10-Q 1 rwi10qmar.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-Q [X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010 [] Transition report under Section 13 or 15(d) of the Exchange Act For the transition period from to ----------- ----------- Commission file number: 333-148636 ----------------- RACE WORLD INTERNATIONAL, INC. (Exact name of small business issuer as specified in its charter) Nevada 20-8720608 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 968 - 240 th Street V2Z 2Y3 Langley, British Columbia, Canada (Address of principal (Zip Code) executive offices) ------------------ Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Title of each class ------------------- Common stock, par value $0.001 per share Preferred stock, par value $0.001 per share Issuer's telephone number, including area code: (604) 539-9680 (Former name or former address, if changed since last report)Not Applicable Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No ---------------------------------------------------------------------- Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] (Do not Smaller reporting company [X] check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as Defined in Rule 12b-2 of the Exchange Act). [x] Yes [ ] No As of May 13, 2010 the Issuer had 46,200,000 shares of common stock issued and outstanding. ------------------------------------------------------------------------- RACE WORLD INTERNATIONAL, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010 TABLE OF CONTENTS PART I Item 1. Financial Statements Balance Sheets as of March 31, 2010 and December 31, 2009 . . . . . . . . F-1 Statements of Operations for the Three Months Ended March 31, 2010 and March 31, 2009 and from Inception (Dec 29,2006) to March 31, 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .F-2 Statement of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . F-3 Statements of Cash Flows for the Three Months Ended March 31, 2010 and March 31, 2009 and from Inception(Dec 29, 2006) to March 31, 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . F-5 Item 2. Management's Discussion and Analysis or Plan of Operation . .6 Item 3. Quantitative and Qualitative Disclosures about Market Risk. .13 Item 4. Controls and Procedures . . . . . . . . . . . . . . . . . . .13 PART II Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . .14 Item 2. Unregistered Sale of Equity Securities and Use of Proceeds. .14 Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . .14 Item 4. Submission of Matters to a Vote of Security Holders . . . . .14 Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . .14 Item 6. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . .14 RACE WORLD INTERNATIONAL, INC. (A Development Stage Company) FINANCIAL STATEMENTS MARCH 31, 2010

APPROVED BY THE DIRECTORS: /s/Evan Williams ---------------- Evan William Director /s/ Solomon Nordine ------------------- Solomon Nordine Director .F-1. Race World International, Inc. (a development stage company) Statements of Operations (Unaudited) For the Three For the Three Period From Months Ended Months Ended Dec 29, 2006 March 31, 2010 March 31, 2009 (inception) to March 31, 2010 ---------------------------------------------------------------------- REVENUE Interest Revenue $ - $ 16 $ 11,492 Operating Revenue - - 2,581 ------------- ------------- --------------- Total Revenue - 16 14,073 ============= ============= =============== EXPENSES Advertising & Promotion 70 238 20,831 Bank Charges 89 95 833 Depreciation 813 2,375 5,688 Foreign Currency Loss 221 676 4,592 Listing and Share Transfer fees 6,272 7,703 42,180 Management fees 14,770 4,761 67,471 Professional fees 15,614 3,780 93,413 Rent 1,477 1,274 14,416 Travel - 397 7,284 ------------- ------------- -------------- Total Expenses 39,326 21,299 256,708 ============= ============= ============== NET LOSS $ (39,326) $ (21,283) $(242,635) ============= ============= ============== Loss per share $ (0.00) $ (0.00) $ (0.01) (Note 2(f)) ============= ============= ============== Weighted average number of shares outstanding 46,200,000 46,200,000 41,130,724 ============= ============= ============== ---------------------------------------------------------------------- The accompanying notes are an integral part of these financial statements. .F-2. Race World International, Inc. (a development stage company) Statement of Stockholders? Equity (Unaudited) For the Period from Dec 29, 2006 (inception) to March 31, 2010
----------------------------------------------------------------------------- Common stock -------------- Deficit Acc. Total Number Amount Additional During Devel- Stockholders Of Shares Paid-in opment Stage Equity Capital --------- -------- ----------- --------------- ------------- Issue of Common 19,700,000 $ 19,700 $ 78,800 $ - $ 98,500 Stock for cash On organization Of the Company Issue of Common 26,200,000 $ 26,200 $ 107,131 $ - $133,331 Stock for cash Net loss for Period - - - $ (21,508) $(21,508) --------- -------- ----------- --------------- ------------- Balance 45,900,000 $45,900 $ 185,931 $ (21,508) $ 210,323 December 31, 2007 Issue of Common 300,000 300 29,700 - 30,000 Stock for cash Net loss for Period - - - (135,649) (135,649) --------- --------- ---------- --------------- ------------- Balance December 31, 2008 46,200,000 $46,200 $ 215,631 $(157,157) $ 104,674 Net Loss for Period - - - (46,152) (46,152) --------- -------- ----------- --------------- ------------- Balance December 31, 2009 46,200,000 $46,200 $ 215,631 $(203,309) $ 58,522 Net Loss for Period - - - (39,326) (39,326) --------- -------- ----------- --------------- ------------- Balance March 31, 2010 46,200,000 $46,200 $ 215,631 $ (242,635) $ 19,196 ========== ======== =========== =============== =============
The accompanying notes are an integral part of these financial statements. .F-3.
