##### 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 ended June 30, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 0-18045
 
 Commission File Number
 DIRT Motor Sports, Inc. d/b/a World Racing Group
  Delaware
    
    90-0284113(State of incorporation)
    
    (IRS Employer Identification No.)
 7575 West Winds Blvd, Suite D, Concord, North Carolina 28027
 
 (704) 795-7223
 
  þ o
 APPLICABLE ONLY TO CORPORATE ISSUERS
  o þ
 There were 14,670,240 shares of common stock outstanding as of August 10, 2007.
 o þ




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##### 



TABLE OF CONTENTS
 PAGEPART I  FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial StatementsCondensed Consolidated Balance Sheets  June 30, 2007 and
December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations for the Three Months and Six Months
Ended June 30, 2007 and 2006
    
    
    4Condensed Consolidated Statement of Stockholders Equity for the Six
Months Ended June 30, 2007
    
    
    5Condensed Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2007 and 2006
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    16Item 3. Controls and Procedures
    
    
    26PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 4. Submission of Matters to a Vote of Security Holders
    
    
    26Item 6. Exhibits
    
    
    27Signatures
    
    
    28Rule 13a-14(a)/15d-14(a) Certification of Tom DeeryRule 13a-14(a)/15d-14(a) Certification of Brian CarterSection 1350 Certification of Tom Deery and Brian CarterRule 13a-14(a)/15d-14(a) Certificate of Tom DeeryRule 13a-14(a)/15d-14(a) Certificate of Brian CarterSection 1350 Certification
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 DIRT MOTOR SPORTS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2007 and December 31, 2006
(Unaudited)
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assetsCash and cash equivalents
    
    $
    552,141
    
    
    $
    532,230Accounts receivable  trade
    
    
    442,178
    
    
    
    223,065Inventory
    
    
    104,033
    
    
    
    110,077Prepaid expenses and other current assets
    
    
    250,991
    
    
    
    330,943Total current assets
    
    
    1,349,343
    
    
    
    1,196,315Land, buildings and equipment, net
    
    
    10,576,971
    
    
    
    10,447,633Trademarks
    
    
    100,000
    
    
    
    100,000Goodwill, net of impairment of $10,320,537
    
    
    
    
    
    
    Prepaid Expenses  long term
    
    
    83,333
    
    
    
    166,667Other assets, net of amortization of $69,002 in 2007 and $55,331 in 2006
    
    
    111,998
    
    
    
    140,122Total assets
    
    $
    12,221,645
    
    
    $
    12,050,737LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    1,967,442
    
    
    $
    474,781Accrued liabilities
    
    
    1,886,874
    
    
    
    1,147,749Deferred revenues
    
    
    1,094,412
    
    
    
    129,424Notes payable
    
    
    2,104,526
    
    
    
    713,008Total current liabilities
    
    
    7,053,254
    
    
    
    2,464,962Notes payable, net of current portion shown above
    
    
    4,204,574
    
    
    
    4,001,711Total liabilities
    
    
    11,257,828
    
    
    
    6,466,673Stockholders EquitySeries D Preferred stock, $0.01 par value; 20,000 shares authorized; 17,684 and
17,875 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively
    
    
    53,313,932
    
    
    
    53,624,538Common stock, $0.0001 par value; 100,000,000 shares authorized; 14,670,240
and 14,374,496 shares issued and outstanding at June 30, 2007 and
December 31, 2006, respectively
    
    
    1,467
    
    
    
    1,438Additional paid-in capital
    
    
    14,599,313
    
    
    
    12,684,051Accumulated deficit
    
    
    (66,950,895
    )
    
    
    (60,725,963
    )Total stockholders equity
    
    
    963,817
    
    
    
    5,584,064Total liabilities and stockholders equity
    
    $
    12,221,645
    
    
    $
    12,050,737
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DIRT MOTOR SPORTS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2007 and 2006
 Three Months Ended:
    
    
    Six Months Ended:2007
    
    
    2006
    
    
    2007
    
    
    2006RevenuesRace sanctioning and event fees
    
    $
    3,044,722
    
    
    $
    1,461,584
    
    
    $
    3,631,290
    
    
    $
    1,771,632Admission fees and ticket sales
    
    
    2,135,883
    
    
    
    1,719,162
    
    
    
    3,555,599
    
    
    
    3,070,714Sponsorship and advertising revenue
    
    
    831,685
    
    
    
    735,044
    
    
    
    1,199,930
    
    
    
