##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-QSB þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period year ended December 31, 2003 33-5203-D
(Commission File Number) BOUNDLESS MOTOR SPORTS RACING, INC.  Colorado
(State or other jurisdiction of
Incorporation)
    
    84-0953839
(IRS Employer Identification No.)
 2500 McGee Drive, Suite 147
Norman, Oklahoma 73072
(Address of principal executive offices) (Zip Code) Issuer telephone number, including area code: (972) 783-8500 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. x Yes o No Transitional Small Business Disclosure Format: o Yes x No As of February 12, 2004, 17,382,168 of the Issuers $.0001 par value common
stock were outstanding. 1




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TABLE OF CONTENTS  
 PAGEPART I   FINANCIAL INFORMATIONITEM 1. CONSOLIDATED FINANCIAL STATEMENTSConsolidated Balance Sheets as of December 31, 2003 (Unaudited) and September 30, 2002
    
    3Consolidated Statements of Operations for the Three Months Ended December 31,2003 and from Inception (May 12, 2003) through  December 31, 2003 (Unaudited)
    
    4Consolidated Statements of Stockholders' Equity (Deficit) for the Three Months Ended December 31, 2003 and from Inception (May 12, 2003) through  December 31, 2003 (Unaudited)
    
    5Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2003 and from Inception (May 12, 2003) through  December 31, 2003 (Unaudited)
    
    6Notes to Consolidated Financial Statements
    
    7ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    13ITEM 3. CONTROLS AND PROCEDURES
    
    16PART II  OTHER INFORMATIONITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
    
    16SIGNATURES
    
    18Rule 13a-14(a)/15d-14(a) CertificationsRule 13a-14(a)/15d-14(a) CertificationsSection 1350 CertificationsSection 1350 Certifications
  2




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Boundless Motor Sports Racing, Inc.
(Development Stage)
Consolidated Balance Sheets
As of December 31, 2003 and September 30, 2003 (Unaudited)
    
    (Audited)December 31, 2003
    
    September 30, 2003AssetsCurrent AssetsCash and cash equivalents
    
    $
    31,709
    
    
    $
    615Notes receivable
    
    
    1,216,732
    
    
    
    612,047Other current assets
    
    
    11,094
    
    
    
    9,047Total Current Assets
    
    
    1,259,535
    
    
    
    621,709Deposits
    
    
    5,175,002
    
    
    
    Property and equipment, net
    
    
    50,770
    
    
    
    55,135Intangible assets
    
    
    23,429
    
    
    
    23,429Other assets
    
    
    6,109
    
    
    
    6,109Total Assets
    
    $
    6,514,845
    
    
    $
    706,382LiabilitiesCurrent LiabilitiesAccounts payable trade
    
    $
    130,557
    
    
    $
    305,651Accrued liabilities
    
    
    16,798
    
    
    
    46,113Notes payable to shareholder
    
    
    1,986,637
    
    
    
    656,659Total Current Liabilities
    
    
    2,133,992
    
    
    
    1,008,423Shareholders Equity (Deficit)Preferred Stock: $0.01 par value;
10,000,000 shares authorized, none
issued and outstanding
    
    
    
    
    
    
    Common Stock: $0.0001 par value;
100,000,000 shares authorized,
17,382,168 issued and outstanding
on December 31, 2003 and 15,740,500
issued and outstanding on September 30, 2003.
    
    
    1,738
    
    
    
    1,574Additional paid in capital
    
    
    5,095,842
    
    
    
    171,002Deficit accumulated during development stage
    
    
    (716,727
    )
    
    
    (474,617
    )Total Shareholders Equity (Deficit)
    
    
    4,380,853
    
    
    
    (302,041
    )Total Liabilities and Shareholders Equity (Deficit)
    
    $
    6,514,845
    
    
    $
    706,382
 The accompanying notes are an integral part of these consolidated financial statements. 3




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(Development Stage)
Consolidated Statements of Operations For the Three Months Ended December 31, 2003 and from Inception (May 12, 2003) through
December 31, 2003
(Unaudited) Inception (May 12, 2003)Three months ended
    
