<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

         FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003.

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

      FOR THE TRANSITION PERIOD FROM _________________ TO ________________.

                         COMMISSION FILE NUMBER 1-13925

                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                      ------------------------------------
             (Exact name of registrant as specified in its charter)

                   Delaware                            38-3389456
                   --------                            ----------
       (State or other jurisdiction of      (IRS Employer Identification No.)
       Incorporation or organization)

            5350 Lakeview Parkway Drive South, Indianapolis, IN 46268
            ---------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (317) 715-4196
                                 --------------
              (Registrant's telephone number, including area code)

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

                                      None

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

                          Common Stock, $.01 par value
                                (Title of class)

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [ ] No [ X ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to Form
10-K [ X ].

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [ X ]

On June 30, 2004 the aggregate market value of the shares of voting stock of
Registrant held by non-affiliates was approximately $226,815 based on the last
sales price on the Pink Sheets Market of $0.02 per share.

At August 24, 2004, the Registrant had 14,718,134 shares of common stock
outstanding.
<PAGE>
                           FORM 10-K TABLE OF CONTENTS

<TABLE>
<S>                                                                                                          <C>
Part I
   Item 1:    BUSINESS........................................................................................1
   Item 2:    PROPERTIES......................................................................................8
   Item 3:    LEGAL PROCEEDINGS...............................................................................8
   Item 4:    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................................9

Part II
   Item 5:    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
              STOCKHOLDER MATTERS............................................................................10
   Item 6:    SELECTED CONSOLIDATED FINANCIAL DATA...........................................................12
   Item 7:    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..........14
   Item 7A:   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.....................................29
   Item 8:    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................................................29
   Item 9:    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...........30
   Item 9A:   CONTROLS AND PROCEDURES........................................................................30

Part III
   Item 10:   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.............................................31
   Item 11:   EXECUTIVE COMPENSATION.........................................................................31
   Item 12:   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND  MANAGEMENT................................34
   Item 13:   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................................36
   Item 14:   PRINCIPAL ACCOUNTING FEES AND SERVICES.........................................................41

Part IV
   Item 15:   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K...............................42
SIGNATURES

CERTIFICATIONS

EXHIBITS
</TABLE>

                                       i
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                                     PART I

This Annual Report on Form 10-K contains forward-looking statement within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
including statement that indicate what we "believe," "expect" and "anticipate"
or similar expressions. These statements involve known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
our achievement to differ materially from those expressed or implied by such
forward-looking statement. Such factors include, among others, the information
contained under the captions Part I, Item 1, "Business," and Part II, Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Additional Factors that May Affect Future Results" in this
Annual Report. You are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis only as of the
date of this Annual Report. We undertake no obligation to publicly release the
results of any revisions of these forward-looking statements. You are strongly
urged to read the information set forth under the captions Part I, Item 1,
"Business," and Part II, Item 7 "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for a more detailed description
of these significant risks and uncertainties.

ITEM 1: BUSINESS

INTRODUCTION

      Championship Auto Racing Teams, Inc. (the Company), through CART, Inc. its
wholly-owned subsidiary, owned, operated and sanctioned the open-wheel
motorsports series known in 2003 as the Bridgestone Presents the Champ Car World
Series Powered By Ford. CART, Inc. was responsible for organizing, marketing and
staging each of the races in the Champ Car World Series.

      In February 2004, we completed the sale of substantially all of our
operating assets to Open Wheel Racing Series, LLC. (Open Wheel), most of our
employees resigned and accepted employment with Open Wheel and we ceased
operations. We cannot list here all the risks and uncertainties that could cause
our actual future financial results to differ materially from our present
expectations or projections regarding the estimated distribution to
shareholders, but we can identify many of them. These are set forth in "Factors
That May Affect Future Results."

      The following information is presented primarily for historical purposes
and should be read noting that the Company is no longer involved in an active
business. As you read the following you should also refer to the consolidated
financial statements and related notes contained in this report, as well as item
6, "Selected Consolidated Financial Data."

      In 2003, in light of the significant near term financial challenges that
faced the Company, we retained the investment banking firm of Bear Stearns & Co.
Inc. to assist us in exploring financing and other strategic alternatives
available to us. On August 18, 2003, the Company announced it had received a
proposal from Open Wheel and was engaged in negotiations regarding a possible
transaction with Open Wheel. Subsequently, on September 10, 2003, the Company
and Open Wheel announced that they had signed a definitive merger agreement
providing for Open Wheel to acquire the Company for cash equivalent to $0.56 per
share, based on the number of shares of Company common stock then outstanding.
On December 15, 2003, we announced that the merger agreement was terminated, and
we subsequently entered into an agreement with Open Wheel to sell certain of the
assets of CART, Inc. to Open Wheel, and Open Wheel agreed to assume certain
contractual obligations in connection with the bankruptcy of CART, Inc., all as
described below.

      In the past two years, our financial condition has deteriorated
significantly. CART, Inc., our wholly owned subsidiary that operated the Champ
Car World Series, experienced a

                                       1
<PAGE>
significant reduction in revenue from all of its previous revenue sources,
including sanction fees, television programming and sponsorship fees. At the
same time, race promoters, who were critical partners in the Champ Car World
Series, also experienced a deterioration in their financial condition. This
deterioration was primarily attributable to a decrease in promotional and
advertising expenditures by corporations due to the general downturn in the
economy, decreased attendance at some race venues as a result of the split with
the Indy Racing League and competition from NASCAR, which experienced rapid
growth during this period. In addition, during this period, two of the three
engine manufacturers which supplied engines for the Champ Car World Series left
the series to participate in the Indy Racing League. Our teams, which were
supported to a significant degree by engine manufacturers and their suppliers,
were being encouraged to follow those manufacturers to the Indy Racing League.
The teams that elected to participate in the Champ Car World Series experienced
a dramatic loss of sponsorship revenue related to the departed engine
manufacturers as well as the adverse economic conditions that caused companies
to cut back promotion and advertising of their brands. In addition, the teams
experienced increased costs because they were required to pay for the lease of
engines as compared to receiving complimentary engine leases in the past. These
conditions required CART, Inc. to expend significant amounts of capital on entry
support programs and team participation payments to encourage teams to remain in
the Champ Car World Series with the anticipation that the economic climate for
the Champ Car World Series would improve in 2004.

      Beginning in 2001, CART, Inc. lost several important race venues. Three of
CART, Inc.'s more profitable international races were lost due to, in the case
of Brazil, an adverse political climate, in the case of Germany, bankruptcy of
the promoter and, in the case of Japan, the decision by the race venue, which
was owned by Honda Motor Company, not to renew with CART, Inc. but rather to run
an Indy Racing League event in which participating teams were using Honda
engines. CART, Inc. was also forced to cancel another race due to safety
concerns. Promoters of CART, Inc.'s other events were also experiencing
weakening revenue streams and therefore began demanding lower sanction fees or
sanction fees that were based either in whole or in part on a revenue or net
income sharing model. CART, Inc. lost some promoters altogether. In order to
preserve important markets, CART, Inc. began self-promoting some of its series
races rather than utilizing third party promoters. In 2002, CART, Inc. promoted
two of its races and in 2003 it promoted six of its races. Unfortunately, due to
unfavorable trends in consumer and corporate spending, the overall economic
conditions affecting advertising in open-wheel motorsports and the entertainment
industry in general and the declining popularity of open-wheel motorsports in
the United States, the expenses of self-promoted races were significantly
greater than the revenues generated.

      During 2001, CART, Inc. began negotiations for a new television agreement
to replace its existing fixed fee television agreement that was due to expire at
the end of the 2001 season. The existing agreement guaranteed that at least half
of the Champ Car World Series races would be shown on network television (ABC)
and the balance of the races would be shown on the ESPN cable network. That
agreement provided a guaranteed amount of income with no offsetting expenses.
Unfortunately, CART, Inc. was unable to negotiate an acceptable fixed fee
television agreement to replace the agreement that expired at the end of 2001.
Therefore, beginning in 2002, CART, Inc. began buying the air-time and bearing
the production costs for its television broadcasts in order to provide its race
sponsors, race promoters and team sponsors with adequate television coverage of
its races. CART, Inc.'s television revenue thus became dependent solely upon
advertising and international rights sales. In addition, the new television
agreements provided for fewer network broadcasts and a significant number of
races broadcast on a cable network with less exposure than ESPN. Due to the
adverse economic and industry developments described in the previous paragraph
and CART, Inc.'s limited experience with selling television advertising, the
revenue generated from sales of television advertising was significantly less
than the costs to produce and air the television broadcasts.

                                       2
<PAGE>
      Also in 2001 and 2002, difficult economic conditions and other factors
adversely affected CART, Inc.'s sponsorship revenues. Beginning in 1999, CART,
Inc. had outsourced its sponsorship sales function pursuant to a long-term
contract which guaranteed CART, Inc. a minimum amount of annual sponsorship
revenue plus escalations on an annual basis. At the beginning of 2001, however,
CART, Inc.'s sponsorship sales partner defaulted on its contract, ceased
operations and filed for bankruptcy protection. As a result, CART, Inc. was
required to build an internal sponsorship sales force. This sales force had to
operate under adverse economic conditions that caused corporate sponsors to
reduce their expenditures for both teams and the Champ Car World Series. The
decline in sponsorship revenue was also attributable to our weakened television
package, as sponsors value a sponsorship opportunity largely on the amount of
exposure they receive on television. In some cases, corporate sponsors left the
Champ Car World Series to align themselves with a rival series. In other cases,
corporate sponsors left motorsports altogether. Our title sponsor for the
previous four years decided not to renew its title sponsorship and withdrew from
the Champ Car World Series after the 2002 season.

      Other factors also contributed to our declining financial condition during
this time period. During 2001, CART, Inc. was in negotiations to change the
engine specifications for the Champ Car World Series beginning with the 2003
race season. At the time, American Honda Motor Company, Toyota Motor Sales,
U.S.A., Inc. and Ford Motor Company supplied engines for the Champ Car World
Series. In some cases, these car manufacturers supplied free engines and
provided other financial support to certain teams. In addition, the
manufacturers were major sponsors for race promoters and also purchased large
quantities of television advertising. At the end of the 2002 season, however,
Honda and Toyota left the Champ Car World Series to participate in the Indy
Racing League. Several of the teams participating in the Champ Car World Series
followed Honda and Toyota to the rival series. Although CART, Inc. was able to
enter into a contract with a subsidiary of Ford to purchase and service engines
for the Champ Car World Series for the 2003 and 2004 seasons, the loss of Honda
and Toyota had an adverse effect on CART, Inc. and the Champ Car World Series
promoters and teams.

      As a result of the foregoing, by the middle of 2002 it had become apparent
to CART, Inc. that it would need to find a way to retain its remaining teams and
attract new teams in order to have 18 to 20 race cars in the field for the 2003
season. Failure to field 18 to 20 race cars would, depending on the agreements,
have resulted in defaults under certain promoter and television agreements. In
light of the circumstances, CART, Inc. believed that the only way to retain
existing teams and attract new teams would be to provide participating teams
with additional financial support. CART, Inc. believed that this support would
result in increased team participation in 2003 and would give it the opportunity
to market its television and sponsorship rights on a profitable basis.
Therefore, in August 2002, CART, Inc. announced its entry support program and
increased its existing team participation payments in order to ensure adequate
team participation in the 2003 Champ Car World Series. The entry support program
and the team participation payments provided a total of $42,500 in cash payments
to teams, per race, for each car entered in the 2003 Champ Car World Series.
These payments amounted to a total of $14.5 million for the 2003 Champ Car World
Series. These payments were in addition to prize money and other non-monetary
benefits that accrued to participating teams. In October 2002, recognizing the
difficulties the teams were having in securing sponsorship, CART, Inc. announced
its commitment to spend an aggregate amount of $30 million in team assistance
payments, which would be in addition to the entry support program and team
participation payments. In exchange for the entry support, team participation
and team assistance payments, the teams agreed to participate in the Champ Car
World Series for the entire 2003 season and granted CART, Inc. the right to sell
certain advertising space on the teams' racecars. CART, Inc. planned to package
this advertising opportunity with its advertising inventory from television and
self-promoted races. CART, Inc. believed this would provide an integrated
marketing opportunity to sponsors whereby they could participate at the team,
race event and series levels. However, CART, Inc. was unsuccessful in selling
the integrated advertising packages.

                                       3
<PAGE>
      On October 29, 2002, the Company retained Bear Stearns to act as its
financial advisor in its consideration of strategic alternatives to increase
stockholder value.

      At that time, management, at the direction of the board of directors,
began developing a four-year business plan incorporating the changing business
model discussed above, including financial forecasts for the four fiscal years
ending December 31, 2006. From October 2002 to April 2003, the Company's
management worked with an outside consultant to develop the business plan.

      During the spring and summer of 2003, the overall economic, financial and
operating conditions affecting our business continued to deteriorate. These
developments were reflected in a series of deteriorating financial forecasts
provided to our board of directors and publicly disclosed on June 16, 2003, July
22, 2003 and August 11, 2003. Consequently, the expectations of management and
our board of directors as to our future performance diminished and it became
clear to management that we would not have sufficient resources to fund the
Champ Car World Series in 2004, even if the entry support, team participation
and team assistance payments were reduced.

      On August 18, 2003, the Company publicly announced that it had received a
proposal from Open Wheel and that it was engaged in negotiations regarding a
possible transaction with Open Wheel.

      On August 24, 2003, the Company publicly announced that its board of
directors had instructed management to continue negotiating with Open Wheel with
respect to all terms related to a possible acquisition of the Company. The
Company, Open Wheel and their respective advisors continued to engage in
negotiations regarding the terms of a possible transaction and related
definitive agreements.

      On September 10, 2003, representatives of the Company, Open Wheel and Open
Wheel Acquisition Corp., a wholly-owned subsidiary of Open Wheel, executed and
delivered the merger agreement and other related agreements and issued a joint
press release announcing the proposed transaction.

      On December 2, 2003, we announced that representatives of Open Wheel
informed the Company that Open Wheel believed that a number of conditions of the
pending merger between the parties would not be satisfied by the time of the
special meeting of stockholders that was scheduled for December 19, 2003. The
Company considered Open Wheel's position and believed that it was unlikely that
the condition requiring the absence of a material adverse effect would be
satisfied because it expected that there would be a net decrease in the number
of teams planning to participate in the series for the 2004 season from the
number that participated in the 2003 season. Open Wheel indicated it would not
waive any condition of the closing.

      On December 15, 2003, we announced that we had entered into an Asset
Purchase Agreement ("the Agreement") with Open Wheel. The Agreement would allow
Open Wheel to purchase the assets of CART, Inc. needed to operate the Champ Car
World Series and the stock of Pro-Motion Agency, Inc., our subsidiary that
operates the Toyota Atlantics series. In addition, Open Wheel would assume from
us and CART, Inc. the rights and obligations under certain promoter, sponsor and
other contracts. Open Wheel indicated that it intended to continue to operate
the Champ Car World Series and the Toyota Atlantic series. The total
consideration that would be paid under the agreement was $3.0 million less $1.5
million in 2003 prize money to teams who were not affiliated with Open Wheel;
which was an obligation of CART, Inc. that would be assumed by Open Wheel.

      The Agreement terminated the previously announced merger agreement that
had been entered into between Championship and Open Wheel on September 10, 2003.

                                       4
<PAGE>
      On December 16, 2003, CART, Inc. filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. Section in the
United States Bankruptcy Court Southern District of Indiana (RE CART, Inc., Case
No. 03-23385-FJO-11).

      An Amendment by Interlineation (the "Amendment") with respect to the
Agreement was entered into on January 15, 2004 to reflect the change in
consideration and the assumption of certain claims.

      Pursuant to a January 28, 2004, court order, on February 13, 2004, the
assets of CART, Inc., the stock of Promotion Agency, LTD. and CART Licensed
Products, Inc., were sold to Open Wheel for total consideration of $3.3 million
in cash, the assumption by the buyer of $1.4 million in prize money owed to
teams not affiliated with the principles of Open Wheel for the 2003 race season,
forgiveness of $1.3 million in prize money due teams affiliated with the
principles of Open Wheel and the assumption of certain promoter, sponsor and
other contracts.

      We currently intend to liquidate our remaining assets, pay off our
remaining liabilities, and complete the process of liquidation and winding up
the Company's affairs as soon as practicable. Our Board of Directors has not
adopted a plan of liquidation and dissolution at this time, but will consider
this option when the liquidation and bankruptcy of our subsidiary CART, Inc. is
complete and after approval by our shareholders. In the event that our Board of
Directors adopts a plan of liquidation and dissolution, we would expect to incur
liquidation expenses, in addition to payments of ongoing operating expenses and
settlement of existing or potential obligations. Liquidation expenses may
include, among others, employee salaries, severance and related costs, legal and
accounting fees, as well as payments to a liquidation trustee. While we cannot
currently make a precise estimate of the expenses, we believe that a significant
portion of our current cash may be required to pay the above expenditures.

      Our 10-K is being filed late because of our inability to complete the
audit of our year end financial statements. Because of the complications
resulting from the bankruptcy of CART, Inc. we were unable to file timely the
10-K. In addition, we failed to file the Forms 10-Q for the quarters ended March
31, 2004 and June 30,2004. We anticipate that the Form 10-Q for the quarter
ended March 31, 2004 will be filed coincident with this filing. The information
being provided herein should be viewed primarily as historical information since
we are no longer actively engaged in any business. Our plan is to complete the
bankruptcy of CART, Inc. and thereafter to propose to our shareholders a plan of
liquidation and dissolution of the Company. This process involves numerous risks
and uncertainties. You should review "Factors That May Affect Future Results"
herein.

GLOSSARY

      Sanction Fees. Sanction fees were received from the promoters of our races
(other than races we promoted). The fees were based on contracts between the
promoters and CART, INC.. Under certain agreements, we had the right to receive
a share of the net income from the event.

