10-Q 1 rwisept201010q.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 SEPTEMBER 30, 2010 [] Transition report under Section 13 or 15(d) of the Exchange Act For the transition period from to ----------- ----------- Commission file number: 000-53909 ----------------- 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.) 252 Dongen East Street Kuiwen District, Weifang, Shandong, China 261041 (Address of principal (Zip Code) executive offices) ------------------ Issuer's telephone number, including area code: 15906367765 ------------------ 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 ----------------------------------------------------------------------- (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 APPLICABLE ONLY TO CORPORATE ISSUERS As of November 15, 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 SEPTEMBER 30, 2010 TABLE OF CONTENTS PART I Item 1. Financial Statements Balance Sheets as of Sept 30, 2010 and December 31, 2009 . . . . . . . . F-1 Statements of Operations for the Three Months and Nine Months Ended Sept 30, 2010 and Sept 30, 2009 and from Inception (Dec 29,2006) to Sept 30, 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .F-2 Statement of Stockholders' Equity . . . . . . . . . . . . . . . . . . . .F-3 Statements of Cash Flows for the Three Months and Nine Months Ended Sept 30, 2010 and Sept 30, 2009 and from Inception(Dec 29, 2006) to Sept 30, 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. .8 Item 4. Controls and Procedures . . . . . . . . . . . . . . . . . . .8 PART II Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . .10 Item 2. Unregistered Sale of Equity Securities and Use of Proceeds. .10 Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . .10 Item 4. Submission of Matters to a Vote of Security Holders . . . . .10 Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . .10 Item 6. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . .11 RACE WORLD INTERNATIONAL, INC. (A Development Stage Company) FINANCIAL STATEMENTS SEPTEMBER 30, 2010

APPROVED BY THE DIRECTOR: /s/Wang Shi Bin ---------------- Wang Shi Bin Director .F-1.

The accompanying notes are an integral part of these financial statements. .F-2. Race World International, Inc. (a development stage company) Statement of Stockholders' Equity (Unaudited) For the Period from Dec 29, 2006 (inception) to September 30, 2010

The accompanying notes are an integral part of these financial statements. .F-3.

The accompanying notes are an integral part of these financial statements. .F-4. RACE WORLD INTERNATIONAL, INC. (a development stage company) September 30, 2010 1. 0RGANIZATION AND DEVELOPMENT STAGE ACTIVITIES The Company was incorporated under the laws of the State of Nevada on Dec 29, 2006. The company purpose in the Articles of Incorporation is to engage in any lawful activity or activities in the State of Nevada and throughout the world. As of September 30, 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 purchase of three months or less to be cash equivalents. b .Revenue recognition Revenue is recognized on the sale and transfer of goods and services. c .Foreign currencies The functional currency of the Company is the United States dollar. Transactions in foreign currencies are translated into United States dollars at the rates in effect on the transaction date. Exchange gains or losses arising on translation or settlement of foreign currency denomination monetary items are included in the statement of operations. d .Property and equipment Property and equipment are recorded at cost and are depreciated using the straight-line method over their estimated useful lives as follows: Asset Rate ------- ------ Race Vehicle 10 years The cost of maintenance and repairs are expensed as incurred. 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 2009 2008 ------- -------- Race Vehicle $ - $ 95,000 Accumulated Depreciation - (11,875) ------- -------- $ - $ 83,125 ======= ======== The company does not carry storage or operating insurance on the Race Vehicle. 4.Stockholders' Equity: Common Stock Offerings: On Dec 29, 2006, the Company completed a private placement offering of 19,700,000 common shares to its officers and directors for $98,500. On August 9, 2007, the Company completed a private placement offering of 26,200,000 to its remaining founders for $133,331. On August 19, 2008, the Company completed a private placement Offering of 300,000 common shares to new subscribers for net proceeds of $30,000. 6. RELATED PARTY TRANSACTIONS a.On January 1, 2008 a management agreement was entered into with JPI, a company controlled by the wife of the past company president, and management fees (2010 - $38,396; 2009 - $7,342) relate to this agreement. Management fees for July 2009 to December 2009 have been waived. b.JPI owned and operated a Formula Atlantic Racecar on behalf of RWI for advertising purposes. The RWI team car was entered into five races between April and September 2008. Advertising fees (2010 - Nil; 2009 - $238) relate to the team car. c.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. d.On July 14, 2010, Evan Willams and his company, Buzan Electrical Consultants (2003) Ltd., purchased the Formula Atlantic Racing Car with all spare parts, tools, and paddock support vehicle for a total of $80,000 plus 12% HST. e.Professional fees include amounts attributed to S N Ventures Inc. (2010 - $56,502; 2009 - $2,171), a company controlled by the past Treasurer. f.Rental charges were paid on a month-to-month basis to JPI (2010 - $2,894; 2009 - $2,564). 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 - $5,680; 2009 - $7,678), a company controlled by the past Treasurer's brother. h.The amounts due to shareholders are unsecured, non-interest bearing, with no fixed terms of repayment. 6.INCOME TAXES