    ThroughDecember 31, 2003
    
    December 31, 2003Revenue
    
    $
    
    
    
    $
    Operating ExpensesGeneral and administrative
    
    
    227,452
    
    
    
    720,728Depreciation and amortization
    
    
    4,365
    
    
    
    6,473Total Operating Expenses
    
    
    231,817
    
    
    
    727,201Other (Expenses) IncomeInterest income
    
    
    4,685
    
    
    
    16,732Interest expense
    
    
    (14,978
    )
    
    
    (21,639
    )Other income
    
    
    
    
    
    
    15,381Total Other (Expense) Income
    
    
    (10,293
    )
    
    
    10,474Net Loss
    
    $
    (242,110
    )
    
    $
    (716,727
    )Net Loss per Share
    
    $
    (0.01
    )
    
    $
    (0.04
    )Weighted average of number of
shares outstanding
    
    
    17,088,870
    
    
    
    16,272,904
 The accompanying notes are an integral part of these consolidated financial statements. 4




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Boundless Motor Sports Racing, Inc.
(Development Stage)
Consolidated Statements of Shareholders Equity (Deficit)For the Three Months Ended December 31, 2003 and from Inception (May 12, 2003) through
December 31, 2003
(Unaudited) DeficitAccumulatedAdditional
    
    During
    
    TotalCommon Stock
    
    
    
    
    
    Paid-In
    
    Development
    
    ShareholdersShares
    
    Amount
    
    Capital
    
    Stage
    
    Equity (Deficit)Balance, (May 12, 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 Sorts
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
    )Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (242,110
    )
    
    
    (242,110
    )Issuance of common shares
    
    
    1,641,668
    
    
    
    164
    
    
    
    4,924,840
    
    
    
    
    
    
    
    4,925,004Balance, December 31, 2003
    
    
    17,382,168
    
    
    $
    1,738
    
    
    $
    5,095,842
    
    
    
    ($716,727
    )
    
    $
    4,380,853
 The accompanying notes are an integral part of these consolidated financial statements. 5




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Boundless Motor Sports Racing, Inc.
(Development Stage)
Consolidated Statements of Cash Flows
For the Three Months Ended December 31, 2003 and from Inception (May 12, 2003) through
December 31, 2003
(Unaudited) Inception (May 12, 2003)Three months ended
    
    ThroughDecember 31, 2003
    
    December 31, 2003Cash Flows from Operating Activities:Net Loss
    
    $
    (242,110
    )
    
    $
    (716,727
    )Adjustment to reconcile net loss to
net cash used in operating activities:Depreciation and amortization
    
    
    4,365
    
    
    
    6,473Accrued interest income
    
    
    (4,685
    )
    
    
    (16,732
    )Increase (decrease) in cash from changes in:Accounts Payable Trade
    
    
    (175,094
    )
    
    
    95,458Accrued Liabilities
    
    
    (14,337
    )
    
    
    6,681Other Current Assets
    
    
    (2,047
    )
    
    
    (11,094
    )Other Long Term Assets
    
    
    
    
    
    
    (6,109
    )Cash Used in Operating Activities
    
    
    (433,908
    )
    
    
    (642,050
    )Cash Flows from Investing Activities:Purchase of Fixed Assets
    
    
    
    
    
    
    (57,243
    )Advances on Acquisitions
    
    
    (500,000
    )
    
    
    (500,000
    )Issuance of Note Receivable
    
    
    (600,000
    )
    
    
    (1,200,000
    )Cash Used in Investing Activities
    
    
    (1,100,000
    )
    
    
    (1,757,243
    )Cash Flows from Financing Activities:Initial Equity Investment
    
    
    
    
    
    
    216,000Issuance of Common Stock
    
    
    250,002
    
    
    
    250,002Promissory Notes from Shareholder
    
    
    1,315,000
    
    
    
    1,965,000Cash Provided by Financing Activities
    
    
    1,565,002
    
    
    