      Sponsorship Revenue. We received corporate sponsorship revenue based on
negotiated contracts. For 2003, we had corporate sponsorship contracts with 12
major manufacturing and consumer products companies.

      Beginning in 2003, we developed an Entrant Support Program as a part of an
enhanced incentive program we developed with our teams. Under the program, we
provided financial support to new and existing teams to run in the Champ Car
World Series and, in exchange, each team provided logo space on its cars for
Champ Car-designated sponsors to advertise.

      Television Revenue. In 2002, we had contracts for domestic television
rights with Fox, Speed Channel and CBS. We had seven races broadcast on CBS, one
race broadcast on FOX and

                                       5
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the balance of the races were broadcast on Speed Channel. We bought the air-time
and paid for production (See "Television Expenses") for the CBS and Fox races
and received the advertising inventory. We, along with our agents, were
responsible for selling the advertising time. Speed Channel produced and
provided the air time, at their cost, for races to be broadcast on their
network. In addition, Speed Channel aired Champ Car practice and qualifying, a
half-hour pre-race show and a weekly magazine show. Speed Channel retained the
advertising inventory and income for all shows aired on their network.

      In 2002, International television rights were with Fittipaldi USA
(Brazil), Gold Coast Motor Events Co. (Australia), Molstar (Canada), Promotion
Entertainment of Mexico LLC (Mexico), Sports Television Incorporated (Japan),
and Octagon CSI.

      A rights fee was paid to us by each international broadcast partner for
rights to air the CART race either live, time-delayed or as a highlight package,
in the country where they held our rights.

      In 2003, we had contracts for our domestic television rights with CBS and
Speed Channel. We broadcasted six races on CBS and the balance on Speed Channel.
We bought the air-time and paid for production for the CBS races. Speed Channel
provided the air-time for the races aired on their network, including Champ Car
practice and qualifying and a half-hour pre-race show. We paid for production
for the races to be broadcast on their network. We received the advertising
inventory for all shows aired on both networks and we were responsible for
selling the advertising.

      In 2003, International television rights were with Fittipaldi USA
(Brazil), Gold Coast Motor Events Co. (Australia), Molstar (Canada), Promotion
Entertainment of Mexico LLC (Mexico), and Octagon CSI (all others).

      A rights fee was paid to us by each international broadcast partner for
rights to air the Champ Car race either live, time-delayed or as a highlight
package, in the country where they held our rights.

      Race Promotion Revenue. In 2002, we promoted the races in Chicago,
Illinois and Miami, Florida. In 2003, we promoted six of our races. Race
promotion revenue included all the commercial rights associated with promoting a
Champ Car event, such as admissions, event sponsorship and hospitality sales.

      Engine Leases. In 2003, we purchased the engines that were used for the
2003 Champ Car World Series race season. Each team was required to use these
engines in order to compete in the series. We leased the engines to the teams
for $100,000 per car per year.

      Other Revenue. Other revenue included membership and entry fees,
contingency awards money, royalties, commissions and other miscellaneous revenue
items. Membership and entry fees were payable on an annual basis by Toyota
Atlantics Championship competitors. In addition, we charged fees to competitors
for credentials for all team participants and driver license fees for all
drivers competing in the series. We received royalty revenue for the use of the
CART service marks and trademarks on licensed merchandise that was sold both at
tracks and at off-track sites. We received commission income from the sale of
chassis and parts to our support series teams.

      Race Distributions. We paid the racing teams for their on-track
performance. Race distributions included the following for each event:

                                       6
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      -     event purse which was paid based on finishing position

      -     contingency award payments

      -     year-end point fund, which was paid on year end finishing position
            (except during 2003)

      -     participation payments

      -     entrant support payments

      -     team assistance

      We paid awards to the teams, based on their cumulative performance for the
season, out of the year-end point fund. Participation payments were made in 2003
to each of our entries on a per car, per race basis. In addition, entrant
support payments were made to participating teams as part of a financial
incentive plan to attract and retain teams to compete in our series. The
payments were made to teams in exchange for logo advertising space on their
cars. We had the opportunity to sell and retain the revenue from the
advertising. In 2003, we provided assistance to certain teams to ensure that
there were a sufficient number of race cars competing in our series. We spent
$31.8 million in team assistance, spread out over the race season, to make sure
there were a sufficient number of healthy competitors for the 2003 season. In
exchange for the team assistance we received certain sponsorship rights from the
team.

      Race Expenses. We were responsible for officiating and administering all
of our events. Costs primarily included officiating fees, travel, per diem and
lodging expenses for the following officiating groups:

      -     medical services

      -     race administration

      -     race officiating and rules compliance

      -     registration

      -     safety

      -     technical inspection

      -     timing and scoring

      Race Promotion Expenses. In 2002, we co-promoted two races. In 2003, we
promoted six of our own events. Race promotion expenses related to all costs
associated with staging a Champ Car event include track rental, personnel costs
and promotion of the event.

      Television Expenses. In 2002, we bought the air time at approximately
$235,000 per hour and paid approximately $3.4 million for production for our CBS
and FOX races. We also incurred expenses for our international production of
$2.3 million. For domestic television rights with respect to the CBS and FOX
broadcasts, we received the advertising inventory which we and our agents sold,
to partially offset these expenses. We also received a guaranteed rights fee
from our international broadcast partners to partially offset these costs. (See
"Television Revenue")

      In 2003, we bought the air time at approximately $240,000 per hour for our
CBS races. Speed Channel provided the air time for the races aired on their
network, including Champ Car practice and qualifying and a half-hour pre-race
show. We paid for production costs associated with the races to be broadcast on
their network. We also incurred expenses for our international production for
all of our races.

      Administrative and Indirect Expenses. Administrative and indirect expenses
included all operating costs not directly incurred for a specific event:

                                       7
<PAGE>
      -     administration

      -     marketing and advertising

      -     sponsorship sales and service

      -     public relations

EMPLOYEES

      As of March 31, 2004, we had three employees and two employees as of July
31, 2004. In connection with our intention to dissolve the company in the
future, we have retained these employees for the purpose of executing the
dissolution process, including winding down the Company, CART, Inc. and
Raceworks, LLC.

ITEM 2: PROPERTIES

      We have sublet our office space in Indianapolis, Indiana (approximately
64,000 square feet) to Open Wheel on terms that are substantially the same as
our current lease. Annual lease payments under the obligation are $308,965.
Similarly, annual charges to Open Wheel under the sublease are $308,965. We
remain liable on such lease, which has future lease payments as of March 31,
2004 of $2.1 million, and expires in October 31, 2010. We have retained office
space in this building, at no cost to us, for administrative purposes to execute
our plan to liquidate and dissolve our business.

ITEM 3: LEGAL PROCEEDINGS

      On November 4, 2003, 88 Corp. filed suit against CART, Inc. in the United
States Federal District Court for the Central District of California. 88 Corp.,
the promoter of the CART Champ Car World Series race at the California Speedway
in Fontana, California, claimed that the race which was to be held on November
2, 2003 was canceled due to a "force majeure" and requested a judicial
determination as to whether or not the organizational and rights fee of $2.5
million, previously paid by 88 Corp. to CART, minus reasonable expenses incurred
by CART, should be refunded to 88 Corp. As a result of the bankruptcy of CART,
this litigation was suspended. 88 Corp. has filed a proof of claim against CART
in the bankruptcy court proceedings requesting repayment of the $2.5 million,
imposition of a constructive trust, and such other relief as the bankruptcy
court deems appropriate. CART has objected to the claim and has asserted against
88 Corp. a claim for wrongful termination of the sanction agreement as it
relates to the 2003 and 2004 races in the amount of $5.2 million. These claims
are currently pending in bankruptcy court and we are unable to make a
determination as to the likelihood of an unfavorable outcome or estimate the
amount or range of the recovery or loss.

      On December 16, 2003, CART, Inc., the Company's wholly owned subsidiary,
filed for protection under Chapter 11 of the Bankruptcy Code in the United
States Bankruptcy Court, Southern District of Indiana, Indianapolis Division.
CART, Inc.'s Chapter 11 Plan has been filed with the Bankruptcy Court. Based
upon filings by creditors of CART, Inc. , there will be claims by creditors
against CART, Inc. which could result in litigation against CART, Inc. in
Bankruptcy Court. The Company is currently unable to determine the extent of
these asserted claims and whether or not they will ultimately result in
litigation involving CART, Inc.

      On December 12, 2003, S. R. Holdings Co., filed an action against the
Company and Raceworks, LLC, its wholly owned limited liability company, for an
alleged breach of contract to provide concession services at the Champ Car World
Series race held in Miami, Florida in 2003 and in future years. The case was
filed in the Circuit Court of Miami, Dade County, Florida. The Company filed
answer denying all allegations. Raceworks filed an answer denying all
allegations and asserted a counterclaim for breach of the agreement by S.R.
Holdings for failure to make a minimum payment to Raceworks. The Company is
unable to make a

                                       8
<PAGE>
determination as to the likelihood of an unfavorable outcome or estimate of the
amount or range of possible loss.

      On August 5, 2004 the Company was served with a complaint to avoid and
recover preferential transfers filed on behalf of WorldCom, Inc. and MCI, Inc.,
in the United States Bankruptcy Court for the Southern District of New York. The
action alleges that the Company received $1,500,000 in July of 2002 which was a
payment within 90 days of the date that WorldCom, Inc. and its subsidiaries
commenced their bankruptcy by filing under Chapter 11 of the Bankruptcy Code.
The Company has not filed an answer at this point in time and is unable to make
a determination as to the likelihood of an unfavorable outcome. The range of the
possible loss is up to $1,500,000.

      We may become involved in other litigation not specifically identified
above.

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

                                       9
<PAGE>
                                     PART II

ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED

          STOCKHOLDER MATTERS

            Our common stock was traded on The New York Stock Exchange under the
trading symbol "MPH" until October 15, 2003. From October 16, 2003 to the
present, our common stock has been trading on the over-the-counter bulletin
board under the ticker symbol "CPNT.PK." As of July 31, 2004, we had 14,718,134
shares of common stock outstanding and approximately 574 record holders of our
common stock.

      In the following table we have provided the high and low sales price for
our common stock, as reported by the NYSE for each calendar quarter of 2002 and
2003 (through October 15, 2003). From October 16, 2003 through the end of the
fourth quarter of 2003 and through June 30, 2004, the following table shows the
high and low sales prices of our common stock as reported on the
over-the-counter bulletin board.

<TABLE>
<CAPTION>
Quarter Ended                                       High             Low
-------------                                       ----             ---
<S>                                                <C>             <C>
2004
First Quarter                                      $0.16           $0.095
Second Quarter                                      0.13             0.02

2003
First Quarter                                      $4.13            $2.72
Second Quarter                                      3.95             2.40
Third Quarter                                       2.57             0.58
Fourth Quarter (through October 15, 2003)           0.62             0.53
Fourth Quarter (from October 16, 2003)              0.56             0.09

2002
First Quarter                                     $17.00           $13.78
Second Quarter                                     14.50             8.05
Third Quarter                                       9.42             3.54
Fourth Quarter                                      5.10             3.49
</TABLE>

      We have not declared or paid any dividends on our common stock to date.

                                       10
<PAGE>
      EQUITY COMPENSATION PLAN INFORMATION

      The following table sets forth information regarding outstanding options,
warrants and rights and shares reserved for future issuance under our existing
equity compensation plans as of December 31, 2003. Descriptions of the plans are
included in footnote 13 of our consolidated financial statements. Each of these
plans have been previously approved by the Company's stockholders.

<TABLE>
<CAPTION>
                                              (A)                        (B)                Number of securities
                                    Number of Securities to       Weighted-average         remaining available for
                                    be issued upon exercise       exercise price of      future issuance (excluding
                                    of outstanding options,     outstanding options,       securities reflected in
          Plan Category                warrants, rights           warrants, rights              column (A))
          -------------                -----------------          -----------------             -----------
<S>                                 <C>                         <C>                      <C>
Equity compensation plans
approved by security holders:

(1)  1997 Employee and Director
Stock Option Plans                           85,302                    $20.77                       none*

(2)  1997 Director Stock Option
Plan                                         90,000                    $20.77                       none*

(2)  2001 Long-Term Stock
Incentive Plan                             1,029,300                   $11.65                     470,700

Equity compensation plans not
approved by security holders
                                              none                 not applicable              not applicable
                                              ----                 --------------              --------------
      Total                                1,204,602                   $12.98                      470,700
                                           =========                   ======                      =======
</TABLE>

--------------------
* No further options will be granted under either the 1997 Stock Option Plan or
the 1997 Director Stock Option Plan.

                                       11
<PAGE>
ITEM 6: SELECTED CONSOLIDATED FINANCIAL DATA

      The following selected consolidated financial data, as of and for each of
the five years in the period ended December 31, 2003, are derived from our
audited consolidated financial statements. The selected consolidated financial
data below should be read in combination with our consolidated financial
statements and related notes contained elsewhere in this document and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31,
                                                                             -----------------------
                                                             2003              2002           2001           2000          1999
                                                             ----              ----           ----           ----          ----
                                                                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                        <C>             <C>             <C>             <C>            <C>
STATEMENT OF OPERATIONS:
Revenues:
  Sanction fees                                            $  24,720       $  36,607       $  47,226       $  38,902      $  35,689
  Sponsorship revenue                                          7,777          10,150          12,314          21,063         19,150
  Television revenue                                           1,889           4,538           5,228           5,501          5,018
  Race promotion revenue                                      10,772           1,417              --              --             --
  Engine leases, rebuilds and wheel sales                      1,900              --           1,286           2,122          2,054
  Other revenue                                                2,638           4,533           4,209           7,460          6,865
                                                           ---------       ---------       ---------       ---------      ---------
         Total revenues                                       49,696          57,245          70,263          75,048         68,776
Expenses:
  Race distributions (1)                                      60,850          19,797          18,599          15,370         15,334
  Race expenses                                                8,059          10,823          10,618           9,869          6,670
  Race promotion expense                                      20,844           9,687              --              --             --
  Costs of engine rebuilds and wheel sales                        --              --             348             652            610
  Television expense                                          14,941          10,975              --              --             --
  Administrative and indirect expenses (2)                    20,567          27,756          35,605          25,275         20,646
  Merger charges                                               1,953              --              --              --             --
  Bad debt-sponsorship partner (3)                                --              --              --           6,320             --
  Litigation expenses (4)                                      2,660              --           3,547              --             --
  Relocation Expense                                              --           1,422              --              --             --
  Asset impairment and strategic charges (5)                   9,580              --           8,548              --             --
  Depreciation and amortization                                3,841           1,436           1,493           1,352          1,048
                                                           ---------       ---------       ---------       ---------      ---------
         Total expenses                                     (143,295)         81,896          78,758          58,838         44,308
                                                           ---------       ---------       ---------       ---------      ---------
Operating income (loss)                                      (93,599)        (24,651)         (8,495)         16,210         24,468
Realized gain (loss) on sale of investments                      400              26              --              --             --
Interest income                                                1,274           3,762           7,033           7,463          5,255
                                                           ---------       ---------       ---------       ---------      ---------
Income (loss) before income taxes                            (91,925)        (20,863)         (1,462)         23,673         29,723
Income tax expense (benefit)                                     427          (7,302)           (512)          8,520         10,865
                                                           ---------       ---------       ---------       ---------      ---------
Income (loss) before effect of accounting change             (92,352)        (13,561)           (950)         15,153         18,858
Cumulative effect of accounting change                            --            (956)             --              --             --
                                                           ---------       ---------       ---------       ---------      ---------
Net income (loss)                                          $ (92,352)      $ (14,517)      $    (950)      $  15,153      $  18,858
                                                           =========       =========       =========       =========      =========
Earnings (loss) per share before cumulative effect of
   accounting change:
         Basic                                             $   (6.27)      $   (0.92)      $   (0.06)      $    0.97      $    1.22
                                                           =========       =========       =========       =========      =========
         Diluted                                           $   (6.27)      $   (0.92)      $   (0.06)      $    0.97      $    1.22
                                                           =========       =========       =========       =========      =========
Net earnings (loss) per share:
         Basic                                             $   (6.27)      $   (0.99)      $   (0.06)      $    0.97      $    1.22
                                                           =========       =========       =========       =========      =========
         Diluted                                           $   (6.27)      $   (0.99)      $   (0.06)      $    0.97      $    1.19
                                                           =========       =========       =========       =========      =========
Weighted average shares outstanding:
         Basic                                                14,718          14,718          15,289          15,624         15,427
                                                           =========       =========       =========       =========      =========
         Diluted                                              14,718          14,738          15,289          15,657         15,908
                                                           =========       =========       =========       =========      =========
</TABLE>

                                       12
<PAGE>
<TABLE>
<CAPTION>
                                                          AS OF DECEMBER 31,
                                                          ------------------
                                   2003          2002          2001          2000          1999
                                   ----          ----          ----          ----          ----
                                                            (In Thousands)
<S>                              <C>           <C>           <C>           <C>           <C>
BALANCE SHEET DATA:
 Cash and cash equivalents       $  3,211      $  6,773      $ 27,765      $ 19,504      $  7,216
 Short-term investments             7,356        79,489        87,621        98,206        91,758
 Working capital (deficit)          4,838        92,288       111,604       119,953        99,480
 Total assets                      20,045       114,451       132,941       144,101       124,887
  Long-term debt (including
   current portion)                 1,750            --            --            --            --
 Total stockholders' equity      $ 10,121      $103,018      $117,936      $133,894      $114,330
</TABLE>

(1)   Distributions for the year ended December 31, 2003, include team
      assistance, entry support and participation payments. Distributions for
      the years ended December 31, 2002 and 2001 include reimbursement of
      overseas travel expenses to race teams.