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 operating loss carry-forwards to 2009 for income tax purposes to be $247,834. .F-5. ITEM 2. Management Discussion and Analysis of Financial Condition and Results of Operations. Safe Harbor Statement This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are "forward-looking statements" for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward- looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements. These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our consolidated financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein. The following discussion should be read in conjunction with our consolidated financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q. The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future. Overview We were incorporated pursuant to the laws of the State of Nevada on December 29, 2006 under the name Race World International, Inc. Race World was originally formed to develop and operate a motorsports theme park. Race World International Inc. is no longer pursuing that project and is considering other business ventures. Liquidity and Capital Resources As of September 30, 2010, we had no cash or cash equivalents and a working capital deficiency of $118,192. As of September 30, 2010 our accumulated deficit was $380,023. For the nine months ended September 30, 2010 our net loss was $176,714 compared to $39,731 during the same period in 2009. This increase was due mostly to higher management, professional fees and travel. Our losses have been funded by proceeds from shareholder loans and from the sale of our common stock. During the nine months ended September 30, 2010, our cash position decreased by $1,874. We used net cash of $87,286 in operating activities for the nine months ended September 30, 2010 compared to net cash of $19,557 in operating activities for the same period in 2009. We did not use any money in investing activities for the nine months ended September 30, 2010, nor did we use any money for investing activities during the same period in 2009. 6 During the nine months ended September 30, 2010 our monthly cash requirement was approximately $9,698 compared to approximately $2,173 for the same period in 2009. These financial statements have been prepared on the assumption that we are a going concern, meaning we will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate when a company is not expected to continue operations for the foreseeable future. Our continuation as a going concern is dependent upon our ability to attain profitable operations and generate funds there-from, and/or raise equity capital or borrowings sufficient to meet current and future obligations. Management plans to raise equity financings over the next twelve months to finance operations. There is no guarantee that we will be able to complete any of these objectives. We have incurred losses from operations since inception and at September 30, 2010, have a working capital deficiency and an accumulated deficit that creates substantial doubt about our ability to continue as a going concern. Results of Operations for the three months ended September 30, 2010 compared to the three months ended September 30, 2009 and from inception to September 30, 2010. Limited Revenues Since our inception on December 29, 2006 to September 30, 2010, we have earned limited revenue of $14,073. As of September 30, 2010, we have an accumulated deficit of $380,023 and we did not earn any revenues during the three months ending on September 30, 2010. At this time, our ability to generate any significant revenues continues to be uncertain. Our financial statements contain an additional explanatory paragraph in Note 2, which identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustment that might result from the outcome of this uncertainty. Net Loss We incurred a net loss of $97,976 for the three months ended September 30, 2010, compared to a net loss of $6,730 for the same period in 2009. This increase in net loss is mostly due to higher professional fees and travel expenses. From inception on December 29, 2006 to September 30, 2010, we have incurred a net loss of $380,023. Our basic and diluted loss per share was $0.002120 for the three months ended September 30, 2010, and $0.000145 for the same period in 2009. Expenses Our total operating expenses increased from $6,730 to $89,600 for the three months ended September 30, 2010 compared to the same period in 2009. This increase in expenses is mostly due to higher professional fees and travel. Since our inception on December 29, 2006 to September 30, 2010, we have incurred total operating expenses of $385,720. Our management fees increased from $0 to $1,178 for the three months ended September 30, 2010 