    2,431,002Net Increase in Cash
    
    
    31,094
    
    
    
    31,709Cash and Cash Equivalents at Beginning of Period
    
    
    615
    
    
    
    Cash and Cash Equivalents at End of Period
    
    $
    31,709
    
    
    $
    31,709Non Cash Financing Activities:Issuance of Common Stock
    
    $
    4,675,002
    
    
    $
    4,675,002
 The accompanying notes are an integral part of these consolidated financial
statements. 6




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Boundless Motor Sports Racing, Inc.
Notes to Consolidated Financial Statements
(Development Stage)
December 31, 2003 NOTE 1  GOING CONCERN The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States
of America, which contemplates continuation of the Company as a going concern.
As shown in the consolidated financial statements, the Company incurred a net
loss of $242,110 for the three month period ended December 31, 2003 and has an
accumulated deficit of $716,727 as of December 31, 2003. The future success of the Company is dependent on its ability to obtain
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. 7




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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 purposes of the statement of cash flows, the Company considers all highly
liquid investments with original 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 of America 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. The Company has
not issued any stock equivalents. 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. 8




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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 December 31, 2003, the
Company believes there is no impairment of property and equipment. 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 December 31, 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) Mandatory
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 loan of $600,000. The interest rate was changed to
4.25% and the note is due in May 2004. 9




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NOTE 5  DEPOSITS As of December 31, 2003, The Company, had put on deposit $500,000 with and
issued 1,558,334 shares of common stock, valued at $3.00 per share to, the
sellers of Dirt Motorsports, Inc., to be applied toward the purchase price at
closing. NOTE 6  PROPERTY AND EQUIPMENT Property and equipment consisted of the following at December 31, 2003 Computers
    
    $
    37,458Office Furniture
    
    
    9,524Office Equipment
    
    
    10,26157,243Less Accumulated Depreciation
    
    
    6,473Property and Equipment, Net
    
    $
    50,770
 Depreciation expense for the three month period ended December 31, 2003 was $4,365. NOTE 7  RELATED PARTY TRANSACTIONS Note Payable to Shareholder Paul Kruger, Chairman and CEO, as of the date of this filing has provided
approximately $2.2 million in funding for the Company, of which, $1,965,000 is
in the form of promissory notes. The amount lent by Mr. Kruger as of December 31, 2003, including accrued
interest, is $1,986,637. 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, 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 leases an aircraft to Business Jet, a company that the Company
utilizes for travel services. The Company spent approximately $27,000 with
Business Jet for aircraft charter services during the quarter ended December
31, 2003. 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. $20,000 in legal fees during the three month
period ended December 31, 2003. NOTE 8  INCOME TAXES: The Company has made no provision for income taxes because there have been no
operations creating 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. 10




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At December 31, 2003, the Company had net operating loss carry forwards of
approximately $717,000 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. 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 December 31, 2003 is
as follows: Amount
    
    RateIncome tax benefit
    
    $
    243,687
    
    
    
    34
    %Valuation allowance
    
    
    (243,687
    )
    
    
    (34
    %)Income tax provision
    
    $
    
    
    
    
    
 The income tax benefit is the result of the Companys net operating loss carry
forwards. The valuation allowance has been provided due to the uncertainty
that the Company will generate future operations to utilize this net operating
loss carry forward. NOTE 9  COMMITMENTS The Companys subsidiary has entered into a 72 month lease for 5,200 square
feet of office space 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
 NOTE 10  SUBSEQUENT EVENTS Notes Receivable In January 2004, the promissory note with World of Outlaws, Inc., (See note 4),
was amended to include an additional $250,000. The interest rate is 4.25% and
the note is due in May 2004. On February 4, 2004, the world of Outlaws
acquisition was completed. The note receivable balance of $1,450,000 plus
accrued interest of $21,815 was applied to the purchase price of the assets
acquired. Deposits Subsequent to December 31, 2003 an additional $500,000 has been placed on
deposit with the sellers of Dirt Motorsports, Inc. (See note 5). Borrowings 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. World of Outlaws Asset Purchase On February 4, 2004, The Company finalized the acquisition of substantially all
the assets of World of Outlaw. In exchange for the assets acquired, the
Company paid to Mr. Johnson $5,000,000, which amount was offset by
$1,471,814.73 in cash advances, plus interest, provided by the Company to WoO
in connection with the Stock 11