    952,570Merchandise sales
    
    
    127,722
    
    
    
    172,172
    
    
    
    184,787
    
    
    
    266,203Other revenue
    
    
    15,292
    
    
    
    42,005
    
    
    
    57,776
    
    
    
    88,913Total revenues
    
    
    6,155,304
    
    
    
    4,129,967
    
    
    
    8,629,382
    
    
    
    6,150,032Operating expensesTrack and event operations
    
    
    7,447,164
    
    
    
    5,672,343
    
    
    
    10,271,053
    
    
    
    8,854,668Sales and marketing
    
    
    502,312
    
    
    
    279,033
    
    
    
    878,176
    
    
    
    499,189Merchandise operations and cost of
sales
    
    
    74,371
    
    
    
    275,782
    
    
    
    136,890
    
    
    
    466,482General and administrative
    
    
    512,128
    
    
    
    1,027,320
    
    
    
    1,275,403
    
    
    
    1,815,147Non-cash stock compensation
    
    
    486,768
    
    
    
    838,472
    
    
    
    969,872
    
    
    
    1,484,482Depreciation and amortization
    
    
    207,004
    
    
    
    201,658
    
    
    
    408,743
    
    
    
    392,346Total operating expenses
    
    
    9,229,747
    
    
    
    8,294,608
    
    
    
    13,910,137
    
    
    
    13,512,314Loss from operations
    
    
    (3,074,443
    )
    
    
    (4,164,641
    )
    
    
    (5,280,755
    )
    
    
    (7,362,282
    )Other (Expenses) IncomeInterest expense, net
    
    
    (866,027
    )
    
    
    (6,262,973
    )
    
    
    (944,177
    )
    
    
    (7,932,052
    )Total Other Expense
    
    
    (866,027
    )
    
    
    (6,262,673
    )
    
    
    (944,177
    )
    
    
    (7,932,052
    )Net (Loss)
    
    $
    (3,940,470
    )
    
    $
    (10,427,614
    )
    
    $
    (6,224,932
    )
    
    $
    (15,294,334
    )Dividends on preferred stock:Stated dividends, Series D
    
    
    (261,626
    )
    
    
    
    
    
    
    (261,626
    )
    
    
    Exchange of Series C Preferred Stock
    
    
    
    
    
    
    (1,250,000
    )
    
    
    
    
    
    
    (1,250,000
    )Net loss applicable to common stock
    
    $
    (4,202,096
    )
    
    $
    (11,677,614
    )
    
    $
    (6,486,558
    )
    
    $
    (16,544,334
    )Net loss applicable to common stock
per common share Basic and diluted
    
    $
    (0.29
    )
    
    $
    (0.92
    )
    
    $
    (0.45
    )
    
    $
    (1.35
    )Weighted average common shares
outstanding Basic and diluted
    
    
    14,598,042
    
    
    
    12,751,853
    
    
    
    14,563,816
    
    
    
    12,296,482
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DIRT MOTOR SPORTS, INC.
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
For the Six Months Ended June 30, 2007
(Unaudited)
 AdditionalPreferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    AccumulatedShares
    
    
    Amounts
    
    
    Shares
    
    
    Amounts
    
    
    Capital
    
    
    (Deficit)
    
    
    TotalBalance, December 31, 2006
    
    
    17,875
    
    
    $
    53,624,538
    
    
    
    14,374,496
    
    
    $
    1,438
    
    
    $
    12,684,051
    
    
    $
    (60,725,963
    )
    
    $
    5,584,064Value assigned to stock options, non-cash stock
compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    908,821
    
    
    
    
    
    
    
    908,821Restricted stock issued in exchange for professional
services
    
    
    
    
    
    
    
    
    
    
    105,000
    
    
    
    10
    
    
    
    31,041
    
    
    
    
    
    
    
    31,051Series D conversions to common stock
    
    
    (191
    )
    
    
    (572,232
    )
    
    
    190,744
    
    
    
    19
    
    
    
    572,213
    
    
    
    
    
    
    
    Value assigned to common stock to be issued in
connection
with the issuance of notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    664,813
    
    
    
    
    
    
    
    664,813Dividends, accrued but unpaid
    
    
    
    
    
    
    261,626
    
    
    
    
    
    
    
    
    
    
    
    (261,626
    )
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,224,932
    )
    
    
    (6,224,932
    )Balance, June 30, 2007
    
    
    17,684
    
    
    $
    53,313,932
    
    
    
