##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-KSB

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2003

33-5203-D
(Commission File Number)

BOUNDLESS MOTOR SPORTS RACING, INC.

(Exact name of registrant as specified in its charter)


Colorado
(State or other jurisdiction of
Incorporation)
    
    84-0953839
(IRS Employer Identification No.)


1801 Gateway Blvd, Suite 105
Richardson, Texas 75080
(Address of principal executive offices) (Zip Code)

Issuer telephone number, including area code: (972) 783-8500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class: None

Name of each exchange on which registered: N/A

Securities registered pursuant to Section 12(g) of the Act:

Title of each class: None

Indicate by check mark whether the issuer (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 the filing
requirements for at least the past 90 days. o Yes x No

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best
of Registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. o

State issuers revenues for its most recent fiscal year. $0

Transitional Small Business Disclosure Format:o Yes x No

Aggregate market value of the voting stock held by non-affiliates of the
registrant as of January 13, 2004: $9,577,495 (at a closing price of $3.90 per
share).

As of January 13, 2004, 17,382,168 of the Issuers $.0001 par value common
stock were outstanding.





---

TABLE OF CONTENTS



|                                                |                                                                                               |  |  |  |  |  |  | 
|----------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART 1                                         
|                                                | Item 1. Business                                                                             
|                                                | Item 2. Property                                                                             
|                                                | Item 3. Legal Proceedings                                                                    
|                                                | Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II                                        
|                                                | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                
|                                                | Item 6. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                | Item 7. Financial Statements and Supplementary Data                                          
|                                                | Item 8. Changes in and Disagreements on Accounting and Financial Disclosure                  
|                                                | Item 8A. Evaluation of Internal and Disclosure Controls                                      
|PART III                                       
|                                                | Item 9. Directors and Executive Officers of the Registrant and Compliance with Section 16(a) 
|                                                | Item 10. Executive Compensation                                                              
|                                                | Item 11. Security Ownership of Certain Beneficial Owners and Management                      
|                                                | Item 12. Certain Relationships and Related Transactions                                      
|PART IV                                        
|                                                | Item 13. Exhibits and Reports on Form 8-K                                                    
|                                                | Item 14. Principal Accountant Fees and Services                                              
|SIGNATURES                                     
|INDEPENDENT AUDITORS REPORT                   
|Consolidated Balance Sheet                     
|Consolidated Statement of Operations           
|Consolidated Statement of Shareholders Deficit
|Consolidated Statement of Cash Flows           
|Notes to Consolidated Financial Statements     
|Stock Purchase Agreement                       
|Amendment No. 1 to Stock Purchase Agreement    
|Asset Purchase Agreement                       
|Amendment No. 1 to Asset Purchase Agreement    
|Contract of Sale                               
|Amendment No. 1 to Contract of Sale            
|Stock Purchase Agreement                       
|Amendment No. 1 to Stock Purchase Agreement    
|Amended and Restated Bylaws                    
|Promissory Note - $50,000                      
|Promissory Note - $600,000                     
|Promissory Note - $600,000                     
|Amendment No. 1 to Promissory Note             
|Amendment No. 2 to Promissory Note             
|Pledge Agreement                               
|Promissory Note                                
|Guaranty                                       
|Certification of CEO Pursuant to Section 302   
|Certification of CEO Pursuant to Section 906   



---



##### Table of Contents









PART 1







Item 1. Business

Boundless Motor Sports Racing, Inc. (the Company) was incorporated under the
laws of the State of Colorado on July 7, 1983 under the name Moonstone, Inc.
(Moonstone) for the primary purpose of seeking acquisitions of businesses or
properties, without limitation as to geographic location or type of business.
Moonstones initial activities were directed toward the acquisition of
operating capital. Moonstone changed its name to The Entity, Inc. in 1991.

On July 31, 2003, The Entity, Inc. acquired Boundless Motor Sports Racing,
Inc., a Nevada corporation (Boundless), and GPX Partners, L.L.C., a Texas
limited liability company (GPX), in exchange for an aggregate of 14,926,400
newly issued shares of The Entity, Inc.s common stock. As a result of these
transactions, the former owners of Boundless and GPX, as a group, acquired
control of The Entity, Inc. through their aggregate holdings of approximately
94.8% of the voting securities of The Entity, Inc.

On July 31, 2003, in connection with the Company the acquisition of Boundless
and GPX, The Entity, Inc. changed its name to Boundless Motor Sports Racing,
Inc.

The Company is now focusing its efforts as a dirt track style racing and sports
entertainment company that seeks to acquire and operate motor sports
sanctioning bodies and venues. The Company is still in the early stages of its
development and will have to sell equity or obtain loans to have any cash for
even limited operations.

The Company has five (5) full-time employees.

Motor Sports Industry

Motor sports are among the most popular and fastest-growing spectator sports in
the United States, with annual attendance at all U.S. motor sports events
exceeding 18 million people. The Company believes that the impetus for growth
in this industry has been the growing popularity of NASCAR, due to increased
broadcast network television exposure.

The motor sports racing industry consists of several distinct categories of
auto racing, each with its own organizing body (sanctioning body), with
corresponding sanctioned events. Sanctioning bodies are responsible for all
aspects of race management required to conduct a racing event, including:
regulating racing, drivers, safety and teams, providing officials to ensure
fair competition, and administering the race and series purses and other prize
payments. Sanctioning bodies typically derive revenues from merchandising,
race sponsorships, television distribution, and membership fees. In the 2001
racing season, approximately $1.5 billion was spent on corporate sponsorships
in the motor sports industry, according to IEG Sponsorship Report, Chicago.

Of the sanctioning bodies in the United States, NASCAR, IRL, NHRA, and Grand Am
are among the more well known sanctioned motor sport bodies in the United
States. The largest auto-racing category in the United States, in terms of
media exposure and sponsorships, is stock car racing, conducted by the National
Association of Stock Car Auto Racing (NASCAR). Until roughly ten years ago,
NASCAR events and viewership were predominately confined to the southeastern
part of the US. Today, NASCAR races are held, and viewers hail from, all over
the country.

Motor sport events are generally heavily promoted, with a number of supporting
events surrounding each main race event. Examples of supporting events include:
secondary races, qualifying time trials, practice sessions, driver autograph
sessions, automobiles and product expositions, catered parties, other racing
related events designed to maximize the spectators overall entertainment
experience and enhance value to sponsors.

2



---



##### Table of Contents



Dirt-Track Racing

The dirt-track style of racing is considered one of the more affordable, grass
roots family entertainment forms of motor sport racing, especially among motor
sport enthusiasts. Many of the dirt oval tracks in operation in the United
States today have their roots at county or state fairgrounds and dirt track
racing has historically been the highlight at these state and county fairs.
Historically, these type of races were promoted locally. Many of the promoters
of dirt-track style racing saw large profits made in this form of racing, and
in turn, built their own tracks and began promoting races on a more regional
basis.

Today, there are over 900 dirt-style racing tracks in the United States and in
excess of 25,000 drivers who actively race on dirt tracks. There are numerous
sanctioning bodies for this type of racing, and races are generally classified
according to car types, including: modified, super modified, sportsman, late
models and sprint cars. Among dirt-track style racing sanction bodies, World
of Outlaws and DIRT Motorsports are the best known. Currently the sponsorship
for dirt track racing consists of regional sponsors.

General Business Plan

The Companys general business plan is to acquire and operate motor sports
sanctioning bodies and venues and seek to nationalize dirt-track style motor
racing. The Company believes that much of the current success of motor sport
racing is due to the efforts of NASCAR in consolidating, marketing and
promoting its stock car races, and the Companys current strategy is to utilize
this model for dirt-track style racing. Under this business model, the Company
anticipates revenues from the primary sources that typically generate revenue
for motors sport sanctioning bodies: (1) sanctioning fees; (2) merchandise
sales and licensing fees; (3) sponsorships; (4) television and electronic media
distribution rights; (5) membership fees; and (6) event ticket sales.