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Purchase Agreement and $525,000 in deposits WoO had received for sanctioning of
future sprint car racing events. The net purchase price of $3,003,185.27, was
paid by a twelve month promissory note bearing interest at the rate of seven
percent (7%) per annum, with principal payments on the note due in the
following increments: (a) $100,000 on March 1, 2004, (b) $400,000 on May 1,
2004, (c) $500,000 on September 1, 2004, with the remaining principal balance
due on maturity; and accrued interest being due and payable quarterly.
Payments on the promissory note are secured by the assets that were acquired
from WoO, plus all future assets acquired by WOWI. The promissory note is also
guaranteed by Mr. Paul A. Kruger, the Companys Chief Executive Officer. 12




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Operations Boundless Motor Sports Racing, Inc. (the Company) was incorporated under the
laws of the State of Colorado and is focusing its efforts on developing a dirt
track style racing and sports entertainment company, that seeks to acquire and
operate motor sports sanctioning bodies and venues. The Company is a Development Stage Company, thus, no ongoing operations were
conducted and no revenues were generated during the three month period ended
December 31, 2003. Operating expenses incurred were general and administrative
expenses associated with maintaining the Company while initiating its business
plan. As an accounting reporting entity, the Company, was not in existence during the
three month period ended December 31, 2002, so no prior year comparisons are
available. During the quarter ended on December 31, 2003, the Company incurred
$231,817 in operating expenses. The Company had a loss from operations for the
three months ended December 31, 2003 of $242,110 and an associated loss per
share of $0.01. 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. In pursuing its, business plan, 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. This Series first race
was held on February 03, 2004 and is independent of the aforementioned
acquisitions of DIRT and WoO. On February 4, 2004, The Company finalized the acquisition of substantially all
the assets of World of Outlaw. In exchange for the assets acquired, the
Company paid to Mr. Johnson $5,000,000, which amount was offset by
$1,471,814.73 in cash advances, plus interest, provided by the Company to WoO
in connection with the Stock Purchase Agreement and $525,000 in deposits WoO
had received for sanctioning of future sprint car racing events. The net
purchase price of $3,003,185.27, was paid by a twelve month promissory note
bearing interest at the rate of seven percent (7%) per annum, with principal
payments on the note due in the following increments: (a) $100,000 on March 1,
2004, (b) $400,000 on May 1, 2004, (c) $500,000 on September 1, 2004, with the
remaining principal balance due on maturity; and accrued interest being due and
payable quarterly. Payments on the promissory note are secured by the assets
that were acquired from WoO, plus all future assets acquired by WOWI. The
promissory note is also guaranteed by Mr. Paul A. Kruger, the Companys Chief
Executive Officer. Additionally, during the three month period ended December 31, 2003, The
Company had put on deposit $500,000 with and issued 1,558,334 shares of common
stock, valued at $3.00 per share to, the sellers of DIRT, to be applied toward
the purchase price at closing. Since December 31, 2003 an additional $500,000
has been placed on deposit to also be applied towards the purchase price at
closing. Liquidity and Capital Resources The Companys primary source of funding through December 31, 2003 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 as of December
31, 2003. 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 13




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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, pay-off the promissory note issued in the WoO transaction, and operate
the new Late Model Series. Approximately $9,000,000 is needed to complete
these goals. 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 ability
to continue as a going concern maybe in question. The following table summarizes our contractual obligations as of December 31,
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
    
    $
    1,986,637
    
    
    $
    1,986,637
    
    
    
    
    
    
    
    
    
    
    
    
 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. 14




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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. 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 cash flows. 15