    14,670,240
    
    
    $
    1,467
    
    
    $
    14,599,313
    
    
    $
    (66,950,895
    )
    
    $
    963,817
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DIRT MOTOR SPORTS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2007 and 2006
 2007
    
    
    2006Cash flows from operating activities:Net (loss)
    
    $
    (6,224,932
    )
    
    $
    (15,294,334
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    408,743
    
    
    
    392,346Non-cash interest expense, notes payable
    
    
    664,813
    
    
    
    7,930,582Non-cash stock compensation
    
    
    939,872
    
    
    
    1,484,482Increase (decrease) in cash for changes in:Accounts receivable
    
    
    (219,113
    )
    
    
    (320,588
    )Inventory
    
    
    6,044
    
    
    
    (98,514
    )Prepaid expenses and other current assets
    
    
    79,952
    
    
    
    (202,528
    )Other non-current assets and long term prepaid expenses
    
    
    82,787
    
    
    
    35,539Accounts payable
    
    
    1,492,661
    
    
    
    (663,789
    )Accrued liabilities
    
    
    739,125
    
    
    
    1,449,831Deferred revenue
    
    
    964,988
    
    
    
    870,906Net cash (used in) operating activities
    
    
    (1,065,060
    )
    
    
    (4,416,067
    )Cash flows from investing activities:Purchase of property, contract rights, trademarks and goodwill
    
    
    (277,110
    )
    
    
    (269,108
    )Net cash (used in) investing activities
    
    
    (277,110
    )
    
    
    (269,108
    )Cash flows from financing activities:Payments on notes payable
    
    
    (137,919
    )
    
    
    (1,811,567
    )Payments of placement agent fees and other issuance costs
    
    
    
    
    
    
    (1,257,368
    )Proceeds from issuance of preferred stock
    
    
    
    
    
    
    12,000,000Proceeds from issuance of notes payable
    
    
    1,500,000
    
    
    
    1,943,211Net cash provided by financing activities
    
    
    1,362,081
    
    
    
    10,874,276Net increase (decrease) in cash and cash equivalents
    
    
    19,911
    
    
    
    6,189,101Cash and cash equivalents, beginning of period
    
    
    532,230
    
    
    
    18,645Cash and cash equivalents, end of period
    
    $
    552,141
    
    
    $
    6,207,746Supplemental schedule of non-cash activities:Purchase of vehicles and equipment through the issuance of notes
    
    $
    232,300
    
    
    $
    Cash payments for interest
    
    $
    191,094
    
    
    $
    327,854Non-cash revenues and expenses, barter agreements
    
    $
    119,138
    
    
    $
    134,000Stated dividends, Series D Preferred Stock, payable in common shares
    
    $
    261,626
    
    
    $
    Conversion of Preferred stock: Series A to Series B
    
    $
    
    
    
    $
    28,279,812Conversion of notes payable into Series D Preferred Stock
    
    $
    
    
    
    $
    13,201,777Issuance of warrants with promissory notes
    
    $
    
    
    
    $
    1,715,113
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DIRT MOTOR SPORTS, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2007
 NOTE 1  DESCRIPTION OF BUSINESS
   NOTE 2
 GOING CONCERN
   NOTE 3  BASIS OF PRESENTATION
   NOTE 4
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Reclassifications
  Use of Estimates
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Principles of Consolidation
  Revenue Recognition and Deferred Revenue
  Accounting for Advertising Barter Transactions
  Expense Recognition and Deferral
   Net Loss Per Share and Warrants Outstanding
  Three months ended June 30:
    
    
    Six months ended June 30:2007
    
    
    2006
    
    
    2007
    
    
    2006Net (Loss)
    
    $
    (3,940,470
    )
    
    $
    (10,427,614
    )
    
    $
    (6,224,932
    )
    
    $
    (15,294,334
    )Dividends on Preferred Stock:Stated dividends, Series D Preferred
    
    
    (261,626
    )
    
    
    
    
    
    
    (261,626
    )
    
    
    Exchange of Series C Preferred stock
    
    
    
    
    
    
    (1,250,000
    )
    
    
    
    
    
    
    (1,250,000
    )Net loss applicable to common stock
    
    $
    (4,202,096
    )
    
    $
    (11,677,614
    )
    
    $
    (6,486,558
    )
    
    $
    (16,544,334
    )Net loss applicable to common stock
per common share Basic and diluted
    
    $
    (0.29
    )
    
    $
    (0.92
    )
    
    $
    (0.45
    )
    
