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 September 30, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
Commission file number 0-23823
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WALLSTREET RACING STABLES, INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-1313024
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5525 Erindale Drive, Suite 201, Colorado Springs, Colorado 80918
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(Address of principal executive offices) (Zip Code)
(719) 260-8509
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(Registrant's telephone number, including area code)
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(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 XX No
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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
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$.001 par value 902,450 shares outstanding
Common Stock at November 5, 1999
<PAGE>
WALLSTREET RACING STABLES, INC.
Index
Page
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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements 1-4
Item 2. Management's Discussion and Analysis Or
Plan of Operation 5-6
Part II - OTHER INFORMATION 7
SIGNATURES 8
ii
<PAGE>
Wallstreet Racing Stables, Inc.
Balance Sheets
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Unaudited Audited
September June
30, 1999 30, 1999
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ASSETS
- ------
Current Assets:
Cash $3,134 $3,267
Accounts Receivable 446 6,784
Prepaid Expenses 813 427
--- ---
Total Current Assets 4,393 10,478
----- ------
Property And Equipment
Racehorses 41,950 41,950
------ ------
Total 41,950 41,950
Accumulated Depreciation (16,176) (14,123)
------ ------
Net Property And Equipment 25,774 27,827
------ ------
TOTAL ASSETS $30,167 $38,305
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts Payable - Trade 30,267 18,355
Accrued Salaries 32,000 20,000
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Total Current Liabilities 62,267 38,355
------ ------
Long-Term Liabilities 0 0
- -
TOTAL LIABILITIES 62,267 38,355
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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; 894,950 Shares Issued and
Outstanding - June (audited). 902,450 Shares
Issued and Outstanding - September (unaudited) 902 902
Capital Paid In Excess Of Par Value 466,829 466,829
Retained (Deficit) (499,831) (467,781)
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TOTAL SHAREHOLDERS' EQUITY (32,100) (50)
------ --
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $30,167 $38,305
======= =======
The Accompanying Notes Are An Integral Part Of These Financial Statements.
1
<PAGE>
Wallstreet Racing Stables, Inc.
Statements Of Operations
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Unaudited Unaudited
For The For The
Three Month Three Month
Interim Period Interim Period
Ended Ended
September September
30, 1999 30, 1998
-------- --------
Revenue
Purses $14,280 $7,690
Total Revenue 14,280 7,690
------ -----
Operating Expenses:
Boarding And Training 6,411 6,641
Depreciation 2,053 3,283
Filing and Recording Fees 92 1,323
Horseshoeing expense 292 466
Horse Transportation 441 1,117
Impairment of Asset 0 2,777
Insurance 486 244
Jockey Fees 1,313 901
Legal And Accounting 4,139 12,463
Listing Fees 975 3,975
Office 2,339 2,381
Payroll Taxes 0 207
Race Expenses 1,592 1,686
Rent 1,500 1,500
Salaries 12,000 12,000
Telephone 749 728
Travel And Entertainment 9,145 3,632
Vet Expenses 2,810 3,327
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Total Operating Expenses 46,337 58,651
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Income (Loss) From Operations (32,057) (50,961)
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Other Income (Expense):
Interest Income 16 591
Interest (Expense) (9) (7)
Total Other Income (Expense) 7 584
- ---
Income (Loss) Before Taxes (32,050) (50,377)
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Income Tax Expense 0 0
Net Income (Loss) ($32,050) ($50,377)
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Weighted Average Common Shares Outstanding 902,450 894,950
(Loss) Per Share (0.04) (0.06)
==== ====
The Accompanying Notes Are An Integral Part Of These Financial Statements.
2
<PAGE>
Wallstreet Racing Stables Inc.