(2)   Administrative and indirect expenses for the years ended December 31, 2001
      and 2000 include severance payments to former employees of $4,329 and
      $2,758, respectively.

(3)   Bad debt expense relates to a charge associated with our sponsorship
      agreement with ISL Marketing AG.

(4)   Litigation expense for the year ended December 31, 2003, relates to the
      settlements attributable to an arbitration settlement of $1.75 million
      paid in August 2003, to Engine Developments Ltd. in a breach of contract
      case over a contract to purchase engines, a settlement of $400 in a breach
      of contract suit filed by two former team owners, DellaPenna Motorsports
      and Precision Preparation, Inc., settlement of contract disputes with ESPN
      television of $250 over the canceled Texas Motor Speedway race, an
      arbitration award to Action Performance Companies, Inc. of $900 in a
      breach of contract case in regard to a licensed merchandise contract, and
      settlement of $500 for an early termination of a sanction agreement with
      IMSA in regard to a race in Miami, Florida. The expenses were partially
      offset by receipt of $1.0 million from proceeds received from a bankruptcy
      settlement regarding claims filed against EuroSpeedway Lausitz for loss of
      sanction fees and other damages that occurred when the 2002 event was
      canceled as a result of the bankruptcy of the promoter. Litigation expense
      for the year ended December 31, 2003 relates to a settlement with Texas
      Motor Speedway ("TMS") for the postponement of a race at TMS during 2001.

(5)   Asset impairment charges for the year ended December 31, 2003, relates to
      the write down of certain long lived assets in connection with the "Asset
      Purchase Agreement" entered into with Open Wheel in December of 2003 and
      the write down of intangible assets and long lived assets in connection
      with Raceworks, LLC our subsidiary that operated the race in Miami,
      Florida. The asset impairment charges for the year ended December 31, 2001
      relate to the discontinuance of operations of the Dayton Indy Lights
      Championship effective at the conclusion of the 2001 race season.

                                       13
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

      Championship Auto Racing Teams, Inc. is engaged in the process of orderly
liquidation of its remaining assets, the winding up of its business, and the
dissolution of the Company.

      Upon completion of the sale of substantially all of our operating assets
to Open Wheel in February 2004, most of our employees resigned and accepted
employment with Open Wheel and we ceased operations. The risks and uncertainties
that could cause our actual future financial results to differ materially from
our present expectations or projections regarding the estimated distribution to
shareholders are set forth in "Factors That May Affect Future Results."

      The following information is presented primarily for historical purposes
and should be read noting that the Company is no longer involved in an active
business. As you read the following you should also refer to the consolidated
financial statements and related notes contained in this report, as well as item
6, "Selected Consolidated Financial Data."

DISCONTINUANCE OF INDY LIGHTS

      The financial results below include the operations of American Racing
Series ("ARS") which operated the Dayton Indy Lights Championship series. At the
end of the 2001 season, we discontinued the operations of ARS and the Dayton
Indy Lights Championship series. (See Footnote 12 to our consolidated financial
statements included in Item 15 of this report.) All revenues and expenses
related to the Dayton Indy Lights Championship series ceased for 2002 and
beyond.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

USE OF ESTIMATES

      The following discussion and analysis of our financial condition and
results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods.

      Significant accounting estimates include accounting for allowance for
doubtful accounts for accounts receivable, impairment of tangible and intangible
assets, income taxes and related valuation allowance and certain contingent
liabilities.

      We believe that the estimates, assumptions and judgments involved in the
accounting policies described below did not have a material impact on our
financial statements for the year ended December 31, 2003. However, as we wind
down the Company, our financial position will be based on a number of estimates
which will have or may have a significant effect on the Company's financial
condition. These estimates are subject to the risks and uncertainties which we
describe in this report. Actual results, therefore, could differ from those
estimated.

      We review the valuation of our accounts receivable on a monthly basis. The
allowance for doubtful accounts is estimated based on managements assessment of
conditions that might impact the collectibility of accounts.

      We adopted FASB Statement of Financial Accounting Standards (SFAS) No.
142, "Goodwill and Intangible Assets," effective January 1, 2002. The statement
requires companies

                                       14
<PAGE>
to discontinue amortizing goodwill and certain intangible assets with an
indefinite useful life. The statement also requires that we test our goodwill
and intangible assets for impairment upon adoption of the statement and
periodically thereafter. Our goodwill was associated with our acquisitions of
Pro-Motion Agency, Inc., CART Licensed Products, LP, and Raceworks, LLC on April
10, 1998, January 1, 1999, and March 7, 2003, respectively. Upon adoption of the
statement, we recorded a one-time, non-cash charge of $1.5 million, or $956,000
net of tax benefit of $514,000, to write-off the value of the goodwill related
to the acquisition of Pro-Motion Agency, Inc. and CART Licensed Products, L. P.
An analysis of the goodwill associated with the acquisitions of Raceworks, LLC
was conducted subsequent to the race that was held in Miami, Florida in
September of 2003. The operating results and cash flows were significantly lower
than expected which was an indication of impairment. The Company recognized a
non-cash asset impairment of $1.3 million to write-off goodwill and other
intangible assets related to the acquisition. The write-off of goodwill results
from the use of discounted cash flows in assessment of fair value for each
reporting unit as required by SFAS No. 142. Under SFAS No. 142, goodwill
impairment is deemed to exist if the carrying value of a reporting unit exceeds
its estimated fair value. Our analysis are subjective and are based on
conditions existing at the time the assumptions are made. Actual results could
differ materially from those assumptions.

      Our estimates of deferred tax assets and liabilities and their related
valuation allowances and the significant items giving rise to deferred tax
assets and liabilities reflect our assessment of actual future taxes to be paid
or tax refunds to be received. Actual income taxes could vary significantly from
these estimates due to adjustments resulting from final review of our tax
returns by taxing authorities.

      Our determination of the treatment of contingent liabilities in the
financial statements is based on our view of the expected outcome of the
applicable contingency. In the ordinary course of business, we consult with
legal counsel on matters related to litigation. We are involved in litigation as
a part of our normal course of business (refer to Item 3: Legal Proceedings).
When a complaint is filed by or against the Company, we disclose the complaint
in our financial statements. When a claim against us is probable and estimable,
we record the expense. When we are the party filing the claim, we do not record
a gain contingency until a settlement for the claim for damages is received.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002

      Revenues. Total revenues for 2003 were $49.7 million, a decrease of $7.5
million, or 13%, from 2002. This was due to a decrease in sanction fee revenues,
sponsorship revenue, television revenue and other revenue, partially offset by
an increase in race promotion revenue and engine leases as described below.

      Sanction fees for 2003 were $24.7 million, a decrease of $11.9 million, or
32%, from 2002. The decrease was partially due to a decrease in the number of
races for which we received a sanction fee. In 2002, we staged 19 races and
received a sanction fee from 17 of those races, compared to 2003 when we
received a sanction fee with respect to 13 races. In 2003, we promoted the races
in Kent, United Kingdom, Lausitz Germany, Portland, Oregon, Cleveland, Ohio,
Lexington, Ohio and Miami, Florida and did not receive sanction fees for these
events. The results for these events are reported in race promotion revenue and
race promotion expense. In 2002, we received sanction fees from races in Motegi,
Japan of $4.5 million, Rockingham, United Kingdom of $2.8 million, Portland,
Oregon of $1.4 million, Cleveland, Ohio of $900,000 and Lexington, Ohio of
$1.2 million. In 2003, we also entered into amended agreements with certain
promoters pursuant to which we reduced the originally contracted sanction fee.

                                       15
<PAGE>
      Sponsorship revenue for 2003 was $7.8 million, a decrease of $2.4 million,
or 23%, from 2002. This decrease was primarily attributable to the loss of our
title sponsor in the amount of $5.0 million after the 2002 season, the decrease
was partially offset by an increase in 2003 sponsorship income from our two
presenting sponsors in the amount of $2.5 million.

      Television revenue for 2003 was $1.9 million, a decrease of $2.6 million,
or 58%, from 2002. The decrease was due to a reduction in television advertising
revenues of $800,000, due to a decrease in the amount of available ads sold and
a reduction in ad prices due to a decline in television ratings of our shows. In
addition, international rights fees declined by $1.9 million, due to a decrease
in demand for our television show and inability to sell advertising for our show
in the Brazilian market which in past years had been one of our most profitable
markets internationally.

      Race promotion revenue for 2003 was $10.8 million, an increase of $9.4
million or 660%, from 2002. The increase was due to staging six self-promoted
events in 2003 compared to two in 2002. In 2003, we promoted the races in Kent,
United Kingdom, Lausitz Germany, Portland, Oregon, Cleveland, Ohio, Lexington,
Ohio and Miami, Florida. In 2002 we promoted the races in Chicago, Illinois and
Miami, Florida. The corresponding expenses are reported in race promotion
expense below.

      Engine leases for 2003, were $1.9 million with no corresponding revenue in
2002. In 2003, we purchased the engines that were used for the 2003 Champ Car
World Series race season. Each team was required to use these engines in order
to compete in the series. We leased the engines to the teams for $100,000 per
car per year.

      Other revenue for 2003 was $2.6 million, a decrease of $1.9 million, or
42%, from 2002. Other revenue includes membership and entry fees, contingency
awards money, royalty income, commission on parts sales and other miscellaneous
revenue. The decrease was primarily due to the discontinuance of membership,
entry fees and pop-off valve leases for the Champ Car Series in 2003; a
reduction of $600,000, and fewer entries in our Toyota Atlantic series which
reduced entry fees and parts commissions by $500,000. In addition, there was a
reduction in non-recurring miscellaneous income. In 2002, we received an
insurance settlement reimbursement of $500,000 and a breach of contract
settlement for $500,000.

      Expenses. Total expenses for 2003 were $143.3 million, an increase of
$61.4 million, or 75%, from 2002. This increase was due to higher race
distributions, race promotion expenses, television expenses, merger and
strategic charges, litigation expense, asset impairment and strategic charges
and depreciation and amortization, partially offset by a reduction in race
expenses, administrative and indirect expenses and relocation expense as
described below.

      Race distributions for 2003 were $60.9 million, an increase of $41.1,
million or 207%, from 2002. The increase was primarily due to in 2003, we
provided assistance to certain teams to ensure that there were a sufficient
number of race cars competing in our series. We paid $31.8 million in team
assistance in 2003 compared to $2.0 million in 2002. The increase was also
partially due to an increase in participation payments that we made to all of
our teams, from $10,000 per car per race in 2002 to $20,000 per car per race in
2003. In addition, for the 2003 Champ Car World Series we began an entrant
support program where we made payments of $22,500 per car per race to each
participating team. In 2003, we paid $14.5 million in participation and entry
support payments compared to $3.5 million in 2002.

      Race expenses for 2003 were $8.1 million, a decrease of $2.8 million, or
26%, from 2002. The decrease is partially due to a decrease in freight expenses
of $800,000, related to the race in Rockingham, England in 2002. The freight
expenses were related to transporting the cars and equipment for the two races
scheduled to be conducted in Europe. The German promoter filed for bankruptcy in
2002 and the race was canceled; in an amendment to the original agreement for
the Rockingham race, CART agreed to pay the German promoter's share of the
freight charges. The

                                       16
<PAGE>
decrease is also due to a reduction in salaries, fees, per diems and travel
expenses of $1.4 million, due to having fewer officials working the events and a
$600,000 decrease related to a reduction of our pace car program.

      Race promotion expenses for 2003 were $20.8 million, an increase of $11.2
million, or 115%, from 2002. The increase is due to staging six self-promoted
events in 2003 compared to two in 2002. In 2003, we promoted the races in Kent,
United Kingdom, Lausitz Germany, Portland, Oregon, Cleveland, Ohio, Lexington,
Ohio and Miami, Florida. In 2002 we promoted the races in Chicago, Illinois and
Miami, Florida.

      Television expense for 2003 was $14.9 million, an increase of $4.0 million
or 36% from 2002. The increase was due to a change in our television agreements
from the previous year. In 2002, Speed Channel paid for the production and
received the ad inventory for shows aired on their network. In 2003, we paid for
the production expenses and received the ad inventory for shows aired on their
network.

      Administrative and indirect expenses for 2003 were $20.6 million, a
decrease of $7.2 million, or 26%, from 2002. This decrease was primarily
attributable to a decrease in, marketing and advertising of $3.4 million, sales
costs related to the loss of our tile sponsor of $2.2 million, professional fees
of $850,000 and salary and employee related expenses of $594,000, due to a
reduction in the workforce from 2002.

      Merger charges for 2003 was $2.0 million with no corresponding expense in
the prior year. This expense was attributable to legal and consulting expenses
associated with the terminated merger and subsequent asset purchase agreement
entered into with Open Wheel Racing, LLC.

      Litigation expense for 2003 was $2.7 million with no corresponding expense
in the prior year. This expense was partially attributable to an arbitration
settlement of $1.75 million paid in August 2003, to Engine Developments Ltd. in
a breach of contract case over a contract to purchase engines, a settlement of
$400,000, in a breach of contract suit filed by two former team owners,
DellaPenna Motorsports and Precision Preparation, Inc., settlement of contract
disputes with ESPN television over the canceled Texas Motor Speedway race of
$250,000, an arbitration award to Action Performance Companies, Inc. in a breach
of contract case in regard to a licensed merchandise contract of $931,000, and
settlement of early termination of a sanction agreement with IMSA of $500,000,
in regard to a race in Miami, Florida. The expenses were partially offset by
receipt of $1.0 million from a bankruptcy settlement regarding claims filed
against EuroSpeedway Lausitz for loss of sanction fees and other damages that
occurred when the 2002 event was canceled as a result of the bankruptcy of the
promoter.

      Relocation expenses for 2002 were $1.4 million with no corresponding
expense in the current year. This expense relates to moving our headquarters
from Troy, Michigan to Indianapolis, Indiana.

      Asset impairment charges for 2003 were $9.6 million with no corresponding
expense in the prior year. The charges partially relate to impairment of
long-lived assets associated with the bankruptcy of CART, Inc. and the court
approved "Asset Purchase Agreement" entered into with Open Wheel Racing Series,
LLC of $4.5 million. In addition, the impairment charges include the write-down
of goodwill and long lived assets of $5.1 million, associated with our
subsidiary Raceworks, LLC, which was the promoter of the race in Miami, Florida.
In December of 2003 it was determined that it was not feasible to continue
holding races in the Miami market; the impairment expense is the write-down to
fair value of the tangible and intangible assets related to this subsidiary.

      Depreciation and amortization for 2003 was $3.8 million, compared to
depreciation and amortization of $1.4 million for 2002. The increase was
primarily attributable to the depreciation

                                       17
<PAGE>
related to the engines we purchased in 2003 that were leased to teams in the
2003 Champ Car Series.

      Interest Income. Interest income for 2003 was $1.3 million, compared to
interest income (net) of $3.8 million for 2002. The decrease of $2.5 million was
primarily attributable to a decrease in interest rates and available cash
balances.

      Income Tax Expense/Benefit. Income tax expense for 2003 was $427,000,
compared to an income tax benefit of $7.3 million in 2002. Due to the Company
winding up its business and dissolving, management does not believe that any
future tax benefit will be realized, therefore, the tax benefit for 2003 has
been completely reduced by a valuation allowance. The 2003 tax expense relates
to foreign taxes paid where no future foreign tax credit will be realized. The
effective tax rate for 2002 was 35%.

      Cumulative Effect of Accounting Change. Cumulative effect of accounting
change for 2002 was $1.5 million, or $956,000 net of tax benefit of $514,000.
There was no corresponding amount in the same period in the current year. The
amount relates to our implementation of Statement of Financial Accounting
Standard No. 142 pursuant to which we wrote off our impaired goodwill.

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

      Revenues. Total revenues for 2002 were $57.2 million, a decrease of $13.0
million, or 18%, from 2001. This was due to a decrease in sanction fee revenues,
sponsorship revenue, television revenue and engine leases, rebuilds and wheel
sales, partially offset by race promotion revenue and other revenue as described
below.

      Sanction fees for 2002 were $36.6 million, a decrease of $10.6 million, or
22%, from 2001. The decrease was partially due to a decrease in the number of
races for which we received a sanction fee, in 2001, we staged 20 races and
received a sanction fee from each, compared to 2002 when we received a sanction
fee with respect to 17 races. In 2002, we promoted the race in Chicago and the
race in Miami and did not receive sanction fees for these events; the results
for these events are reported in race promotion revenue and race promotion
expense. In 2001, we also received sanction fees from races in Nazareth, PA,
Brooklyn, MI, Detroit, MI, Houston, TX and Lausitz, Germany. We did not race at
those venues in 2002 and therefore did not receive sanction fees. This was
partially offset in 2002 with new races in Denver, CO, Montreal, Canada and
Mexico City, Mexico for which we received sanction fees. In 2002, we also
entered into amended agreements with certain promoters pursuant to which we
reduced the originally contracted sanction fee in exchange for a percentage of
profits from the event. The sanction fees and/or percentage of profits we
received were less than the sanction fees received in the previous year at the
races in Corby, England, Elkhart Lake, WI, Portland, OR and Cleveland, OH.

      Sponsorship revenue for 2002 was $10.2 million, a decrease of $2.2
million, or 18%, from 2001. This decrease was primarily attributable to the loss
of sponsorship income from the Indy Lights series which we discontinued at the
end of the 2001 race season, as well as a reduction in sponsorship fees from one
of our sponsors, pursuant to a renegotiation clause in the applicable
sponsorship contract.

      Television revenue for 2002 was $4.5 million, a decrease of $690,000, or
13%, from 2001. The decrease was due to a change in our television agreements
from the previous year. In 2001, we received a guaranteed rights fee for both
our domestic and international television rights. In 2002, we purchased the
air-time, and we received the advertising revenue for our races broadcast on
network television. We also received rights fees for the international
broadcasts of all of our races. The advertising revenue and rights fees received
in 2002 were less than the guaranteed rights fee received in 2001. The
corresponding expenses are reported in television expenses.

