr. Thomasville, NC 27360

 

Material Changes to the Procedures by which Security Holders May Recommend Nominees to the Board of Directors

On December 15, 2010, we adopted a nominating committee charter. Under such charter, while there have been no material changes to the procedures by which our shareholders may recommend nominees to the board of directors, the board of directors may take into consideration as one of the factors in its evaluation of shareholder-recommended nominees, the size and duration of the share holdings of the recommending shareholder or shareholder group in relation to the total outstanding shares of the Company. The board of directors may also consider the extent to which the recommending shareholder intends to continue holding its interest in the Company, including, in the case of nominees recommended for election at an annual meeting of shareholders, whether the recommending shareholder intends to continue holding its interest at least through the time of such annual meeting.

 

Board of Directors

 

Director Qualifications

We seek directors with established strong professional reputations and experience in areas relevant to the strategy and operations of our businesses. We also seek directors who possess the qualities of integrity and candor, who have strong analytical skills and who are willing to engage management and each other in a constructive and collaborative fashion. We also seek directors who have the ability and commitment to devote significant time and energy to service on the Board and its committees. We believe that all of our directors meet the foregoing qualifications.

 

Certain of our directors have strong technological backgrounds that are relevant to our industry. Certain of our directors have backgrounds in accounting, public company reporting, compliance and management. We believe that the backgrounds and skills of our directors bring a diverse range of perspectives to the Board.

 

Meetings of the Board of Directors and Committees

During the fiscal year ended December 31, 2013, the Board of Directors did not meet but took action by unanimous written consent. Each director is expected to attend meetings of our Board of Directors and meetings of committees of our Board of Directors of which he is a member, and to spend the time necessary to properly discharge his respective duties and responsibilities.

 

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Board Committees

 

Audit Committee

Presently, our Board of Directors is performing the duties that would normally be performed by an audit committee. We intend to form a separate audit committee, and plan to seek potential independent directors. In connection with our search, we plan to appoint an individual qualified as an audit committee financial expert.

 

ITEM 11.  EXECUTIVE COMPENSATION

 

Name and Principal Position  Year   Salary ($)   Bonus ($)   Other Annual
Compensation
($) (3)
   All Other
Compensation
($)
 
Roy C. Montgomery,   2013   $0   $0   $0   $0 
Chairman of the Board & CEO   2012    0    0    0    0 
    2011    0    0    0    0 
                          
Ronald E. Norwood,   2013   $0   $0   $0   $0 
Chief Operating Officer   2012    0    0    0    0 
    2011    0    0    0    0 
                          
Timothy J. Koziol ,   2013   $0   $0   $0   $0 
Chief Financial Officer (as of September 5, 2012)   2012    0    0   0   0 

 

Employment Agreements

There are no employment agreements with management.

 

Outstanding Equity Awards at Fiscal Year-End

There are no unexercised options, unvested stock awards or equity incentive plan awards for any of the above-named executive officers outstanding as of December 31, 2013.

 

Indemnification of Officers and Directors

We are a Nevada corporation, and accordingly, we are subject to the corporate laws under the Nevada Revised Statutes. Pursuant our articles of incorporation and Nevada’s Revised Business Statutes, our bylaws contain the following indemnification provision for our directors and officers:

 

“The corporation shall indemnify directors, officers, employees, and agents of the corporation to the extent required by the Nevada Revised Statutes and shall indemnify such individuals to the extent permitted by the Nevada Revised Statutes. The corporation may purchase and maintain liability insurance, or make other arrangements for such obligations or otherwise, to the extent permitted by the Nevada Revised Statutes.”

 

Such indemnification provision may be sufficiently broad to permit indemnification of our executive officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act. We do not currently carry directors’ and officers’ liability insurance covering our directors and officers, but we have plans to do so. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. No pending material litigation or proceeding involving our directors, executive officers, employees or other agents as to which indemnification is being sought exists, and we are not aware of any pending or threatened material litigation that may result in claims for indemnification by any of our directors or executive officers.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth certain information, as of December 31, 2012, with respect to any person (including any “group”, as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) who is known to us to be the beneficial owner of more than five percent (5%) of any class of our voting securities, and as to those shares of our equity securities beneficially owned by each of our directors and executive officers and all of our directors and executive officers as a group. Unless otherwise specified in the table below, such information, other than information with respect to our directors and executive officers, is based on a review of statements filed with the Securities and Exchange commission (the “Commission”) pursuant to Sections 13 (d), 13 (f), and 13 (g) of the Exchange Act with respect to our common stock. As of December 31, 2012, there were 16,535,838 shares of our common stock outstanding.

 

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The number of shares of common stock beneficially owned by each person is determined under the rules of the Commission and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which such person has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within sixty (60) days after the date hereof, through the exercise of any stock option, warrant or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.