Race World International, Inc. (a development stage company) Statement of Cash Flows (Unaudited) For the Three For the Three Period from Months Ended Months Ended Dec 29,2006 March 31,2010 March 31, 2009 (inception) to March 31, 2010 -------------------------------------------------------------------- CASH FLOWS (USED IN) PROVIDED BY: OPERATING ACTIVITIES Net loss $ (39,326) $(21,283) $ (242,635) Adjustments for Items not affecting Cash: Depreciation 813 2,375 5,688 Changes in Operating Assets and Liabilities: Decrease (Increase) in prepaid expenses and accrued assets - 2,500 - Increase (Decrease) in accounts payable and accrued liabilities 38,293 14,086 76,859 Increase in Refundable Taxes (1,576) (934) (6,665) ----------- ---------- ----------- (1,796) (3,256) (166,753) =========== ========== =========== INVESTING ACTIVITIES Promissory note receivable (Note 3) - - (95,000) ----------- ---------- ----------- FINANCING ACTIVITIES Common stock issued for cash: - - 261,831 ----------- ---------- ----------- INCREASE (DECREASE) IN CASH (1,796) (3,256) 78 CASH, beginning 1,874 24,194 - ----------- ---------- ----------- CASH, ending $ 78 $ 20,938 $ 78 =========== ========== =========== SUPPLEMENTAL INFORMATION Cash paid during the year to: Interest $ - $ - $ - Income taxes $ - $ - $ - Non-cash events: Promissory note receivable $ - $ - $ 95,000 Purchase of property and equipment $ - $ - $ (95,000) ---------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. .F-4. RACE WORLD INTERNATIONAL, INC. (a development stage company) MARCH 31, 2010 1.ORGANIZATION AND DEVELOPMENT STAGE ACTIVITIES The company was incorporated under the laws of the State of Nevada on December 29, 2006. The company purpose in the Articles of Incorporation is to engage in any lawful activity or activities in the State of Nevada and throughout the world. As of March 31, 2010, the Company is considered to be in the development stage as the Company is devoting substantially all of its effort to establishing its new business and the Company has not generated revenues from its business activities. The Company has no cash flows from operations. The Company is currently seeking additional funds through future debt or equity financing to offset future cash flow deficiencies. Such financing may not be available or may not be available on reasonable terms. The resolution of this going concern issue is dependent on the realization of management's plans. If management is unsuccessful in raising future debt or equity financing, the Company will be required to liquidate assets and curtail or possibly cease operations. 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. Because a precise determination of many assets and liabilities is dependent on future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. The financial statements have, in management's opinion, been properly prepared within reasonable limits of materiality and within the framework of the accounting policies summarized below: a)Cash and cash equivalents The Company considers all short-term investments, including investments in certificates of deposit, with a maturity date at purchases of three months or less to be cash equivalents. b)Revenue recognition Revenue is recognized on the sale and transfer of goods and services. c)Foreign currencies The functional currency of the Company is the United States dollar. Transactions in foreign currencies are translated into United States dollars at the rates in effect on the transaction date. Exchange gains or losses arising on translation or settlement of foreign currency denomination monetary items are included in the statement of operations. d)Property and equipment Property and equipment are recorded at cost and are depreciated using the straight-line method over their estimated useful lives as follows: Asset Rate Race Vehicle 10 years The cost of maintenance and repairs are expensed as incurred. During 2009 the company revised the estimated residual value of its heritage race vehicle and current year depreciation has been revised accordingly. e)Financial instruments The Company's financial instruments consist of cash, refundable taxes, and accounts payable and accrued liabilities. Management is of the opinion that the Company is not subject to significant interest, currency or credit risks on the financial instruments included in these financial statements. The fair market values of these financial instruments approximate their carrying values. f)Income taxes The Company follows the asset and liability method of accounting for income taxes. Under this method, current taxes are recognized for the estimated income taxes payable for the current period. Deferred income taxes are provided based on the estimated future tax effects of temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases as well as the benefit of losses available to be carried forward to future years for tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be covered or settled. The effect of deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets when it is more likely than not that such deferred tax assets will not be realized. g)Loss per share Basic loss per share is computed by dividing loss for the period available to common stockholders by the weighted average number of common stock outstanding during the