Cash Flow Statements
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Unaudited Unaudited
For The For The
Three Month Three Month
Interim Period Interim Period
Ended Ended
September September
30, 1999 30, 1998
-------- --------
Net (Loss) Profit ($32,050) ($50,377)
Items Not Affecting Cash Flow:
Depreciation 2,053 3,283
Impairment of Asset 0 2,777
(Increase) Decrease In Receivable 6,338 (7,224)
(Increase) Decrease In Prepaid Expenses (386) (1,448)
(Increase) Decrease In Deposits 0 100
(Decrease) Increase In Accounts Payable 11,912 37,555
(Decrease) Increase In Accrued Salaries 12,000 10,000
(Decrease) Increase In Payroll Taxes Payable 0 140
- ---
Net Cash Flows Provided From (Used By) Operations (133) (5,194)
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Cash Flows From Investing Activities:
Purchase Of Horses 0 (21,600)
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Net Cash Flows Provided From (Used By) Investing 0 (21,600)
- ------
Cash Flows Provided From Financing Activities 0 0
Net Cash Flows Provided From (Used By) Financing 0 0
- -
Net Increase (Decrease) In Cash (133) (26,794)
Cash At Beginning Of Period 3,267 68,936
----- ------
Cash At End Of Period $3,134 $42,142
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The Accompanying Notes Are An Integral Part Of These Financial Statements.
3
<PAGE>
Wallstreet Racing Stables, Inc.
Notes to the Unaudited Financial Statements
For The Three Month Period Ended September 30, 1999
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Note 1 - Unaudited Financial Information
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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 consists only of normal
reoccurring accruals. The results of operations for the three month
interim period ended September 30, 1999 are not necessarily indicative of
the results to be expected for the fiscal year ended June 30, 2000.
Note 2 - Financial Statements
- -----------------------------
Management has elected to omit substantially all footnotes relating to the
condensed financial statements of the Company included in the Report. For
a complete set of footnotes, reference is made to the Company's Annual
Report on Form 10-KSB for the year ended June 30, 1999 as filed with the
Securities and Exchange Commission and the audited financial statements
included therein.
Note 3 - Basis Of Presentation
- ------------------------------
In the course of its activities, the Company has sustained continuing
losses and expects such losses to continue in the foreseeable future. The
Company's ability to continue as a going concern is dependent upon funding
from outside sources which may take the form of acquisitions, mergers,
joint ventures, acquisitions of additional assets or other business
opportunities.
4
<PAGE>
WALLSTREET RACING STABLES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Introduction
This Report (including the documents incorporated herein by reference)
contains "forward- looking statements" within the meaning of the Federal
securities laws. Such forward-looking statements include, without
limitation, statements regarding the Company's need for working capital,
future revenues and results of operations and are identified by words such
as "anticipates,' "plans," "expects" and "estimates." A variety of factors
could cause the Company's actual results to differ materially from those
contemplated by these forward-looking statements, including, without
limitation, those discussed below. Most of these factors are beyond the
control of the Company. Investors are cautioned not to put undue reliance
on forward-looking statements.
Liquidity and Capital Resources
The financial condition of Wallstreet Racing Stables, Inc. (the
"Company") deteriorated from fiscal year end June 30, 1999 to September 30,
1999. Current assets decreased during that time while current liabilities
increased. As a result, working capital decreased to a negative $57,874 at
September 30, 1999, a decrease of $29,997 from fiscal year end. The
Company reported a negative net worth of $32,100 at September 30, 1999. As
a result of these developments, management is of the opinion that the
Company is dependent upon receipt of financing from outside sources to
continue as a going concern.
The Company has endeavored for years to acquire a stable of
racehorses, revenues from which would be sufficient to achieve
profitability. However, the Company has been unable to attract the kind of
capital necessary to obtain this stable and to compete in the thoroughbred
horse racing industry. As a result, management has recently undertaken
efforts to explore additional opportunities, both within and outside of the
thoroughbred industry, in an effort to return value to the shareholders.
Additional opportunities may take the form of acquisitions, mergers, joint
ventures, acquisition of additional assets or other business opportunities.
However, as of the date of this Report, no specific opportunities are being
assessed.