 

The table also shows the number of shares beneficially owned as of December 31, 2013 by each of our individual directors and executive officers, by our nominee directors and executive officers and by all our current directors and executive officers as a group.

 

Name  No. of Shares
Owned
   % of Stock
Outstanding
 
Revete Capital Partners, LLC*   5,400,000    32.09 
General Pacific Partners, LLC*   4,166,280    24.76 
Billington Brown Acceptance, LLC *   770,865    4.48 
P-1, Inc. *   708,333    4.21 
Chester Montgomery**   362,170    2.15 
Specialty Rentals, LLC *   35,000    0.21 
Rick Ware Racing, LLC   1,000,000    5.94 
Directors & Officers          
Roy C. Montgomery   88,510    0.53 
Ronald E. Norwood   97,585    0.58 
Timothy J Koziol        
           
Directors & Officers as a Group   186,095    1.1 
Total   12,628,743    75.05 
Based on 16,827,505 shares issued and outstanding          

 

*Kevin P. O’Connell is the managing member of Revete’ Capital Partners, LLC, General Pacific Partners, LLC), Billington Brown Acceptance, LLC and Specialty Rentals, LLC, and the majority shareholder of P-1, Inc.

 

**Chester Montgomery is the father of Roy Montgomery, CEO and Chairman of the Board of our Company.

 

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ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

The Company had limited revenues in 2013 and 2012 from a small client base. During the year ended December 31, 2013, 96% of total revenues were consulting fees from related parties. The remaining 4% represented winnings from races. By comparison, during the year ended December 31, 2012, 47% of revenues were consulting fees from related parties and the remaining 53% related to consulting and sponsorship fees from non-related companies

 

The Company paid consulting fees to related parties of $39,620 and $57,500 for the years ended December 31, 2013 and 2012 respectively. The services provided by the related parties were administrative consulting and test and development consulting.

 

On June 20, 2013, the Company purchased a race car in exchange for 1,000,000 shares of common stock with a value of $200,000.

 

On June 25, 2013, the Company sold a race car to a shareholder in exchange for the cancellation of 708,333 shares of common stock. The stock had been originally issued at a value of $141,666 and was the sales value attributed to the sale. The sale resulted in a gain of $123,000 which has been recorded as additional paid in capital.

 

As of December 31, 2013, the Company owed a related party, a company owned by a majority shareholder, $74,724 (2012 - $3,885).

 

Director Independence

Our board of directors is currently composed of one member, who does not qualify as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director's business and personal activities and relationships as they may relate to us and our management.

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

Our current principal independent auditor is Cutler & Co. LLC, whom we engaged on November 8, 2013. The following are the services provided and the amounts billed.

 

Audit Fees

The aggregate fees billed by Cutler & Co. LLC for professional services rendered for the audit of the Company’s annual financial statements for the fiscal year ended December 31, 2013, was $1,500 The aggregate fees billed by Borgers & Cutler CPAs PLLC for professional services rendered for the audit of the Company’s annual financial statements for the fiscal year ended December 31, 2012, was $10,500. Borgers & Cutler CPAs PLLC is our former auditor.

 

Audited-Related Fees

For the year ended December 31, 2013 there were no fees billed by Cutler & Co. LLC for services reasonably related to the performance of the audit or review of the financial statements outside of those fees disclosed above under “Audit Fees”.

 

For the year ended December 31, 2012, there were no fees billed by Borgers & Cutler CPAs PLLC for services reasonably related to the performance of the audit or review of the financial statements outside of those fees disclosed above under “Audit Fees”.

 

Tax Fees

For the year ended December 31, 2013 the Company incurred no fees from Cutler & Co. LLC for services for tax compliance, tax advice and tax planning work.

 

For the year ended December 31, 2012 the Company incurred no fees from Borgers & Cutler CPAs PLLC for services for tax compliance, tax advice and tax planning work.

 

25
 

 

All Other Fees

For the year ended December 31, 2013 and December 31, 2012, there were no other fees billed by Cutler & Co. LLC or Borgers & Cutler CPAs PLLC for products and services outside of those fees disclosed above under “Audit Fees”, “Audit-Related Fees” and “Tax Fees”.

 

Audit Committee Pre-Approval Policies and Procedures

The policy of the board of directors is to pre-approve all audit and permissible non-audit services provided by our independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services. The independent auditor and management are required to periodically report to the board of directors regarding the extent of services provided by the independent auditor in accordance with this pre-approval. The chair of the board of directors is also authorized, pursuant to delegated authority, to pre-approve additional services of up to $5,000 per engagement on a case-by-case basis, and such approvals are communicated to the full board of directors at its next meeting.