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Item 3. Controls and Procedures Prior to the date of filing of this report, the Company carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information relating to us (including our consolidated subsidiaries)
required to be included in our periodic SEC filings. There have been no significant changes in our internal controls or in other
factors that could significantly affect internal controls subsequent to the
date we carried out this evaluation. 
 PART II OTHER INFORMATION 
 Item 6. Exhibits and Reports on Form 8-K The following documents are filed as part of this report: (a) Exhibits 2.1
    
    Asset Purchase Agreement, dated as of February 4, 2004, by and among
World Of Outlaws, Inc. a Texas corporation, Ted Johnson, Boundless Motor
Sports Racing, Inc., a Colorado corporation, and WOWI Acquisition, Inc., a
Texas corporation (Incorporated by reference to Exhibit 2.1 of the
Companys Current Report on Form 8-K filed with the Commission on February
10, 2004).2.2
    
    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 (Incorporated by reference to Exhibit 2.8 of the
Companys Annual Report on Form 10-KSB filed for the year ended September
30, 2003).2.3
    
    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. (Incorporated by
reference to Exhibit 2.9 of the Companys Annual Report on Form 10-KSB
filed for the year ended September 30, 2003).2.4
    
    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. (Incorporated by reference to Exhibit 2.10 of the Companys
Annual Report on Form 10-KSB filed for the year ended September 30, 2003).10.1
    
    Promissory Note dated as of February 4, 2004. (Incorporated by
reference to Exhibit 10.1 of the Companys
Current Report on Form 8-K filed with the Commission on February 10,
2004).10.2
    
    Security Agreement dated as of February 4, 2004, by and between WOWI
Acquisition, Inc., a Texas corporation, and World of Outlaws, Inc (Incorporated by reference to
Exhibit 10.2 of the Companys Current Report on Form 8-K filed with the
Commission on February 10, 2004).10.3
    
    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
(Incorporated by reference to Exhibit 10.4 of the Companys Annual Report
on Form 10-KSB filed for the year ended September 30, 2003).10.4
    
    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
(Incorporated by reference to Exhibit 10.5 of the Companys Annual Report
on Form 10-KSB filed for the year ended September 30, 2003).10.5
    
    Pledge Agreement dated as of June 26, 2003 by and between the Company and
Ted Johnson. (Incorporated by reference to Exhibit 10.6 of the Companys
Annual Report on Form 10-KSB filed for the year ended September 30, 2003).10.6
    
    Promissory Note dated January 23, 2004 by and between the Company and
SXJE, LLC (Incorporated by reference to Exhibit 10.7 of the Companys
Annual Report on Form 10-KSB filed for the year ended September 30, 2003).10.7
    
    Guaranty dated January 23, 2004 by Paul Kruger in favor of SXJE, LLC.
(Incorporated by reference to Exhibit 10.8 of the Companys Annual Report
on Form 10-KSB filed for the year ended September 30, 2003).31.1
    
    Rule 13a-14(a)/15d-14(a) Certifications.*31.2
    
    Rule 13a-14(a)/15d-14(a) Certifications.*32.1
    
    Section 1350 Certifications.*
 16




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32.2
    
    Section 1350 Certifications.*99.1
    
    Press Release dated February 5, 2004 (Incorporated by reference to
Exhibit 10.2 of the Companys Current Report on Form 8-K filed with the
Commission on February 10, 2004).
 *Filed herewith (b) Reports on Form 8-K: The Company filed the following reports on Form 8-K during the quarter ended
December 31, 2003: (1) 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 (2) 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; (3) Form 8-K filed on January
13, 2004 reporting, under Item 5, the anticipated filing date for the Companys
Form 10-KSB; (4) Form 8-K filed on January 28, 2004 reporting, under Item 5, a
revised anticipate filing date for the Companys Form 10-KSB and (5) Form 8-k
filed on February 10, 2004 reporting under Item 2, reporting the acquisition of
the assets of World of Outlaws. 17




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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: February 13, 2004
    /s/ Paul A. KrugerPaul A Kruger, Chief Executive OfficerDate: February 13, 2004
    /s/ Thomas L. EarnshawChief Financial Officer 18