period. h)Recent accounting pronouncements New authoritative accounting guidance (Accounting Standards Update No. 2009-5) under ASC Topic 820 provides guidance for measuring the fair value of a liability in circumstances in which a quoted price in an active market for the identical liability is not available. In such instances, a reporting entity is required to measure fair value utilizing a valuation technique that uses (i) the quoted price of the identical liability when traded as an asset, (ii) quoted prices for similar liabilities or similar liabilities when traded as assets, or (iii) another valuation technique that is consistent with the existing principles of ASC Topic 820, such as an income approach or market approach. The new authoritative accounting guidance also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The new authoritative accounting guidance under ASC Topic 820 is effective for our financial statements beginning January 1, 2010 and is not expected to have a significant impact on the company's financial statements. 3. PROPERTY AND EQUIPMENT 2010 2009 --------- --------- Race Vehicle $ 95,000 $ 95,000 Accumulated Depreciation (5,688) (4,875) --------- --------- $ 89,312 $ 90,125 ========= ========= The company does not carry storage or operating insurance on the Race Vehicle. 4.STOCKHOLDER'S EQUITY Common stock offering: On December 29, 2006, the Company completed a private placement offering of 19,700,000 common shares to its officers and directors for $98,500. On August 9, 2007, the Company completed a private placement offering of 26,200,000 common shares to its remaining founders for $133,331. On August 19, 2008, the Company completed a private placement offering of 300,000 common shares to new subscribers for net proceeds of $30,000. 5.RELATED PARTY TRANSACTIONS a)Included in accounts payable and accrued liabilities are (2010 - $31,316 ; 2009 - $19,718) owing to the president of the Company. b)On January 1, 2008 a management agreement was entered into with JPI, a company controlled by the wife of the company president, and all management fees (2010 - $14,770; 2009 - $4,761) relate to this agreement. Management fees for July 2009 to December 2009 have been waived. c)JPI owned and operated a Formula Atlantic Race car on behalf of RWI for advertising purposes. The RWI team car was entered into five races between April and September 2008. Advertising fees (2010 - Nil; 2009 - $238) relate to the team car. d)On July 1, 2008, JPI sold its Formula Atlantic Racing Car to RWI, as well as all spare parts, tools and the paddock support vehicle for a total of $95,000. The purchase price was subjected to an appraisal by I.W.E. Rear Ends Only Ltd., an approved auto specialist. e)Professional fees include amounts attributed to S N Ventures Inc. (2010 - $12,037; 2009 - $881), a company controlled by the Treasurer. f)Rental charges are paid on a month-to-month basis to JPI (2010 - $1,477; 2009- $1,274). Rental charges for July 2009 to December 2009 have been waived. g)Listing and Stock Transfer Fees include amounts attributed to U N Holdings Inc. (2010 - $2,905; 2009 - $2,381), a company controlled by the Treasurer's brother. 6.INCOME TAXES Deferred tax assets and liabilities: Deferred tax assets (liabilities): MARCH 31, 2010 ------------------------------------------------------------------------ Property and equipment $ (14,862) Operating loss carry-forwards 97,358 Valuation allowance (82,496) ------------------------------------------------------------------------ Net deferred tax asset $ - ======================================================================== Management believes that it is not more likely than not that it will create sufficient taxable income sufficient to realize its deferred tax assets. It is reasonably possible these estimates could change due to future income and the timing and manner of the reversal of deferred tax liabilities. Due to its losses, the Company has no income tax expense. The Company has computed its 2009 operating loss carry-forwards for income tax purposes to be $247,834. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our financial statements and attached notes. This discussion may contain forward-looking statements that could involve risks and uncertainties. Forward-looking Statements: The statements contained in this 10-Q that are not historical fact are "forward-looking statements," which can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "should," or "anticipates," the negatives thereof or other variations thereon or comparable terminology, and include statements as to the intent, belief or our current expectations with respect to the future operations, performance or position. These forward-looking statements are estimates and predictions. We cannot assure you that the future results indicated, whether expressed or implied, will be achieved. While sometimes presented with numerical specificity, these forward-looking statements are based upon a variety of assumptions relating to our business, which, although currently considered reasonable by us, may not be realized. Because of the number and range of the assumptions underlying our forward-looking statements, many of which are subject to significant uncertainties and contingencies beyond our reasonable control, some of the assumptions