##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C.
20549
 FORM 10-QSB/A 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 0-18045
(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: (405) 360-5047 or (877) 5-RACING 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.
þ Yes
     o No Transitional Small Business
Disclosure Format: o Yes
     þ No As of February 12, 2004, 17,382,168 of the Issuers $.0001 par value common stock were outstanding.   1




---



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 Statement 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
    
    
    12ITEM 3. CONTROLS AND PROCEDURES
    
    
    16PART II  OTHER INFORMATIONITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
    
    
    16SIGNATURES
    
    
    18Certification of CEOCertification of CFOCertification of CEO and CFO
  2




---



##### Table of Contents



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
    
    
    811,667
    
    
    
    Property and equipment, net
    
    
    50,770
    
    
    
    55,135Intangible assets
    
    
    23,429
    
    
    
    23,429Other assets
    
    
    6,109
    
    
    
    6,109Total Assets
    
    $
    2,151,510
    
    
    $
    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
    
    
    732,507
    
    
    
    171,002Deficit accumulated during development stage
    
    
    (716,727
    )
    
    
    (474,617
    )Total Shareholders Equity (Deficit)
    
    
    17,518
    
    
    
    (302,041
    )Total Liabilities and Shareholders Equity (Deficit)
    
    $
    2,151,510
    
    
    $
    706,382
 The accompanying notes are an integral part of these consolidated financial statements. 3




---



##### Table of Contents



(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




---



##### Table of Contents



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
    
    
    
    561,505
    
    
    
    
    
    
    
    561,669Balance, December 31, 2003
    
    
    17,382,168
    
    
    $
    1,738
    
    
    $
    732,507
    
    
    
    ($716,727
    )
    
    $
    17,518
 The accompanying notes are an integral part of these consolidated financial statements. 5




---



##### Table of Contents



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
    
    $
    311,676
    
    
    $
    311,676
 The accompanying notes are an integral part of these consolidated financial statements. 6




---



##### Table of Contents



Boundless Motor Sports Racing, Inc. 
    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, 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, The Entity, Inc. (the Company) completed a simultaneous acquisition of
Boundless Motor Sports Racing, Inc., a Nevada corporation (Boundless), and GPX Partners, L.L.C.,
a Texas limited liability company (GPX). The acquisition was accounted for as a reverse
acquisition and reflected in the financial statements as a recapitalization of Boundless. The
pre-merger financial statements of Boundless and GPX have become the historical financial
statements of the combined company, and accordingly, the assets and liabilities of Boundless and
GPX have been brought forward at their book values, no goodwill has been recognized, the
accumulated deficit of Boundless has been brought forward, and common stock and additional paid-in
capital of the combined company have been retroactively restated to give effect to the exchange
ratio as set forth in the merger agreement. Boundless was incorporated in May 2003 for the purpose of creating a racing and sports
entertainment company primarily through the acquisition of existing motor sports sanctioning bodies
and venues. In accordance with the merger agreement, 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). 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. 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. GPX had a wholly owned subsidiary, GPX Acquisition, Inc. GPX Acquisition was merged into GPX on
July 31, 2003, its only asset being design drawings on which costs had been incurred in the amount
of $23,429 related to a proposed race track to be built at some future time. 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, 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 7




---



##### Table of Contents



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. While common ownership existed between Boundless and GPX, because Mr. Kruger was not a member,
manager or officer of GPX, and Mr. Kruger had the option to purchase all shares of the Company held
by shareholders of Boundless who were also members of GPX, it was determined that the GPX members
ownership of Boundless common stock did not represent common control since the full benefit of that
ownership could not be realized by such GPX owners until after consummation of the merger and the
successful completion of the capital funding requirements by the Company. Based upon this
determination, the accumulated deficit of GPX was eliminated in these financial statements. The shares issued to the Former Owners of Boundless were issued without registration in reliance
upon Section 4(2) of the Securities Act of 1933, as amended. On July 31, 2003, in connection with the acquisition of Boundless and GPX, the Company changed its
name to Boundless Motor Sports Racing, Inc. This name change was effected on August 12, 2003. At December 31, 2003, the Company was devoting substantially all of its efforts to establishing the
business and was 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. Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred tax assets will not
be realized. 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. Revenue Recognition and Deferred Revenue The Company recognizes sanction fees upon the successful completion of a scheduled sanctioned race.
Sanction fees collected prior to a scheduled race event are deferred and recognized when earned
upon the occurrence of the scheduled race event. The Company recognizes revenue from sponsorship
agreements when earned in the applicable racing season as set forth in the sponsorship agreement.
Revenue from merchandise sales are recognized at the time of sale less estimated returns and
allowances, if any. Ticket sales are recognized as revenues on the day of the event. Membership
income is recognized proratedly over the term of the membership. 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. 8




---



##### Table of Contents



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 30 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 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. 9




---



##### Table of Contents



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. 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 $0.20 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




