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, 1999
-----------------------
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
- ------------------ ----------------
(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
---- -----
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 950,950 shares outstanding
Common Stock at February 10, 2000
<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 6-8
Part II - OTHER INFORMATION 8
SIGNATURES 9
ii
<PAGE>
Wallstreet Racing Stables, Inc.
Balance Sheets
- ------------------------------------------------------------------
Unaudited Audited
December June
31, 1999 30, 1999
-------- --------
ASSETS
- ------
Current Assets:
Cash $2,781 $3,267
Accounts Receivable 8,052 6,784
Prepaid Expenses 14,390 427
------ ---
Total Current Assets 25,223 10,478
------ ------
Property And Equipment
Racehorses 20,600 41,950
------ ------
Total 20,600 41,950
Accumulated Depreciation (9,275) (14,123)
------ ------
Net Property And Equipment 11,325 27,827
------ ------
TOTAL ASSETS $36,548 $38,305
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts Payable - Trade 10,794 18,355
Accrued Salaries 44,000 20,000
------ ------
Total Current Liabilities 54,794 38,355
------ ------
Long-Term Liabilities 0 0
- -
TOTAL LIABILITIES 54,794 38,355
------ ------
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; 902,450 Shares Issued and
Outstanding - June (audited). 950,950 Shares
Issued and Outstanding - December (unaudited) 951 902
Capital Paid In Excess Of Par Value 497,093 466,829
Retained (Deficit) (516,290) (467,781)
------- -------
TOTAL SHAREHOLDERS' EQUITY (18,246) (50)
------ --
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $36,548 $38,305
The Accompanying Notes Are An Integral Part Of These Financial Statements.
1
<PAGE>
Wallstreet Racing Stables, Inc.
Statements Of Operations
- ------------------------------------------------------------------
Unaudited Unaudited
For The For The
Three Month Three Month
Interim Period Interim Period
Ended Ended
December December
31, 1999 31, 1998
-------- --------
Revenue
Purses $10,047 $90,385
Miscellaneous Income 0 20,000
- ------
Total Revenue 10,047 110,385
------ -------
Operating Expenses:
Boarding And Training 4,364 9,380
Depreciation 1,777 3,779
Filing And Recording Fees 2,626 461
Horseshoeing expense 271 393
Horse Transportation 195 713
Insurance 214 426
Jockey Fees 1,115 9,030
Legal And Accounting 1,126 4,638
Office 2,328 3,536
Professional Services 0 10,000
Race Expenses 2,501 17,298
Rent 1,500 1,500
Salaries 12,000 12,000
Telephone 748 996
Travel And Entertainment 1,223 11,740
Vet Expenses 2,000 7,392
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Total Operating Expenses 33,988 93,282
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Income (Loss) From Operations (23,941) 17,103
------ ------
Other Income (Expense):
Interest Income 8 177
Interest (Expense) (3) (6)
Gain (Loss) on Sale of Horse 7,477 222
----- ---
Total Other Income (Expense) 7,482 393
----- ---
Income (Loss) Before Taxes (16,459) 17,496
------ ------
Income Tax Expense 0 0
Net Income (Loss) ($16,459) $17,496
======= =======
Weighted Average Common Shares Outstanding 910,533 899,950
Gain (Loss) Per Share (0.02) 0.02
==== ====
The Accompanying Notes Are An Integral Part Of These Financial Statements.
2
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Wallstreet Racing Stables, Inc.
Statements Of Operations
- ------------------------------------------------------------------
Unaudited Unaudited
For The For The
Six Month Six Month
Interim Period Interim Period
Ended Ended
December December
31, 1999 31, 1998
-------- --------
Revenue
Purses $24,327 $98,075
Miscellaneous Income 0 20,000
- ------
Total Revenue 24,327 118,075
------ -------
Operating Expenses:
Boarding And Training 10,775 16,021
Depreciation 3,829 7,062
Filing and Recording Fees 2,717 1,784
Horseshoeing expense 563 858
Horse Transportation 636 1,830
Impairment of Asset 0 2,777
Insurance 700 670
Jockey Fees 2,428 9,931
Legal And Accounting 5,266 17,101
Listing Fees 975 3,975
Office 4,668 5,916
Payroll Taxes 0 207
Professional Services 0 10,000
Race Expenses 4,093 18,985
Rent 3,000 3,000
Salaries 24,000 24,000
Telephone 1,497 1,724
Travel And Entertainment 10,368 15,372
Vet Expenses 4,810 10,719
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Total Operating Expenses 80,325 151,932
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(Loss) From Operations (55,998) (33,857)
------ ------
Other Income (Expense):
Interest Income 24 768
Interest (Expense) (12) (13)
Gain (Loss) on Sale of Horse 7,477 222
----- ---
Total Other Income (Expense) 7,489 977
----- ---
(Loss) Before Taxes (48,509) (32,880)
------ ------
Income Tax Expense 0 0
Net (Loss) ($48,509) ($32,880)
======= =======
Weighted Average Common Shares
Outstanding 906,492 897,450
(Loss) Per Share (0.05) (0.04)
==== ====
The Accompanying Notes Are An Integral Part Of These Financial Statements.