inevitably will not materialize and unanticipated events and circumstances may occur subsequent to the date of this 10-Q. These forward-looking statements are based on current information and expectation and we assume no obligation to update them at any stage. Therefore, our actual experience and results achieved during the period covered by any particular forward-looking statement may differ substantially from those anticipated. Consequently, the inclusion of forward-looking statements should not be regarded as a representation by us or any other person that these estimates will be realized, and actual results may vary materially. We cannot assure that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate. Description of Business: History and Development Race World International, Inc. was incorporated pursuant to the laws of the State of Nevada on December 29, 2006 under the name Race World International, Inc. Race World has been formed to develop and operate a motor sports theme park. Phase 1 Funding of approximately $231,831 was provided by our Founding Shareholders. Part of this funding was spent on organizational matters, including securing office space and necessary supplies. We also retained legal counsel and auditors. Race World's current operations are summarized as follows: -We have formed our Nevada Company -Organized our head office in Langley, British Columbia -Created an initial web-site and secured our relevant domain name -Appointed our legal counsel to explore acceptance of our motor sports theme park in Nevada -Our President, Evan Williams, has viewed several potential sites for development Phase 2 Subsequent to our registration statement, which became effective July 22, 2008, funding of $30,000 was secured. Engineering studies were completed and land suitable for our motor sports theme park was located. The land is properly zoned for our use. We are presently negotiating for a long term lease with the principles. We have no current plans to begin developing Phases 3 and 4 until financing is available. No financing is available at present. The following summary illustrates an estimated time frame for completion of each Phase of our development assuming financing becomes available: Phase Financing Use Time Frame Phase 3 $ 20,000,000 Pre-paid lease and racetracks April 2010 - July 2010 Phase 4 $ 40,000,000 Buildings & Equip. April 2011 - June 2011 Totals $ 60,000,000 April 2010 - June 2011 As we do not currently have financing for Phases 3 - 4, there is no guarantee that this time frame will be met. Phase 3 - 4 Accomplishments Since Inception Date Phase 3: Reviewed five potential sites, preliminary discussions with owners of three acceptable sites, no contracts have been drawn. On-site inspections of eight racetracks, data and design gathering, discussions at our Board level of prospective designs and costs. We are negotiating a partially pre-paid lease for 1,500 acres in Nevada. Phase 4: Reviewed building types and systems at eight racetracks. Each Phase of Financing will enable us to proceed with the following Plans: Phase 3 Future financing will enable us to acquire land. When we have located suitable land, and assuming we are able to acquire financing, our desired occupancy date will be not later than July 2010. Future financing will enable us to build our four main tracks. We anticipate three months of construction activity to be completed by June 2011. A description of our proposed road courses and tracks follow: .6. ROAD COURSES Race Track # 1 (RW1) This automobile road course will offer track time rental and automobile rentals ranging from the novice to Formula 1. Individuals, race teams, race clubs, and auto manufacturers will be able to rent time on the track. The course will be designed by race enthusiasts and professionals. It will be not less than 8 kms and its special features will include: a) Short circuit for club meets and use b) Mid length national circuit c) Long circuit set to international standards d) Changing elevations on all circuits. This is a particularly attractive feature for the experienced racer. e) Right and left hand turns f) Allocated pit crew areas g) Multi corner spectator viewing Race Track # 2 (RW2) This track will be a 1/4-mile drag strip built to NHRA and IHRA standards. Race Track # 3 (RW3) This track will be a go-kart road course featuring both left and right hand turns, and will be the first track to be constructed. Individuals, clubs, race teams, and kart manufacturers will be able to rent time on the track as well as go-karts. We intend having a "long circuit" of not less than 1,500 meters in length and 9 meters in width . This will attract novice and serious drivers alike and allow for both shifter and non-shifter karts. Race Track # 4 (RW4) This track will be a 3/8 mile semi banked oval track. Monster truck events will be offered within the oval at specific times. Portable grand stands will be in place. Race Track # 5 (RW5) This course will be an off road dirt track for ATV and off road use. There will be a mud area for extreme 4WD trials. Race Track # 6 (RW6) This will be a dedicated super cross track built to AMA specifications. Phase 4 Future financing will enable us to construct our buildings and flood lighting. We plan to complete construction by June 2011. A description of our proposed