 

ITEM 15. EXHIBITS

 

(1) Financial Statements

The following financial statements of the Company are included in Part II, Item 8 of this Report:

 

  Reports of Independent Registered Public Accounting Firms F-3
  Balance Sheets at December 31, 2013 and 2012 F-5
  Statements of Operations for the Years Ended December 31, 2013and 2012 and the period from  
  January 10, 2006 (Inception) to December 31, 2013 F-6
  Statement of Stockholders’ Equity for the period from January 10, 2006 (Inception) to  
  December 31, 2013 F-7
  Statements of Cash Flows for the Years Ended December 31, 2013 and 2012 and the period from  
  January 10, 2006 (Inception) to December 31, 2013 F-8
  Notes to Financial Statements F-9

 

(2) Financial Statement Schedules

Schedules are omitted because the required information is not present or is not present in amounts sufficient to require submission of the schedule or because the information required is given in the financial statements or the notes thereto.

 

(3) Exhibits

 

Exhibit # Description
   
3(i).1 Articles of Incorporation of Speedsport Branding, Inc., as amended *
3(ii).1 Corporate Bylaws for Speedsport Branding, Inc. *
10.1 Equipment Lease Agreement between Speedsport Branding, LLC and P-1, LLC*
31.1 Section 302 Certification by the Corporation’s Chief Executive Officer
31.2 Section 302 Certification by the Corporation’s Chief Financial Officer
32.1 Section 906 Certification by the Corporation’s Chief Executive Officer
32.2 Section 906 Certification by the Corporation’s Chief Financial Officer

 

101.INS XBRL Instance Document
101.SCH XBRL Schema Document
101.CAL XBRL Calculation Linkbase Document
101.DEF XBRL Definition Linkbase Document
101.LAB XBRL Label Linkbase Document
101.PRE XBRL Presentation Linkbase Document

 

(*Previously filed with Form S-1)

 

26
 

 

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Speedsport Branding, Inc. (Registrant)
     
Date: April 11, 2014 By: /s/ Roy C. Montgomery
    Roy C. Montgomery
    Chief Executive Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Name   Title   Date
         
/s/ Roy C. Montgomery   Chief Executive Officer, Chief Financial Officer and Treasurer,   April 11, 2014
Roy C. Montgomery   (Principal Executive Officer and Principal Financial Officer), Director    
         
/s/ Timothy J. Koziol   Chief Financial Officer   April 11, 2014
Timothy J. Koziol        

 

 

27
 

 

 

SPEEDSPORT BRANDING, INC.

(A DEVELOPMENT STAGE COMPANY)

 

AUDITED FINANCIAL STATEMENTS

 

FOR THE TWELVE MONTHS ENDED December 31, 2013 and 2012

 

THE PERIOD FROM INCEPTION (JANUARY 26, 2006) TO DECEMBER 31, 2013

 

 

 

F-1
 

 

 

SPEEDSPORT BRANDING, INC.

(A DEVEVELPOMENT STAGE COMPANY)

Audited Financial Statements

 

 

TABLE OF CONTENTS

  Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F - 3
   
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F - 4
   
AUDITED FINANCIAL STATEMENTS
   
Balance Sheets at December 31, 2013 and 2012 F - 5
   
Statements of Operations for the Years Ended December 31, 2013 and 2012
And the Period from January 10, 2006 (Inception) to December 31, 2013
F - 6
   
Statements of Changes in Stockholders’ Equity for the Period from January 10, 2006 (Inception) to December 31, 2013 F - 7
   
Statements of Cash Flows for the Years Ended December 31, 2013 and 2012
And the Period from January 10, 2006 (Inception) to December 31, 2013
F - 8
   
Notes to Audited Financial Statements F - 9

 

 

F-2
 

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Board of Directors

Speedsport Branding, Inc.

Thomasville, North Carolina

 

We have audited the accompanying balance sheets of Speedsport Branding, Inc. as of December 31, 2013 and the related statement of operations, changes in stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements as of December 31, 2012 and for the year then ended were audited by another auditor who expressed an unqualified opinion on April 10, 2013.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Speedsport Branding, Inc. as of December 31, 2013, and the results of its operations, changes in stockholders’ equity and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements the Company has suffered losses and negative cash flow from operations which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

 

   
 Arvada, Colorado /s/ Cutler & Co., LLC
 April 4, 2014 Cutler & Co., LLC

 

 

 

F-3
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Board of Directors

Speedsport Branding, Inc.