                                       18
<PAGE>
      Race promotion revenue for 2002 was $1.4 million, with no corresponding
amount in 2001. The revenue was due to our promotion of the Chicago race which
was our first self-promoted race.

      There were no engine leases, rebuilds and wheel sales for 2002, a decrease
of $1.3 million from the same period in the prior year. This decrease was due to
the discontinuance of the Indy Lights Championship.

      Other revenue for 2002 was $4.5 million, an increase of $324,000, or 8%,
from 2001. Other revenue includes membership and entry fees, contingency awards
money, royalty income, commission on parts sales and other miscellaneous
revenue. The increase was primarily due to an insurance settlement reimbursement
of $500,000. The increase was partially offset by decreased membership and entry
fees, and a decrease in award banquet revenue.

      Expenses. Total expenses for 2002 were $81.9 million, an increase of $3.1
million, or 4%, from 2001. This increase was due to higher race distributions,
race expenses, television expenses, race promotion expenses and relocation
expense, partially offset by a reduction in depreciation and amortization, cost
of engine rebuilds and wheel sales and administrative and indirect expenses,
litigation and asset impairment and strategic charges as described below.

      Race distributions for 2002 were $19.8 million, an increase of $1.2,
million or 6%, from 2001. The increase was primarily due to a $10,000 per race
participation payment that we made to all of our teams beginning in 2002. In
addition, during 2002 we have provided $2.0 million in assistance to certain
teams in order to ensure their necessary participation in our series. The
increase was also due to an increase in the purse and year-end points fund for
the Toyota Atlantics Series. The increase was partially offset by travel
payments made to teams in 2001 for European travel that were not made in 2002
and a decrease in Champ Car and Indy Lights purse payments due to holding one
less Champ Car race in 2002 and discontinuing the Indy Lights Championship at
the conclusion of the 2001 race season.

      Race expenses for 2002 were $10.8 million, an increase of $205,000, or 2%,
from 2001. This increase is primarily due to freight expenses related to the
race in Rockingham, England. In 2001, the freight expenses related to
transporting the cars and equipment to Europe were paid by the promoters. In an
amendment to the original agreement for the Rockingham race, CART, Inc. agreed
to pay these freight charges. The increase is also due to increased salaries,
fees and travel expenses in regards to the competition and safety departments.
The increase was partially offset by the discontinuance of the Indy Lights
Championship.

      Race promotion expenses for 2002 were $9.7 million, with no corresponding
amount in 2001. The expense was due to our promotion of the Chicago and Miami
races.

      There was no cost of engine rebuilds and wheel sales for 2002, a decrease
of $348,000 from the same period in the prior year. This decrease was due to the
discontinuance of the Indy Lights Championship.

      Television expense for 2002 was $11.0 million with no corresponding
expense in the prior period. The increase was due to a change in our television
agreements from the previous year. In 2001, we received a guaranteed rights fee
for both our domestic and international television rights with no corresponding
expense. In 2002, we bought the air-time and paid for production expenses for
our network races. In addition, we incurred expenses to provide an international
feed for all of our races.

      Administrative and indirect expenses for 2002 were $27.8 million, a
decrease of $7.8 million, or 22%, from 2001. This decrease was primarily
attributable to a decrease in severance expense, marketing and advertising,
professional fees for strategic planning, TV consulting and employee recruitment
and the discontinuance of the Indy Lights Championship, partially offset by

                                       19
<PAGE>
an increase in bad debt expense, legal fees, public relations and the advance
program. An advance program team visited selected race venues prior to the event
weekend and invited local media and corporate guests to participate in
activities at the track in order to generate excitement in the market prior to
the event.

      Litigation expense for 2001 was $3.5 million. There was no corresponding
expense in 2002. The charge was a result of a settlement with the Texas Motor
Speedway for the cancellation of a race that was to be held in April 2001.

      Relocation expenses for 2002 were $1.4 million with no corresponding
expense in the prior year. This expense relates to our headquarters moving from
Troy, Michigan to Indianapolis, Indiana.

      Asset impairment and strategic charges for 2001 were $8.5 million. There
was no corresponding expense in the current year. These charges related to the
formal exit plan for the discontinuance of the Indy Lights series. The charges
related to the impairment of goodwill ($5.6 million) and property and equipment
($2.0 million) and $885,000 relating to provisions for doubtful accounts,
severance payments and other settlement charges.

      Depreciation and amortization for 2002 was $1.4 million, compared to
depreciation and amortization of $1.5 million for 2001.

      Operating Loss. Operating loss for 2002 was $24.7 million, compared to
operating loss of $8.5 million for 2001 due to the items discussed above.

      Interest Income (Net). Interest income (net) for 2002 was $3.8 million,
compared to interest income (net) of $7.0 million for 2001. The decrease of $3.2
million was primarily attributable to a decrease in interest rates and available
cash balances.

      Loss Before Income Taxes. Loss before income taxes for 2002 was $20.9
million, compared to a loss before income taxes of $1.5 million for 2001 due to
the items discussed above.

      Income Tax Benefit. Income tax benefit for 2002 was $7.3 million, compared
to an income tax benefit of $512,000 in 2001. The effective tax rate for 2002 of
35% was comparable to that in 2001 of 35%.

      Loss Before Cumulative Effect of Accounting Change. Loss before cumulative
effect of accounting change for 2002 was $13.6 million compared to loss before
cumulative effect of accounting change of $950,000 for the same period in the
prior year.

      Cumulative Effect of Accounting Change. Cumulative effect of accounting
change for 2002 was $1.5 million, or $956,000 net of tax benefit of $514,000.
There was no corresponding amount in the same period in the prior year. The
amount relates to our implementation of Statement of Financial Accounting
Standard No. 142 pursuant to which we wrote off our impaired goodwill.

      Net Loss. Net loss for 2002 was $14.5 million, compared to a net loss of
$950,000 in 2001 due to the items discussed above.

LIQUIDITY AND CAPITAL RESOURCES

      Since our inception, we have funded our operations and capital
expenditures from the proceeds of our public offerings and our cash reserves
generated from operations. At December 31, 2003, we had $4.8 million in working
capital, and our primary source of liquidity was $3.2 million in cash and cash
equivalents. Our cash balance on December 31, 2003 was $3.2 million, a

                                       20
<PAGE>
net decrease of $3.6 million from December 31, 2002. This decrease was primarily
the result of net cash used in operating activities and financing activities of
$69.3 million and $1.0 million respectively partially by net cash proceeds from
investing activities of $66.7 million.

      Our short term investment balance on December 31, 2003 was $7.4 million, a
net decrease of $72.1 million from December 31, 2002. This decrease was
primarily due to funding our operations during 2003.

      In May 2003, the Company entered into an agreement with a third party
where we paid for the costs of capital improvements retained by the third party
necessary to stage an event where we were the promoter. We accepted an unsecured
note of $750,000 for said improvements. In November, of 2003 we terminated the
contract due to certain breaches of the contract. Pursuant to the terms of the
contract if future races are not held at the facility the note receivable is
terminated. Therefore, we wrote off the note in its entirety.

      In June 2003, the Company entered into an amendment to a sanction
agreement with a promoter where we accepted a note in the amount of $400,000 as
payment for a portion of the sanction fee. This note is payable in 36 equal
monthly installments, bearing interest at 10% per annum, beginning January 1,
2004. The note is collateralized by all products and proceeds of all other
events staged by the promoter at the promoter's facility. We have not received
any payments on the note which were to begin on January 1, 2004. After an
assessment of the financial condition of the promoter and other considerations,
it was determined that the note should be been written-down to management's
estimate of its fair value of $150,000 and an impairment loss has been recorded
in regard to the note and trade account receivables for $320,139.

CONTRACTUAL OBLIGATIONS

      In April 2002, we entered into a lease for our new corporate headquarters
in Indianapolis, Indiana. The lease commenced on May 1, 2002 and expires on
October 31, 2010. The total amount due through the life of the lease as of
December 31, 2003 is $2.1 million. We have sublet this office space to Open
Wheel, on substantially the same terms as our lease and retain office space for
our use, at no cost. However, we remain liable on the lease.

      In March 2003, we entered into a lease for office space in Miami, Florida.
The lease commenced on June 1, 2003 and was to expire on May 31, 2008. The total
amount due through the life of the lease was $478,198. On December 12, 2003 we
cancelled and compromised the lease for a payment of $43,941 and the lessor
retained the security deposit of $16,058.

      The following table summarizes our contractual obligations as of December
31, 2003, that remain outstanding obligations of the Company as of March 31,
2004. Certain contractual obligations of the Company as of December 31, 2003
were assumed or assigned to Open Wheel in the "Asset Purchase Agreement"
finalized in February 2004. The obligations that were assumed or assigned to
Open Wheel and are no longer an obligation of the Company are not included in
the table below.

<TABLE>
<CAPTION>
                                                                  Payments due by Period
                                                                  ----------------------
                                                        Less Than           1-3             4-5           After 5
Contractual Obligations                   Total           1 Year           Years           Years           Years
-----------------------                   -----           ------           -----           -----           -----
<S>                                     <C>             <C>             <C>             <C>             <C>
Operating Leases*                       $2,111,261      $  308,965      $  926,895      $  617,930      $  257,471
Other Long-Term Obligations              1,781,000       1,245,000         536,000              --              --
                                        ----------      ----------      ----------      ----------      ----------
Total Contractual Cash Obligations      $3,892,261      $1,553,965      $1,462,895      $  617,930      $  257,471
                                        ==========      ==========      ==========      ==========      ==========
</TABLE>

*Sublet to Open Wheel Racing Series for the amounts of lease obligations.

                                       21
<PAGE>
      In July 2002, we guaranteed a $1.8 million commercial term loan in
connection with our acquisition of Raceworks, LLC. The Company subsequently
assumed this loan in conjunction with the acquisition of Raceworks, LLC and has
recorded the loan in its long-term debt. The principal on the loan shall be paid
quarterly, starting October 31, 2003 and on the last day of each January, April,
July and October thereafter, in the amount of $50,000 per quarter. Payments of
principal and interest were paid for the October 2003 and January 2004
installments. The Company was in default of certain financial covenants of the
loan. These financial covenants require that total stockholders' equity of the
Company not be below $75 million. As a result, the entire amount of the note has
been classified as current. On May 10, 2004, the entire principal of the note
was paid according to an assignment and release entered into with the holder of
the note.

      On March 7, 2003, we acquired 100% of the equity in Raceworks, LLC. The
purchase price was $1.2 million, including $473,000 of cash and a contingent
promissory note of $722,000, without interest, and assumption of liabilities of
$4.7 million. On December 8, 2003, the company entered into a release and
settlement agreement, with the sellers of Raceworks, that released both parties
from any future obligations under the acquisition agreement in exchange for
payment of $361,250 in cash to the sellers. In December of 2003, after the
merger agreement with OWRS was terminated, as discussed above, it was determined
that OWRS had no interest in the assets of Raceworks, LLC or continuing to race
in the city of Miami. The Company recognized an impairment charge of $5.1
million to write-off the goodwill and long lived assets of Raceworks, LLC.

      Litigation and settlements expense was $2.7 million for the year ended
December 31, 2003. This expense was partially attributable to an arbitration
settlement of $1.75 million paid in August 2003, to Engine Developments Ltd. in
a breach of contract case over a contract to purchase engines, a settlement of a
breach of contract suit filed by two former team owners, DellaPenna Motorsports
and Precision Preparation, Inc., settlement of contract disputes with ESPN
television over the canceled Texas Motor Speedway race, an arbitration award to
Action Performance Companies, Inc. in a breach of contract case in regard to a
licensed merchandise contract, and settlement of an early termination of a
sanction agreement with IMSA in regard to a race in Miami, Florida. The expenses
were partially offset by receipt of $1.0 million from proceeds received from a
bankruptcy settlement regarding claims filed against EuroSpeedway Lausitz for
loss of sanction fees and other damages that occurred when the 2002 event was
canceled as a result of the bankruptcy of the promoter.

      In addition, in August 2003 we paid $1.7 million to Joseph Heitzler, our
former CEO, in complete settlement of all actions brought by Mr. Heitzler in
claims related to his employment with the Company. The charge to expense related
to this settlement had been recorded in the year-ended December 31, 2001.

      Capital spending for 2003 was approximately $2.2 million. Capital
expenditures included approximately $900,000 for race promotion equipment,
$693,000 for engines and related equipment, $306,000 for race car chassis and
improvements, $288,000 for trucks and trailers and $69,000 for computers and
office equipment. No capital spending will occur in 2004.

OFF-BALANCE SHEET ARRANGEMENTS

      In October 2002, we provided a deposit of $550,000 and a letter of credit
in the amount of $1.7 million in regards to the production of conversion kits
for race car chassis for the 2003 season. The letter of credit guaranteed that
at least 20 of the kits would be purchased by our race teams. As the kits were
purchased, the letter of credit was reduced accordingly. If 20 kits were not
purchased by our teams, we would have been required to purchase the remaining
kits and continue to sell the kits to teams as they were needed. All 20 race
kits were purchased by our race teams; consequently, the deposit was refunded on
February 27, 2003 and the letter of credit was canceled.

                                       22
<PAGE>
RELATED PARTY TRANSACTIONS

      We have historically entered into transactions with related parties,
because several of our directors and one of our significant shareholders are
team owners. We believed that it was necessary and appropriate to have team
owners involved as directors or significant shareholders of the Company because
of their unique knowledge of our business. We believed that all the transactions
which we have entered into with our directors or significant shareholders, were
comparable to the terms that we have in the past or could in the future enter
into with third parties with respect to each of these transactions. In order to
avoid conflicts of interest, any of our directors who were affiliated with an
entity that was entering into a transaction with us did not vote on any matters
related to such transactions and, in certain circumstances, refrained from
participating in any discussions related to such transactions.

      Gerald R. Forsythe, a 22.9% stockholder of the Company, is one of the
three principal members, of Open Wheel Racing Series, LLC, the other members
being Mr. Gentilozzi and Mr. Kalkhoven, which purchased the operating assets of
CART, Inc. pursuant to the Asset Purchase Agreement, entered into in February
2004. The consideration paid to CART, Inc. for the purchase of such assets,
along with the stock of Pro-Motion Agency, Ltd. and CART Licensed Products, Inc.
was total consideration of $3.3 million in cash, the assumption by the buyer of
$1.4 million in prize money owed to teams not affiliated with the principals of
Open Wheel, forgiveness of $1.3 million in prize money due teams affiliated with
principals of Open Wheel, including Mr. Forsythe and Mr. Gentilozzi, and the
assumption of certain promoter, sponsorship, and other contracts. The agreement
was approved by order of the bankruptcy court at a hearing held on January 28,
2004.

      The following related party transactions occurred during the three year
period ended December 31, 2003:

      The related party transactions under "Purse Distributions, Entry Support
Program and Lease Arrangements" were all payments or transactions that were made
on the identical basis to all race teams, whether they were affiliated with
directors or significant shareholders or not affiliated. The payments payable to
related parties under the caption "Team Assistance Program" related to further
assistance that the Company provided to race teams to assure their participation
in the 2003 race season. The amounts payable to each race team varied, depending
upon the team's ability to raise third party sponsorship, the number of cars
that the team raced in 2003, their budget and other factors. The Company
determined that these payments were necessary in order to assure a proper field
for 2003 and believed that the amounts payable to each of the race teams
affiliated with a director was consistent with arrangements that the Company
could enter into with third parties. Both of these programs were developed to
insure the necessary participation in the series. Without this additional
funding, it was unlikely that there would have been 18 teams, which would have
resulted in defaults under certain of the Company's agreements with promoters
and television and could have resulted in severe financial consequences to the
Company.

      Purse Distributions, Year-end Point Fund, Entry Support Program and Team
Assistance. We have entered into transactions with entities that were affiliated
with our directors and/or 5% stockholders who were owners of our race teams.
Race teams that participated in the Champ Car World Series received purse
distributions on a per race basis and from the year end point fund, which
amounts were paid based solely upon their performance in specific races. All of
these payments were made to our race teams regardless of the affiliation with
our directors or significant stockholders. Open Wheel Racing Series, LLC
released CART, Inc. from any obligation relating to amounts due them for the
year-end point fund and assumed the obligation to pay the year-end point fund to
the other participants of the 2003 season as part of the Asset Purchase
Agreement entered into with the Company as discussed previously (with the
exception

                                       23
<PAGE>
of the year-end point fund due Patrick Racing, Inc.) The following table
provides information with respect to payments made or accrued during 2003 by us
to race teams that were affiliated with directors and/or significant
stockholders of CART:

<TABLE>
<CAPTION>
                                                       (paid)                        (accrued)
Race Team/Affiliated Person                      Purse Distributions            Year-end Point Fund
---------------------------                      -------------------            -------------------
<S>                                              <C>                            <C>
Newman/Haas Racing/Carl A. Haas                       $ 1,479,500                    $ 700,000
Forsythe Racing, Inc./Gerald R. Forsythe                1,576,000                    1,150,000
Patrick Racing, Inc./U.E. Patrick                         454,250                      130,000
Derrick Walker Racing, Inc./Derrick Walker                618,500                      110,000
Rocketsports, Inc./Paul Gentilozzi                        420,250                      100,000
PK Racing LLC/Kevin Kalkhoven                             332,250                        -----
</TABLE>

      In 2003, we leased engines and provided financial assistance to every team
that participated in the Champ Car World Series, including teams affiliated with
our directors and/or 5% stockholders. The financial assistance payments related
to two programs instituted for the 2003 season, the Entry Support Program (ESP)
and the Team Assistance Program. ESP provided up to $42,500 in cash payments to
teams, per race, for each car entered into the series.