The decrease in working capital results primarily from an increase in
current liabilities. Accounts payable and accrued salaries each increased
in connection with expenses incurred by the Company in the ordinary course
of business. The Company currently has insufficient current assets with
which to satisfy those liabilities and its operations use, rather than
provide cash. Accordingly, the Company is dependent on the receipt of
funding from outside sources to satisfy the liabilities. Historically,
certain officers and directors of the Company have advanced funds to
alleviate short-term working capital needs. However, there is no assurance
such individuals will continue to do so. Absent the availability of such
funding, the Company would be forced to rely on other private debt or
equity financing, of which there is also no assurance. In the event the
Company was unable to obtain capital to satisfy outstanding and future
obligations, the Company may be forced to liquidate its assets to meet
those obligations.
5
<PAGE>
Ongoing working capital requirements include expenses associated with
care, maintenance and training of Company thoroughbreds and general and
administrative expenses, including salaries, travel, entertainment, legal
and accounting fees. Expenses associated with the thoroughbreds is
generally proportional to the number of horses in which the Company owns an
interest. As the Company disposed of one thoroughbred in the second fiscal
quarter, and anticipates disposition of another, it is anticipated that
direct expenses will decrease in the coming months. However, general and
administrative expenses are generally fixed, and will remain relatively
constant for the future. Accordingly, the Company anticipates a continuing
need for funding until such time as some type of reorganization can be
effected.
Results of Operations
During the three months ended September 30, 1999, the Company realized
a net loss of $32,050, or $.04 per share, on revenues of $14,280. This
compares to a net loss of $50,377 on revenues of $7,690 for the three month
period ended September 30, 1998.
Revenues from racing purses doubled in the most recent fiscal quarter,
from $7,690 for the three month period ended September 30, 1998 to $14,280
for the comparable period ended September 30, 1999. Expenses decreased
during that same period, from a total of $58,651 for the three month period
ended September 30, 1998 to $46,337 for the three months ended September
30, 1999. As a result, the Company's net loss was reduced.
Contributing to the decrease in expenses were a reduction in legal and
accounting fees and the absence of any impairment of assets. The reduction
in legal and accounting fees was attributable to the absence of
extraordinary expenses experienced during the three months ended September
30, 1998 in connection with an abandoned merger. The reduction in
impairments is associated with a one-time charge to earnings during the
1998 period as a result of the death of a thoroughbred. Remaining expenses
remained generally constant from first quarter 1998 to first quarter 1999.
Two thoroughbreds in which the Company had an interest at fiscal year
end have been or will be transferred or abandoned. Burnt Timber, a four-
year-old colt, was claimed in November for $13,500. Proceeds from that
transaction will be used to defray accrued liabilities. Da Hoss, a seven-
year-old stakes-winning gelding, was officially retired in November after a
very distinguished racing career. Management of the Company, as well as
the owner of a majority interest in that horse, will endeavor to place him
at a retirement farm in Kentucky. The net result of those transactions is
to substantially reduce the number of horses in which the Company had an
interest, and concurrently, potential sources of revenue. Those events
also precipitated the decision to seek other business opportunities
discussed above.
Since the Company's inception, the Company's thoroughbreds have been
unable to generate revenues sufficient to cover direct and indirect
operating expenses. Accordingly, management is forced to reevaluate the
Company's business plan and seek other alternatives. The results of those
efforts will be reported in future filings made by the Company.
6
<PAGE>
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.
No report required.
7
<PAGE>
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: November 10, 1999 By: /s/ Raymond E. McElhaney
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Raymond E. McElhaney, President, Chief
Executive Officer, Chief Financial
Officer and Chairman of the Board of
Directors
(Principal Executive Officer)
Date: November 10, 1999 By: /s/ Bill M. Conrad
--------------------- -----------------------------------
Bill M. Conrad, Vice-President,
Secretary, Treasurer and Director
(Principal Accounting Officer)
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE 9/30/99 FORM
10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB.
</LEGEND>
<CIK> 0001040751
<NAME> WALLSTREET RACING STABLES, INC.
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
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<CURRENT-ASSETS> 4,393
<PP&E> 41,950
<DEPRECIATION> (16,176)
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