FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
_________________
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Commission file number 0-23823
_______
WALLSTREET RACING STABLES, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Colorado 84-1313024
___________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5525 Erindale Drive, Suite 201, Colorado Springs, Colorado 80918
__________________________________________________________ __________
(Address of principal executive offices) (Zip Code)
(719) 260-8509
____________________
(Registrant's telephone number, including area code)
___________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
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 No XX
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class of Stock Amount Outstanding
__________________ __________________________
$.001 par value 697,000 shares outstanding
Common Stock at March 12, 1998
WALLSTREET RACING STABLES, INC.
Index
Page
____
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements 1-6
Item 2. Management's Discussion and Analysis Or
Plan of Operation 7-9
Part II - OTHER INFORMATION 10
SIGNATURES 11
Wallstreet Racing Stables, Inc.
Balance Sheet
__________________________________________________________________
Unaudited Audited
December June
31, 1997 30, 1997
_________ ________
ASSETS
______
Current Assets:
Cash $70 $12,087
Accounts Receivable 9,120 144
Prepaid Expenses 1,764 4,968
______ ______
Total Current Assets 10,954 17,199
______ ______
Property And Equipment
Broodmares 10,250 10,250
Racehorses 54,437 38,238
______ ______
Total 64,687 48,488
Accumulated Depreciation (15,137) (8,737)
______ ______
Net Property And Equipment 49,550 39,751
______ ______
TOTAL ASSETS $60,504 $56,950
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
____________________________________
Current Liabilities:
Accounts Payable - Trade 36,628 17,473
Accrued Salaries 16,000 0
Accrued Interest - Shareholders 951 0
Notes Payable - Shareholders 46,233 0
______ ______
Total Current Liabilities 99,812 17,473
______ ______
Long-Term Liabilities 0 0
_ _
TOTAL LIABILITIES 99,812 17,473
______ ______
SHAREHOLDERS' EQUITY
Preferred Stock - $.01 Par Value, 5,000,000
Shares Authorized; -0- Shares Issued And
Outstanding 0 0
Common Stock - $.001 Par Value, 15,000,000
Shares Authorized; 697,000 Shares Issued and
Outstanding 697 697
Capital Paid In Excess Of Par Value 268,494 264,494
Retained (Deficit) (308,499) (225,714)
_______ _______
TOTAL SHAREHOLDERS' EQUITY (39,308) 39,477
______ ______
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $60,504 $56,950
======= =======
The Accompanying Notes Are An Integral Part Of These
Unaudited Financial Statements.
2
Wallstreet Racing Stables, Inc.
Statement Of Operations
____________________________________________________________________
Unaudited Unaudited
Three Month Three Month
Period Period
Ended Ended
December December
31, 1997 31, 1996
___________ __________
Revenue
Purses $0 $83,250
Horses For Resale 10,500 0
______ _
Total Revenue 10,500 83,250
Cost Of Horses Sold 1,255 0
_____ _
Gross Profit 9,245 83,250
_____ ______
Boarding And Training 8,381 6,848
Commissions 0 1,025
Depreciation 3,516 2,128
Horseshoeing expense 219 0
Horse Transportation 776 1,626
Insurance 2,023 1,638
Legal And Accounting 1,782 1,708
Offering Costs 0 67
Office 2,281 680
Race Expenses 135 23,157
Rent 1,500 1,500
Salaries 12,000 6,000
Telephone 781 1,053
Travel And Entertainment 2,470 10,495
Vet Expenses 3,900 1,589
_____ _____
Total Operating Expenses 39,764 59,514
______ ______
(Loss) Profit From Operations (30,519) 23,736
______ ______
Other Income (Expense):
Interest Income 5 52
Interest (Expense) (846) (725)
(Loss) On Sale Of Horse 0 0
Total Other Income (Expense) (841) (673)
___ ___
(Loss) Profit Before Taxes (31,360) 23,063
Income Tax Expense 0 0
Net (Loss) Profit ($31,360) $23,063
======= =======
Weighted Average Common Shares Outstanding 697,000 648,250
Basic (Loss) Per Share (0.04) 0.04
====== ====
The Accompanying Notes Are An Integral Part Of These
Unaudited Financial Statements.