      The Company entered into a sponsorship agreement with Ford Motor Company,
which provided in part, that Ford would lease to each of the teams Ford vehicles
for their use in 2003. For ease of administration, Ford leased these vehicles to
the Company and the Company subleased the vehicles to each team on a net basis.
There was no net cost or benefit to the Company related to this arrangement.

      The Company purchased one hundred (100) race engines from Cosworth Racing,
Inc. for a total purchase price of $4.0 million and agreed to pay for track
support in the amount of $1.5 million. The Company in turn leased these engines
to each team on the basis of $100,000 per entrant per year.

      The following table lists the amount of engine lease income we received
and Entry Support Payments we made to related parties for the 2003 race season.

<TABLE>
<CAPTION>
                                             Engine Lease Income    ESP Payments
Race Team/Affiliated Person                       from Teams          to Teams
---------------------------                       ----------          --------
<S>                                          <C>                    <C>
Newman/Haas Racing/Carl A. Haas                     $ 200,000       $ 1,530,000
Forsythe Racing, Inc./Gerald R. Forsythe              200,000         1,530,000
Patrick Racing, Inc./U.E. Patrick                     100,000           765,000
Derrick Walker Racing, Inc./Derrick Walker            200,000         1,530,000
PK Racing LLC/Kevin Kalkhoven                         100,000           765,000
Rocketsports, Inc./Paul Gentilozzi                    100,000           765,000
</TABLE>

      Team Assistance Program. The Team Assistance Program supplied an
additional $31.8 million in team assistance spread over the 2003 race season as
described above. The following table sets forth the Team Assistance Program
payments to teams affiliated with directors and/or 5% stockholders.

                                       24
<PAGE>
<TABLE>
<CAPTION>
Race Team/Affiliated Person                    Team Assistance Payments
---------------------------                    ------------------------
<S>                                            <C>
Newman/Haas Racing/Carl A. Haas                        $ 2,000,000
Patrick Racing, Inc./U.E. Patrick                        1,400,000
Derrick Walker Racing, Inc./Derrick Walker               5,925,000
Rocketsports, Inc./Paul Gentilozzi                       2,000,000
PK Racing LLC/Kevin Kalkhoven                            1,000,000
</TABLE>

PROMOTER AGREEMENTS

      Some of our directors or stockholders either controlled or were affiliated
with others who controlled racing venues which staged CART and other racing
events. We entered into the following agreements with entities associated with
directors or 5% stockholders:

      Carl A. Haas, a former director of the Company and a race team owner, was
a principal owner of Carl Haas Racing Teams, Ltd. and Texaco Houston Grand Prix
L.L.C. ("HGP"), each of which entered into Promoter Agreements with respect to
Champ Car World Series races at the Wisconsin State Park Speedway in Milwaukee,
Wisconsin and at a temporary road course in Houston, Texas. In the second
quarter of 2002 the Promoter Agreement for the Milwaukee race was renewed for
the 2002 event with the promoter having the option to extend for the 2003 and
2004 years. The sanction fees payable to CART under this agreement is similar to
those paid by independent race promoters. Pursuant to the Promoter Agreement,
entities affiliated with Mr. Haas have paid sanction fees to CART of $1.4 and
$1.7 million in the years 2003 and 2002 respectively. On May 31, 2003, CART,
Inc., entered into an agreement with the Wisconsin State Fair Park to take over
as organizer/promoter of the event from Carl Haas Racing Teams, Ltd. In
addition, we have incurred a total of $100,000 in sales costs and $100,000 in
marketing expenses in relation to our race at Wisconsin State Park Speedway
during 2002. The promoter agreement in regards to the Houston, Texas event
provided for races to be held starting in 1998 through 2003. The Houston, Texas
race was not held in 2002 and 2003 due to construction on the temporary circuit
in downtown Houston. Therefore, the promoter agreement has been terminated by
mutual agreement. Carl Haas Racing Teams, Ltd. paid a $500,000 termination fee
to CART and CART has received an option to acquire certain assets of HGP, used
in operating the Houston event, for $750,000. This option was exercised and
payment was made in January 2003.

      Gerald R. Forsythe, a race team owner and 22.9% stockholder, is a
principal owner of the entities which entered into Promoter Agreements with
respect to Champ Car World Series races in Monterrey, Mexico and Mexico City,
Mexico. These entities affiliated with Mr. Forsythe have paid sanction fees to
CART in the aggregate amount of $4.9 million and $6.1 million for 2003 and 2002
respectively.

      In addition, we have paid a total of $200,000 in sales costs and $200,000
in marketing expenses to these entities during 2002.

      In order to change the date of the Mexico City race as requested by Mr.
Forsythe's affiliated entity, we have paid another promoter $250,000. Mr.
Forsythe's affiliated entity reimbursed us for $125,000 of that expense.

      Gerald R. Forsythe is also a principal owner of an entity which entered
into a Promoter Agreement with respect to Champ Car World Series races in
Rockingham, England. The agreement provided for a race to be held beginning in
2001 through 2006. Following the cancellation of the 2002 race scheduled to be
run in Germany, officials at Rockingham expressed concern regarding the
viability of running a single event in Europe. In order to assure that the
Rockingham event could move forward in 2002, we negotiated an amendment to the
Promoter

                                       25
<PAGE>
Agreement which reduced the sanction fee to $2.8 million and we assumed certain
costs, including freight and transportation, in the amount of $900,000. In
addition, the terms of the future years of the agreement, 2003-2006, were
subject to renegotiation. This renegotiation has subsequently resulted in the
cancellation of the remaining years of the agreement. In addition, we have paid
a total of $100,000 in sales costs and $400,000 in marketing expenses to this
entity during 2002.

      Floyd R. Ganassi Jr., a former director of the Company and a race team
owner, is a principal owner of Chicago Motor Speedway, LLC and has entered into
a Promoter Agreement with respect to a Champ Car World Series race at Chicago
Motor Speedway in Cicero (Chicago), Illinois. Pursuant to the terms thereof, a
Championship race was to be held through 2003. The Chicago Motor Speedway, LLC
was to pay sanction fees to CART of $2.0 million for 2002 and $2.1 million for
2003. In 2002, the Chicago Motor Speedway, LLC announced the suspension of all
race events at Chicago Motor Speedway. We then entered into an agreement with
the Chicago Motor Speedway, LLC where we rented the track for $850,000 in 2002
and promoted the race ourselves.

OTHER TRANSACTIONS

      In addition to the above, we have entered into the following transactions
with related parties:

      Mr. Forsythe is also a principal owner of the entity that holds our
Mexican television rights through 2004. In return for these rights, we received
a minimum guarantee of $325,000 and $300,000 in 2003 and 2002 respectively. In
addition, we will receive 70% of the net profits, if any, until we reach
$500,000, $550,000 and $600,000 for each of the three years ending 2002, 2003
and 2004, respectively.

      Mr. Ganassi is also principal owner of Target Chip Ganassi Racing, Inc.,
which entered into an agreement by which Target Chip Ganassi Racing Inc. ran a
third car for a portion of the 2002 season. Pursuant to the terms thereof, we
paid Target Chip Ganassi Racing, Inc. $1.7 million for running the third car,
and we received the right to sell certain sponsorship space on that car.

      Ralph Sanchez, a director of the Company, is a principal owner of RAS
Development, Inc. which has entered into a five year lease agreement with the
Company for office space in Miami, Florida. Payments for this lease total
$80,292, $97,957, $99,081, $100,045, $101,008 and $16,861 for 2003, 2004, 2005,
2006, 2007 and 2008, respectively. The lease was terminated in December 2003, as
part of the wind-up of the operations in Miami for a payment of $43,941 and Mr.
Sanchez retained the deposit of $16,059.

PAYMENTS TO CART

      In addition to the payments described above, CART received revenues from
its race teams, including those affiliated with CART directors and/or 5%
stockholders, for credential, FIA licenses, drivers fees and other payments
based solely on participation in CART events and CART's self-promoted event.
During 2003, race teams affiliated with CART directors and/or 5% stockholders
made such payments to CART as follows:

<TABLE>
<S>                                                           <C>
          Forsythe Racing, Inc./Gerald R. Forsythe            $ 42,200
          Newman/Haas Racing/Carl A. Haas                       11,300
          Patrick Racing, Inc./U.E. Patrick                     60,000
          Derrick Walker Racing, Inc./Derrick Walker            32,950
          Rocketsports, Inc./Paul Gentilozzi                    10,750
          PK Racing LLC/Kevin Kalkhoven                         39,396
</TABLE>

                                       26
<PAGE>
      As part of the race in Miami, Florida, a special promotion was undertaken
whereby a rock music concert was cross-promoted in conjunction with the race
event. An agreement was entered into with Motorock, LLC, a rock concert
promoter, whose principals are Mr. Gentilozzi and Mr. Kalkhoven, who are also
principals in Open Wheel Racing Series, LLC., which purchased the assets of
CART, Inc. pursuant to the Asset Purchase Agreement as discussed above. The
Company received $141,000 from Motorock, LLC., in exchange for tickets,
hospitality and advertising rights at the race.

      In 2004, the Company is sanctioning the races for Open Wheel Racing
Series, LLC., which Mr. Forsythe, a 22.9% owner of the Company, is a principal
owner. The Company receives $12,500 for each domestic race it sanctions and is
reimbursed for various expenses it incurs in sanctioning the events.

FACTORS THAT MAY AFFECT FUTURE RESULTS

WE CANNOT ASSURE YOU OF THE AMOUNT, IF ANY, OF ANY DISTRIBUTION TO OUR
STOCKHOLDERS UNDER A PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION.

      Liquidation and dissolution may not create value to our stockholders or
result in any remaining capital for distribution to our stockholders. We cannot
assure you of the precise nature and amount of any distribution to our
stockholders pursuant to a plan of distribution. Uncertainties as to the precise
net value of our non-cash assets and the ultimate amount of our liabilities make
it impracticable to predict the aggregate net value, if any, ultimately
distributable to our stockholders. The actual nature and amount of all
distributions will depend in part upon our ability to settle our liabilities or
potential liabilities. We may not be successful in doing so to return a
meaningful amount of cash to our stockholders.

WE MAY NOT BE ABLE TO SETTLE ALL OF OUR OBLIGATIONS TO CREDITORS.

      We have current and future obligations to creditors. These include,
without limitation, long-term contractual obligations and litigation claims and
expenses. As part of the wind down process, we will attempt to settle our
obligations with our creditors. We may not, however, succeed in doing so. If we
cannot reach an agreement with a creditor concerning an obligation, that
creditors may choose to bring a lawsuit against us. Any litigation could delay
or even prevent us from completing the plan of dissolution. Moreover, amounts
required to settle our obligations to creditors will reduce the amount of
remaining capital available for distributions to stockholders.

WE WILL CONTINUE TO INCUR CLAIMS, LIABILITIES AND EXPENSES WHICH WILL REDUCE THE
AMOUNT AVAILABLE FOR DISTRIBUTION TO STOCKHOLDERS.

      Claims, liabilities and expenses such as operating costs, salaries,
directors' and officers' insurance, payroll and local taxes, legal, accounting
and consulting fees and miscellaneous office expenses, will continue to be
incurred as we wind down operations. These expenses will reduce the amount of
assets available for ultimate distribution to stockholders, if any. If available
cash is not adequate to provide for our obligations, liabilities, expenses and
claims, we may not be able to distribute meaningful cash, or any cash at all, to
our stockholders.

                                       27
<PAGE>
DISTRIBUTION OF ASSETS, IF ANY, TO OUR STOCKHOLDERS COULD BE DELAYED.

      Our Board of Directors has not established a firm timetable for proposing
to our stockholders a plan of liquidation, nor can we assure approval of such a
plan or the amount of any distributions to our stockholders. We are currently
unable to predict the precise timing of any distribution, if any, pursuant to
our wind down. The timing of distribution, if any, will depend on and could be
delayed by, among other things, the timing of claim settlements with creditors
and potential litigation. Additionally, a creditor could seek an injunction
against the making of distributions to our stockholders on the ground that the
amounts to be distributed were needed to provide for the payment of our
liabilities and expenses. Additionally, we could seek protection from creditors
under the federal bankruptcy code. Any action of this type could delay or
substantially diminish, or eliminate, the amount available for distribution to
our stockholders.

IF WE FAIL TO CREATE AN ADEQUATE CONTINGENCY RESERVE FOR PAYMENT OF OUR EXPENSES
AND LIABILITIES, OUR STOCKHOLDERS COULD BE HELD LIABLE FOR PAYMENT TO OUR
CREDITORS OF EACH SUCH STOCKHOLDER'S PRO RATA SHARE OF AMOUNTS OWED TO THE
CREDITORS IN EXCESS OF THE CONTINGENCY RESERVE, UP TO THE AMOUNT ACTUALLY
DISTRIBUTED TO SUCH STOCKHOLDER.

      If a plan of dissolution is proposed to and ratified and approved by our
stockholders, we will file a Certificate of Dissolution with the State of
Delaware dissolving the Company. Pursuant to the Delaware General Corporation
Law, we will continue to exist for three years after the dissolution becomes
effective or for such longer period as the Delaware Court of Chancery shall
direct, for the purpose of prosecuting and defending suits against us and
enabling us gradually to close our business, to dispose of our property, to
discharge our liabilities and to distribute to our stockholders any remaining
assets. Under the Delaware General Corporation Law, in the event we fail to
create an adequate contingency reserve for payment of our expenses and
liabilities during this three-year period, each stockholder could be held liable
for payment to our creditors of such stockholder's pro rata share of amounts
owed to creditors in excess of the contingency reserve, up to the amount
actually distributed to such stockholder.

      However, the liability of any stockholder would be limited to the amounts
previously received by such stockholder from us (and from any liquidating trust
or trusts) in the dissolution. Accordingly, in such event a stockholder could be
required to return all distributions previously made to such stockholder. In
such event, a stockholder could receive nothing from us under the plan of
dissolution. Moreover, in the event a stockholder has paid taxes on amounts
previously received, a repayment of all or a portion of such amount could result
in a stockholder incurring a net tax cost if the stockholder's repayment of an
amount previously distributed does not cause a commensurate reduction in taxes
payable. There can be no assurance that the contingency reserve established by
us will be adequate to cover any expenses and liabilities.

WE DO NOT EXPECT TO RECOGNIZE ANY MATERIAL REVENUE IN THE FUTURE

      We do not expect to recognize much, if any, additional revenue.
Furthermore, it may be difficult to collect receivables now that we have
announced our intent to wind down.

WE WILL CONTINUE TO INCUR THE EXPENSES OF COMPLYING WITH PUBLIC COMPANY
REPORTING REQUIREMENTS.

      We have an obligation to continue to comply with the applicable reporting
requirements of the Securities Exchange Act of 1934, as amended, referred to as
the "Exchange Act," even though compliance with such reporting requirements is
economically burdensome.

                                       28
<PAGE>
RECENT ACCOUNTING PRONOUNCEMENTS

      On July 30, 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". The statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." SFAS 146 is
effective for exit or disposal activities that are initiated after December 31,
2002. This statement did not have a material effect on the consolidated
financial statements.

      In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46")
"Consolidation of Variable Interest Entity". The term "variable interest" is
defined in FIN 46 as "contractual, ownership or other pecuniary interests in an
entity that change with changes in the entity's net asset value." Variable
interests are investments or other interests that will absorb a portion of an
entity's expected losses if they occur or receive portions of the entity's
expected residual returns if they occur. The Company does not expect the
recognition provisions of FIN 46 to have a material impact on the Company's
financial position or results of operations.

      In April 2003, the FASB amended and clarified financial accounting and
reporting for derivative instruments, including certain derivative instruments
embedded in other contracts and hedging activities under SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities, "through the
issuance of SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments
and Hedging Activities."SFAS No. 149 is effective for contracts entered into or
modified after June 30, 2003 and for hedging relationships designated after June
30, 2003. The Company's adoption of SFAS No. 149 in fiscal 2003 did not have a
material impact on its financial position or results of operations.

      In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity."SFAS
No. 150 modifies the accounting for certain financial instruments that, under
previous guidance, issuers could account for as equity. SFAS No. 150 requires
that those instruments be classified as liabilities in statements of financial
position. The Company's adoption of SFAS No. 150 in fiscal 2003 did not have a
material impact on its financial position or results of operations.

ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      INTEREST RATE RISK. Our investment policy was designed to maximize safety
and liquidity while maximizing yield within those constraints. At December 31,
2003, our investments consisted of U.S. Agency issues, letters of credit, and
money market funds. The weighted average maturity of our portfolio is 152 days.
The weighted average maturity of the portfolio was 278 days at December 31,
2003. Because of the relatively short-term nature of our investments, our
interest rate risk is not considered significant.

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements and related notes are included in Item 15
of this document.

                                       29
<PAGE>
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

None

ITEM 9A: CONTROLS AND PROCEDURES

(a) We carried out an evaluation, under the supervision and with the
participation of 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-14. 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.

(b) Upon completion of the sale of substantially all of our operating assets to
Open Wheel in February 2004, most of our employees resigned and accepted
employment with Open Wheel and we ceased operations. We are in the process of
winding up the affairs of the Company. We currently have two employees the Chief
Executive Officer and Chief Financial Officer and we also use temporary
accounting help in winding up the Companies affairs. Subsequently, we have had a
reduction in our accounting staff. We have reviewed and revised our internal
controls due to the reduction in staff and change in operations and believe we
have effective internal controls and proper approval and authorization processes
in place.