Sanctioning fees

Race sanctioning bodies sanction racing events at various venues in exchange
for fees from track operators and race promoters. Because a sanctioned racing
event typically draws greater fan attendance, track operators and racing
promoters will generally seek to have their event sanctioned. Based upon
current industry dirt-track operations, the Company believes that its
sanctioning fees should run from $2,500 to $50,000 per event depending on
several variables, including: size of race, race venue, revenue sharing with
the track owner or promoter, race purses and other prizes.

Merchandise

The growing popularity of motor sports events, has resulted in substantial
revenue growth for officially licensed racing-related merchandise. For example,
retail sales of apparel, souvenirs, collectibles, and other merchandise
licensed by NASCAR drivers, teams, and track operators/promoters has climbed to
approximately $1.4 billion in 2002 from approximately $800 million in 1990.
Following the NASCAR business model, the Company believes that there is a
substantial merchandising revenue potential for its dirt-track style race
sanctioning bodies.

Sponsorship

Drawn to the sport by the attractive economics and strong brand loyalty of the
fans, sponsors are very active in all aspects of auto racing. Sponsors
directly support both racing teams, through the funding of certain costs of
their operations, and sanctioning bodies for the use of official trademarks and
logos, and also actively seek advertising exposure through television and radio
coverage, newspapers, race programs, brochures, and advertising at the track on
the day of the race. In addition, sponsors also support track operators by
paying fees associated with the naming of events and at premier racing events
such as the Daytona 500, it is not uncommon to have multiple official corporate
sponsors. During the 2001 racing season, approximately $1.5 billion was spent
on corporate sponsorship in the motor sports industry, according to IEG
Sponsorship Report, Chicago. Based upon current industry dirt-track operations,
the Company believe that sponsorship revenues will be a significant source of
the Companys potential revenues.

3



---



##### Table of Contents



Television and Electronic Media Distribution Rights

Increased exposure to sanctioned events generally leads to increased revenues
from sponsorships and other forms of advertising in addition to the revenues
generated from licensing the broadcast and distribution rights for the events.
Thus, the Company believes that to obtain the greatest exposure for its events
and the highest value in sponsorship rights, the Company must promote its
sanctioned events though television and other electronic media distribution.
To this end, the Company will seek broadcast and media distribution partners.
The Company expects to model these efforts after NASCAR which saw a twenty-nine
percent increase in television viewership in 2002.

Membership Fees

In order for a motor sport racing team to compete in sanctioned races, the
teams must first pay membership fees to the sanctioning body for that race.
These fees typically increase with the popularity of race series and serve to
pay for costs associated with running a sanctioning body. Based upon current
industry dirt-track operations, the Company believes that its team membership
fees should run from $50 to $150 per individual, depending on several
variables, including the ability of the Company to successfully promote the
races its sanctions.

Event Ticket Sales

Track owners and promoters make a large portion of their revenues from event
ticket sales. The prices charged range from $10 to $100 depending on several
variables, including: size of race, race venue, popularity of the drivers,
teams and overall racing series. The Company will only receive revenues from
event ticket sales at tracks that it will own or lease.

Current Activities

The Company has entered into definitive agreements to acquire DIRT Motorsports,
Inc. (DIRT), and World of Outlaws, Inc. (WoO), both of which companies are
dirt-track style racing sanctioning bodies. In addition to sanctioning
dirt-track style races, DIRT also owns and operates two racing facilities, and
operates an additional three leased facilities, which are included in the
pending DIRT transaction.

The Company additionally has established and sanctioned a new Late Model Dirt
Racing Car Series (Series) for the 2004 racing season, with racing scheduled to
start in February of 2004. As of January 13, 2004, the Company had received
tentative commitments from 12 drivers to race in this Series. This Series is
independent of the aforementioned acquisitions of DIRT and WoO.

The costs of acquiring DIRT and WoO will consist of either cash, common stock
of the Company, or a combination of both. The Company needs additional funding
to complete either of these acquisitions and to begin the Series because the
Company has nominal assets and limited financial resources. See Financial
Statements.

The Companys main source of funding to date has been provided by the Companys
Chairman and CEO, Paul A. Kruger. This funding, as of January 13, 2004,
consists of approximately $2.2 million in equity investments and promissory
notes. See Financial Statement footnotes for further details. The Company
estimates it will require approximately $9,000,000 to complete its current
plan to acquire DIRT and WoO, begin the Series and to cover working capital
items until these acquisitions are completed.

DIRT Motor Sports, Inc.

DIRT Motorsports, Inc. is the countrys largest dirt-racing sanctioning body
for Big Block Modified, 358 Modified, and Sportsman classes, and was founded 32
years ago by Glen Donnely, one of the most successful and well respected names
in dirt track racing. In 2002 DIRT Motorsports held 783 sanctioned races for
Modified, Super Modified, and Sportsman classes and an additional 17
full-fender championship races. These brought the final event count to exactly
800, the second-highest season total in DIRT Motorsports history. The
sanctioning bodys prize jewel, the Eckerd 200 at the New York State
Fairgrounds in Syracuse, New York, will be celebrating its 32nd anniversary in
October 2004, and is expected to draw 100,000 in attendance. Each year, DIRT
Motorsports sanctioned races are held at nearly 40 DIRT Motorsports affiliated tracks
situated throughout the Northeastern U.S. and Canada.

4



---



##### Table of Contents



DIRT Motorsports is also the only dirt-track style race sanctioning body to
boast an in-house television production department that produces, syndicates
and distributes over 37 hours of live and taped productions of the DIRT Racing
Series. This racing series is presently seen on Speedvision, Time Warner
Cable, and the Empire TV Network. DIRT Motorsports races are also carried on
cyber series coverage with live audio on the World Wide Web during every
Modified Super DIRT Series race.

World of Outlaws, Inc.

World of Outlaws (WoO) is an internationally recognized sanctioning body for
dirt-track style racing and has been the leading name in Sprint Car Racing for
the past 25 years. World of Outlaws was originally founded, and is still
managed, by Ted Johnson. This year, World Of Outlaws will hold over 100
sanctioned races at 52 dirt tracks throughout the United States and twelve
additional races will be held in Australia. Eight of the 100 WoO races in 2004
are currently scheduled to take place during either the NASCAR Winston Cup
weekends or the IRL weekends to capitalize on the popularity of NASCAR and IRL,
and are anticipated to draw an estimated 30,000 spectators each.

The early days of Sprint Car racing saw drivers crisscrossing the country in
search of the highest paying races they could find. At that time there were no
rules governing when, where, or how they raced. Thus they were dubbed the
Outlaws. Today WoO sanctioned races give fans some of the most exciting
wheel-to-wheel racing on dirt in the world, while emphasizing safety and
sportsman-like conduct in pursuit of victory.

Sprint car racing is a uniquely American form of motor sport, spawned during
the early 20th century at fairground horse tracks, where it is still popular
today. It was once considered a stepping-stone to the Indianapolis 500 before
the arrival of rear-engine Indy cars in the early 1960s; and sprint car racing
has maintained its place in the American culture. Unlike other forms of racing,
sprint car racing rules are uniform across the country.

Certain Risks

The Companys business is subject to numerous risk factors, including the
following:

No Operating History or Revenue and Minimal Assets. The Company has had no
operating history nor any revenues or earnings from operations. The Company has
no significant assets or financial resources. The Company will, in all
likelihood, sustain operating expenses without corresponding revenues, at least
until the consummation of additional fund raising. This may result in the
Company incurring a net operating loss, which will increase continuously until
the Company can raise the funds necessary to complete the targeted
acquisitions. Once completed, there is no assurance that the Company can
successfully operate the acquired businesses.

Speculative Nature of Companys Proposed Operations. The success of the
Companys proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the targeted acquisitions and
managements ability to identify additional business opportunities.

Scarcity of and Competition for Business Opportunities and Combinations. The
Company is currently an insignificant participant in the business of seeking
mergers with, joint ventures with and acquisitions of motor sports racing
sanctioning bodies and facilities. A large number of established and
well-financed entities, including venture capital firms, are active in mergers
and acquisitions of companies which may be desirable target candidates for the
Company. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company
and, consequently, the Company will be at a competitive disadvantage in
identifying possible business opportunities and successfully completing a
business combination. Moreover, the Company will also compete in seeking merger
or acquisition candidates with numerous other small public companies.