Newport Beach, California

 

We have audited the accompanying balance sheets of Speedsport Branding, Inc. (a development stage company) as of December 31, 2012 and the related statement of operations, stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements as of and for the year ended December 31, 2011 and for the period from January 10, 2006 (inception) to December 31, 2011 were audited by another auditor who expressed an unqualified opinion on April 10, 2012.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Speedsport Branding, Inc. as of December 31, 2012, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 8 to the financial statements the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

   
   
Denver, Colorado  
April 10, 2013 /s/ Borgers & Cutler CPAs PLLC

 

 

 

F-4
 

 

SPEEDSPORT BRANDING, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS


   December 31, 2013   December 31, 2012 
ASSETS          
Current assets          
Cash  $33,217   $ 
Total current assets   33,217     
           
Fixed assets, net   176,667    32,000 
           
Total Assets  $209,884   $32,000 
           
           
LIABILITIES & STOCKHOLDERS' EQUITY          
           
Current liabilities          
Bank overdraft  $   $2,032 
Accounts payable   22,466    14,766 
Line of credit   8,246    9,201 
Accrued interest payable   91    62 
Accounts payable – related party   74,724    3,885 
Total current liabilities   105,527    29,946 
           
Total Liabilities   105,527    29,946 
           
Stockholders' Equity          
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding        
Common stock, $0.001 par value; 100,000,000 shares authorized; 16,827,505 and 16,535,838 shares issued and outstanding as at December 31, 2013 and 2012, respectively   16,828    16,537 
Additional paid in capital   1,584,040    1,402,998 
Retained deficit   (1,496,512)   (1,417,481)
Total Stockholders' Equity   104,357    2,054 
           
Total Liabilities and Stockholders' Equity  $209,884   $32,000 

 

The accompanying notes are an integral part of the audited financial statements.

 

F-5
 

 

Speedsport Branding, Inc.

(A Development Stage Company)

STATEMENTS OF OPERATIONS


 

 

   For the years ended December 31,   For the period from January 10, 2006 (Inception) To December 31, 
   2013   2012   2013 
Revenue:               
Consulting  $   $57,500   $96,130 
Consulting - related party   81,000    68,650    149,650 
Sponsorships       20,000    67,463 
Race winnings   3,300        28,358 
Lease income           17,379 
Lease income - related party           42,424 
Total revenue   84,300    146,150    401,404 
                
Operating expenses:               
Depreciation   36,667    32,000    287,927 
General and administrative - related party   39,620    57,500    271,856 
General and administrative   102,129    83,119    1,257,684 
Total operating expenses   178,416    172,619    1,817,467 
                
Operating - other:               
Gain on asset sales   16,301        32,660 
                
Loss from operations   (77,815)   (26,469)   (1,383,403)
                
Other income (expense):               
Interest income           1,286 
Interest expense   (1,216)   (1,306)   (114,395)
Other income (expense) net   (1,216)   (1,306)   (113,109)
                
Income (loss) before provision for income taxes   (79,031)   (27,775)   (1,496,512)
                
Provision for income tax            
                
Net loss  $(79,031)  $(27,775)  $(1,496,512)
                
Net loss per share (Basic and fully diluted)  $0.00*  $0.00*     
                
Weighted average number of common shares outstanding   16,703,304    16,535,838      

 

* Denotes less than $(0.01) per share.

 

The accompanying notes are an integral part of the audited financial statements.

F-6
 

Speedsport Branding, Inc.

(Development Stage Company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD FROM JANUARY 10, 2006 (INCEPTION) TO DECEMBER 31, 2013


    Common Stock (1)    Additional    Deficit Accumulated During The      
    Shares     Amount
($0.001 Par)
     Paid in
Capital
     Development Stage    Stockholders' Equity 
Balances at January 10, 2006      $   $   $   $ 
Shares issued to founders for services at $0.001 per share   10,125,000    10,125            10,125 
Recapitalization   150,000    150    9,850        30,000 
Net loss               (653,409)   (653,409)
                          
Balances at December 31, 2006   10,275,000    10,275    29,850    (653,409)   (613,284)
Forgiveness of debt - related party           36,529        36,529 
Net loss               (322,544)   (322,544)
                          
Balances at December 31, 2007   10,275,000    10,275    66,379    (975,953)   (899,299)
Shares issued in conversion of debt   5,095,983    5,096    1,067,434        1,072,530 
Shares issued for services at $0.20 per share   25,000    25    4,975        5,000 
Shares issued for services at $0.20 per share   44,890    45    8,933        8,978 
Net loss               (132,018)   (132,018)
                          
Balances at December 31, 2008   15,440,873    15,441    1,147,721    (1,107,971)   55,191 
Shares issued in conversion of debt   210,000    210    62,790        63,000 
Net loss               (46,682)   (46,682)
                          
Balances at December 31, 2009   15,650,873    15,651    1,210,511    (1,154,653)   71,509 
Shares issued for cash at $0.20 per share   250,000    250    49,750        50,000 
Shares issued for services at $0.20 per share   125,000    125    24,875        25,000 
Net loss               (79,734)   (79,734)
                          