3
<PAGE>
Wallstreet Racing Stables Inc.
Cash Flow Statements
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Unaudited Unaudited
For The For The
Six Month Six Month
Interim Period Interim Period
Ended Ended
December December
30, 1999 30, 1998
-------- --------
Net (Loss) Profit ($48,509) ($32,880)
Items Not Affecting Cash Flow:
Depreciation 3,829 7,062
Impairment of Asset 0 2,777
Gain on Sale of Horse (7,477) (222)
Issuance of Stock for Services 30,313 7,500
(Increase) Decrease In Receivable (1,268) (430)
(Increase) Decrease In Prepaid Expenses (13,963) (1,022)
(Increase) Decrease In Deposits 0 100
(Decrease) Increase In Accounts Payable (7,561) (1,593)
(Decrease) Increase In Accrued Salaries 24,000 22,000
(Decrease) Increase In Payroll Taxes
Payable 0 16
- --
Net Cash Flows Provided From (Used By)
Operations (20,636) 3,308
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Cash Flows From Investing Activities:
Sale of Horses 20,150 5,000
Purchase Of Horses 0 (21,600)
- ------
Net Cash Flows Provided From (Used By)
Investing 20,150 (16,600)
------ ------
Cash Flows Provided From Financing
Activities 0 0
Net Cash Flows Provided From (Used By)
Financing 0 0
- -
Net Increase (Decrease) In Cash (486) (13,292)
Cash At Beginning Of Period 3,267 68,936
----- ------
Cash At End Of Period $2,781 $55,644
====== =======
Summary of Non-Cash Investing And
Financing Activities:
Stock Issued For Services $30,313 $7,500
The Accompanying Notes Are An Integral Part Of These Financial Statements.
4
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Wallstreet Racing Stables, Inc.
Notes to the Unaudited Financial Statements
For The Six Month Period Ended December 31, 1999
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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 consists only of normal
reoccurring accruals. The results of operations for the six month interim
period ended December 31, 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.
Note 4 - Discontinued Operations
- --------------------------------
During the fiscal quarter ended December 31, 1999, management determined
that the Company should discontinue operations in the thoroughbred horse
racing industry. That decision was prompted by continuing losses from
operations and difficulties encountered in obtaining capital to acquire
sufficient assets to make the Company profitable. Accordingly, during that
fiscal quarter, one horse in which the Company had an interest was retired
and the Company sold its interest in two additional horses. At December
31, 1999, the Company retained an interest in two horses and efforts to
dispose of those interests continued subsequent to December 31. The
Company is also exploring opportunities to preserve shareholder value,
including mergers, acquisitions or other business transactions.
5
<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 business transactions, 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
At December 31, 1999, Wallstreet Racing Stables, Inc. (the "Company")
had negative working capital of $29,571, substantially unchanged from
working capital at June 30, 1999 of negative $27,877. The Company also had
a negative net worth of $18,246 at December 31, 1999. Current assets at
December 31, 1999 consisted primarily of prepaid expenses while current
liabilities consist of trade accounts payable and accrued salaries. The
Company therefore had little liquidity and is dependent on receipt of
financing from outside sources to continue as a going concern.
The Company has experienced a lack of liquidity and working capital
since fiscal year end June 30, 1999. Expectations that the Company could
generate working capital through racing purses and the sale or syndication
of its bloodstock were unfulfilled. The Company was also unable to attract
capital from outside sources in an amount sufficient to reach profitability
on a consistent basis. In view of this situation, a decision was made to
discontinue operations in the thoroughbred industry.