5



---



##### Table of Contents



Management. The Company currently is adding qualified management to lead and
assist it in developing plans and integrating acquired businesses; however,
there can be no assurances that the Company will be successful in these
efforts.

Need for Additional Capital. The Company will be required to obtain financing
to implement our business plan and acquisition strategy. As a result, your
evaluation of the Company is based on a lack of operating history and upon the
uncertainty of our ability to raise capital or to consummate the targeted
acquisitions. If such capital needs are met through the issuance of equity or
convertible debt securities, the percentage ownership of our shareholders will
be reduced. Our success will be determined in a large part by our ability to
obtain financing, and we can give no assurance that we will be successful in
obtaining adequate financing on favorable terms, if at all. The absence of
financing may impair our ability to implement our business plan. Although there
are no present plans, agreements, commitments or undertakings with respect to
the issuance of additional shares of common stock or securities convertible
into any such shares, we may decide to issue securities to third parties in the
future to consummate an acquisition. Any such shares issued would further
dilute the percentage ownership of our common stock held by our shareholders.

Qualified Auditors Opinion. As the future success of the Company is likely
dependent on its ability to fund operations and close the transactions
described herein, the Companys auditor has issued a qualified opinion as to
its ability to continue as a going concern.

Illiquidity of Common Stock.Although there is a public market for our common
stock, trading volume has been historically low which substantially increases
your risk of loss. We can give no assurance that an active and liquid public
market for the shares of the common stock will develop in the future. Low
trading volume in our common stock could affect your ability sell the shares of
common stock. The development of a public trading market depends upon not only
the existence of willing buyers and sellers, but also on market makers. The
market bid and asked prices for the shares may be significantly influenced by
decisions of the market makers to buy or sell the shares for their own account,
which may be critical for the establishment and maintenance of a liquid public
market in the shares. Market makers are not required to maintain a continuous
two-sided market and are free to withdraw firm quotations at any time.
Additionally, in order to maintain our eligibility for quotation on the OTC
Bulletin Board, we need to have at least one registered and active market
maker. No assurance can be given that any market making activities of any
additional market makers will commence or that the activities of current market
makers will be continued.

Effect of Substantial Future Sales of Common Stock. Sales of substantial
amounts of our common stock in the public market in the future could have an
adverse effect on the market price of our common stock. Sales of substantial
amounts of our common stock in the public market, or the perception that such
sales could occur, could adversely affect prevailing market prices of our
common stock.

No Dividends. We have not paid any dividends to date, and have no plans to pay
any dividends on our common stock for the foreseeable future. We can give no
assurance that we will ever pay any dividends in respect of the common stock.

Safe Harbor StatementCertain statements contained in this Form 10-KSB
constitute forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended (the Securities Act), and Section 21E
of the Exchange Act. These statements, identified by words such as
anticipate, believe, estimate, should, expect and similar
expressions, include our expectations and objectives regarding our future
financial position, operating results and business strategy. These statements
reflect the current views of management with respect to future events and are
subject to risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or industry results, to be materially
different from and worse than those described in the forward-looking
statements. Such risks and uncertainties include those set forth in this
section and elsewhere in this Form 10-KSB. We do not intend to update the
forward-looking information to reflect actual results or changes in the factors
affecting such forward-looking information. We intend the forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements in the Private Securities Litigation Reform Act of 1995.

6



---



##### Table of Contents









Item 2. Property

Boundless currently leases 5,200 square feet of office space and has its
corporate headquarters at 1801 Gateway Blvd, Suite 105, Richardson, TX 75080.
The current lease term is for 72 months.







Item 3. Legal Proceedings

The Company is not a party to any pending legal proceedings, nor is its
property subject to such proceedings.







Item 4. Submission of Matters to a Vote of Security Holders

On July 28, 2003, the shareholders approved, at a special meeting of the
shareholders of the Company: (i) a change of its corporate name; and (ii), a
one for 100 hundred reverse stock split. The record date for such reverse stock
split was August 12, 2003.







PART II







Item 5. Market for Registrants Common Equity and Related Stockholder Matters

The range of high and low bid quotations for the Companys common stock for
each fiscal quarter since the last report, as reported by the OTC Bulletin
Board, was as follows:

Year EndedSeptember 30, 2003
    
    High
    
    LowFirst quarter
    
    
    *
    
    
    
    *Second quarter
    
    
    *
    
    
    
    *Third quarter
    
    $
    3.00
    
    
    $
    1.00Fourth quarter
    
    $
    10.00
    
    
    $
    1.00


* No quotations reported

The above quotations reflect inter-dealer prices, without retail mark-up,
mark-down, or commission and may not necessarily represent actual transactions.

As of September 30, 2003, there were 409 record holders of the Companys common
stock.

The Company has not declared or paid any cash dividends on its common stock and
does not anticipate paying dividends for the foreseeable future.

The Company has not issued any options under the Companys stock option plan.

Boundless Merger

On July 31, 2003 the Company entered into an Agreement and Plan of Merger (the
Boundless Merger Agreement), by and among the Company, Boundless, the
shareholders of Boundless and TEI Acquisition, Inc., a wholly-owned subsidiary
of the Company (TEI), pursuant to which, TEI merged with and into Boundless and
Boundless emerged from the merger as the surviving corporation and a
wholly-owned subsidiary of the Company.

Pursuant to the terms of the Boundless Merger Agreement, (i) each outstanding
share of the capital stock of Boundless held in its treasury was canceled and
retired, (ii) the remaining 13,461,200 outstanding shares of capital stock of
Boundless were converted into the right to receive an aggregate of 13,461,200
shares of the Companys common stock, on a post-split basis. The structure of
the Boundless Merger Agreement was determined through negotiations between the
parties thereto. No material relationship existed between the Company and
Boundless, or any affiliate, director, or officer of the Company, or any
associate of any such director or officer.

7



---



##### Table of Contents



The shares issued to the former shareholders of Boundless were issued without
registration in reliance upon Section 4(2) of the Securities Act of 1933, as
amended.

GPX Partners, L.L.C.

On July 31, 2003, the Company entered into an Agreement and Plan of Merger (the
GPX Merger Agreement), by and among the Company, GPX, the members of GPX and
GPX Acquisition, Inc., a wholly-owned subsidiary of the Company (GAI), pursuant
to which, GAI merged with and into GPX and GPX emerged from the merger as the
surviving corporation and a wholly-owned subsidiary of the Company.

Pursuant to the terms of the GPX Merger Agreement, the outstanding membership
interests of GPX were converted into the right to receive an aggregate of
1,465,200 shares of the Companys common stock, on a post-split basis, and GPX
became a wholly owned subsidiary of the Company. The structure of the GPX
Merger Agreement was determined through negotiations between the parties
thereto. No material relationship existed between the Company and GPX, or any
affiliate, director, or officer of the Company, or any associate of any such
director or officer.

The shares issued to the former shareholders of Boundless were issued without
registration in reliance upon Section 4(2) of the Securities Act of 1933, as
amended.







Item 6. Managements Discussion and Analysis of Financial Condition and Results of Operations

The Company is a Development Stage Company, thus, no ongoing operations were
conducted and no revenues were generated during the period ended September 30,
2003. Operating expenses incurred were general and administrative expenses
associated with maintaining the Company while the aforementioned acquisitions
were pursued.

The Company, as an accounting reporting entity, was not in existence at the
year ended September 30, 2002, so no prior year comparisons are available.
During the fiscal year ended September 30, 2003, the Company incurred $495,384
in operating expenses. The Company had a loss from operations for the period
ended September 30, 2003 of $474,617 and an associated loss per share of $0.03
for the period ended September 30, 2003.