Balances at December 31, 2010   16,025,873    16,026    1,285,136    (1,234,387)   66,775 
Shares issued for cash at $0.20 per share   250,000    250    49,750        50,000 
Shares issued for services at $0.20 per share   161,865    162    32,211        32,373 
Shares issued for services at $1.25 per share   15,600    16    19,484        19,500 
Shares issued for services at $0.20 per share   82,500    83    16,417        16,500 
Net loss               (155,319)   (155,319)
                          
Balances at December 31, 2011   16,535,838    16,537    1,402,998    (1,389,706)   29,829 
Net loss               (27,775)   (27,775)
                          
Balances December 31, 2012   16,535,838    16,537    1,402,998    (1,417,481)   2,054 
Shares issued for purchase of assets at $0.20 per share   1,000,000    1,000    199,000        200,000 
Sale of asset in exchange for cancellation of
shares at $0.20 per share
   (708,333)   (708)   (140,958)       (141,666)
Gain on sale of asset to a related party           123,000        123,000 
Net loss               (79,031)   (79,031)
                          
Balances December 31, 2013   16,827,505   $16,829   $1,584,040   $(1,496,512)  $104,357 

 

(1) As adjusted for a 1 for 5 LLC interest for common share exchange in May 2008.

 

The accompanying notes are an integral part of the audited financial statements.

F-7
 

Speedsport Branding, Inc.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS


 

    For the years ended December 31,    For the period from Jan. 10, 2006 (Inception) To December 31, 
    2013    2012    2013 
Cash Flows From Operating Activities:               
Net loss  $(79,031)  $(27,775)  $(1,496,512)
                
Adjustments to reconcile net loss to net cash used in operating activities:               
Depreciation   36,667    32,000    287,927 
Bad debt (recovery)       (32,257)   15,000 
Stock issued for services           117,476 
(Gain) Loss on asset sales   (16,301)       (32,660)
Changes in operating assets and liabilities:               
Accounts receivable           (15,000)
Accounts payables   7,710    13,993    22,466 
Accrued interest   29    (511)   80,623 
Accrued payables - related parties       (41,640)   3,885 
Net cash provided by (used in) operating activities   (50,936)   (56,190)   (1,016,795)
                
Cash Flows From Investing Activities:               
Fixed asset purchases           (11,314)
Fixed asset sales proceeds   16,301        148,701 
Net cash provided by (used in) investing activities   16,301        137,387 
                
Cash Flows From Financing Activities:               
Notes & loans payable - borrowings   1,537    4,932    713,887 
Notes & loans payable - payments   (2,492)   (4,408)   (136,393)
Repayments on related party advances   (127,264)   (114,302)   (1,565,654)
Advances from related parties   198,103    144,559    1,770,785 
Bank overdraft   (2,032)   2,032     
Issuance of common stock for cash           130,000 
Net cash provided by (used in) financing activities   67,852    32,813    912,625 
                
Net Increase (Decrease) In Cash   33,217    (23,377)   33,217 
                
Cash At The Beginning Of The Period       23,377     
                
Cash At The End Of The Period  $33,217   $   $33,217 
                
Schedule Of Non-Cash Investing And Financing Activities               
                
Debt converted to capital  $   $   $490,000 
Interest converted to capital  $   $   $76,469 
Related party debt converted to capital  $   $   $409,061 
Assets purchased by issuing related party notes  $   $   $486,868 
Assets purchased by issuing stock  $200,000   $   $200,000 
Assets purchased by issuing notes  $   $   $45,623 
Forgiveness of debt - related party  $   $   $36,529 
Sale of asset to related party for cancellation of stock  $141,666   $   $141,666 
                
During 2007, an asset with a net book value of $144,505 was transferred to a related party to settle outstanding debt of $181,034. Upon the transfer, the difference of $36,529 was deemed to be forgiveness of debt and was recorded as an additional paid in capital.
                
Supplemental Disclosure               
Cash paid for interest  $1,187   $1,589   $26,153 
Cash paid for income taxes  $   $   $ 
                

 

The accompanying notes are an integral part of the audited financial statements. 

F-8
 

 

SPEEDSPORT BRANDING, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO AUDITED FINANCIAL STATEMENTS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2013 AND 2012

AND THE PERIOD FROM JANUARY 10, 2006 (INCEPTION) TO DECEMBER 31, 2013

 

 

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Speedsport Branding, Inc. (the “Company”), was incorporated in the State of Nevada on January 10, 2006. The Company designs and modifies motorsport racecars for its own use, provides race consulting services to other race teams, and competes in organized racing events. The Company is currently considered to be in the development stage, and has generated only limited revenues from its activities in the racing business. Speedsport Branding, LLC was formed in the State of California on January 26, 2006. On May 15, 2008, in a merger classified as a transaction between parties under common control, the sole membership interest owner in Speedsport Branding, LLC exchanged 30,000 membership interests for 150,000 common shares in Speedsport Branding, Inc. Subsequent to the consummation of the merger Speedsport Branding, LLC ceased to exist. The results of operations of Speedsport Branding, Inc. and Speedsport Branding, LLC have been combined from January 26, 2006 forward through the date of merger.

