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 March 31, 1998
______________
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 698,000 shares outstanding
Common Stock at May 13, 1998
WALLSTREET RACING STABLES, INC.
Index
Page
____
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements 1-5
Item 2. Management's Discussion and Analysis Or
Plan of Operation 6-8
Part II - OTHER INFORMATION 9
SIGNATURES 10
Wallstreet Racing Stables, Inc.
Balance Sheet
__________________________________________________________________
Unaudited Audited
March June
31, 1998 30, 1997
_________ ________
ASSETS
______
Current Assets:
Cash $356 $12,087
Accounts Receivable 10 144
Prepaid Expenses 382 4,968
______ ______
Total Current Assets 748 17,199
______ ______
Property And Equipment
Broodmares 0 10,250
Racehorses 54,437 38,238
______ ______
Total 54,437 48,488
Accumulated Depreciation (16,523) (8,737)
______ ______
Net Property And Equipment 37,914 39,751
______ ______
TOTAL ASSETS $38,662 $56,950
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
____________________________________
Current Liabilities:
Accounts Payable - Trade 41,404 17,473
Accrued Salaries 28,000 0
Accrued Interest - Shareholders 1,977 0
Notes Payable - Shareholders 46,233 0
______ ______
Total Current Liabilities 117,614 17,473
______ ______
Long-Term Liabilities 0 0
_ _
TOTAL LIABILITIES 117,614 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; 698,000 Shares Issued and
Outstanding At March 31, 1998 (Unaudited);
697,000 Shares At December 31, 1997 698 697
Capital Paid In Excess Of Par Value 269,492 264,494
Retained (Deficit) (349,142) (225,714)
_______ _______
TOTAL SHAREHOLDERS' EQUITY (78,952) 39,477
______ ______
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $38,662 $56,950
======= =======
The Accompanying Notes Are An Integral Part Of These
Unaudited Financial Statements.
1
Wallstreet Racing Stables, Inc.
Statement Of Operations
____________________________________________________________________
Unaudited Unaudited
Three Month Three Month
Period Period
Ended Ended
March March
31, 1998 31, 1997
___________ __________
Revenue
Purses $0 $0
Horses For Resale 0 0
_ _
Total Revenue 0 0
Cost Of Horses Sold 0 0
_ _
Gross Profit 0 0
_ _
Boarding And Training 6,990 7,550
Commissions 0 0
Depreciation 3,036 1,551
Horseshoeing expense 193 0
Horse Transportation 63 303
Insurance 1,382 2,016
Legal And Accounting 3,593 788
Offering Costs 2,580 0
Office 2,085 1,094
Race Expenses 194 0
Rent 1,500 1,500
Salaries 12,000 6,000
Telephone 480 895
Travel And Entertainment 140 5,261
Vet Expenses 48 847
_____ _____
Total Operating Expenses 34,284 27,805
______ ______
(Loss) Profit From Operations (34,284) (27,805)
______ ______
Other Income (Expense):
Interest Income 0 247
Interest (Expense) (1,084) (199)
(Loss) On Sale Of Horse (5,274) 0
_____ _
Total Other Income (Expense) (6,358) 48
_____ __
(Loss) Profit Before Taxes (40,642) (27,757)
Income Tax Expense 0 0
Net (Loss) Profit ($40,642) ($27,757)
======= =======
Weighted Average Common Shares Outstanding 698,000 662,875
Basic (Loss) Per Share (0.06) (0.04)
====== ====
The Accompanying Notes Are An Integral Part Of These
Unaudited Financial Statements.
2
Wallstreet Racing Stables, Inc.