facilities follows: PROPOSED FACILITIES RWI materials for construction are conventional and entirely available locally from a multiplicity of suppliers. Club Houses Each division of motor sports will have a type specific Club House. The size and specifications will be dependent on expected spectator and customer use. A full range of accessories and services will be available. We anticipate each form of racing will generate specific needs in terms of equipment and special skills by staff. .7. Grand Stands We anticipate a blend of permanent and portable grand stands to accommodate larger crowds dependent on the type of event venue. Each track will have grand stands. Observation Towers We anticipate several to serve the dual functions of V.I.P. and spectator pleasure and to assist track officials carry out duties as they relate to safety and security measures. Flood Lighting The drag racing, go-kart, and 3/8th mile oval tracks will be flood lighted for night use. PROPOSED FUTURE FACILITIES RWI would like to offer the following services and facilities within its motor sports theme park at some time after June 2011 when operations have commenced. No financing is currently available for the following facilities. We intend leasing land for these purposes to interested parties. The Lessee will be required to supply financing for the cost of construction of the facilities and other necessary capital expenditures and improvements. Restaurants & Stores Several will be offered. We anticipate RWI will provide long-term land leases and specific building requirements for lease operators. Hotel Full service accommodation will be planned for the future. Again, RWI would supply the land for long-term lease. Residential Rental accommodation will be planned for the future. Commercial Leased office and workshop buildings will be built in the future for motor sport related companies. We anticipate our theme park complex will offer a wide range of activities. Rentals including automotive and related accessories, track rentals, entertainment, support services, and accommodations will also be offered. We have also presented in this report a brief overview of our future development intentions. Any potential investor taking part is cautioned that our motor sports theme park may not be feasible. Any potential investor is asked to read our list of risk factors. We will strive to establish long-term business relationships within the race community. There have been no public announcements of our development plans. We consider it prudent, for the present time, to proceed with our research as discreetly and privately as possible while evaluating the land we wish to purchase. We will have no operating income until we have completed Phase 3 and 4 funding and successfully developed our motor sports theme park. We will commence operations as soon as Phase 4 construction is complete. .8. TYPICAL REVENUE PRODUCING TRANSACTION As we are presently considering Phase 3 and 4 financing only, a breakdown of typical anticipated future revenues are speculative only, and will not be presented at this time. STRATEGIC RELATIONSHIPS Strategic Relationships will be a major part of our marketing plan in the future. Clubs and automotive related organizations will play a key part generating revenues. We anticipate a specific part of our marketing plan will be committed to developing such contacts and relationships. THE MARKET RWI intends to offer our race enthusiast a geographically unique motor sports adventure. Las Vegas has approximately 700,000 tourist's visits per month and RWI will target initially 6,000 (0.0085%) tourists per month to its site. The main market for the recreational sector is the permanent residents of Nevada, California, and the tourists who visit Las Vegas. The market for the professional sector is the worldwide community of motor racing teams. Dependence upon a major customer is not a factor in RWI's business plan. The following list highlights our customer base in order of anticipated importance: 1. Tourist flow to Las Vegas. 2. Professional motor sport organizers, such as S.C.C.A. (Sports Car Club of America). 3. Motor sports teams for testing and development. 4. Permanent local residents for go karting, drag racing, off roading etc. 5. Commercial space leased to enterprises who wish to be located in a motor sports theme park. 6. Residential clients who wish to live in a motor sports theme park. COMPETITION RWI intends to offer motor sports adventures to the tourist market that are presently only available in a limited or spasmodic manner. As previously mentioned, there are no daily continuous competitive facilities in the Las Vegas area. The one established complex nearby (Las Vegas Speedway) does not cater to any of the motor sport activities that RWI will offer and conversely, RWI does not intend to compete in any of the areas that the speedway has traditionally offered. See "Risk Factors" for a discussion of potential future competition. EMPLOYEES AND STRATEGIC ADVISORS As of the date of this report, we have no full-time employees with the exception of our four members of Executive Management and Board of Directors. We will utilize outside consultants as required to offer our services. These consultants would be independent contractors. PATENTS, COPYRIGHTS, LOGOS, TRADEMARKS