---



##### Table of Contents



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




---



##### Table of Contents



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, 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. 
 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 was a development stage company until February 4, 2004. Thus, no ongoing operations
were conducted and no revenues were generated during the 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. 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, 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, The Entity, Inc. (the Company) completed a simultaneous acquisition of
Boundless Motor Sports Racing, Inc., a Nevada corporation (Boundless), and GPX Partners, L.L.C.,
a Texas limited liability company (GPX). The acquisition was accounted for as a reverse
acquisition and reflected in the financial statements as a recapitalization of Boundless. The
pre-merger financial statements of Boundless and GPX have become the historical financial
statements of the combined company, and accordingly, the assets and liabilities of Boundless and
GPX have been brought forward at their book values, no goodwill has been recognized, the
accumulated deficit of Boundless has been brought forward, and common stock and additional paid-in
capital of the combined company have been retroactively restated to give effect to the exchange
ratio as set forth in the merger agreement. 12




---



##### Table of Contents



Boundless was incorporated in May 2003 for the purpose of creating a racing and sports
entertainment company primarily through the acquisition of existing motor sports sanctioning bodies
and venues. In accordance with the merger agreement, 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). Boundless was considered a development stage
enterprise for the period from inception (May 12, 2003) through September 30, 2003. 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. 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. GPX had a wholly owned subsidiary, GPX Acquisition, Inc. GPX Acquisition was merged into GPX on
July 31, 2003, its only asset being design drawings on which costs had been incurred in the amount
of $23,429 related to a proposed race tack to be built at some future time. 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, 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. Simultaneously with the merger of the Company and Boundless, all Boundless shareholders, some of
whom were members of GPX, delivered to Paul Kruger an option to purchase all of the shares of the
Company to be acquired by the Boundless shareholders in the merger, at a purchase price of $0.001
per share. The option was exercisable in the event that the Company does not complete a $3 million
equity financing on or before September 30, 2003. While common ownership existed between Boundless and GPX, because Mr. Kruger was not a member,
manager or officer of GPX, and Mr. Kruger had the option to purchase all shares of the Company held
by shareholders of Boundless who were also members of GPX, it was determined that the GPX members
ownership of Boundless common stock did not represent common control since the full benefit of that
ownership could not be realized by such GPX owners until after consummation of the merger and the
successful completion of the capital funding requirements by the Company. Based upon this
determination, the accumulated deficit of GPX was eliminated in these financial statements. The shares issued to the Former Owners of Boundless were issued without registration in reliance
upon Section 4(2) of the Securities Act of 1933, as amended. On July 31, 2003, in connection with the acquisition of Boundless and GPX, the Company changed its
name to Boundless Motor Sports Racing, Inc. This name change was effected on August 12, 2003. World of Outlaws Acquisition On February 4, 2004, the Company, through its wholly owned subsidiary WOWI Acquisition, Inc.
(WOWI), finalized the acquisition of substantially all the assets of World of Outlaws, Inc. (WoO).
In exchange for the assets acquired, the Company paid to WoO $5,000,000, which amount was offset by
$1,450,000 in pre-acquisition cash advances, plus interest of $21,815 provided by the Company to
WoO in connection with the 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, 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, and (c) $500,000 on September 1, 2004, with the remaining principal
balance due on maturity; and accrued interest due and payable quarterly. The promissory note is
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 and
significant shareholder. With the purchase of World of Outlaws, the Company has acquired the corporate name World of
Outlaws, Inc. and all associated trade-names, trade-marks, and trade-mark registrations. This will
allow the Company to sanction World of Outlaws sprint-car racing events and expand into other
series such as a World of Outlaws late -model series without restrictions. 13




---



##### Table of Contents



DIRT Acquisitions In October 2003, the Company made a cash deposit of $500,000 and issued 1,558,334 shares of its
common stock to the owners of DIRT Motorsports, Inc. and two affiliated tracks known as Rolling
Wheels DIRT Race Track and Cayuga County Dirt Track towards the acquisition of these properties. 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 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 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. 14




---



##### Table of Contents



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. Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred tax assets will not
be realized. 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. Revenue Recognition and Deferred Revenue The Company recognizes sanction fees upon the successful completion of a scheduled sanctioned race.
Sanction fees collected prior to a scheduled race event are deferred and recognized when earned
upon the occurrence of the scheduled race event. The Company recognizes revenue from sponsorship
agreements when earned in the applicable racing season as set forth in the sponsorship agreement.
Revenue from merchandise sales are recognized at the time of sale less estimated returns and
allowances, if any. Ticket sales are recognized as revenues on the day of the event. Membership
income is recognized proratedly over the term of the membership. 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 30 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 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. 15




---



##### Table of Contents



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. 
 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).
 16




---



##### Table of Contents



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.*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




---



##### 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: March 2, 2005
    /s/ Paul A. KrugerPaul A Kruger, Chief Executive Officer Date: March 2, 2005
    /s/ Glenn A. JacksonChief Accounting Officer 18