3
Wallstreet Racing Stables, Inc.
Statement Of Operations
___________________________________________________________________
Unaudited Unaudited
Six Month Six Month
Period Period
Ended Ended
December December
31, 1997 31, 1996
_________ _________
Revenue
Purses $126 $104,802
Horses For Resale 10,500 0
______ _
Total Revenue 10,626 104,802
Cost Of Horses Sold 1,255 0
_____ _
Gross Profit 9,371 104,802
_____ _______
Operating Expenses:
Advertising 60 0
Boarding And Training 20,679 8,320
Commissions 1,800 4,575
Depreciation 6,401 4,256
Horseshoeing expense 769 0
Horse Transportation 1,075 2,088
Insurance 4,031 2,519
Legal And Accounting 6,332 5,532
Offering Costs 0 67
Office 6,824 3,696
Race Expenses 1,964 28,890
Rent 3,000 3,000
Salaries 20,000 12,000
Telephone 1,276 1,457
Travel And Entertainment 9,667 14,114
Vet Expenses 7,255 3,368
_____ _____
Total Operating Expenses 91,133 93,882
______ ______
(Loss) Profit From Operations (81,762) 10,920
______ ______
Other Income (Expense):
Interest Income 38 52
Interest (Expense) (1,061) (761)
(Loss) On Sale Of Horse 0 0
Total Other Income (Expense) (1,023) (709)
_____ ___
(Loss) Profit Before Taxes (82,785) 10,211
Income Tax Expense 0 0
Net (Loss) Profit ($82,785) $10,211
======= =======
Weighted Average Common Shares Outstanding 697,000 648,250
Basic (Loss) Per Share (0.12) 0.02
==== ====
The Accompanying Notes Are An Integral Part Of These
Unaudited Financial Statements.
4
Wallstreet Racing Stables, Inc.
Cash Flow Statement
___________________________________________________________________
Unaudited Unaudited
Six Month Six Month
Period Period
Ended Ended
December December
31, 1997 31, 1996
_________ _________
Net (Loss) Profit ($82,785) $10,211
Items Not Affecting Cash Flow:
Depreciation 6,401 4,256
Contribution of Services 4,000 12,000
(Increase) Decrease In Receivable (8,976) 9,180
(Increase) Decrease In Prepaid Expenses 3,204 1,968
Increase In Accounts Payable 19,155 711
Increase in Accrued Interest 951 0
Increase In Accrued Salaries 16,000 0
______ _
Net Cash Flows Provided From (Used By)
Operations (42,050) 38,326
______ ______
Cash Flows From Investing Activities:
Purchase Of Horses (16,200) (25,515)
______ ______
Net Cash Flows Provided From (Used By)
Investing (16,200) (25,515)
______ ______
Cash Flows Provided From Financing Activities:
Note Payable - Shareholder 46,233 0
Sale Of Common Stock 0 0
Stock Subscriptions Exercised 0 0
Deferred Offering Costs 0 0
_ _
Net Cash Flows Provided From (Used By)
Financing 46,233 0
______ _
Net Increase In Cash (12,017) 12,811
Cash At Beginning Of Period 12,087 3,433
______ _____
Cash At End Of Period $70 $16,244
=== =======
Summary Of Non-Cash Investing And Financing Activities:
The Accompanying Notes Are An Integral Part Of These
Unaudited Financial Statements.
5
Wallstreet Racing Stables, Inc.
Notes to the Unaudited Financial Statements
For the Six Month Period Ended December 31, 1997
________________________________________________
Note 1 - Unaudited Financial Information
________________________________________
The information furnished herein was taken from the books and records of the
Company without audit. The Company believes, however, that it has made all
adjustments necessary to reflect properly the results of operations for the
six month interim period ended December 31, 1997. The adjustments consist
only of normal reoccurring accruals. The results of operations for the three
and six month interim periods ended December 31, 1997 are not necessarily
indicative of the results to be expected for the year ended June 30, 1998.