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. The Company maintains cash with a commercial bank. The deposits are made with a reputable financial institution and the Company does not anticipate realizing any losses from these deposits.

 

Accounts receivable

The Company reviews accounts receivable periodically for collectability and establishes an allowance for doubtful accounts and records bad debt expense when deemed necessary. Significant management judgment is required to determine the allowance for doubtful accounts. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired. At December 31, 2013 and 2012, the Company had no balance in its allowance for doubtful accounts.

 

Property and equipment

Property and equipment are recorded at cost and depreciated under the straight line method over each item's estimated useful life. The Company uses a five year life for racecars, vehicles and furniture and fixtures.

 

Long-Lived Assets

In accordance with FASB ASC 360, “Property, Plant, and Equipment” which establishes the accounting for impairment of long-lived tangible and intangible assets other than goodwill, the Company reviews for impairment when facts or circumstances indicate that the carrying value of long-lived assets to be held and used may not be recoverable. If such facts or circumstances are determined to exist, an estimate of the undiscounted future cash flows produced by the long-lived asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on various valuation techniques, including the discounted value of estimated future cash flows. The Company reports impairment cost as a charge to operations at the time it is identified. During the years ended December 31, 2013 and 2012 and during the period from January 10, 2006 (inception) to December 31, 2013, the Company determined that there was no impairment of long-lived assets.

 

F-9
 

 

SPEEDSPORT BRANDING, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO AUDITED FINANCIAL STATEMENTS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2013 AND 2012

AND THE PERIOD FROM JANUARY 10, 2006 (INCEPTION) TO DECEMBER 31, 2013

 

 

Financial Instruments

The Company measures its financial assets and liabilities in accordance with the requirements of FASB ASC 825 “Financial Instruments”. The carrying values of its accounts payable, note payable (current portion), line of credit, accrued expenses, and other current liabilities approximate fair value due to the short-term maturities of these instruments.

 

Revenue recognition

Revenue from event consulting is recognized upon completion of the contracted services. Revenue from race sponsorships is recognized upon completion of the race for which the advertising was provided. Other revenue is recognized on an accrual basis as earned under contract terms.

 

Income tax

The Company accounts for income taxes pursuant to FASB ASC 740, “Income Taxes”. Under FASB ASC 740 deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

FASB ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under FASB ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. At December 31, 2013 and 2012, there were no unrecognized tax benefits.

 

Net income (loss) per share

The Company utilizes FASB ASC 260, “Earnings per Share.” Basic earnings per share is computed by dividing earnings (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include additional common share equivalents available upon exercise of stock options and warrants using the treasury stock method. Dilutive common share equivalents include the dilutive effect of in-the-money share equivalents, which are calculated based on the average share price for each period using the treasury stock method, excluding any common share equivalents if their effect would be anti-dilutive For the years ended December 31, 2013 and 2012, there were no potentially dilutive debt or equity instruments issued or outstanding.

 

Products and services, geographic areas and major customers

The Company earns revenue from race purses, race event consulting, the sale of advertising to racing sponsors, and the occasional lease of racecars, but does not separate sales of different activities into operating segments.

 

The Company had limited revenues in 2013 and 2012 from a small client base. During the year ended December 31, 2013, 96% of total revenues were consulting fees from related parties. The remaining 4% represented winnings from races. By comparison, during the year ended December 31, 2012, 47% of revenues were consulting fees from related parties and the remaining 53% related to consulting and sponsorship fees from non-related companies.

 

F-10
 

 

SPEEDSPORT BRANDING, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO AUDITED FINANCIAL STATEMENTS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2013 AND 2012

AND THE PERIOD FROM JANUARY 10, 2006 (INCEPTION) TO DECEMBER 31, 2013

 

 

Stock based compensation

The Company accounts for employee and non-employee stock awards under FASB ASC 718, “Compensation – Stock Compensation”, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.

 

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on our financial statements.

 

NOTE 2. GOING CONCERN

The Company has suffered recurring losses from operations which raises substantial doubt about the Company’s ability to continue as a going concern. Continued losses could cause the Company to be unable to continue in the racing industry or to meet debt obligations. The Company believes that racing requires significant capital outlays on a continual basis to successfully fund operations, but with adequate funding that profitable operations can be achieved. Without proper capitalization the Company could discontinue operations. The Company has generated no significant operating revenue during the year ended December 31, 2013, but are making efforts to attract financing for operations and anticipates generating more revenue in the next 12 months, and more specifically during the racing season from February through November, through increased racing activities, event consulting and sponsorships. The Company's assets are very specialized, and any value recovery should the Company cease operations may be minimal, and insufficient to meet debt obligations.