Liquidity and Capital Resources

At September 30, 2003 the Companys working capital balance was a $386,714
deficit. The Companys sole source of funding to date has been from Chairman
and CEO, Paul A. Kruger, via a combination of an original equity investment in
the Company and subsequent promissory notes. As of the date of this filing,
Mr. Kruger has provided nearly $2.2 million in funding for the Company, of
which, $1,965,000 is in the form of promissory notes. The amount lent as of
September 30, 2003, was $650,000. These notes accrue interest at a rate of 4%
per annum. The entire principal balance, and accrued interest on these Notes
are payable in full on July 1, 2004; provided, however, that notwithstanding
the above, the principal balance and accrued but unpaid interest on these Notes
shall be due and payable upon the closing of any public or private offering by
the Company in which the gross proceeds from such offering are at least $3
million. These notes are to be secured by certain assets of the Company and
its subsidiaries.

On January 23, 2004, the Company borrowed $1,000,000 from SXJE, LLC. This loan
bears interest at an initial rate of six percent (6%) per annum, increasing to
twelve percent (12%) per annum on May 23, 2004. The loan matures on January
23, 2005, but provides for prepayment following the closing of an offering of
at least $4,000,000. The loan is to be secured by certain assets of the
Company and its subsidiaries, and is guaranteed by Mr. Kruger. Further Mr.
Kruger has agreed to lend up to an additional $2,000,000 to the Company , the
terms of which are to be determined by mutual agreement of the Company and Mr.
Kruger.

Management is currently seeking additional funding in the forms of loans,
equity investments, or a combination thereof to complete the acquisitions of
DIRT Motorsports and WoO, and operate the new Series. Approximately $9,000,000
is needed to complete these goals.

8



---



##### Table of Contents



There is no assurance that the Company will be successful in obtaining the
funding necessary to complete the acquisition transactions. If it is not
successful, the Company will not be able to sustain operations without
additional funding, for which there is no identified source, except for Mr.
Kruger; however, there can be no assurances that Mr. Kruger will provide such
additional funding, or if he does, the terms of such additional funding.

As the future success of the Company is likely dependent on its ability to fund
operations and close the transactions described herein, the Companys auditor
has issued a qualified opinion as to its ability to continue as a going
concern.

The following table summarizes our contractual obligations as of September 30,
2003.

Payment Due by PeriodLess than
    
    2 to 3
    
    4 to 5
    
    After 5Contractual Obligations
    
    Total
    
    1 Year
    
    Years
    
    Years
    
    YearsOperating Leases
    
    $
    397,085
    
    
    $
    42,763
    
    
    
    146,616
    
    
    
    146,616
    
    
    
    61,090Notes Payable and Accrued Interest
    
    $
    656,659
    
    
    
    656,659
    
    
    
    
    
    
    
    
    
    
    
    


The Companys significant accounting policies include:

Cash and Cash Equivalents

For purpose of the statement of cash flows, the Company considers all highly
liquid investments with maturities of three months or less to be cash.

Income Taxes

The Company accounts for income taxes under Financial Accounting Standards
Number 109 (SFAS 109), Accounting for Income Taxes. Deferred income tax
assets and liabilities are determined based upon differences between financial
reporting and tax basis of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to be reversed.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Net loss per share

Net loss per share has been computed by dividing net loss by the weighted
average number of common shares and equivalents outstanding.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided for
financial reporting purposes using the straight-line method over the estimated
useful lives of the related assets ranging from 3 to 7 years. Expenditures for
maintenance, repairs and minor renewals are expensed as incurred; major
renewals and betterments are capitalized. At the time depreciable assets are
retired or otherwise disposed of, the cost and the accumulated depreciation of
the assets are eliminated from the accounts and any profit or loss is
recognized.

9



---



##### Table of Contents



The carrying values of property and equipment are evaluated for impairment
based upon expected future undiscounted cash flows. If events or circumstances
indicate that the carrying value of an asset may not be recoverable, an
impairment loss would be recognized equal to the difference between the
carrying value of the asset and its fair value.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All material intercompany accounts
and transactions have been eliminated in consolidation.
Intangible Assets

Upon its inception, the Company adopted Statement of Financial Accounting
Standard (SFAS) No. 142, Goodwill and Other Intangible Assets. Under SFAS
No. 142 goodwill and intangible assets with indefinite lives are not to be
amortized but are tested for impairment at least annually. Intangible assets
with definite useful lives will continue to be amortized over the respective
estimated useful lives. As of September 30, 2003, the Company believes that
there is no impairment of intangible assets.

New Accounting Pronouncements

In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN 45). The interpretation requires a
guarantor to recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the guarantee and expands
the disclosures required. Initial recognition and measurement provisions of FIN
45 are applicable on a prospective basis to guarantees issued or modified after
December 31, 2002. The adoption of FIN No. 45 had no effect on our financial
position, results of operations, or cash flows.

In December 2002, the FASB issued Statement No. 148, Accounting for Stock-Based
CompensationTransition and Disclosure, (SFAS 148). SFAS 148 amends Statement
123, Stock-Based Compensation, with respect to Statement 123s transition
provisions and required disclosures. The adoption of SFAS had no impact on our
financial position, results of operations or cash flows.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities  an Interpretation of ARB No. 51 (FIN 46). FIN
46 clarifies the consolidation requirements of variable interest entities. The
adoption of FIN 46 had no effect on our financial position, results of
operations, or cash flows.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities  (SFAS 149). SFAS 149 amends
and clarifies certain derivative instruments embedded in other contracts, and
for hedging activities under SFAS 133. SFAS 149 is effective for certain
contracts entered into or modified by the Company after June 30, 2003. The
adoption of SFAS No. 149 had no impact on our financial position, results of
operations, or cash flows.

In May 2003, the FASB issued SFAS No. 150, Accounting for Instruments with
Characteristics of Both Debt and Equity (SFAS 150). Statement 150 requires
liability classification for three types of instruments: 1) mandatorily
redeemable shares that obligate the company to deliver cash or other assets to
shareholders on fixed or determinable dates; 2) freestanding written put
options and forward purchase contracts on a companys own shares that obligate
the company to deliver cash or other assets, and 3) contracts that obligate a
company to issue its own shares in amounts that are unrelated to, or inversely
related to, the value of the shares. The effective date of SFAS 150 has been
deferred indefinitely. The adoption of SFAS No. 150 had no impact on our
financial position, results of operations or cashflows.







Item 7. Financial Statements and Supplementary Data

Please refer to pages F-1 through F-7.

10



---



##### Table of Contents









Item 8. Changes in and Disagreements on Accounting and Financial Disclosure



None







Item 8A. Evaluation of Internal and Disclosure Controls

The Companys principal executive and principal financial officers have
evaluated the effectiveness of the issuers disclosure controls and procedures
as of a date within 90 days prior to the filing date of the report (evaluation
date) and have concluded that the disclosure controls and procedures are
adequate and effective based upon their evaluation as of the evaluation date.

There were no significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of the most
recent evaluation of such, including any corrective actions with regard to
significant deficiencies and material weaknesses.







PART III







Item 9. Directors and Executive Officers of the Registrant and Compliance with Section 16(a)

The directors and executive officers of the Company as of September 30, 2003,
are as follows:

Name
    
    Age
    
    PositionPaul Kruger
    
    
    49
    
    
    Chairman of the Board, Chief Executive Officer, Chief Financial Officer and DirectorLeslie Wulf
    
    
    43
    
    
    President and DirectorBobby Hartslief
    
    
    48
    
    
    Chief Operating Officer and DirectorJesse Shelmire(1)
    
    
    45
    
    
    DirectorRichard Dahlson
    
    
    45
    
    
    Director




|(1) |  | Mr. Shelmire resigned as a director of the Company on November 24, 2003.
|--- |  | ------------------------------------------------------------------------

Paul A. Kruger, Founder, Chairman and CEO  In 1980, M. Kruger co-founded MCM
Group, Ltd. (MCM Group), which owned and operated a financial services
marketing company, United Bank Club Association, Inc. (UBCA). He served as
its President and CEO until February 1996, when UBCA was sold to a subsidiary
of Cendant Corp. (CD-NYSE) (Cendant). In February 1999, Mr. Kruger became
Chief Executive Officer and a director of Foresight, Inc. Effective December 7,
2000; Foresight, Inc. was acquired by a subsidiary of Precis, Inc. (NASDAQ:
PCIS). From December 2000 until July 2002, Mr. Kruger served as the Chairman of
the Board of Directors and the CEO of Precis, Inc. During 1999 Mr. Kruger also
became Chairman and CEO of PalWeb Corporation (OTCBB PLEB) from which he
resigned in January 2003 to initiate the creation of the Company. In July
2003, Mr. Kruger became Chairman, CEO and CFO of the Company. Mr. Kruger
received his B.B.A. in accounting from Cameron University in 1975 and earned a
J.D. degree from Oklahoma City University in 1980.