RWI anticipates no need for patents. Logos will be trademarked and certain concessions will be negotiated for essential services, but these are considered minor in the overall scope of the business plan. PROPERTY Our executive offices are located at 968 - 240th Street, Langley, BC, Canada V2Z 2Y3. Our telephone number is (604) 539-9680. .9. Should financing become available we will attempt to lease property suitable for our use. GOVERNMENTAL REGULATIONS We are not aware of any existing or probable governmental regulations, which will have a material negative effect on our business. Currently, we do not meet the classification of an "Investment Company" as that term is defined in the Investment Company Act of 1940 because we do not hold securities that would comprise 40 percent of our total assets. We will continue to monitor that "securities component" level of forty (40%) percent to ensure that we never fall under that classification. In the event that we ever approach the "Investment Company" threshold, we will re-evaluate our policies and investment structure. The Investment Advisers Act of 1940 does not apply to our activities, as we will not be providing to the public any type of investment advice or analysis. SEASONALITY We do not anticipate our business will be seasonal in nature as our proposed location is warm and dry year round. Critical Accounting Policies: Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The critical accounting policies that affect our more significant estimates and assumptions used in the preparation of our financial statements are reviewed and any required adjustments are recorded on a monthly basis. Results of Operations: We have not commenced operations, however when operational, substantial positive and negative fluctuations can occur in our business due to a variety of factors. These factors may include variations in the economy, and the abilities to raise capital. As a result, net income and revenues in a particular period may not be representative of full year results and may vary significantly in our early stage of our operations. In addition, results of operations, may vary in the future, and will be materially affected by many factors of a national and international nature, including economic and market conditions, currency values, inflation, the availability of capital, the level of volatility of interest rates, the valuation of security positions and investments and legislative and regulatory developments. Our results of operations also may be materially affected by competitive factors and our ability to attract and retain highly skilled individuals. Period Ended March 31, 2010: We will not have operating revenues until our motor sports theme park has been funded, constructed, and becomes operational. During the last three months, we have focused on the following: 1. We have continued to update our business plan. 2. We have continued to update our internet website. 3. Our Chief Executive Officer, Evan Williams, has continued to speak with Business contacts, marketing agents, and realtors. Additional information was received and delivered respecting our motor sports theme park. We continue our negotiations for a partially pre-paid lease on 1500 acres of land in Nevada. 4. We have continued engineering and racetrack design studies to ensure the suitability of any future land acquisition. Comparison of Three Month Periods Ended March 31, 2010, and March 31, 2009 The major changes in specific accounts in our operating statement for the three-month period ended March 31, 2010 as compared to the previous three month period ended March 31, 2009 are as follows: Revenue There was no operating revenue for the three month period ended March 31, 2010, or for the three months ended March 31, 2009. Expenses Advertising and promotion costs of $70 were incurred during the three months ended March 31, 2010. Advertising and promotional costs of $238 were paid for the three months ended March 31, 2009. Depreciation of $813 was incurred during this three month period. Depreciation of 2,375 was incurred during the three months ending March 31, 2009. Listing and share transfer fees of $6,272 were also incurred in the three months ended March 31, 2010. Listing and share transfer fees of $7,703 were paid during the three months ending March 31, 2009. Management fees incurred during the three months ended March 31, 2010 were $14,770. Management fees of $4,761 were paid for the three months ended March 31, 2009. Rental fees paid during the three-month period ended March 31, 2010 were $1,477. No travel costs were incurred during this period. During the three months ended March 31, 2009, travel costs of $397 and rent of $1,274 were paid. The net loss for the three month period ended March 31, 2010 was $39,326 or $0.0008512 per share compared to a loss of $21,283 for the three months ended March 31, 2009 an increase of $18,043. .10. Off-Balance Sheet Arrangements: We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures. Contractual Obligations: We have no contractual obligations. LIQUIDITY AND CAPITAL RESOURCES: Liquidity is the ability to meet current and future financial obligations of a short-term nature. We have no operating history. We require additional capital to advance our motor sports theme park and business operations. We