                                       30
<PAGE>
                                    PART III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The following table sets forth certain information with respect to each
director and executive officer of the Company as of August 13, 2004:

<TABLE>
<CAPTION>
                                                                                             Director
       Name                    Principal Occupation During the Last Five Years         Age    Since
       ----                    -----------------------------------------------         ---   --------
<S>                       <C>                                                          <C>   <C>
Christopher R. Pook,      Mr. Pook has served as President and CEO of the Company      63    January
  President and Chief     since December 2001. Prior to joining the Company, Mr.               2002
  Executive Officer,      Pook served as President of the Grand Prix Association
  Director                of Long Beach, Inc., a subsidiary of Dover Downs,
                          Entertainment, Inc. In 1973, Mr. Pook conceived the idea
                          of running a world-class automobile race through the
                          city streets of Long Beach, and his dream became a
                          reality when the initial event, a Formula 5000 event,
                          was staged in September 1975. Thereafter, the Long Beach
                          Grand Prix became a Formula One race and "The Toyota
                          Grand Prix of Long Beach" evolved into an annual event
                          on the World Championship Grand Prix circuit. Following
                          the 1983 event, Mr. Pook made a decision to change the
                          format of the Long Beach Grand Prix from Formula One to
                          CART Champ Cars. In 1996, the Grand Prix Association of
                          Long Beach, Inc., with Mr. Pook as President and Chief
                          Executive Officer, completed an initial public offering
                          of stock, and also acquired tracks in St. Louis and
                          Memphis. In 1998, this company was purchased by Dover
                          Downs Entertainment, Inc. (NYSE: DVD). Mr. Pook has
                          served as a member of the Board of Directors of Dover
                          Downs Entertainment, Inc. since 1998. Mr. Pook is a
                          Member of the Board of Directors of the Los Angeles
                          Organizing Committee for the 2012 Olympic Games; he is
                          Co-Chair of the Local Organizing Committee for the 2005
                          FINA World Swimming Championships and is Chairman of the
                          Board of the Long Beach Area Convention & Visitors
                          Bureau.

Thomas L. Carter,         Mr. Carter was elected Chief Financial Officer in           48        --
  Chief Financial         October 2000 and was first named Vice President of
  Officer                 Finance and Administration of CART, Inc. in March 1998
                          after serving as Director of Finance since February
                          1997. From 1995 to 1996, Mr. Carter was employed by
                          Rehman Robinson as a senior tax manager. From 1990 to
                          1995, Mr. Carter was employed by Deloitte & Touche as a
                          senior tax consultant. From 1973 to 1989, Mr. Carter
                          worked in various positions with the Michigan Department
                          of Treasury. Mr. Carter is a certified public
                          accountant.
</TABLE>

ITEM 11: EXECUTIVE COMPENSATION

      The following table discloses compensation received by each person who
served as CART's Chief Executive Officer during 2003 and its four other most
highly paid executive officers for the fiscal year ended December 31, 2003, as
well as their compensation for the fiscal years ended December 31, 2002 and
2001.


                                       31
<PAGE>
                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                    Annual                                   Long Term Compensation
                                                 Compensation                                        Awards
                                            -----------------------                      --------------------------------
                                                                                          Securities
                                                                                          Underlying
                                                                        Other Annual       Options/         All Other
Name and Principal Position                 Salary ($)    Bonus ($)   Compensation ($)     SARs (#)      Compensation ($)
---------------------------                 ----------    ---------   ----------------   -------------   ----------------
<S>                             <C>         <C>           <C>         <C>                <C>             <C>
Christopher R. Pook (1)         2003          $450,000    $ 67,000          (2)                   0          $29,792
  President and CEO             2002           375,000     169,000                          250,000           20,000(3)
                                2001            14,423     120,000                          450,000                0

Thomas L. Carter                2003          $210,000    $      0          (2)                   0          $10,747
  Chief Financial Officer       2002           210,000           0                           40,000            5,330(3)
                                2001           200,000      20,000                           50,000            3,435

David Clare (4)                 2003          $235,000    $      0          (2)                   0          $10,105
  Chief Operating Officer

J. Carlisle Peet, III (5)       2003          $175,000    $      0          (2)                   0          $ 7,635
  Vice President and Chief
  Legal Officer of CART, Inc.

Vicki O'Connor                  2003          $195,700    $      0          (2)                   0          $10,060
  President of Pro-Motion       2002           195,700           0                                0            5,285(3)
  Agency, Ltd.                  2001           190,000           0                            5,000            6,153
</TABLE>

(1)   Mr. Pook was elected as President and CEO in December 2001. He was not
      employed by CART prior to that time. He has entered into an amended
      employment agreement whereby he will be paid a base salary of $450,000 per
      year for 2004.

(2)   The aggregate amount of perquisite compensation to be reported herein is
      less than the lesser of $50,000 or 10% of the total annual salary and
      bonus reported for the named executive officer. No other annual
      compensation was paid or payable to the named executive officers in the
      years indicated.

(3)   Includes the payment of term life insurance premiums on behalf of the
      named executive officer, as follows: Mr. Pook ($2,580); Mr. Carter
      ($2,580); Mr. Clare ($2,580); Mr. Peet ($2,468); and Ms. O'Connor
      ($2,535). Includes the contributions to defined benefit plans on behalf of
      the named executive officer, as follows: Mr. Pook ($7,525); Mr. Carter
      ($8,167); Mr. Clare ($7,525); Mr. Peet ($5,167); and Ms. O'Connor
      ($7,525). Also includes the payment of premiums for life and disability
      insurance on behalf of Mr. Pook in the amount of $19,867.

(4)   Mr. Clare resigned as Chief Operating Officer in March 2004. Mr. Clare and
      the Company entered into a settlement agreement regarding Mr. Clare's
      employment contract with the Company whereby all claims relating to the
      agreement were released by Mr. Clare in exchange for a payment of $100,000
      to Mr. Clare.

(5)   Mr. Peet resigned as Vice President and Chief Legal Officer of CART, Inc.
      in February, 2004.


                                       32
<PAGE>
      Currently, there are only two employees of the Company. Christopher Pook,
the sole Director, President and CEO of the Company amended his employment
agreement on January 30, 2004. In the amendment, Mr. Pook agreed to waive all of
his potential payments related to a proposed change of control of Championship.
If a change of control did occur, Mr. Pook may have been entitled to a payment
equal to three times his current compensation and would receive additional
benefits. Mr. Pook and the Company agreed that Mr. Pook would continue to be
employed as President and CEO of the Company through December 18, 2004 and would
continue to receive his current monthly salary. Mr. Pook's salary on a
annualized basis is $450,000.

      Mr. Carter entered into an amendment to his employment agreement for the
Company effective February 9, 2004. Mr. Carter agreed to retain his position as
Chief Financial Officer, Vice President of Finance, Chief Accounting Officer,
and Treasurer. Mr. Carter will receive a salary of $210,000 for the year ended
December 31, 2004 along with additional benefits.

      Because Mr. Pook is the sole Director of the Company, there is no longer a
Compensation Committee. Mr. Pook's employment agreement was approved by the
Compensation Committee which was in place at the time the amendment to the
employment agreement was entered into.


                        OPTION GRANTS IN LAST FISCAL YEAR

      The following table provides information on option grants in 2003 to each
of the named executive officers.

<TABLE>
<CAPTION>
                                                      Individual Grants
                                        -----------------------------------------

                           Number of       % of Total
                          Securities        Options
                          Underlying       Granted to       Exercise                Grant Date
                            Options       Employees in       Price     Expiration    Present
        Name              Granted (1)   Fiscal Year (1)    ($/Share)      Date       Value ($)
        ----              -----------   ----------------   ---------   ----------   ----------
<S>                       <C>           <C>                <C>         <C>          <C>
Christopher R. Pook            0               --              --          --           --
Thomas L. Carter               0               --              --          --           --
David Clare                    0               --              --          --           --
J. Carlisle Peet, III          0               --              --          --           --
Vicki O'Connor                 0               --              --          --           --
</TABLE>

(1)   We did not grant any options during 2003

                          AGGREGATE OPTION EXERCISES IN
                        LAST FISCAL YEAR AND FISCAL YEAR-
                               END OPTION VALUES

      The following table provides information on option exercises in 2003 by
each of the named executive officers and the values of each of such officer's
unexercised options at December 31, 2003.


                                       33
<PAGE>
<TABLE>
<CAPTION>

                                                        Number of Securities      Value of Unexercised In-the-
                                                            Underlying                  Money Options at
                                                       Unexercised Options at           Fiscal Year-End
                                                         Fiscal Year-End                     (1)
                           Number of                ---------------------------   ----------------------------
                            Shares
                          Acquired on    Value
        Name               Exercise     Realized    Exercisable   Unexercisable   Exercisable    Unexercisable
        ----              -----------   --------    -----------   -------------   -----------    -------------
<S>                       <C>           <C>         <C>           <C>             <C>            <C>
Christopher R. Pook            0            0         383,333        316,667           0               0
Thomas L. Carter               0            0          62,500         47,500           0               0
David Clare                    0            0               0              0           0               0
J. Carlisle Peet, III          0            0           6,666         13,334           0               0
Vicki O'Connor                 0            0          26,667          5,833           0               0
</TABLE>

(1)   The value of unexercised options is based upon the difference between the
      exercise price and the average of the high and low market prices on
      December 31, 2003 of $0.10.

                       DIRECTOR COMPENSATION ARRANGEMENTS

      The following information relates to CART's compensation and reimbursement
practices during 2003 for directors who were not CART officers and who were not
affiliated with teams participating in CART events (Messrs. Andretti, Hardymon,
Henderson, Sanchez and Tucker). CART employees and those directors who are
affiliated with teams participating in CART events do not receive any
compensation for their Board activities.

      In addition to the cash compensation discussed below, members of the Board
of Directors who were not CART officers and who were not affiliated with teams
participating in CART events (Messrs. Andretti, Hardymon, Henderson, Sanchez and
Tucker) received options to purchase 10,000 shares of common stock when first
elected and options to purchase 5,000 shares upon each re-election. (The
exercise grant for 2003 was rescinded by the directors)

      During 2003, members of the Board of Directors who were not CART officers
and who were not affiliated with teams participating in CART events, were paid
an annual retainer of $25,000. All Board members were reimbursed for expenses
attendant to Board membership. Mr. Pook is currently the only Director and he is
not compensated separate from his duties as President and Chief Executive
Officer.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT AND RELATED STOCKHOLDER MATTERS

      The following table shows the amount of CART common stock beneficially
owned by any person or group known to us that is the beneficial owner of more
than 5% of CART's common stock as of August 13, 2004.


                                       34
<PAGE>
<TABLE>
<CAPTION>
                                   Aggregate Number           Percent of
                                      of Shares                 Shares
     Name and Address             Beneficially Owned          Outstanding
     ----------------             ------------------          -----------
<S>                               <C>                         <C>
Gerald R. Forsythe (1)                3,377,400                 22.95%
Forsythe Racing, Inc.
Indeck Energy Services, Inc.
1111 South Willis Avenue
Wheeling, IL  60090

FMR Corp. (2)                         1,471,600                  9.99%
Edward C. Johnson, III
Abigail P. Johnson
82 Devonshire Street
Boston, MA  02109

Jonathan P. Vannini (3)               1,255,000                  8.53%
828 Irwin Drive
Hillsborough, CA  94010

Gryphon Master Fund L.P.(4)             884,400                   6.0%
500 Crescent Court, Suite 270
Dallas, Texas 75201

Wheatons Holdings Limited (5)           920,900                   6.3%
17485 McLaren Road
Caledon Ontario
Canada L0N 1C0
</TABLE>

(1)   We have received this information regarding share ownership from the
      Schedule 13D/A that was filed with the SEC on September 12, 2002, and
      subsequent Form 4 filed with the SEC in February 2003. Mr. Forsythe has
      agreed to vote and exchange all shares he or his affiliated entities has
      acquired in excess of 15% of the outstanding stock consistent with the
      recommendations of the Board of Directors of CART on all strategic matters
      for a period of three years.

(2)   We have received this information regarding share ownership from the
      Schedule 13G/A that was filed with the SEC on February 17, 2004.

(3)   We have received this information regarding share ownership from the
      Schedule 13D/A that was filed with the SEC on November 29, 2001.

(4)   We have received this information regarding share ownership from the
      Schedule 13G/A that was filed with the SEC on February 9, 2004.

(5)   We have received this information regarding share ownership from the
      Schedule 13G that was filed with the SEC on August 15, 2003.

      The following table shows the amount of common stock of CART beneficially
owned (unless otherwise indicated) by CART's directors, the executive officers
of CART named in the Summary Compensation Table, and the directors and executive
officers of CART as a group. Except as otherwise indicated, all information is
as of August 13, 2004.

      The number of shares beneficially owned by each director or executive
officer is determined under rules of the Securities and Exchange Commission, and
the information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares as to
which the individual has the sole or shared voting power or investment power and
also any shares which the individual has the right to acquire as of December 31,
2003 through the exercise of stock options or other rights. Unless otherwise


                                       35
<PAGE>
indicated, each person has sole investment and voting power (or shares such
powers with his/her spouse) with respect to the shares set forth in the
following table.

<TABLE>
<CAPTION>
                            Name                                      Amount and              Percent of
                                                                       Nature of               Shares
                                                               Beneficial Ownership (1)     Outstanding(2)
                                                              --------------------------    --------------
<S>                                                           <C>                           <C>
Christopher R. Pook.....................................      383,333    Vested Options          2.6%

Thomas L. Carter........................................        3,000    Direct                   *
                                                               62,500    Vested Options

David Clare                                                         0                             *

J. Carlisle Peet, III**.................................        6,666    Vested options           *

Vicki O'Connor**........................................       26,667    Vested Options           *

All current directors and executive officers as a
   group (2) persons....................................        3,000    Direct                 3.27%
                                                                    0    Indirect
                                                              479,166    Vested Options
</TABLE>

*     Represents less than 1% of the Company's outstanding common stock.

**    Options forfeited in May 2004.

(1)   "Vested Options" are stock options which may be exercised as of December
      31, 2003.

(2)   Percentages are based upon 14,718,134 shares of common stock outstanding
      on March 31, 2004.

Section 16(a) Beneficial Ownership Reporting Compliance

      Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and holders of more than 10% of our common stock
to file with the Securities and Exchange Commission reports regarding their
ownership and changes in ownership of our stock. CART believes that during
fiscal 2003, its executive officers and directors complied with all Section
16(a) filing requirements. In making this statement, CART has relied upon the
written representations of its directors and officers.

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      We have historically entered into transactions with related parties,
because several of our directors and one of our significant shareholders are
team owners. Since we are not engaged in an active business for 2004, it is not
anticipated that there will be any additional material transactions with
affiliates other than completion of the Bankruptcy Plan and performance by the
Company of its obligations under the Asset Purchase Agreement and the Sanction
Agreement. We believe that it is necessary and appropriate to have team owners
involved as directors or significant shareholders of the Company because of
their unique knowledge of our business. We believe that all the transactions
which we have entered into with our directors or significant shareholders, are
comparable to the terms that we have in the past or could in the future enter
into with third parties with respect to each of these transactions. In order to
avoid conflicts of interest, any of our directors who are affiliated with an
entity that is entering into a transaction with us have not and will not vote on
any matters related to such transactions and may, in certain circumstances,
refrain from participating in any discussions related to such transactions.


                                       36
<PAGE>
      Gerald R. Forsythe, a 22.9% stockholder of the Company, is one of three
principal members of Open Wheel Racing Series, LLC, the other members being Mr.
Gentilozzi and Mr. Kalkhoven, which purchased the operating assets of CART, Inc.
pursuant to the Asset Purchase Agreement, entered into in February 2004. The
consideration paid to CART, Inc. for the purchase of such assets, along with the
stock of Pro-Motion Agency, Ltd. and CART Licensed Products, Inc. was total
consideration of $3.3 million in cash, the assumption by the buyer of $1.4
million in prize money owed to teams not affiliated with the principals of Open
Wheel, forgiveness of $1.3 million in prize money due teams affiliated with
principals of Open Wheel, including Mr. Forsythe and the assumption of certain
promoter, sponsorship, and other contracts. The agreement was approved by order
of the bankruptcy court at a hearing held on January 28, 2004.

      The following related party transactions occurred in 2003 and in prior
years:

      The related party transactions under "Purse Distributions, Entry Support
Program and Lease Arrangements" were all payments or transactions that were made
on the identical basis to all race teams, whether they were affiliated with
directors or significant shareholders or not affiliated. The payments payable to
related parties under the caption "Team Assistance Program" related to further
assistance that the Company provided to race teams to assure their participation
in the 2003 race season. The amounts payable to each race team varied, depending
upon the team's ability to raise third party sponsorship, the number of cars
that the team raced in 2003, their budget and other factors. The Company
determined that these payments were necessary in order to assure a proper field
for 2003 and believed that the amounts payable to each of the race teams
affiliated with a director was consistent with arrangements that the Company
could enter into with third parties. Both of these programs were developed to
insure the necessary participation in the series. Without this additional
funding, it was unlikely that there would have been 18 teams, which would have
resulted in defaults under certain of the Company's agreements with promoters
and television and could have resulted in severe financial consequences to the
Company.