Leslie Wulf, Founder, President and Director  Mr. Wulf has been President and
a director of the Company since July 2003. Mr. Wulf has more than 19 years of
experience in developing and managing multiple-unit operations, with several
being start-up operations. Previously, he served as CEO/Founder of Childrens
Choice, a national non-traditional childcare company. Mr. Wulf has held senior
positions as Vice President Operations and Development,

11



---



##### Table of Contents



and subsequently, as President of a 36-unit Australian subsidiary of a
Canadian-headquartered, 120-unit bakery restaurant operation. He served as
Chief Executive Officer of a U.S.-based owner and operator of 47 family
entertainment, educational and fitness centers in eleven countries. Mr. Wulf
also served as President of a multi-unit operator of family entertainment and
childcare centers.

Bobby Hartslief, Chief Operating Officer and Director  Mr. Hartslief has been
Chief Operating Officer and a director of the Company since July 2003. Mr.
Hartslief has been involved in the racing industry for 23 years. In 1980, Mr.
Hartslief purchased the only internationally graded motor racing circuit in
Africa, called Kyalami. Over the next five years he operated the circuit. Mr.
Hartslief sold Kyalami in 1986 and moved to Monaco, where he managed the
affairs of three-time world champion Nelson Piquet. Mr. Hartslief returned to
South Africa in the early 1990s and obtained financial backing from the State
Government to build Phakisa, a new FIM/FIA standard International road circuit
that included an American style oval in an economically depressed area of South
Africa. Mr. Hartslief earned his Certificate of Commerce from the University
of Watersrand of Johannesburg, South Africa in 1975.

Richard Dahlson, Director  Mr. Dahlson has been a director of the Company
since July 31, 2003. Mr. Dahlson is currently a partner at Jackson Walker
L.L.P., a law firm headquartered in Dallas, Texas, which also serves as legal
counsel to the Company. Mr. Dahlson has been with Jackson Walker L.L.P. since
1984. Mr. Dahlson received his B.S.B.A. from the University of Minnesota
(1981), and his J.D. degree from the University of Wisconsin (1984). Mr.
Dahlson also serves as a director of American HomeStar Corporation, a
manufactured housing company.

Section16(a)Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange
Act), requires our officers and directors, and persons who own more than 10%
of a registered class of our equity securities, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the SEC). Such persons are required by the SEC regulation to
furnish us with copies of all Section 16(a) forms they file. During the fiscal
year ended September 30, 2003, we believe that our officers, directors and
persons who own more than 10% of a registered class of our equity securities
have timely filed all reports required by Section 16(a) of the Exchange Act.
In making this disclosure, we have relied solely on our review of the copies of
such forms received by us with respect to fiscal 2003, or written
representations from certain reporting persons.

Code of Ethics

Due to the current formative stage of the Companys development, it has not yet
developed a written code of ethics for its directors or executive officers.







Item 10. Executive Compensation

No one executive officer received, or has accrued for his benefit, in excess of
$100,000 for the year. The annualized salaries of each of Mr. Wulf, Mr.
Harstlief and Mr. Mers, however are in excess of $100,000. No cash bonuses
were or are to be paid to such persons.

12



---



##### Table of Contents



SUMMARY COMPENSATION TABLE OF EXECUTIVES

Annual Compensation
    
    AwardsName and
    
    Year
    
    Salary
    
    Bonus
    
    Other Annual
    
    Restricted
    
    SecuritiesPrincipal
    
    
    
    ($)
    
    ($)
    
    Compensation
    
    Stock
    
    UnderlyingPosition
    
    
    
    
    
    
    
    ($)
    
    Award(s)
    
    Options/($)
    
    SARs (#)Paul A. Kruger,
    
    
    2003
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Chairman/CEOLeslie Wulf
    
    
    2003
    
    
    $
    50,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0President/DirectorBobby Hartslief
    
    
    2003
    
    
    $
    40,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0COO/Director


There are no plans pursuant to which cash or non-cash compensation was paid or
distributed during the last fiscal year, or is proposed to be paid or
distributed in the future, to the executive officers of the Company. No other
compensation except for that described above was paid or distributed during the
last fiscal year to the executive officers of the Company. There are no
compensatory plans or arrangements, with respect to any executive officer of
the Company, which result or will result from the resignation, retirement or
any other termination of such individuals employment with the Company or from
a change in control of the Company or a change in the individuals
responsibilities following a change in control.

Option/SAR Grants Table (None)

Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR value
(None)

Long Term Incentive Plans  Awards in Last Fiscal Year (None)

DIRECTOR COMPENSATION FOR LAST FISCAL YEAR

(Except for compensation of Officers who are also Directors which Compensation
is listed in Summary Compensation Table of Executives)

Cash Compensation
    
    Security GrantsName
    
    Annual
    
    Meeting
    
    Consulting
    
    Number
    
    Number ofRetainer
    
    Fees
    
    Fees/Other
    
    of
    
    SecuritiesFees ($)
    
    ($)
    
    Fees ($)
    
    Shares
    
    Underlying(#)
    
    Options/SARs(#)A. All
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Directors


13



---



##### Table of Contents









Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information, as of September 30, 2003, with
respect to each officer, director and beneficial owner of more than five
percent of the Companys outstanding common stock of the Companys $.0001 par
value common stock

Stock
    
    Names and Address
    
    Beneficial
    
    PercentTitle of Class
    
    of Beneficial Owner
    
    Ownership
    
    of ClassCommon
    
    Paul Kruger
    
    
    4,289,200
    (1)(2)(3)
    
    
    27.2
    %Common
    
    Jesse Shelmire
    
    
    3,133,981
    (1)(2)
    
    
    19.9
    %Common
    
    Leslie Wulf
    
    
    3,127,388
    (1)(2)
    
    
    19.9
    %Common
    
    Bobby Hartslief
    
    
    3,068,780
    (1)(2)(4)
    
    
    19.5
    %Common
    
    Richard Dahlson
    
    
    66,667
    (1)(2)
    
    
    *


(1) The business address of each of the directors and officers of the Company
is 1801 Gateway Blvd., Suite 105, Richardson, Texas 75080.

(2) In connection with the Boundless merger, each of Mr. Shelmire, Wulf,
Hartslief and Dahlson agreed to resell to Mr. Kruger, for a price of $0.001 per
share, the shares of such shareholders issued to such persons in the Boundless
merger, in the event that the Company was unable to consummate at least a
$3,000,000 funding on or prior to September 30, 2003. This condition was not
satisfied, and Mr. Kruger, or his assigns intends to repurchase all or
substantially all of such shares.

(3) Includes 300,000 shares owned by Mr. Krugers children.

(4) Includes 700,000 shares owned by Mr. Hartslief wife and children.

All Officers and Directors as a group total 86.9% ownership.

* less than on percent







Item 12. Certain Relationships and Related Transactions

Mr. Kruger, Chairman and CEO, as of January 13, 2004, has provided nearly $2.2
million in funding for the Company, of which, $1,965,000 is in the form of
promissory notes. These notes accrue interest at a rate of 4% per annum. The
entire principle balance of, and accrued interest on, these Notes are payable
in full on July 1, 2004; provided, however, that the principal balance of, and
accrued but unpaid interest on, these notes shall be due and payable upon the
closing of any public or private offering by the Company in which the gross
proceeds from such offering are at least $3 million.

Mr. Kruger also owns interest in an Aircraft Charter company, Hildalgo Trading,
LLC, that the Company utilizes for travel services. The Company has spent
nearly $23,000 in utilizing this aircraft charter service during the 2003
fiscal year.

Mr. Kruger also leases an aircraft to Business Jet, another company that the
Company utilizes for travel services. The Company has spent nearly $66,000
with Business Jet for aircraft charter services during the 2003 fiscal year.