 

Because of the Company’s history of net losses and negative working capital position, its independent auditors, in their report on the financial statements for the year ended December 31, 2013, expressed substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty.

 

NOTE 3. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

 

   December 31 
   2013   2012 
Racecars  $200,000   $160,000 
Other vehicles   8,090    53,713 
    208,090    213,713 
Less accumulated depreciation   (31,423)   (181,713)
Total  $176,667   $32,000 

 

Depreciation expense for the years ended December 31, 2013 and 2012 was $36,667 and $32,000, respectively. The property and equipment is stored at a non-related party’s facility in North Carolina. No rent is charged by the owner as the space required for storage is minimal.

 

NOTE 4. LINE OF CREDIT

The Company has a line of credit with a bank for $9,600, which is guaranteed by a majority shareholder. Interest on the outstanding balance accrues at 13.75% per annum. As of December 31, 2013 and 2012, the outstanding balance was $8,246 and 9,201, respectively.

 

F-11
 

 

SPEEDSPORT BRANDING, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO AUDITED FINANCIAL STATEMENTS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2013 AND 2012

AND THE PERIOD FROM JANUARY 10, 2006 (INCEPTION) TO DECEMBER 31, 2013

 

 

The Company has a line of credit with a related party, which is owned by a majority shareholder, for $450,000, which is secured by Company property. Under the agreement, disbursement of funds is not required and the related party has sole discretion to disburse any funds. The related party has agreed to advance up to $100,000, per each request of advance, if needed, as of December 31, 2013. Any amounts advanced accrue interest at 10% per annum and principal and interest are due at the end of each quarter. As of December 31, 2013 and 2012, there was no balance outstanding on this line of credit.

 

NOTE 5. RELATED PARTY TRANSACTIONS

In January 2006, the Company issued 10,125,000 shares of common stock to the founders of the Company with a value of $10,125 in payment of services.

 

In February 2007, the Company signed an agreement to lease a race car from a related party, a majority shareholder. Under the terms of the agreement the Company leases the race car for specific races and pays $7,500 for each sprint race use and $15,000 for each endurance race use. The term is on a per event basis and has no end date. General and administrative expense on the statement of operations includes $37,500 at December, 31, 2008. The total amount owed at December 31, 2008 was $97,500. On September 1, 2009, the Company committed to issue 325,000 shares of common stock to settle this debt. In 2009, 175,000 common shares were issued to convert $52,500 of the debt. As of December 31, 2011, $45,000 was outstanding as stock subscription payable. In 2012, the Company paid $45,000 in cash to settle the remaining liability instead of issuing shares.

 

In March 2007, the Company signed an agreement to lease a truck to a related party, a majority shareholder. The amount of $866 per month is reflected as revenue on the statement of operations. The agreement ended in January 2011.

 

In 2007, the Company transferred a trailer with a net book value of $144,505 to a related party, a majority shareholder, in settlement of debt and related interest in the amount of $181,034. Related party forgiveness of debt in the amount of $36,529 was recorded as additional paid in capital.

 

In 2008, the Company rented pit equipment from a related party, a company owned by a majority shareholder, for a total of $10,500. On October 1, 2009, the Company issued 35,000 shares of common stock in payment of this obligation.

 

In 2008, the Company converted notes payable and related interest totaling $912,530 into 4,562,650 shares of common stock. Included in the transaction was $375,370 of related party notes payable and accrued interest due to its president and significant shareholders that were converted to 1,876,850 shares of common stock.

 

On December 31, 2008, the Company issued 44,890 shares of common stock valued at approximately $9,000 to a related party, the Company’s president, in payment of services rendered.

 

On December 31, 2008, the Company issued 533,333 shares of common stock valued at $160,000 to a related party, a company owned by a majority shareholder, in repayment of a loan created in the purchase of an asset.

 

In 2009, the Company borrowed $53,225 from two related parties, both of which are owned by a majority shareholder. The loans were due on demand, are unsecured and bear interest at 8%. In 2011, the loan was paid in full.

 

F-12
 

 

SPEEDSPORT BRANDING, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO AUDITED FINANCIAL STATEMENTS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2013 AND 2012

AND THE PERIOD FROM JANUARY 10, 2006 (INCEPTION) TO DECEMBER 31, 2013

 

 

On October 20, 2010, the Company issued 125,000 shares of common stock to a related party, the father of the Company’s president, in payment of services rendered for $25,000.