      Purse Distributions, Year-end Point Fund, Entry Support Program and Team
Assistance. We have entered into transactions with entities that were affiliated
with our directors and/or 5% stockholders who were owners of our race teams.
Race teams that participated in the Champ Car World Series received purse
distributions on a per race basis and from the year end point fund, which
amounts were paid based solely upon their performance in specific races. All of
these payments were made to our race teams regardless of the affiliation with
our directors or significant stockholders. Open Wheel Racing Series, LLC
released CART, Inc. from any obligation relating to amounts due them for the
year-end point fund and assumed the obligation to pay the year-end point fund to
the other participants of the 2003 season as part of the Asset Purchase
Agreement entered into with the Company as discussed previously (with the
exception of the year-end point fund due Patrick Racing, Inc.) The following
table provides information with respect to payments made or accrued during 2003
by us to race teams that were affiliated with directors and/or significant
stockholders of CART:

<TABLE>
<CAPTION>
                                                    (paid)                (accrued)
Race Team/Affiliated Person                   Purse Distributions    Year-end Point Fund
---------------------------                   -------------------    -------------------
<S>                                           <C>                    <C>
Newman/Haas Racing/Carl A. Haas                 $ 1,479,500              $ 700,000
Forsythe Racing, Inc./Gerald R. Forsythe          1,576,000              1,150,000
Patrick Racing, Inc./U.E. Patrick                   454,250                130,000
Derrick Walker Racing, Inc./Derrick Walker          618,500                110,000
Rocketsports, Inc./Paul Gentilozzi                  420,250                100,000
PK Racing LLC/Kevin Kalkhoven                       332,250                  -----
</TABLE>


                                       37
<PAGE>
      In 2003, we leased engines and provided financial assistance to every team
that participated in the Champ Car World Series, including teams affiliated with
our directors and/or 5% stockholders. The financial assistance payments related
to two programs instituted for the 2003 season, the Entry Support Program (ESP)
and the Team Assistance Program. ESP provided up to $42,500 in cash payments to
teams, per race, for each car entered into the series.

      The Company entered into a sponsorship agreement with Ford Motor Company,
which provided in part, that Ford would lease to each of the teams Ford vehicles
for their use in 2003. For ease of administration, Ford leased these vehicles to
the Company and the Company subleased the vehicles to each team on a net net
basis. There was no net cost or benefit to the Company related to this
arrangement.

      The Company purchased one hundred (100) race engines from Cosworth Racing,
Inc. for a total purchase price of $4.0 million and agreed to pay for track
support in the amount of $1.5 million. The Company in turn leased these engines
to each team on the basis of $100,000 per entrant per year.

      The following table lists the amount of engine lease income we received
and Entry Support Payments we made to related parties for the 2003 race season.

<TABLE>
<CAPTION>
                                               Engine Lease Income       ESP Payments
Race Team/Affiliated Person                         from Teams             to Teams
---------------------------                    -------------------       ------------
<S>                                                 <C>                  <C>
Newman/Haas Racing/Carl A. Haas                     $ 200,000            $ 1,530,000
Forsythe Racing, Inc./Gerald R. Forsythe              200,000              1,530,000
Patrick Racing, Inc./U.E. Patrick                     100,000                765,000
Derrick Walker Racing, Inc./Derrick Walker            200,000              1,530,000
PK Racing LLC/Kevin Kalkhoven                         100,000                765,000
Rocket Sports, Inc./Paul Gentilozzi                   100,000                765,000
</TABLE>

      Team Assistance Program. The Team Assistance Program supplied an
additional $31.8 million in team assistance spread over the 2003 race season as
described above. The following table sets forth the Team Assistance Program
payments to teams affiliated with directors and/or 5% stockholders.

<TABLE>
<CAPTION>
Race Team/Affiliated Person                        Team Assistance Payments
---------------------------                        ------------------------
<S>                                                <C>
Newman/Haas Racing/Carl A. Haas                         $ 2,000,000
Patrick Racing, Inc./U.E. Patrick                         1,400,000
Derrick Walker Racing, Inc./Derrick Walker                5,925,000
Rocketsports, Inc./Paul Gentilozzi                        2,000,000
PK Racing LLC/Kevin Kalkhoven                             1,000,000
</TABLE>

PROMOTER AGREEMENTS

      Some of our directors or stockholders either controlled or were affiliated
with others who controlled racing venues which staged CART and other racing
events. We entered into the following agreements with entities associated with
directors or 5% stockholders:

      Carl A. Haas, a former director of the Company and a race team owner, was
a principal owner of Carl Haas Racing Teams, Ltd. and Texaco Houston Grand Prix
L.L.C. ("HGP"), each of which entered into Promoter Agreements with respect to
Champ Car World Series races at the Wisconsin State Park Speedway in Milwaukee,
Wisconsin and at a temporary road course in Houston, Texas. In the second
quarter of 2002 the Promoter Agreement for the Milwaukee race was renewed for
the 2002 event with the promoter having the option to extend for the 2003 and


                                       38
<PAGE>
2004 years. The sanction fees payable to CART under this agreement is similar to
those paid by independent race promoters. Pursuant to the Promoter Agreement,
entities affiliated with Mr. Haas have paid sanction fees to CART of $1.4 and
$1.7 million in the years 2003 and 2002 respectively. On May 31, 2003, CART,
Inc., entered into an agreement with the Wisconsin State Fair Park to take over
as organizer/promoter of the event from Carl Haas Racing Teams, Ltd. In
addition, we have incurred a total of $100,000 in sales costs and $100,000 in
marketing expenses in relation to our race at Wisconsin State Park Speedway
during 2002. The promoter agreement in regards to the Houston, Texas event
provided for races to be held starting in 1998 through 2003. The Houston, Texas
race was not held in 2002 and 2003 due to construction on the temporary circuit
in downtown Houston. Therefore, the promoter agreement has been terminated by
mutual agreement. Carl Haas Racing Teams, Ltd. paid a $500,000 termination fee
to CART and CART has received an option to acquire certain assets of HGP, used
in operating the Houston event, for $750,000. This option was exercised and
payment was made in January 2003.

      Gerald R. Forsythe, a race team owner and 22.9% stockholder, is a
principal owner of the entities which entered into Promoter Agreements with
respect to Champ Car World Series races in Monterrey, Mexico and Mexico City,
Mexico. These entities affiliated with Mr. Forsythe have paid sanction fees to
CART in the aggregate amount of $4.9 million and $6.1 million for 2003 and 2002
respectively.

      In addition, we have paid a total of $200,000 in sales costs and $200,000
in marketing expenses to these entities during 2002.

      In order to change the date of the Mexico City race as requested by Mr.
Forsythe's affiliated entity, we have paid another promoter $250,000. Mr.
Forsythe's affiliated entity reimbursed us for $125,000 of that expense.

      Gerald R. Forsythe is also a principal owner of an entity which entered
into a Promoter Agreement with respect to Champ Car World Series races in
Rockingham, England. The agreement provided for a race to be held beginning in
2001 through 2006. Following the cancellation of the 2002 race scheduled to be
run in Germany, officials at Rockingham expressed concern regarding the
viability of running a single event in Europe. In order to assure that the
Rockingham event could move forward in 2002, we negotiated an amendment to the
Promoter Agreement which reduced the sanction fee to $2.8 million and we assumed
certain costs, including freight and transportation, in the amount of $900,000.
In addition, the terms of the future years of the agreement, 2003-2006, were
subject to renegotiation. This renegotiation has subsequently resulted in the
cancellation of the remaining years of the agreement. In addition, we have paid
a total of $100,000 in sales costs and $400,000 in marketing expenses to this
entity during 2002.

      Floyd R. Ganassi Jr., a former director of the Company and a race team
owner, is a principal owner of Chicago Motor Speedway, LLC and has entered into
a Promoter Agreement with respect to a Champ Car World Series race at Chicago
Motor Speedway in Cicero (Chicago), Illinois. Pursuant to the terms thereof, a
Championship race was to be held through 2003. The Chicago Motor Speedway, LLC
was to pay sanction fees to CART of $2.0 million for 2002 and $2.1 million for
2003. In 2002, the Chicago Motor Speedway, LLC announced the suspension of all
race events at Chicago Motor Speedway. We then entered into an agreement with
the Chicago Motor Speedway, LLC where we rented the track for $850,000 in 2002
and promoted the race ourselves.


                                       39
<PAGE>
      OTHER TRANSACTIONS

      In addition to the above, we have entered into the following transactions
with related parties:

      Mr. Forsythe is also a principal owner of the entity that holds our
Mexican television rights through 2004. In return for these rights, we received
a minimum guarantee of $325,000 and $300,000 in 2003 and 2002 respectively. In
addition, we will receive 70% of the net profits, if any, until we reach
$500,000, $550,000 and $600,000 for each of the three years ending 2002, 2003
and 2004, respectively.

      Mr. Ganassi is also principal owner of Target Chip Ganassi Racing, Inc.,
which entered into an agreement by which Target Chip Ganassi Racing Inc. ran a
third car for a portion of the 2002 season. Pursuant to the terms thereof, we
paid Target Chip Ganassi Racing, Inc. $1.7 million for running the third car,
and we received the right to sell certain sponsorship space on that car.

      Ralph Sanchez, a director of the Company, is a principal owner of RAS
Development, Inc. which has entered into a five year lease agreement with the
Company for office space in Miami, Florida. Payments for this lease total
$80,292, $97,957, $99,081, $100,045, $101,008 and $16,861 for 2003, 2004, 2005,
2006, 2007 and 2008, respectively. The lease was terminated in December 2003, as
part of the wind-up of the operations in Miami for a payment of $43,941.44 and
Mr. Sanchez retained the deposit of $16,058.56.

PAYMENTS TO CART

      In addition to the payments described above, CART received revenues from
its race teams, including those affiliated with CART directors and/or 5%
stockholders, for credential, FIA licenses, drivers fees and other payments
based solely on participation in CART events and CART's self-promoted event.
During 2003, race teams affiliated with CART directors and/or 5% stockholders
made such payments to CART as follows:

<TABLE>
<S>                                                       <C>
        Forsythe Racing, Inc./Gerald R. Forsythe          $ 42,200
        Newman/Haas Racing/Carl A. Haas                     11,300
        Patrick Racing, Inc./U.E. Patrick                   60,000
        Derrick Walker Racing, Inc./Derrick Walker          32,950
        Rocketsports, Inc./Paul Gentilozzi                  10,750
        PK Racing LLC/Kevin Kalkhoven                       39,396
</TABLE>

      As part of the race in Miami, Florida, a special promotion was undertaken
whereby a rock music concert was cross-promoted in conjunction with the race
event. An agreement was entered into with Motorock, LLC, a rock concert
promoter, whose principals are Mr. Gentilozzi and Mr. Kalkhoven, who are also
principals in Open Wheel Racing Series, LLC., which purchased the assets of
CART, Inc. pursuant to the Asset Purchase Agreement as discussed above. The
Company received $141,000 from Motorock, LLC., in exchange for tickets,
hospitality and advertising rights at the race.

      In 2004, the Company is sanctioning the races for Open Wheel Racing
Series, LLC., which Mr. Forsythe, a 22.9% owner of the Company, is one of three
principal owners, the other members being Mr. Gentilozzi and Mr. Kalkhoven. The
Company receives $12,500 for each domestic race it sanctions and is reimbursed
for various expenses it incurs in sanctioning the events.


                                       40
<PAGE>
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information presented below discloses the aggregate fees billed to us for
each of the last two calendar years by Deloitte & Touche LLP, our independent
registered public accounting firm.

AUDIT FEES

Fiscal 2003 - $ 281,437         Fiscal 2002 - $126,819

This category includes fees for professional services rendered for the audit of
our annual financial statements and review of financial statements included in
our Forms 10-Q and services provided with statutory and regulatory filings
related to the terminated merger agreement with Open Wheel Racing, LLC.

AUDIT-RELATED FEES

Fiscal 2003 - $0                Fiscal 2002 - $0

This category includes fees for assurance and related services that are
reasonably related to the performance of the audit or review of our financial
statements and are not included in audit fees, above.

TAX FEES

Fiscal 2003 - $45,290           Fiscal 2002 - $31,346

This category includes fees for professional services that are rendered for tax
compliance, tax advice, and representation with tax authorities. The nature of
the services comprising the fees were for tax return reviews, advice regarding
federal and state tax audits, advice and representation regarding foreign tax
requirements and other tax advisory services.

ALL OTHER FEES

Fiscal 2003 - $1,651            Fiscal 2002 - $0

THIS CATEGORY INCLUDES ALL OTHER FEES NOT ASSOCIATED WITH SERVICES AS DESCRIBED
                          IN THE CLASSIFICATIONS ABOVE.


                                       41
<PAGE>
                                     PART IV

ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)   List of Documents Filed as Part of this Report:
(1)   Consolidated Financial Statements start on page F-1
(2)   Financial Statement Schedule Schedule II Valuation and Qualifying Accounts
      is on page S-1
(3)   Exhibits

      2.1   Chapter 11 Plan of CART, Inc. and Disclosure Statement filed in the
            United States Bankruptcy Court, Southern District of Indiana,
            Indianapolis Division.

      3.1   Certificate of Incorporation of the Company filed December 8, 1997
            (1)

      3.2   Bylaws of the Company (1)

      10.1  2001 Long Term Stock Incentive Plan (6)

      10.5  Form of Promoter Agreement (1)

      10.6  Promoter Agreement with Wisconsin State Park Speedway related to
            West Allis, Wisconsin dated June 5, 1996 (1)

      10.7  Promoter Agreement with Texaco Houston Grand Prix L.L.C. related to
            Houston, Texas dated July 28, 1997 (1)

      10.11 Form of Sponsorship Agreement (1)

      10.15 Promoter Agreement with Ganassi Group, L.L.C. related to Chicago,
            Illinois dated April 7, 1998 (2)

      10.19 Promoter Agreement with Monterrey Grand Prix related to Monterrey,
            Mexico dated March 30, 2000 (3)

      10.20 Promoter Agreement with Rockingham Motor Speedway related to
            Rockingham, England dated July 3, 2000 (4)

      10.21 Employment Agreement with Joseph F. Heitzler dated December 4, 2000
            (5)

      10.22 First Amendment to Championship Auto Racing Teams, Inc. Employment
            Agreement with Joseph F. Heitzler, dated December 4, 2001 (6)

      10.23 Employment Agreement with Christopher R. Pook as of December 18,
            2001 (6)

      10.24 Promoter Agreement with Grupo Automouilistico Nacional y Deportiuo,
            S. de R.L. de C.V. related to Mexico City, Mexico dated November 20,
            2001 (6)

      10.25 Television Agreement Promotion Entertainment of Mexico, LLC related
            to Mexican television rights dated February, 28, 2002 (6)

      10.26 Letter of Agreement with Chicago Motor Speedway, LLC related to the
            lease of Chicago Motor Speedway (the track) dated February 21, 2002
            (6)

      10.27 Amendment to the Sanction Agreement by and between the Company and
            Rockingham Motor Speedway dated as of August 16, 2002 (7)

      10.28 Form of Engine Lease Agreement (8)

      10.29 Form of Entrant Support and Participation Agreement (8)

      10.30 Form of FORD Vehicle Agreement (8)

      10.31 Team Assistance Agreement with Newman/Haas Racing, Inc. (8)

      10.32 Team Assistance Agreement with Newman/Haas Racing, Inc. (8)

      10.33 Team Assistance Agreement with Patrick Racing, Inc. (8)

      10.34 Team Assistance Agreement with Walker Racing, Inc. dated February
            14, 2003 (8)

      10.35 Team Assistance Agreement with Walker Racing, Inc. dated February
            14, 2003 (8)

      10.36 Chassis Upgrade Agreement with Walker Racing, Inc. dated January 29,
            2003 (8)

      10.37 Show Car Agreement with Walker Racing, Inc. dated February 19, 2003
            (8)

      10.38 Race Car Lease Agreement with Walker Racing, Inc. dated February 25,
            2003(8)

      10.39 Office Lease Agreement with RAS Development, Inc. dated March
            2003(8)

      10.40 Amendment to Employment Agreement between the Company and
            Christopher R. Pook, dated January 30, 2004

                                       42
<PAGE>
      10.41 Employment Agreement between the Company and Thomas L. Carter, dated
            February 9, 2004

      10.42 Conditional Agreement to Subordinate Parent Claim dated January 26,
            2004

      10.43 Agreement between CART, Inc. and Open Wheel Racing Series, LLC,
            dated March 2004 relating to the sanctioning of races

      21.1  Subsidiaries of the Registrant

      23.1  Consent of Deloitte & Touche LLP.

      99.1  Certification Pursuant to 18 U.S.C Section 1350

      99.2  Certification Pursuant to 18 U.S.C Section 1350


(1)   Incorporated by reference to exhibit filed as part of our Registration
      Statement on Form S-1 (Registration No. 333-43141)

(2)   Incorporated by reference to exhibit filed with our Quarterly Report on
      Form 10-Q for the quarter ended March 31, 1998.

(3)   Incorporated by reference to exhibit filed with our Quarterly Report on
      Form 10-Q for the quarter ended June 30, 2000.

(4)   Incorporated by reference to exhibit filed with our Annual Report on Form
      10-K for the year ended December 31, 2000.

(5)   Incorporated by reference to exhibit filed with our Quarterly Report on
      Form 10-Q for the quarter ended September 30, 2001.

(6)   Incorporated by reference to exhibit filed with our Annual Report on Form
      10-K for the year ended December 31, 2001.

(7)   Incorporated by reference to exhibit filed with our Quarterly Report on
      Form 10-Q for the quarter ended September 30, 2002.

(8)   Incorporated by reference to exhibit filed with our Annual Report on Form
      10-K for the year ended December 31, 2002.

We filed the following Form 8-Ks during the 3 months ended December 31, 2003:

1)    On October 3,, 2003, the Company filed a Form 8-K, pursuant to Item 5 of
      such form, reporting that we issued a Press Release announcing the
      resignation of Carl A. Haas from the Company's Board of Directors.

2)    On October 6, 2003, the Company filed a report on Form 8-K, pursuant to
      Item 5 of such form, reporting that we issued a Press Release announcing
      that we receive formal notification from the New York Stock Exchange that
      the Company had fallen below the continuing listing criteria.

3)    On October 16, 2003, the Company filed a report on Form 8-K, pursuant to
      Item 5 of such form, reporting that we issued a Press Release announcing
      that the Company stock would be quoted on the OTC Bulletin Board.

4)    On October 30, 2003, the Company filed a report on Form 8-K, pursuant to
      Item 5 of such form, reporting that we issued a Press Release reporting
      our earnings for the quarter ended September 30, 2003.