14



---



##### Table of Contents



Mr. Dahlson, a director of the Company, is a partner with Jackson Walker
L.L.P., a law firm that serves as outside legal counsel for the Company. The
Company paid Jackson Walker L.L.P. $37,327 in legal fees during 2003.







PART IV







Item 13. Exhibits and Reports on Form 8-K

The following documents are filed as part of this report:

(a) Exhibits

2.1
    
    Agreement and Plan of Merger, dated as of July 31, 2003, by and among GPX
Acquisition, LLC, a Texas limited liability company, The Entity, Inc., a
Colorado corporation, Larry M. Carr, GPX Partners, L.L.C. (GPX), a Texas
limited liability company, and all of the members of GPX (Incorporated by
reference to Exhibit 2.1 of the Companys Current Report on Form 8-K filed
with the Commission on August 8, 2003).2.2
    
    Agreement and Plan of Merger, dated as of July 31, 2003, by and among
TEI, Acquisition, Inc., a Nevada corporation, The Entity, Inc., a Colorado
corporation, Larry M. Carr, Boundless Motor Sports Racing, Inc., a Nevada
corporation (Boundless), and all of the shareholders of Boundless
(Incorporated by reference to Exhibit 2.2 of the Companys Current Report
on Form 8-K filed with the Commission on August 8, 2003).2.3
    
    Stock Purchase Agreement, dated as of August 13, 2003, by and among DIRT
Motorsports, Inc., a New York corporation (DIRT), Glenn Donnelly, the
holder of all outstanding capital of DIRT, the Company, and Boundless
Track Operations, Inc. a Nevada corporation.*2.4
    
    Amendment No. 1 to Stock Purchase Agreement, dated as of October 2, 2003,
by and among DIRT Motorsports, Inc., a New York corporation (DIRT),
Glenn Donnelly, the holder of all outstanding capital of DIRT, the
Company, and Boundless Track Operations, Inc. a Nevada corporation.*2.5
    
    Asset Purchase Agreement, dated as of August 13, 2003, by and among
Finger Lake International, Inc., a New York corporation (Seller), Glenn
Donnelly, Bruno M. DiMatteo and Paul Vitale, being all of the shareholders
of Seller, the Company, and Boundless Track Operations, Inc. a Nevada
corporation.*2.6
    
    Amendment No. 1 to Asset Purchase Agreement, dated as of October 3, 2003,
by and among Finger Lake International, Inc., a New York corporation
(Seller), Glenn Donnelly, Bruno M. DiMatteo and Paul Vitale, being all
of the shareholders of Seller, the Company, and Boundless Track
Operations, Inc. a Nevada corporation.*2.7
    
    Contract of Sale dated as of August 13, 2003, by and among Mr. Glenn
Donnelly, the Company, and Boundless Track Operations, Inc. a Nevada
corporation.*2.8
    
    Amendment No. 1 to Contract of Sale dated as of October 3, 2003, by and
among Mr. Glenn Donnelly, the Company, and Boundless Track Operations,
Inc. a Nevada corporation.*2.9
    
    Stock Purchase Agreement, dated as of August 12, 2003, by and among World
of Outlaws, Inc., a Texas corporation (WoO), Ted Johnson, the holder of
all outstanding capital of WoO, and the Company.*2.10
    
    Amendment No. 1 to Stock Purchase Agreement, dated as of November 28,
2003, by and among World of Outlaws, Inc., a Texas corporation (WoO),
Ted Johnson, the holder of all outstanding capital of WoO, and the
Company.*3.1
    
    Amended and Restated Bylaws.*10.1
    
    Promissory Note dated June 3, 2003, in the principal amount of $50,000
issued by the Company as maker to Mr. Paul Kruger as payee.*10.2
    
    Promissory Note dated July 1, 2003, in the principal amount of $600,000
issued by the Company as maker to Mr. Paul Kruger as payee.*10.3
    
    Promissory Note dated June 26, 2003, in the principal amount of $600,000
issued by World of Outlaws, Inc., a Texas corporation, as maker to the
Company as payee.*10.4
    
    Amendment No. 1 to Promissory Note dated as of October 30, 2003, by and
between World of Outlaws, Inc., a Texas corporation, and the Company.*10.5
    
    Amendment No. 2 to Promissory Note dated as of November 28, 2003, by and
between World of Outlaws, Inc., a Texas corporation, and the Company.*10.6
    
    Pledge Agreement dated as of June 26, 2003 by and between the Company and Ted Johnson.*10.7
    
    Promissory Note dated January 23, 2004 by and between the Company and SXJE, LLC. *


15



---



##### Table of Contents



10.8
    
    Guaranty dated January 23, 2004 by Paul Kruger in favor of SXJE, LLC. *31.1
    
    Rule 13a-14(a)/15d-14(a) Certifications.*32.1
    
    Section 1350 Certifications.*


*Filed herewith

(b) Reports on Form 8-K:

The Company filed the following reports on Form 8-K during the quarter ended
September 30, 2003: (1) Form 8-K filed with the Securities and Exchange
Commission (the SEC) on August 4, 2003 reporting, under Items 5 and 7, the
Companys one for 100 reverse stock split; (2) Form 8-K filed with the SEC on
August 8, 2003 reporting, under Items 1, 2 ,5 and 7, the acquisitions of
Boundless and GPX; (3) Form 8-K/A filed with the SEC on October 15, 2003
reporting, under Item 7, the pro forma financial information related to the
acquisitions of Boundless and GPX and (4) Form 8-K/A filed with the SEC on
January 10, 2004 reporting, under Item 7, the pro forma financial information
related to the acquisitions of Boundless and GPX; (5) Form 8-K filed on January
13, 2004 reporting, under Item 5, the anticipated filing date for the Companys
Form 10-KSB; and (6) Form 8-K filed on January 28, 2004 reporting, under Item
5, a revised anticipate filing date for the Companys Form 10-KSB.







Item 14. Principal Accountant Fees and Services

For the period since inception (May 2003) through September 30, 2003, the
Company has accrued $33,000 related to audit fees and paid $2,900 of audit fees
relating to disclosure requirements. No other fees were billed or have been
accrued.

16



---



##### Table of Contents









SIGNATURES



In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

BOUNDLESS MOTOR SPORTS RACING, INC.
(Registrant)Date: January 29, 2004
    
    /s/ Paul A. KrugerPaul A Kruger, Chief Executive Officer and
Chief Financial Officer


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Date: January 29, 2004
    
    /s/ Paul A. KrugerPaul A. Kruger, DirectorDate: January 29, 2004
    
    /s/ Leslie WulfLeslie Wulf, DirectorDate: January 29, 2004
    
    /s/ Bobby HartsliefBobby Hartslief, DirectorDate: January 29, 2004
    
    /s/ Richard F. DahlsonRichard F. Dahlson, Director


17



---



##### Table of Contents









INDEPENDENT AUDITORS REPORT

Board of Directors
Boundless Motor Sports Racing, Inc.

Richardson, Texas

We have audited the accompanying consolidated balance sheet of Boundless Motor
Sports Racing, Inc. (a development stage Company) as of September 30, 2003 and
the related consolidated statements of operations, shareholders deficit, and
cash flows for the period of inception (May 12, 2003) through September 30,
2003. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Boundless Motor
Sports Racing, Inc. at September 30, 2003, and the results of their operations
and their cash flows for the period of inception (May 12, 2003) through
September 30, 2003, in conformity with accounting principles generally
accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note [1] to
the consolidated financial statements, the Company is in the development stage
and has no current viable operations, has minimal cash and current liabilities
exceed current assets by $386,714, which raises a substantial doubt about the
Companys ability to continue as a going concern. The future success of the
Company is dependent on its ability to attain additional capital and to attain
future profitable operations. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

(Signed BDO Seidman, LLP)

January 13, 2004
Dallas, Texas

F-1



---



##### Table of Contents









Boundless Motor Sports Racing, Inc.
(Development Stage)
Consolidated Balance Sheet
September 30, 2003

AssetsCurrent AssetsCash and cash equivalents
    
    $
    615Notes receivable
    
    
    612,047Other current assets
    
    
    9,047Total Current Assets
    
    
    621,709Property and equipment, net
    
    
    55,135Intangible assets
    
    
    23,429Other assets
    
    
    6,109Total Assets
    
    $
    706,382LiabilitiesCurrent LiabilitiesAccounts payable trade
    
    $
    305,651Accrued liabilities
    
    
    46,113Notes payable to shareholder
    
    
    656,659Total Current Liabilities
    
    
    1,008,423Shareholders DeficitCommon Stock: 15,740,500 shares outstanding $0.0001 par value
    
    
    1,574Additional paid in capital
    
    
    171,002Deficit accumulated during
development stage
    
    
    (474,617
    )Total Shareholders Deficit
    
    
    (302,041
    )Total Liabilities and Shareholders Deficit
    
    $
    706,382


The accompanying notes are an integral part of these consolidated financial
statements.