Note 2 - Unaudited Financial information
________________________________________
Management has elected to omit substantially all footnotes relating to the
condensed financial statements of the Company. For a complete set of
footnotes, reference is made to the Company's Prospectus as filed with the
Securities and Exchange Commission dated February 13, 1998 and the audited
financial statements filed therewith.
6
WALLSTREET RACING STABLES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
Introduction
Certain statements contained herein constitute "forward
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward looking statements
include without limitation statements regarding the Company's
plan of business operations and related expenditures, anticipated
race careers of Company owned thoroughbreds and stabling and
training information. Factors that could cause actual results to
differ materially include, among others, the following: the
health and training progress of the thoroughbreds, availability
of training and stabling facilities, general economic conditions
and the overall thoroughbred horse racing industry. Most of
these factors are outside the control of the Company. Investors
are cautioned not to put undue reliance on forward looking
statements. Except as otherwise required by applicable
securities statutes or regulations, the Company disclaims any
intent or obligation to update publicly these forward looking
statements, whether as a result of new information, future events
or otherwise.
The Company became a reporting entity with the Securities
and Exchange Commission on February 13, 1998 as a result of
filing a registration statement with that entity under the
Securities Act of 1933. The Company is seeking to raise a
maximum of $500,000 in a public offering through the sale of
500,000 shares of Common Stock at an offering price of $1.00 per
share. The offering is being conducted by the Company through
certain of its officers and directors. There is no minimum sale
of shares which must be achieved to close the offering. Proceeds
from the offering have been budgeted for operational expenses,
including boarding and training of the Company's thoroughbreds,
general and administrative expenses and repayment of debt. If
sufficient proceeds are received, the Company may also acquire
additional thoroughbreds.
Subsequently, the Company filed its Registration Statement
on Form 8-A, registering its Common Stock under the Securities
Exchange Act of 1934. This Quarterly Report represents the first
periodic report filed by the Company since its registration. It
is suggested that this Report be read in conjunction with the
Company's Prospectus dated February 13, 1998.
Liquidity and Capital Resources
On December 31, 1997, the Company had a working capital
deficit of $88,858, representing current assets of $10,954 and
current liabilities of $99,812. Working capital decreased
$88,584 from June 30, 1997 as a result of liabilities incurred in
the ordinary course of business and the Company's failure to
generate cash flow from operations. Management is of the opinion
that the Company is dependent upon the proceeds of its public
offering, obtaining additional capital and achieving profitable
operations to continue as a going concern. The Company has only
recently commenced operation and continues to use, rather than
generate, cash from operations. For the six month period ended
December 31, 1997, the Company's operations used approximately
$42,000 of cash.
7
Current assets at December 31, 1997 consisted almost
entirely of accounts receivable and prepaid expenses. The
Company had only $70 in cash. Current liabilities, on the other
hand, amounted to almost $100,000, including approximately
$36,000 of trade accounts payable, $16,000 of accrued salaries
and approximately $46,000 of notes payable to shareholders.
These notes are due March 31, 1998, unless extended. Management
believes that the Company is dependent on the proceeds of its
public offering to pay such liabilities and generate cash for the
foreseeable future.
All of the cash necessary for operations during the six
month period ended December 31, 1997 was provided by certain
principal shareholders in the form of loans. Those loans are
represented by promissory notes executed by the Company, totaling
approximately $46,000 at December 31, 1997. Each of the notes
bears interest at the rate of 9% per annum and are due and
payable in full on or before March 31, 1998.
The Company's primary need for working capital for the
foreseeable future is for boarding and training expenses
associated with care and maintenance of the thoroughbred
racehorses currently owned by the Company, and general and
administrative expenses. Boarding and training for the six month
period ended December 31, 1997 was approximately $21,000 (See,
Results of Operations, below). General and administrative
expenses include legal and accounting fees associated with the
Company's status as a publicly traded entity, office expenses,
officers salaries, travel and entertainment. Management also
hopes that the Company may acquire additional thoroughbreds in
the future to supplement its existing stable of racehorses. Such
acquisitions, it is hoped, will contribute to future revenues.