During the six month period ended December 31, 1999, the Company's
operations used approximately $21,000 in cash. This compares to positive
cash flow of $3,300 for the six month period ended December 31, 1998. In
view of the Company's negative cash flow during the recent six month
period, management made a decision to begin selling Company assets to
satisfy its obligations. During the six month period ended December 31,
1999, the Company realized approximately $20,000 from the sale of its
interest in thoroughbreds, which sales were made to unrelated third
parties. The sale price of these assets was determined by negotiation
between representatives of the Company and the buyers. All sales were made
for cash.
All of the cash generated from the sale of assets was expended on
operations during the most recently completed fiscal quarter. Accordingly,
at December 31, 1999, the Company was left with little cash and a
relatively insignificant amount of accounts receivable. Foreseeing this
situation, management of the Company undertook efforts to explore other
business opportunities in an effort to preserve or enhance shareholder
value. As a result of those efforts, the Company executed a non-binding
6
<PAGE>
letter of intent with an unrelated third party to merge with or acquire the
assets of that entity. This independent third party is engaged in
consulting in the e-commerce industry. The closing of that transaction is
subject to a number of contingencies, including execution of a definitive
agreement and continuing due diligence by both parties, and there is no
assurance such transaction will be completed. If the transaction cannot be
completed, the Company may be forced to liquidate its remaining assets and
cease operations.
Sale of the Company's assets during the quarter ended December 31,
1999 should assist in reducing expenses and preserving any remaining
working capital. Direct expenses associated with care and maintenance of
the thoroughbreds, such as boarding and training, depreciation, race and
vet expenses, should be reduced as the number of horses in which the
Company has an interest is reduced. However, fixed expenses, such as
salaries, rent, legal and accounting fees will remain generally constant.
Results of Operations
During the six month period ended December 31, 1999, the Company
realized a net loss from operations of $55,996 on revenues of $24,327. The
net loss for that period, including other income, was $48,509, or $(.05)
per share. This compares to a loss for the six month period ended December
31, 1998 of $32,880, or $(.04) per share. During the three month period
ended December 31, 1999, the Company lost $16,459, compared to net income
of $17,496 for the three month period ended December 31, 1998.
Revenues decreased substantially from the six month period ended
December 31, 1998 to the comparable period ended December 31, 1999, from
$118,075 to $24,327. This decrease is attributable to lack of success of
the Company's thoroughbreds in racing during the recent six month period.
Da Hoss, the most successful of the thoroughbreds in which the Company had
an interest, was permanently retired in Lexington, Kentucky in the fall of
1999. Da Hoss will be boarded at a horse park, where all of his care and
maintenance expenses will be paid by a third party. The remaining
thoroughbreds in which the Company had an interest during the six months
ended December 31, 1999 were not of a caliber to generate purses similar to
those previously won by Da Hoss. Management attributes this failure, in
turn, to a lack of working capital with which to acquire better
thoroughbreds.
With the decrease in thoroughbreds, operating expenses decreased from
second quarter 1998 to second quarter 1999. Operating expenses for the six
months ended December 31, 1999 were $80,325, compared to $151,932 for the
comparable period ended in 1998. This decrease in expenses contributed to
reducing the net loss which the Company would otherwise have realized.
Direct expenses associated with care and maintenance of the thoroughbreds,
such as boarding and training, depreciation, transportation, race expenses,
travel and entertainment were reduced with the sale of certain
thoroughbreds. Other expenses such as legal and accounting and
professional services also decreased, contributing to the decrease in
overall expenses. However, management anticipates the Company will
continue to incur losses until such time as it obtains assets sufficient to
generate revenues to cover direct and indirect expenses.
The net loss for the six month period ended December 31, 1999 was
reduced by a gain of approximately $7,500 on the sale of one of the
Company's thoroughbreds. While management continues efforts to dispose of
7
<PAGE>
remaining horses in which the Company had an interest, it is unable to
predict with any degree of certainty the results of those efforts.
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.
8
<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: February 10, 2000 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: February 10, 2000 By: /s/ Bill M. Conrad
------------------- ------------------------------------------
Bill M. Conrad, Vice-President, Secretary,
Treasurer and Director
(Principal Accounting Officer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE 12/31/99 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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<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
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