F-2



---



##### Table of Contents









Boundless Motor Sports Racing, Inc.
(Development Stage)
Consolidated Statement of Operations
Period of Inception (May 12, 2003) through
September 30, 2003

Revenue
    
    $
    Operating ExpensesGeneral and administrative
    
    
    493,275Depreciation and amortization
    
    
    2,108Total Operating Expenses
    
    
    495,384Other (Expenses) IncomeInterest income
    
    
    12,047Interest expense
    
    
    (6,661
    )Other income
    
    
    15,381Total Other Income
    
    
    20,767Basic Net Loss
    
    $
    (474,617
    )Net Loss per Share
    
    $
    (0.03
    )Weighted average of number of
shares outstanding
    
    
    15,740,500


The accompanying notes are an integral part of these consolidated financial
statements.

F-3



---



##### Table of Contents









Boundless Motor Sports Racing, Inc.
(Development Stage)
Consolidated Statement of Shareholders Deficit
Period of Inception (May 12, 2003) through September 30, 2003

DeficitAccumulatedAdditional
    
    During
    
    TotalCommon Stock
    
    
    
    
    
    Paid-In
    
    Development
    
    Shareholders'Shares
    
    Amount
    
    Capital
    
    Stage
    
    DeficitBalance, (May 2003, date of
inception)
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (474,617
    )
    
    
    (474,617
    )Issuance of Founders Shares
    
    
    13,461,200
    
    
    
    
    
    
    
    216,000
    
    
    
    
    
    
    
    216,000Retirement of Founders Shares
    
    
    (13,461,200
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of Common Stock in
relation to Merger between
The Entity Inc., Boundless
Motor Sports Racing, Inc.
and GPX Partners LLC
    
    
    15,740,500
    
    
    
    1,574
    
    
    
    (44,998
    )
    
    
    
    
    
    
    (43,424
    )Balance, September 30, 2003
    
    
    15,740,500
    
    
    $
    1,574
    
    
    $
    171,002
    
    
    $
    (474,617
    )
    
    $
    (302,041
    )


The accompanying notes are an integral part of these consolidated financial
statements.

F-4



---



##### Table of Contents









Boundless Motor Sports Racing, Inc.
(Development Stage)
Consolidated Statement of Cash Flows
Period of Inception (May 12, 2003) through September 30, 2003

Cash Flows from Operating Activities:Net Loss
    
    $
    (474,617
    )Adjustment to reconcile net loss to
net cash used in operating activities:Depreciation and Amortization
    
    
    2,108Accrued Interest Income
    
    
    (12,047
    )Increase (decrease) in cash from changes in:Accounts Payable  Trade
    
    
    270,552Accrued Liabilities
    
    
    21,018Other Current Assets
    
    
    (9,047
    )Other Long Term Assets
    
    
    (6,109
    )Cash Used in Operating Activities
    
    
    (208,142
    )Cash Flows from Investing Activities:Purchase of Fixed Assets
    
    
    (57,243
    )Issuance of Note Receivable
    
    
    (600,000
    )Cash Used in Investing Activities
    
    
    (657,243
    )Cash Flows from Financing Activities:Initial Equity Investment
    
    
    216,000Promissory Notes from Shareholder
    
    
    650,000Cash Provided by Financing Activities
    
    
    866,000Cash at Beginning of Period
    
    
    Cash at Ending of Period
    
    $
    615Supplemental Cash Flow Information:Cash paid for interest
    
    $
    7


The accompanying notes are an integral part of these consolidated financial
statements.

F-5



---



##### Table of Contents









Boundless Motor Sports Racing, Inc.
Notes to Consolidated Financial Statements
(Development Stage)
September 30, 2003

NOTE 1  GOING CONCERN

The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States,
which contemplates continuation of the Company as a going concern. As shown in
the consolidated financial statements, the Company incurred a net loss of
$474,617 in 2003. As of September 30, 2003, the Company had minimal cash and
current liabilities exceeded current assets by $386,714.

The future success of the Company is dependent on its ability to attain
additional capital, or to find an acquisition to add value to its present
shareholders and ultimately, upon its ability to attain future profitable
operations. There can be no assurance that the Company will be successful in
obtaining such financing, or that it will attain positive cash flow from
operations.

NOTE 2  THE COMPANY

Nature of Business

Moonstone, Inc., (Moonstone) was incorporated July 7, 1983 under the laws of
Colorado for the primary purpose of seeking acquisitions of business or
properties, without limitation as to geographic location or type of business.
The Articles of Incorporation and Bylaws were amended when Moonstone, Inc. a
publicly traded shell, merged with The Entity, Inc. Moonstone the surviving
entity, soon thereafter changed its name to The Entity, Inc.

On July 31, 2003, in connection with the acquisition by The Entity, Inc. of
Boundless Motor Sports Racing, Inc., a Nevada corporation (Boundless), and GPX
Partners, L.L.C., a Texas limited liability company (GPX), The Entity, Inc.
issued an aggregate of 14,926,400 shares of The Entity, Inc.s common stock to
the former shareholders of Boundless and members of GPX (collectively, the
Former Owners). These shares were issued on a post-split basis (i.e.,
effective after the one for 100 reverse stock split of The Entity, Inc.
effected on August 12, 2003). As a result of these transactions, the Former
Owners, as a group, acquired control of The Entity, Inc. through their
aggregate holdings of approximately 94.8% of the voting securities of The
Entity, Inc.. Three of the major members of GPX were also major shareholders of
Boundless.

On July 31, 2003, in connection with the acquisition of Boundless and GPX, The
Entity, Inc. changed its name to Boundless Motor Sports Racing, Inc (the
Company). This name change was effected on August 12, 2003.

Boundless Merger

On July 31, 2003 the Company entered into an Agreement and Plan of Merger (the
Boundless Merger Agreement), by and among the Company, Boundless, the
shareholders of Boundless and TEI Acquisition, Inc., a wholly-owned subsidiary
of the Company (TEI), pursuant to which, TEI merged with and into Boundless and
Boundless emerged from the merger as the surviving corporation and a
wholly-owned subsidiary of the Company.

Pursuant to the terms of the Boundless Merger Agreement, (i) each outstanding
share of the capital stock of Boundless held in its treasury was canceled and
retired, (ii) the remaining 13,461,200 outstanding shares of capital stock of
Boundless were converted into the right to receive an aggregate of 13,461,200
shares of the Companys common stock, on a post-split basis. The structure of
the Boundless Merger Agreement was determined through negotiations between the
parties thereto. No material relationship existed between the Company and
Boundless, or any affiliate, director, or officer of the Company, or any
associate of any such director of officer.

The shares issued to the former shareholders of Boundless were issued without
registration in reliance upon Section 4(2) of the Securities Act of 1933, as
amended.

F-6



---



##### Table of Contents



GPX Partners, L.L.C.

On July 31, 2003, the Company entered into an Agreement and Plan of Merger (the
GPX Merger Agreement), by and among the Company, GPX, the members of GPX and
GPX Acquisition, Inc., a wholly-owned subsidiary of the Company (GAI), pursuant
to which, GAI merged with and into GPX and GPX emerged from the merger as the
surviving corporation and a wholly-owned subsidiary of the Company.