Statement Of Operations
___________________________________________________________________
Unaudited Unaudited
Nine Month Nine Month
Period Period
Ended Ended
March March
31, 1998 31, 1997
_________ _________
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 27,670 15,870
Commissions 1,800 4,575
Depreciation 9,437 5,807
Horseshoeing expense 962 0
Horse Transportation 1,138 2,391
Insurance 5,413 4,535
Legal And Accounting 9,925 6,320
Office 11,488 5,750
Race Expenses 2,158 27,997
Rent 4,500 4,500
Salaries 32,000 18,000
Telephone 1,756 2,352
Travel And Entertainment 9,807 19,375
Vet Expenses 7,303 4,215
_____ _____
Total Operating Expenses 125,417 121,687
_______ _______
(Loss) Profit From Operations (116,046) (16,885)
_______ ______
Other Income (Expense):
Interest Income 38 299
Interest (Expense) (2,145) (960)
(Loss) On Sale Of Horse (5,274) 0
Total Other Income (Expense) (7,381) (661)
_____ ___
(Loss) Profit Before Taxes (123,427) (17,546)
Income Tax Expense 0 0
Net (Loss) Profit ($123,427) ($17,546)
======== =======
Weighted Average Common Shares Outstanding 698,000 662,875
Basic (Loss) Per Share (0.18) (0.03)
==== ====
The Accompanying Notes Are An Integral Part Of These
Unaudited Financial Statements.
3
Wallstreet Racing Stables, Inc.
Cash Flow Statement
___________________________________________________________________
Unaudited Unaudited
Nine Month Nine Month
Period Period
Ended Ended
March March
31, 1998 31, 1997
_________ _________
Net (Loss) Profit ($123,427) ($17,546)
Items Not Affecting Cash Flow:
Depreciation 9,437 5,807
Contribution of Services 4,000 18,000
Loss on Horse Sale 5,273 0
Decrease In Receivable 134 9,178
(Increase) Decrease In Prepaid Expenses 4,586 (5,076)
Increase In Accounts Payable 23,931 6,697
Increase in Accrued Interest 1,977 0
Increase In Accrued Salaries 28,000 0
______ _
Net Cash Flows Provided From (Used By)
Operations (46,089) 17,060
______ ______
Cash Flows From Investing Activities:
Sale of Horses 3,325 0
Purchase Of Horses (16,200) (47,588)
______ ______
Net Cash Flows Provided From (Used By)
Investing (12,875) (47,588)
______ ______
Cash Flows Provided From Financing Activities:
Note Payable - Shareholder 46,233 0
Sale Of Common Stock 1,000 64,000
_____ ______
Net Cash Flows Provided From (Used By) Financing 47,233 64,000
______ ______
Net Increase In Cash (11,731) 33,472
Cash At Beginning Of Period 12,087 3,433
______ _____
Cash At End Of Period $356 $36,905
==== =======
Summary Of Non-Cash Investing And Financing
Activities: $0 $0
== ==
The Accompanying Notes Are An Integral Part Of These
Unaudited Financial Statements.
4
Wallstreet Racing Stables, Inc.
Notes to the Unaudited Financial Statements
For the Nine Month Period Ended March 31, 1998
________________________________________________
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
interim periods presented. The adjustments consist only of normal
reoccurring accruals. The results of operations for the nine month interim
period ended March 31, 1998 are not necessarily indicative of the results to
be expected for the fiscal year ended June 30, 1998.
Note 2 - Financial Statements
_____________________________
Management has elected to omit substantially all footnotes relating to the
condensed financial statements of the Company included in this Report. For a
complete set of footnotes, reference is made to the Company's Registration
Statement on Form SB-2 and Prospectus dated February 13, 1998 as filed with
the Securities and Exchange Commission and the audited financial statements
filed therein.
Note 3 - Securities Public Offering
__________________________________
The Company has filed its Registration Statement on Form SB-2 with the
Securities and Exchange Commission relating to a proposed public offering
which commenced February 13, 1998. The Registration Statement relates to
the proposed 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/or directors. There is no minimum number of
shares or sale proceeds which must be received to complete the offering.
As of March 31, 1998, the Company continued efforts to sell Common Stock
under the terms of the offering.
5
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,
results of the Company's ongoing public offering 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.