    $
    (1.35
    )Weighted average common shares
outstanding Basic and diluted
    
    
    14,598,042
    
    
    
    12,751,853
    
    
    
    14,563,816
    
    
    
    12,296,482
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Weighted
    
    
    Weighted AverageAverage
    
    
    Contractual LifeShares
    
    
    Exercise Price
    
    
    (years)Promissory Note Warrants
    
    
    1,948,510
    
    
    $
    4.50
    
    
    
    3.6Series D warrants
    
    
    2,520,178
    
    
    $
    4.50
    
    
    
    4.2Placement agent warrants
    
    
    1,186,266
    
    
    $
    3.07
    
    
    
    4.6UMP acquisition warrants
    
    
    40,000
    
    
    $
    3.65
    
    
    
    1.0Warrants issued in exchange for the
surrender of common stock
    
    
    542,738
    
    
    $
    0.001
    
    
    
    4.2Other Warrants
    
    
    890,059
    
    
    $
    3.00
    
    
    
    4.2Stock options
    
    
    2,163,000
    
    
    $
    3.45
    
    
    
    3.6Total warrants and stock options outstanding
    
    
    9,290,751
    
    
    $
    3.66
    
    
    
    3.8
 Cash and Cash Equivalents
  Inventories
  Property and Equipment
   Purchase Accounting
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Intangible Assets
   Income Taxes
  Concentration of Credit Risk
  New Accounting Pronouncements
 Share-Based Payment
 Accounting for Certain Hybrid Financial
Instruments
 Accounting for Uncertainty in Income Taxes Accounting for Income Taxes.
 Fair Value Measurements
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Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans
   Stock-Based Compensation
  Share-Based Payment
   Expected volatility
    
    
    58
    %Expected life in years
    
    
    4.0Weighted average risk free interest rate
    
    
    4.66
    %
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Weighted
    
    
    WeightedAverage
    
    
    AverageExercise Price
    
    
    RemainingShares
    
    
    per Share
    
    
    Contractual TermOptions outstanding at December 31, 2006
    
    
    2,040,000
    
    
    $
    3.54
    
    
    
    4.2Granted
    
    
    123,000
    
    
    
    1.83Exercised
    
    
    
    
    
    
    Forfeited/expired
    
    
    
    
    
    
    Options outstanding at June 30, 2007
    
    
    2,163,000
    
    
    $
    3.45
    
    
    
    3.8Options exercisable at June 30, 2007
    
    
    998,333
    
    
    $
    3.71
    
    
    
    3.3
  NOTE 5  PROPERTY AND EQUIPMENT
  Cost
    
    
    Depreciable LifeLand
    
    $
    6,916,338
    
    
    N/ABuildings and grandstands
    
    
    3,444,624
    
    
    7 - 40 yearsTransportation equipment
    
    
    1,655,227
    
    
    5 - 7 yearsOffice furniture and equipment
    
    
    657,316
    
    
    3 - 7 years12,673,505Less accumulated depreciation
    
    
    (2,096,534
    )Property and equipment, net
    
    $
    10,576,971
  NOTE 6  GOODWILL AND OTHER INTANGIBLE ASSETS
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NOTE 7  ACCRUED LIABILITIES
  June 30,
    
    
    December 31,2007
    
    
    2006Points fund
    
    $
    974,085
    
    
    $
    453,150Television
production and programming
    
    
    296,000
    
    
    
    Interest
    
    
    190,715
    
    
    
    74,913Salaries, wages and other compensation and benefits
    
    
    138,344
    
    
    
    195,770Sales taxes
    
    
    117,272
    
    
    
    158,728Office closure and relocation
    
    
    36,305
    
    
    
    114,611Acquisition liabilities
    
    
    15,000
    
    
    
    42,532Other accrued liabilities
    
    
    119,153
    
    
    
    108,045Total Accrued Liabilities
    
    $
    1,886,874
    
    
    $
    1,147,749
 NOTE 8  DEFERRED REVENUE
  June 30,
    
    
    December 31,2007
    
    
    2006Sponsorship prepayments
    
    $
    697,938
    
    
    $
    8,650Sanction fee advances
    
    
    68,353
    
    
    
    12,958Season ticket sales, advance ticket sales
    
    
    193,710
    
    
    
    107,816Membership fees
    
    
    134,411
    
    
    
    $
    1,094,412
    
    
    $
    129,424
 NOTE 9  NOTES PAYABLE
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Remainder of 2007
    