Pursuant to the terms of the GPX Merger Agreement, the outstanding membership
interests of GPX were converted into the right to receive an aggregate of
1,465,200 shares of the Companys common stock, on a post-split basis, and GPX
became a wholly owned subsidiary of the Company. The structure of the GPX
Merger Agreement was determined through negotiations between the parties
thereto. No material relationship existed between the Company and GPX, or any
affiliate, director, or officer of the Company, or any associate of any such
director of officer.
The shares issued to the former shareholders of Boundless were issued without
registration in reliance upon Section 4(2) of the Securities Act of 1933, as
amended.

The Company is currently devoting substantially all of its efforts to
establishing the business and is therefore in the development stage.

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

For purpose of the statement of cash flows, the Company considers all highly
liquid investments with maturities of three months or less to be cash.

Income Taxes

The Company accounts for income taxes under Financial Accounting Standards
Number 109 (SFAS 109), Accounting for Income Taxes. Deferred income tax
assets and liabilities are determined based upon differences between financial
reporting and tax basis of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to be reversed.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Net Loss Per Share

Net loss per share has been computed by dividing net loss by the weighted
average number of common shares and equivalents outstanding.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided for
financial reporting purposes using the straight-line method over the estimated
useful lives of the related assets ranging from 3 to 7 years. Expenditures for
maintenance, repairs and minor renewals are expensed as incurred; major
renewals and betterments are capitalized. At the time depreciable assets are
retired or otherwise disposed of, the cost and the accumulated depreciation of
the assets are eliminated from the accounts and any profit or loss is
recognized.

The carrying values of property and equipment are evaluated for impairment
based upon expected future undiscounted cash flows. If events or circumstances
indicate that the carrying value of an asset may not be recoverable, an
impairment loss would be recognized equal to the difference between the
carrying value of the asset
and its fair value. As of September 30, 2003, the Company believes there is no
impairment of property and equipment.

F-7



---



##### Table of Contents



Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
Boundless Motor Sports Racing, Inc. and its wholly-owned subsidiaries. All
material intercompany accounts and transactions have been eliminated in
consolidation.

Intangible Assets

Upon its inception, the Company adopted Statement of Financial Accounting
Standard (SFAS) No. 142, Goodwill and Other Intangible Assets. Under SFAS
No. 142 goodwill and intangible assets with indefinite lives are not to be
amortized but are tested for impairment at least annually. Intangible assets
with definite useful lives will continue to be amortized over the respective
estimated useful lives. As of September 30, 2003, the Company believes that
there is no impairment of intangible assets.

New Accounting Pronouncements

In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others (FIN 45). The interpretation requires a
guarantor to recognize, at the inception of a guarantee, a liability for the
fair value of the obligation undertaken in issuing the guarantee and expands
the disclosures required. Initial recognition and measurement provisions of FIN
45 are applicable on a prospective basis to guarantees issued or modified after
December 31, 2002. The adoption of FIN 45 had no effect on our financial
position, results of operations, or cash flows.

In December 2002, the FASB issued Statement No. 148, Accounting for Stock-Based
CompensationTransition and Disclosure, (SFAS 148). SFAS 148 amends Statement
123, Stock-Based Compensation, with respect to Statement 123s transition
provisions and required disclosures. The adoption of SFAS 148 had no impact on
our financial position, results of operations or cash flows.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities  an Interpretation of ARB No. 51 (FIN 46). FIN
46 clarifies the consolidation requirements of variable interest entities. The
adoption of FIN 46 had no effect on our financial position, results of
operations, or cash flows.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities  (SFAS 149). SFAS 149 amends
and clarifies certain derivative instruments embedded in other contracts, and
for hedging activities under SFAS 133. SFAS 149 is effective for certain
contracts entered into or modified by the Company after June 30, 2003. The
adoption of SFAS 149 had no impact on our financial position, results of
operations, or cash flows.

In May 2003, the FASB issued SFAS No. 150, Accounting for Instruments with
Characteristics of Both Debt and Equity (SFAS 150). Statement 150 requires
liability classification for three types of instruments: 1) Mandatorily
redeemable shares that obligate the company to deliver cash or other assets to
shareholders on fixed or determinable dates; 2) Freestanding written put
options and forward purchase contracts on a companys own shares that obligate
the company to deliver cash or other assets, and 3) Contracts that obligate a
company to issue its own shares in amounts that are unrelated to, or inversely
related to, the value of the shares. The adoption of SFAS 150 had no impact on
our financial position, results of operations, or cash flows.

NOTE 4  NOTES RECEIVABLE

In June 2003, the Company executed a promissory note with World of Outlaws,
Inc. in the amount of $600,000. The note is unsecured, bears interest at 8%
and was due in December 2003. In October 2003, the promissory note was amended
to include an additional $600,000. The interest rate was changed to 4.25% and
the note is due in May 2004. As of September 30, 2003, management believes
this note receivable is fully collectible.

F-8



---



##### Table of Contents



NOTE 5  PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at September 30, 2003

Computers
    
    $
    37,458Office Furniture
    
    
    9,524Office Equipment
    
    
    10,26157,243Less Accumulated Depreciation
    
    
    2,108Property and Equipment, Net
    
    $
    55,135


Depreciation expense for the period of inception (May 12, 2003)
through September 30, 2003 was $2,108.

NOTE 6  RELATED PARTY TRANSACTIONS

Note Payable to Shareholder

Paul Kruger, Chairman and CEO, as of the date of this filing has provided
nearly $2.2 million in funding for the Company, of which, $1,965,000 is in the
form of promissory notes.

The amount lent as of September 30, 2003, including accrued interest is
$656,659. These notes accrue interest at a rate of 4% per annum. The entire
principal balance, and accrued interest on these Notes are payable in full on
July 1, 2004; provided, however, that notwithstanding the above, the principal
balance and accrued but unpaid interest on these Notes shall be due and payable
upon the closing of any public or private offering by the Company in which the
gross proceeds from such offering are at least $3 million.

Other Related Party Transactions

Mr. Kruger also owns interest in an Aircraft Charter company, Hildalgo Trading,
LLC, that the Company utilizes for travel services. The Company has spent
nearly $23,000 in utilizing this aircraft charter service during the 2003
fiscal year.

Mr. Kruger also leases an aircraft to Business Jet, another company that the
Company utilizes for travel services. The Company has spent nearly $66,000
with Business Jet for aircraft charter services during the 2003 fiscal year.

Mr. Dahlson, a director of the Company, is a partner with Jackson Walker
L.L.P., a law firm that serves as outside legal counsel for the Company. The
Company paid Jackson Walker L.L.P. $37,327 in legal fees during 2003.

NOTE 7  INCOME TAXES:

The Company has made no provision for income taxes because there have been no
operations to date causing income for financial statement or tax purposes.

The Company accounts for income taxes under Financial Accounting Standards
Number 109 (SFAS 109), Accounting for Income Taxes. Deferred income tax
assets and liabilities are determined based upon differences between financial
reporting and tax basis of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to be reversed.

At September 30, 2003, the Company had net operating loss carry forwards of
approximately $475,000 for federal income tax purposes. Net operating loss
carry forwards generated prior to the merger, of approximately $120,000, of The
Entity, Inc. will be limited due to change in control regulations under the
Internal Revenue Code.

F-9



---



##### Table of Contents



A reconciliation of the difference between the expected income tax benefit at
the U.S. federal statutory corporate tax rate and the Companys effective tax
benefit for the period since inception (May 2003) through September 30, 2003 is
as follows:

Amount
    
    RateIncome tax benefit
    
    $
    161,370
    
    
    
    34
    %Valuation allowance
    
    
    (161,370
    )
    
    
    (34
    %)Income tax provision
    
    $
    
    
    
    
    


NOTE 8  COMMITMENTS

The Company has entered into a 72 month lease for 5,200 square feet of office
space which it utilizes as its corporate headquarters at 1801 Gateway Blvd,
Suite 105, Richardson, TX 75080.

Total scheduled future minimum lease payments, under this operating lease is as
follows:

Year Ending2004
    
    $
    42,7632005
    
    
    73,3082006
    
    
    73,3082007
    
    
    73,3082008
    
    
    73,308Thereafter
    
    
    61,090$
    397,085


F-10