do not have enough cash available to satisfy our requirements during the next twelve months. As a result, management will have to sell it's race car or will be dependent on securing debt financing or issuing additional share capital to proceed to operations. Depending on market conditions, we may be required to pay high rates of interest on such loans. There can be no assurance, however, that we will be successful. Operational Matters: Over the next twelve months, we will continue efforts to secure financing for Phases 3 and 4. Specifically we will pursue funding that will enable us to lease land that may be suitable for our motor sports theme park. Also, we will pursue funding for the construction of the racetracks and buildings. .11. Our industry research will be ongoing. We also update our business plan to reflect changing economic conditions and circumstances specific to our proposed business. We will monitor what services other racetracks offer along with their strengths, weaknesses, and fees. Our recruiting efforts will be interact with professionals such as engineers, lawyers, and other professionals outside of our company. We will recruit prospective employees and professionals to work within our company. Employees, however, will only be hired as workload demands. As such we cannot say at this time how many, if any, will be hired during the next twelve months. Our marketing objectives will not commence until shortly before we commence operations. Our marketing will include the use of newspapers, trade journal, trade shows, and the internet. We will change our website as is necessary. Primary Investing Activities: We do not anticipate any major investing activities in the next twelve months, unless adequate funding is secured. Neither do we expect any major purchases or sales of plant and equipment. In addition to the other information set forth in this report, you should carefully consider the "Risk Factors" in the Annual Report, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition and/or operating results. .12. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS Our Company's financial instruments are not materially impacted by changes in interest rates. IMPACT OF INFLATION To date inflationary factors have not had an effect on our company. We are not aware of any material trend, event or capital commitment, which would potentially adversely affect liquidity. OTHER: Except for historical information contained herein, the matters set forth above are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ from those in the forward-looking statements. Potential risks and uncertainties include such factors as the capital costs of our motor sports theme park, our ability to operate efficiently, consumer spending, successful implementation of our marketing plan, the competitive environment within our industry, the ability to initiate and expand our operations, the level of costs incurred in connection with our expansion efforts, economic conditions and the financial strength of our customers and suppliers. See Risk Factors for a thorough discussion of potential risks. ITEM 4. CONTROLS AND PROCEDURES Management's Report on Internal Control over Financial Reporting. Our Internal control over financial reporting is a process that, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, was designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our trustees; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that our controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. As management, it is our responsibility to establish and maintain adequate internal control over financial reporting. As of March 31, 2010, under the supervision and with the participation of our management, including our Chief Executive Officer, we evaluated the effectiveness of our internal control over financial reporting using criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on our evaluation, we concluded that the Company maintained effective internal control over financial reporting as of March 31, 2010, based on criteria established in the Internal Control Integrated Framework issued by the COSO. This quarterly report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this quarterly report. Evaluation of disclosure controls and procedures. As of March 31, 2010, the Company's chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the date of filing this annual report applicable for the period covered by this report. Changes in internal controls. During the period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. .13. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULT UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 31.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002. 31.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002. 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports of Form 8-K No reports were filed on Form 8-K during the first quarter of 2010. SIGNATURES In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE /s/ Evan Williams Chief Executive Officer, May 13, 2010 ----------------- President, Director Evan Williams /s/ Solomon Nordine Chief Financial Officer, May 13, 2010 ------------------- Treasurer, Director Solomon Nordine
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Race World International, Inc. 10-Q