compared to the same period in 2009. Since our inception on December 29, 2006 until September 30, 2010 we have spent $92,276 on management fees. Our professional fees, consisting primarily of legal, accounting, consulting and auditing fees, increased by $48,311 to $49,444 for the three months ended September 30, 2010 from $1,133 for the same period in 2009, mainly due to increased legal and auditing services provided in the three month periods ended September 30, 2010. Since our inception on December 29, 2006 until September 30, 2010 we have spent $155,835 on professional fees. Our travel expenses increased from $0 to $35,060 for the three months ended September 30, 2010 compared to the same period in 2009. Since our inception on December 29, 2006 until September 30, 2010 we have spent $42,343 on travel fees. Our listing and share transfer fees decreased $2,641 from $4,276 to $1,626 for the three months ended September 30, 2010 compared to the same period in 2009. Since our inception on December 29, 2006 until September 30, 2010 we have spent $46,973 on listing and share transfer fees. Results of Operations for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009 Limited Revenues We did not earn any revenues during the nine months ending on September 30, 2010, compared to $2,602 in revenues earned during the same period in 2009. At this time, our ability to generate any significant revenues continues to be uncertain. Net Loss We incurred a net loss of $176,714 for the nine months ended September 30, 2010, compared to a net loss of $39,731 for the same period in 2009. This increase in net loss is mostly due to higher management, professional fees and travel expenses. Our basic and diluted loss per share was $0.003824 for the nine months ended September 30, 2010, and $0.000859 for the same period in 2009. Expenses Our total operating expenses increased from $42,333 to $168,338 for the nine months ended September 30, 2010 compared to the same period in 2009. This increase in expenses is mostly due to higher management, professional fees and travel expenses. Our management fees increased $32,232 from $7,342 to $39,574 for the nine months ended September 30, 2010 compared to the same period in 2009. This increase was largely due to higher payments made to our management. 7 Our professional fees, consisting primarily of legal, accounting, consulting and auditing fees, increased by $70,752 to 78,036 for the nine months ended September 30, 2010 from $7,284 for the same period in 2009. Our travel expenses increased from $397 to $35,060 for the nine months ended September 30, 2010 compared to the same period in 2009. Our listing and share transfer fees decreased from $19,170 to $11,065 for the nine months ended September 30, 2010 compared to the same period in 2009. Inflation The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments. Off-Balance Sheet Arrangements As of September 30, 2010, we had no off-balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. ITEM 3. Quantitative and Qualitative Disclosure About Market Risks. Not applicable. ITEM 4. Control and Procedures. Not applicable. 8 ITEM 4T. Control and Procedures. Management's Report on Internal Control over Financial Reporting. Our Internal control over financial reporting is a process that, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, was designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our trustees; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that our controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. As management, it is our responsibility to establish and maintain adequate internal control over financial reporting. As of September 30, 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 September 30, 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 September 30, 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. 9 Changes in internal controls. During the period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings. As of November 15, 2010 there are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries are a party or of which any of our properties is the subject. Also, our management is not aware of any legal proceedings contemplated by any governmental authority against us. ITEM 2. Unregistered Sales of Equity Securities. None. ITEM 3. Defaults Upon Senior Securities. None. ITEM 4. Submission of Matters to a Vote of Security Holders. None. ITEM 5. Other Information. None. 10 ITEM 6. 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. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized. RACE WORLD INTERNATIONAL, INC. Date: November 15, 2010 /s/Wang Shi Bin ------------------ Wang Shi Bin President, Chief Executive Officer, Chief Financial Officer, Director 11

Race World International, Inc. 10-Q