    $
    2,184,6722008
    
    
    510,1642009
    
    
    2,700,0142010
    
    
    1,487,0612011 and thereafter
    
    
    159,748$
    7,041,659
 NOTE 10  STOCKHOLDERS EQUITY
  Preferred Stock
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th th provided however
   NOTE 11  INCOME TAXES
    NOTE 12  COMMITMENTS
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Payment Due by PeriodRemainder ofTotal
    
    2007
    
    2008
    
    2009
    
    2010
    
    ThereafterOperating leases
    
    $
    828,869
    
    
    $
    92,968
    
    
    $
    257,616
    
    
    $
    139,931
    
    
    $
    142,285
    
    
    $
    196,069
   NOTE 13  LITIGATION AND CONTINGENCIES
  
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FORWARD LOOKING STATEMENTS
  Nature of Business
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Results of Operations  Impact of Seasonality and Weather on Quarterly Results
    Results of Operations  Comparison of Six Months Ended June 30, 2007 (2007) and 2006 (2006)
 Revenues
    Operating expenses
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Results of Operations  Comparison of Three Months Ended June 30, 2007 (2007) and 2006 (2006)
 Revenues
    Operating expenses
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Liquidity and Capital Resources
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Payment Due by PeriodRemainder of
    
    
    
    
    
    
    
    
    
    
    
    
    
    2011 andTotal
    
    2007
    
    2008
    
    2009
    
    2010
    
    thereafterContractual obligationsOperating leases
    
    $
    828,869
    
    
    $
    92,968
    
    
    $
    257,616
    
    
    $
    139,931
    
    
    $
    142,285
    
    
    $
    196,069Employment agreements
    
    
    940,476
    
    
    
    366,375
    
    
    
    514,101
    
    
    
    60,000
    
    
    
    
    
    
    
    Notes payable and
accrued interest
    
    
    7,041,659
    
    
    
    2,184,672
    
    
    
    510,164
    
    
    
    2,700,014
    
    
    
    1,487,061
    
    
    
    159,748
  The Companys significant accounting policies include:
 Reclassifications
  Use of Estimates
  Principles of Consolidation
  Revenue Recognition and Deferred Revenue
  Accounting for Advertising Barter Transactions
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Expense Recognition and Deferral
   Net loss Per Share
   
    
    Promissory note warrants to purchase 1,948,510 shares of common stock at an exercise price of $4.50
    
    Series D warrants to purchase 2,520,178 shares of common stock at an exercise price of $4.50
    
    Other warrants to purchase 542,738 shares of common stock at an exercise price of $0.001
    
    Placement Agent Warrants to purchase 1,186,266 shares of common stock at exercise prices ranging from $2.70 to $5.00
    
    Warrants to purchase 890,059 shares of common stock at an exercise price of $3.00
    
    Other warrants to purchase 40,000 shares of common stock issued at an exercise price of $3.65
    
    Employee stock options to purchase 300,000 shares at an exercise price of $2.49 per share
    
    Employee stock options to purchase 75,000 shares at an
exercise price of $2.50 per share
    
    Employee stock options to purchase 69,000 shares at an exercise price of $1.70 per share
    
    Employee stock options to purchase 54,000 shares at an exercise price of $2.00 per share
    
    Employee stock options to purchase 300,000 shares at an exercise price of $3.65 per share
    
    Employee stock options to purchase 600,000 shares at an exercise price of $3.75 per share
    
    Director stock options to purchase 375,000 shares at exercise prices ranging from $3.00 to $4.75 per share
    
    Other stock options totaling 390,000 shares at exercise prices ranging from $3.00 to $4.50 per share
  Cash and Cash Equivalents
  Inventories
  Property and Equipment
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Purchase Accounting
  Intangible Assets
   Income Taxes
  Concentration of Credit Risk
  New Accounting Pronouncements
 Share-Based Payment
 Accounting for Certain Hybrid Financial
Instruments
 Accounting for Uncertainty in Income Taxes Accounting for Income Taxes.
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##### Table of Contents



Fair Value Measurements
 Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans
   Stock-Based Compensation
 Share-Based Payment
 Accounting for Stock Issued to Employees,
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Options outstanding at December 31, 2005
    
    
    2,040,000
    
    
    $
    3.54Granted
    
    
    123,000
    
    
    
    1.83Exercised
    
    
    
    
    
    
    Forfeited/expired
    
    
    
    
    