The Company has no agreement for commercial debt financing
or line-of-credit agreements, as management believes that the
Company's assets are not sufficient to justify such financing at
present. Accordingly, sources of capital for the foreseeable
future include proceeds from the current public offering,
additional private offering of debt or equity securities or loans
from shareholders. Management does not believe the Company can
increase in a material amount its thoroughbred stable, in the
foreseeable future, due to constraints in working capital.
However, the Company seeks to leverage its investment in
thoroughbred racehorses by forming joint ventures or partnerships
with unrelated third parties for ownership and maintenance of
such thoroughbreds.
Results of Operation
The Company was organized and exists for the purpose of
acquiring, owning, managing, training, racing and ultimately
syndicating thoroughbred racing prospects. During the three and
six month periods ended December 31, 1997, the Company received
virtually no revenue from operations, as most of its existing
thoroughbreds were not racing during that time. The Company
received no revenue from the sale or syndication of its horses
during that time. With four horses in training at March 15, 1998,
however, management anticipates revenues from purses will
increase during the future six month period ended June 30, 1998.
However, there is no assurance that the Company's horses will be
successful, generating revenue or profit to the Company.
8
For the six month period ended December 31, 1997, the
Company realized a net loss of $82,785 on total revenue of $126.
This compares to a profit of $10,211 on total revenue of $104,802
for the six months ended December 31, 1996. Results of
operations for the six month period ended December 31, 1996
included purses won by one of the Company's thoroughbreds. That
horse won the winner's share of a $1 million purse in October,
1996 at the Breeder's Cup, a prestigious series of races held
annually for premier horses in the United States and abroad.
That thoroughbred was injured in May 1997 and spent the principal
remaining portion of calendar 1997 recuperating from surgery.
That horse returned to training in November and may begin racing
again in the spring of 1998. However, there is no assurance that
the horse can return to its original form prior to surgery.
Operating expenses remained generally constant for the six
months ended December 31, 1997 compared to the comparable period
ended December 31, 1996. An increase in boarding and training
expenses from fiscal 1997 to 1998 in the approximate amount of
$12,000 and increase in salary was offset by a substantial
decrease in race expenses and travel and entertainment. The
increase in boarding and training expenses is associated with the
increase in thoroughbreds in which the Company had an interest
during fiscal 1998. Depreciation increased for the same reason.
The increase in salaries is attributable to the fact that
officers and directors began accruing salaries of $2,000 per
month at September 1, 1997, commensurate with such individuals
devoting more time to the Company's affairs.
The Company's operations are somewhat seasonable, in that
most thoroughbred races occur between May and October of each
calendar year. As the Company enters that season, it has four
horses in training. Expenses associated with training, such as
shoeing, transportation, race and vet expenses should increase
proportionately during that time. However, management hopes that
such expenses will be offset by purses available to the winner of
the races in which the Company's thoroughbreds will participate.
However, it is anticipated that the Company will continue to
incur losses until such time, if ever, revenues from racing
purses and the sale or syndication of Company thoroughbreds is
sufficient to cover operating, general and administrative
expenses.
9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
No report required.
Item 2. Changes in Securities.
No report required.
Item 3. Defaults Upon Senior Securities.
No report required.
Item 4. Submission of Matters to a Vote of Security Holders.
No report required.
Item 5. Other Information.
No report required.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits:
None.
B. Reports on Form 8-K:
None.
10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
WALLSTREET RACING STABLES, INC.
Date: March 18, 1998 By: /s/ Raymond E. McElhaney
Raymond E. McElhaney, President, Chief
Executive Officer, Chief Financial Officer
and Chairman of the Board of Directors
(Principal Executive Officer)
Date: March 18, 1998 By: /s/ Bill M. Conrad
Bill M. Conrad, Vice-President, Secretary,
Treasurer and Director
(Principal Financial Officer)
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THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE 12/31/97 FORM
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