Liquidity and Capital Resources
The Company is entirely dependent on the anticipated proceeds from its
public offering, additional advances from shareholders, achieving profitable
operations or additional debt or equity financing to continue as a going
concern. At March 31, 1998, the Company had a working capital deficit of
$116,866, consisting of $748 of current assets and $117,614 in current
liabilities. The Company's liabilities exceeded its assets by $78,952 at that
date, resulting in a negative net worth. Accordingly, the Company is dependent
on the receipt of proceeds from outside sources to realize its assets and
satisfy outstanding liabilities.
The Company's liquidity and working capital have decreased since fiscal
year end June 30, 1997. Working capital decreased an aggregate of $116,592
from fiscal year end to March 31, 1998, as a result of cash applied to
operations and acquisition of additional racehorses. Cash flow during
6
the nine month period ended March 31, 1998 was provided almost exclusively
by advances from shareholders. Operations used an aggregate of $46,089 in
cash during the nine month period.
Capital needs for the foreseeable future include cash for operations
and acquisition of additional throughbred horses. Management anticipates
that the Company will continue to incur losses until such time as the Company
obtains sufficient assets to generate revenues sufficient to cover expenses.
A portion of the proceeds from the public offering in excess of $80,000 have
been budgeted for acquisition of additional horses. Proceeds less than that
amount will be allocated to operating expenses, including repayment of a
portion of outstanding debt to existing shareholders. In the event the
Company does not recieve sufficient proceeds from the public offering,
management will endeavor to obtain additional financing through private debt
or equity offerings.
Results of Operations
During the nine month period ended March 31, 1998, the Company realized
a net loss of $123,427 on revenues of $10,626, compared to a net loss of
$17,546 on revenues of $104,802 for the nine month period ended March 31, 1997.
Revenues during fiscal 1998 are primarily attributable to the sale of a horse
held for resale by the Company. Revenues during fiscal 1997 were exclusively
the result of racing purses won by a horse in which the Company owns an
interest. The Company realized no revenues for the three months ended March
31, 1998 or 1997, as it sold no horses and won no purses during that time.
The Company currently has an interest in five horses of racing age and
temperment. Of those, three are three-year olds, one is a two-year old, with
little racing experience. The fifth is a six-year old gelding in which the
Company owns a 15% interest and who recently returned to training following
surgery in 1997. Management is unable to predict with any degree of certainty
when, if ever, these horses will generate revenue or profit for the Company.
Races are selected by trainers engaged by the Company based on purses,
competition and fitness of the various horses. The frequency and results of
these races cannot be predicted with any degree of certainty.
Expenses of the racehorses remain generally constant, with the exception
of racing expenses. Principal expenses incurred by the Company during the
nine month period ending March 31, 1998 include boarding and training,
depreciation, legal and accounting, office salaries, travel and entertainment.
Boarding and training expenses increased approximately $12,000 from the nine
months ended March 31, 1997 to the nine months ended March 31, 1998, as the
Company had an interest in more horses during the recent nine month period.
Depreciation increased for the same reason. Legal and accounting increased as
a result of additional expenses incurred by the Company in connection with its
recent status as a public reporting entity under rules and regulations of the
Securities and Exchange Commission. Office expenses increased for a similar
reason. Salaries increased from $18,000 for the nine months ended March 31,
1997 to $32,000 for the nine months ended March 31, 1998 as the result of
accruals to officers of the Company commencing September 1, 1997. Additional
salary payable to the officers and commencing at that time was implemented
commensurate with additional responsibilites of such officers and directors.
7
Travel and entertainment associated with investigation and acquisition of
additional horses decreased from fiscal 1997 to 1998, as the Company did not
acquire additional horses during that time.
Part of the loss realized by the Company during the three months ending
March 31, 1998 resulted from a loss of $5,274 on the disposition of a
throughbred during that three months. The Company sold a broodmare in foal,
the cost of which exceeded the Company's share of proceeds from the sale.
8
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.
9
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: May 14, 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: May 14, 1998 By: /s/ Bill M. Conrad
Bill M. Conrad, Vice-President, Secretary,
Treasurer and Director
(Principal Financial Officer)
10
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