    
    Options outstanding at June 30, 2007
    
    
    2,163,000
    
    
    $
    3.45
 Certain Risks
  We need additional capital to continue as a going concern and successfully execute our business
strategy.
   We have a limited operating history. As a result, evaluating our current business model and
prospects may be difficult.
  Speculative nature of our proposed operations.
  Our failure to achieve or maintain profitability could force us to cease our operations.
  Our success depends upon sponsorship and advertising sales for our racing series and racing
events.
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Our executive officers, directors and principal stockholders have substantial influence over
us.
   ur quarterly operating results may fluctuate significantly
   Acquisitions of companies or joint venture investments may disrupt our business or dilute
shareholder value.
  Dependence on qualified and key personnel.
  Illiquidity of our common stock.
  Our common stock price has been volatile, which could result in substantial losses for
stockholders
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Our stock price may decline if additional shares are sold in the market.
  Our articles and bylaws may delay or prevent a potential takeover of us.
  No Dividends.
   
 ITEM 3. CONTROLS AND PROCEDURES
   
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
   4.1
    
    Form of Series D Convertible Preferred Stock Purchase Agreement, dated as of May 16, 2006,
by and among Dirt Motor Sports, Inc., a Delaware corporation, and the purchasers set forth
therein. (filed as Exhibit 4.1 to the Companys Current Report on Form 8-K filed with the
Commission on May 23, 2006).4.2
    
    Certificate of Designation of the Relative Rights and Preferences of the Series D Convertible
Preferred Stock. (filed as Exhibit 4.2 to the Companys Current Report on Form 8-K filed with
the Commission on May 23, 2006).4.3
    
    Form of Series D Warrant. (filed as Exhibit 4.3 to the Companys Current Report on Form 8-K
filed with the Commission on May 23, 2006).4.4
    
    Form of Series B Convertible Preferred Exchange Agreement, dated as of May 16, 2006, by and
among Dirt Motor Sports, Inc., a Delaware corporation, and the holders set forth therein.
(filed as Exhibit 4.4 to the Companys Current Report on Form 8-K filed with the Commission on
May 23, 2006).4.5
    
    Form of Series C Convertible Preferred Exchange Agreement, dated as of May 16, 2006, by and
among Dirt Motor Sports, Inc., a Delaware corporation, and the holders set forth therein.
(filed as Exhibit 4.5 to the Companys Current Report on Form 8-K filed with the Commission on
May 23, 2006).4.6
    
    Form of Warrant Exchange Agreement dated as of May 16, 2006, by and among Dirt Motor Sports,
Inc., a Delaware corporation, North Sound Legacy Institutional Fund LLC, a Delaware limited
liability company, and North Sound Legacy International Fund Ltd, a British Virgin Islands
corporation. (filed as Exhibit 4.6 to the Companys Current Report on Form 8-K filed with the
Commission on May 23, 2006).4.7
    
    Form of Warrant Exchange Agreement dated as of May 16, 2006, by and among Dirt Motor Sports,
Inc., a Delaware corporation, and Royal Bank of Canada. (filed as Exhibit 4.7 to the Companys
Current Report on Form 8-K filed with the Commission on May 23, 2006).4.8
    
    Form of Registration Rights Agreement dated as of May 16, 2006. (filed as Exhibit 4.8 to the
Companys Current Report on Form 8-K filed with the Commission on May 23, 2006).4.9
    
    Form of Mutual Release Agreement, dated as of May 19, 2006, by and between Dirt Motor Sports,
Inc., a Delaware corporation, and Mr. Paul A. Kruger. (filed as Exhibit 4.9 to the Companys
Current Report on Form 8-K filed with the Commission on May 23, 2006).4.10
    
    Form of Lock-Up by between Dirt Motor Sports, Inc., a Delaware corporation and Paul A.
Kruger. (filed as Exhibit 4.10 to the Companys Current Report on Form 8-K filed with the
Commission on May 23, 2006).10.1
    
    Form of Secured Promissory Demand Note (filed as Exhibit 10.1 to the Companys Current Report
on Form 8-K filed with the Commission on April 10, 2007).31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Tom Deery *31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Brian Carter *32
    
    Section 1350 Certification of Tom Deery and Brian Carter *
 
 *
    
    Filed herewith .
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SIGNATURES
  DIRT MOTOR SPORTS, INC.
(Registrant)Date: August 14, 2007
    /s/ Tom DeeryTom Deery, Chief Executive Officer Date: August 14, 2007
    /s/ Brian CarterBrian Carter, Chief Financial Officer - 28 -