 

As of December 31, 2011, the Company had a related party receivable, with a company owned by a majority shareholder, in the amount of $32,257, which was reserved in case of non-repayment. In 2012, the Company collected the receivable and recorded bad debt recovery of $32,257.

 

As of December 31, 2012, the Company owed a related party, a company owned by a majority shareholder, $3,885. As of December 31, 2013, the Company owed the same party $74,724.

 

On June 20, 2013, the Company purchased a race car in exchange for 1,000,000 shares of common stock with a value of $200,000.

 

On June 25, 2013, the Company sold a race car to a shareholder in exchange for the cancellation of 708,333 shares of common stock. The stock had been originally issued at a value of $141,666 and was the sales value attributed to the sale. The sale resulted in a gain of $123,000 which has been recorded as additional paid in capital.

 

The Company paid consulting fees to related parties of $39,620 and $57,500 for the years ended December 31, 2013 and 2012 respectively.

 

As of December 31, 2013, the Company owed a related party, a company owned by a majority shareholder, $74,724.

 

NOTE 6. STOCKHOLDERS’ EQUITY TRANSACTIONS (NON-RELATED PARTY)

 

Preferred Shares

The Company is authorized to issue 10,000,000 shares of preferred stock with such designations, voting and other rights ad preferences as may be determined by the Board of Directors. During the years ended December 31, 2013 and 2012, there are no shares of preferred stock issued or outstanding.

 

Common Shares

In 2006, the Company sold 150,000 shares of common stock for cash of $30,000.

 

In 2008, the Company issued 25,000 shares of common stock with a fair value of $5,000 for services.

 

In 2010, the Company sold 250,000 shares of common stock for cash of $50,000.

 

In 2011, the Company sold 250,000 shares of common stock for cash of $50,000.

 

In 2011, the Company issued 259,965 shares of common stock with a fair value of $68,373 for services.

 

NOTE 7. INCOME TAXES

We did not provide any current or deferred US federal income tax provision or benefit for any of the periods presented in these financial statements because we have experienced losses since Inception (January 10, 2006). When it is more likely than not, that a tax asset cannot be realized through future income, the Company must record an allowance against any future potential future tax benefit. We provided a full valuation allowance against the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry forward periods.

 

F-13
 

 

SPEEDSPORT BRANDING, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO AUDITED FINANCIAL STATEMENTS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2013 AND 2012

AND THE PERIOD FROM JANUARY 10, 2006 (INCEPTION) TO DECEMBER 31, 2013

 

 

The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the years ended December 31, 2013 and 2012 as defined under ASC 740, "Accounting for Income Taxes." We did not recognize any adjustment to the liability for uncertain ta position and therefore did not record any adjustment to the beginning balance of the accumulated deficit on the balance sheet.

 

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences for the periods presented are as follows:

 

   December 31, 2013   December 31, 2012 
Income tax provision at the federal statutory rate   15%   15%
Effect of operating losses   (15)%   (15)%

 

Changes in the net deferred tax assets consist of the following:

 

   December 31, 2013   December 31, 2012 
Net operating loss carry forward  $79,031   $27,775 
Valuation allowance   (79,031)   (27,775)
           
Net deferred tax asset  $   $ 

 

A reconciliation of income taxes computed at the statutory rate is as follows:

 

   December 31, 2013   December 31, 2012 
Tax at statutory rate  $11,855   $4,166 
Increase in valuation allowance   (11,855)   (4,166)
           
Net deferred tax asset  $   $ 

 

The net federal operating loss carry forward will expire between 2026 and 2033. This carry forward may be limited upon the consummation of a business combination under IRC Section 381.

 

 

F-14
 

 

SPEEDSPORT BRANDING, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO AUDITED FINANCIAL STATEMENTS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2013 AND 2012

AND THE PERIOD FROM JANUARY 10, 2006 (INCEPTION) TO DECEMBER 31, 2013

 

 

NOTE 8. SUBSEQUENT EVENTS

 

On April 1, 2014, the Company entered into a non-binding Letter of Intent (the “LOI”) with a non-related party, pursuant to which the Company would merge with a private company to be presented by the non-related party (the “Private Company”) pursuant to an Agreement of Merger and Plan of Reorganization (the "Transaction"). The Transaction is subject to the execution of definitive agreements and due diligence by the Company, the non-related party, and the Private Company.

 

As at the date of this report, there can be no guarantee that a definitive agreement will be concluded or that the Transaction will be completed.

 

In accordance with ASC 855-10, “Subsequent Events” the Company has analyzed its operations subsequent to December 31, 2013 to the date these financial statements were available to be issued on April 10, 2014 and has determined that other than as disclosed above, it does not have any material subsequent events to disclose in these financial statements.

 

 

F-15