5)    On November 10, 2003, the Company filed a report on Form 8-K, pursuant to
      Item 5 of such form, reporting that we issued a Press Release announcing
      that the Company had received comments from the Securities and Exchange
      Commission to its preliminary


                                       43
<PAGE>
      proxy statement relating to the proposed merger with Open Wheel Racing
      Series, LLC and that we would promptly respond to those comments.

6)    On November 13, 2003, the Company filed a report on Form 8-K, pursuant to
      Item 5 of such form, reporting that we issued a Press Release in response
      to our request, Deloitte & Touche, LLP, the Company's independent auditor,
      would re-issue its report for the Company's financial statements,
      including our annual report and 10-K for the year-ended December 31, 2002
      and that such report would include an explanatory paragraph indicating
      that developments during the 9tth month period ended September 30, 2003
      raised substantial doubt about the Company's ability to continue as a
      going concern.

7)    On November 19, 2003, the Company filed a report on Form 8-K, pursuant to
      Item 5 of such form, reporting that we issued a Press Release announcing
      that we would hold a special meeting of stockholders on December 19, 2003
      to vote on the adoption of the announced merger agreement with Open Wheel
      Racing, LLC.

8)    On December 3, 2003, the Company filed a report on Form 8-K, pursuant to
      Item 5 of such form, reporting that we issued a Press Release announcing
      that the Company was informed by Open Wheel Racing Series that it believed
      that a number of conditions of the pending merger would not be satisfied
      and that it would not waive any conditions of closing.

9)    On December 16, 2003, the Company filed a report on Form 8-K, pursuant to
      Item 5 of such form, reporting that we issued a Press Release announcing
      that it had cancelled the special meeting of its stockholders and was
      scheduled to be held on December 19, 2003.

10)   On December 16, 2003, the Company filed a report on Form 8-K, pursuant to
      Item 5 of such form, reporting that we issued a Press Release announcing
      that it had entered into a Asset Purchase Agreement with Open Wheel Racing
      Series, LLC which would allow it to purchase the assets of CART, Inc.
      needed to operate the Champ Car World Series and purchase the stock of
      Pro-Motion Agency, Inc., one of our subsidiaries that operates the Toyota
      Atlantic Series. In addition, it was announced that Open Wheel Racing
      Series, LLC would assume certain rights and obligations under promoters,
      sponsors, and other contracts. The Asset Purchase Agreement also
      terminated the previously announced Merger Agreement.


                                       44
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

DATED: August 24, 2004                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                                            ------------------------------------
                                                         Registrant

                                            By  /s/ Christopher R. Pook
                                                -----------------------
                                                Christopher R. Pook
                                                Chief Executive Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:

/s/ Christopher R. Pook           Chief Executive               August 24, 2004
----------------------------      Officer and Director
Christopher R. Pook

/s/ Thomas L. Carter              Chief Financial and           August 24, 2004
----------------------------      Accounting Officer
Thomas L. Carter


                                       45
<PAGE>
CERTIFICATIONS

I, Christopher R. Pook, certify that:

      1. I have reviewed this annual report on Form 10-K of Championship Auto
Racing Teams, Inc.;

      2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

      3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

      4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e) for the

            (a) designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under our supervision,
      to ensure that material information relating to the registrant, including
      its consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;

            (b) [*]

            (c) evaluated the effectiveness of the registrant's disclosure
      controls and procedures and presented in this report our conclusions about
      the effectiveness of the disclosure controls and procedures, as of the end
      of the period covered by this report based on such evaluation;

            (d) disclosed in this report any change in the registrant's internal
      control over financial reporting that occurred during the registrant's
      most recent fiscal quarter (the registrant's fourth quarter in the case of
      an annual report) that has materially affected, or is reasonably likely to
      materially affect, the registrant's internal control over financial
      reporting; and

      5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

            (a) all significant deficiencies and material weaknesses in the
      design or operation of internal control over financial reporting, which
      are reasonably likely to adversely affect the registrant's ability to
      record, process, summarize and report financial information; and


                                       46
<PAGE>
            (b) any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's internal
      control over financial reporting.

Date: August 24, 2004

/s/ Christopher R. Pook
-----------------------
Christopher R. Pook
Chief Executive Officer

* - Temporarily modified to eliminate certain references to internal control
over financial reporting until the compliance date for management's internal
control report and related attestation.


                                       47
<PAGE>
CERTIFICATIONS

I, Thomas L. Carter, certify that:

      1. I have reviewed this annual report on Form 10-K of Championship Auto
Racing Teams, Inc.;

      2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

      3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

      4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e) for the

            (a) designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under our supervision,
      to ensure that material information relating to the registrant, including
      its consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;

            (b) [*]

            (c) evaluated the effectiveness of the registrant's disclosure
      controls and procedures and presented in this report our conclusions about
      the effectiveness of the disclosure controls and procedures, as of the end
      of the period covered by this report based on such evaluation;

            (d) disclosed in this report any change in the registrant's internal
      control over financial reporting that occurred during the registrant's
      most recent fiscal quarter (the registrant's fourth quarter in the case of
      an annual report) that has materially affected, or is reasonably likely to
      materially affect, the registrant's internal control over financial
      reporting; and

      5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):

            (a) all significant deficiencies and material weaknesses in the
      design or operation of internal control over financial reporting, which
      are reasonably likely to adversely affect the registrant's ability to
      record, process, summarize and report financial information; and


                                       48
<PAGE>
            (b) any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's internal
      control over financial reporting.

Date: August 24, 2004

/s/ Thomas L. Carter
--------------------
Thomas L. Carter
Chief Financial Officer

* - Temporarily modified to eliminate certain references to internal control
over financial reporting until the compliance date for management's internal
control report and related attestation.


                                       49
<PAGE>


                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                        CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
CHAMPIONSHIP AUTO RACING TEAMS, INC.
   Report of Independent Registered Public Accounting Firm.................  F-2

   Consolidated Balance Sheets as of December 31, 2003 and 2002............  F-3

   Consolidated Statements of Operations for the Years
         Ended December 31, 2003, 2002 and 2001............................  F-4

   Consolidated Statements of Stockholders' Equity for
         the Years Ended December 31, 2003, 2002 and 2001..................  F-5

   Consolidated Statements of Cash Flows for the Years
         Ended December 31, 2003, 2002 and 2001............................  F-6

   Notes to Consolidated Financial Statements..............................  F-7
</TABLE>


                                      F-1
<PAGE>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Championship Auto Racing Teams, Inc.

We have audited the accompanying consolidated balance sheets of Championship
Auto Racing Teams, Inc. and its subsidiaries (the "Company") as of December 31,
2003 and 2002, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 2003. Our audits also included the financial statement
schedule listed in the Index at Item 15. These financial statements and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements and consolidated financial statement schedule based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Championship Auto Racing Teams,
Inc. and its subsidiaries as of December 31, 2003 and 2002, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2003, in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

As discussed in Note 1 to the financial statements, a wholly-owned subsidiary of
the Company, CART, Inc. has filed a petition under Chapter 11 of the U.S.
Bankruptcy Code. Pursuant to the court order, the Company sold the assets of
CART, Inc. and the stock of Pro-Motion Agency, Inc. and CART Licensed Products,
Inc., ceased the operations of its wholly-owned subsidiary, Raceworks LLC, and
intends to liquidate its remaining assets. The accompanying consolidated
financial statements do not purport to reflect or provide for the consequences
of the bankruptcy proceedings. In particular, such financial statements do not
purport to show (a) as to assets, their realizable value on a liquidation basis
or their availability to satisfy liabilities, (b) as to prepetition liabilities,
the amounts that may be allowed for claims or contingencies, or the status and
priority thereof, (c) as to stockholders' accounts, the effect of any changes
that may be made in the capitalization of the Company, or (d) as to operations,
the effect of any changes that may be made in its business.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes 1, 18 and 20,
the Company's recurring loses from operations, stockholders' capital deficiency,
sale of substantially all the operating assets of its CART, Inc. as discussed
above, pending or threatened litigation against the Company and its subsidiaries
and the Company's stated intent to liquidate its remaining assets raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also discussed in Notes 1, 18 and 20. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

As discussed in Note 2 to the consolidated financial statements, in 2002, the
Company changed its method of accounting for goodwill and other intangible
assets.

DELOITTE & TOUCHE LLP
Indianapolis, Indiana
August 23, 2004


                                      F-2
<PAGE>
                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                           CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
                                                                                         AS OF DECEMBER 31,
                                                                                         ------------------
                                                                                         2003          2002
                                                                                       --------      --------
<S>                                                                                    <C>           <C>
ASSETS
CURRENT ASSETS:
         Cash and cash equivalents                                                     $  3,211      $  6,773
         Short-term investments                                                           7,356        79,489
         Accounts receivable  (net of allowance for doubtful accounts of $2,154
         and $1,282 in 2003 and 2002, respectively)                                       1,794         4,657
         Notes receivable (net of allowance for uncollectible notes of $250)                150            --
         Prepaid expenses and other current assets                                        1,557         1,474
         Income tax refundable                                                              694        10,087
         Deferred income taxes                                                               --         1,184
                                                                                       --------      --------
Total current assets                                                                     14,762       103,664

PROPERTY AND EQUIPMENT-NET                                                                4,985        10,403

OTHER ASSETS (net of accumulated amortization of $116 and $116 in 2003 and 2002
respectively)                                                                               298           384
                                                                                       --------      --------

TOTAL ASSETS                                                                           $ 20,045      $114,451
                                                                                       ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
         Notes payable                                                                 $  1,750      $     --
         Accounts payable                                                                 2,000         1,703
         Accrued liabilities:
                      Royalties                                                             120           173
                      Payroll                                                                51         2,455
                      Taxes                                                                  --           743
                      Other                                                                 377         4,879
         Liabilities of CART, Inc. subject to compromise (Note 20)                        5,626            --
         Deferred revenue                                                                    --         1,423
                                                                                       --------      --------
Total current liabilities                                                                 9,924        11,376

DEFERRED INCOME TAXES                                                                        --            57
COMMITMENTS AND CONTINGENCIES (NOTE 13)
STOCKHOLDERS' EQUITY:
         Preferred Stock, $.01 par value; 5,000,000 shares authorized, none issued
         and outstanding                                                                     --            --
         Common Stock, $.01 par value; 50,000,000 shares authorized, 14,718,134
         shares issued and outstanding at December 31, 2003 and 2002, respectively          147           147
         Additional paid-in capital                                                      87,765        87,765
         Accumulated earnings (deficit)                                                 (77,841)       14,511
         Accumulated other comprehensive income                                              50           595
                                                                                       --------      --------
Total stockholders' equity                                                               10,121       103,018
                                                                                       --------      --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                             $ 20,045      $114,451
                                                                                       ========      ========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>
                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (DOLLARS IN THOUSANDS EXCEPT LOSS PER SHARE)

<TABLE>
<CAPTION>
                                                                                YEAR ENDED DECEMBER 31,
                                                                                -----------------------
                                                                           2003           2002           2001
                                                                        ---------      ---------      ---------
<S>                                                                     <C>            <C>            <C>
REVENUES:
   Sanction fees                                                        $  24,720      $  36,607      $  47,226
   Sponsorship revenue                                                      7,777         10,150         12,314
   Television revenue                                                       1,889          4,538          5,228
   Race promotion revenue                                                  10,772          1,417             --
   Engine leases, rebuilds and wheel sales                                  1,900             --          1,286
   Other                                                                    2,638          4,533          4,209
                                                                        ---------      ---------      ---------
                 Total revenues                                            49,696         57,245         70,263

EXPENSES:
   Race distributions                                                      60,850         19,797         18,599
   Race expenses                                                            8,059         10,823         10,618
   Race promotion expense                                                  20,844          9,687             --
   Cost of engine rebuilds and wheel sales                                     --             --            348
   Television expense                                                      14,941         10,975             --
   Administrative and indirect expenses (includes severance expense
      of $0, $0 and $4,329 for 2003, 2002 and 2001 respectively)           20,567         27,756         35,605
   Merger charges                                                           1,953             --             --
   Litigation and settlement expense (note 13)                              2,660             --          3,547
   Relocation expense                                                          --          1,422             --
   Asset impairment and strategic charges (notes 4 and 12)                  9,580             --          8,548
   Depreciation and amortization                                            3,841          1,436          1,493
                                                                        ---------      ---------      ---------
                  Total expenses                                          143,295         81,896         78,758
                                                                        ---------      ---------      ---------

OPERATING LOSS                                                            (93,599)       (24,651)        (8,495)
   Realized gain on sale of investments                                       400             26             --
   Interest income                                                          1,274          3,762          7,033
                                                                        ---------      ---------      ---------

LOSS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE       (91,925)       (20,863)        (1,462)
INCOME TAX (EXPENSE) BENEFIT                                                 (427)         7,302            512
                                                                        ---------      ---------      ---------
LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE                        (92,352)       (13,561)          (950)

CUMULATIVE EFFECT OF ACCOUNTING CHANGE (NET OF TAX)                            --           (956)            --
                                                                        ---------      ---------      ---------
NET LOSS                                                                $ (92,352)     $ (14,517)     $    (950)
                                                                        =========      =========      =========
LOSS PER SHARE BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE:
   BASIC                                                                $   (6.27)     $   (0.92)     $   (0.06)
                                                                        =========      =========      =========
   DILUTED                                                              $   (6.27)     $   (0.92)     $   (0.06)
                                                                        =========      =========      =========
LOSS PER SHARE:
   BASIC                                                                $   (6.27)     $   (0.99)     $   (0.06)
                                                                        =========      =========      =========
   DILUTED                                                              $   (6.27)     $   (0.99)     $   (0.06)
                                                                        =========      =========      =========
WEIGHTED AVERAGE SHARES OUTSTANDING:
   BASIC and DILUTED                                                       14,718         14,718         15,289
                                                                        =========      =========      =========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>
                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                               COMMON STOCK             ADDITIONAL      ACCUMULATED
                                               ------------               PAID-IN        EARNINGS
                                          SHARES          AMOUNT          CAPITAL        (DEFICIT)
                                          ------          ------          -------        ---------
<S>                                     <C>             <C>             <C>             <C>
BALANCES, JANUARY 1, 2001                   15,765             158      $  103,130      $   29,978
     Net loss                                   --              --              --            (950)
     Unrealized gain on investments             --              --              --              --

   Comprehensive loss                           --              --              --              --

   Exercise of options                           7              --             109              --
   Acquisition and retirement of
      common stock                          (1,054)            (11)        (15,474)             --
                                        ----------      ----------      ----------      ----------
BALANCES, DECEMBER 31, 2001                 14,718             147          87,765          29,028
     Net loss                                   --              --              --         (14,517)
     Unrealized loss on investments             --              --              --              --
     Reclassification adjustment                --              --              --              --

     Comprehensive loss                         --              --              --              --
                                        ----------      ----------      ----------      ----------
BALANCES, DECEMBER 31, 2002                 14,718             147          87,765          14,511
     Net loss                                   --              --              --         (92,352)
     Unrealized loss on investments             --              --              --              --

     Comprehensive loss                         --              --              --              --
                                        ----------      ----------      ----------      ----------
BALANCES, DECEMBER 31, 2003                 14,718      $      147      $   87,765      $  (77,841)
                                        ==========      ==========      ==========      ==========
</TABLE>

<TABLE>
<CAPTION>
                                         ACCUMULATED
                                           OTHER
                                        COMPREHENSIVE   STOCKHOLDERS'   COMPREHENSIVE
                                        INCOME (LOSS)      EQUITY       INCOME (LOSS)
                                        -------------      ------       -------------
<S>                                     <C>             <C>             <C>
BALANCES, JANUARY 1, 2001                $      628      $  133,894
     Net loss                                    --            (950)     $     (950)
     Unrealized gain on investments             368             368             368
                                                                         ----------
   Comprehensive loss                            --              --      $     (582)
                                                                         ==========
   Exercise of options                           --             109
   Acquisition and retirement of
      common stock                               --         (15,485)
                                         ----------      ----------
BALANCES, DECEMBER 31, 2001                     996         117,936
     Net loss                                    --         (14,517)     $  (14,517)
     Unrealized loss on investments            (384)           (384)           (384)
     Reclassification adjustment                (17)            (17)            (17)
                                                                         ----------
     Comprehensive loss                          --              --      $  (14,918)
                                         ----------      ----------      ==========
BALANCES, DECEMBER 31, 2002                     595         103,018
     Net loss                                    --         (92,352)     $  (92,352)
     Unrealized loss on investments            (545)           (545)           (545)
                                                                         ----------
     Comprehensive loss                          --              --      $  (92,897)
                                         ----------      ----------      ==========
BALANCES, DECEMBER 31, 2003              $       50      $   10,121
                                         ==========      ==========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>
                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                 YEAR-ENDED DECEMBER 31,
                                                                                 -----------------------
                                                                            2003           2002           2001
                                                                         ---------      ---------      ---------
<S>                                                                      <C>            <C>            <C>
CASH FLOW FROM OPERATING ACTIVITIES:
     Net loss                                                            $ (92,352)     $ (14,517)     $    (950)
     Adjustments to reconcile net loss to net cash provided by
     (used in) operating activities:
     Cumulative effect of accounting change (net of tax)                        --            956             --
     Depreciation and amortization                                           4,168          1,436          1,493
     Net loss from sale/disposal of property and equipment                     590             16          1,975
     Asset impairment and impairment of goodwill                             9,580             --          5,628
     Deferred income taxes                                                   1,127          1,946         (1,208)
     Changes in asset and liabilities that provided (used) cash:
          Accounts and notes receivable                                      3,190            538            383
          Inventory, prepaids and other assets                                 134          1,344         (2,159)
          Refundable income tax                                              9,393        (10,087)            --
          Accounts payable                                                   3,420         (1,306)         1,034
          Accrued liabilities                                               (6,924)        (1,938)         6,320
          Deferred revenue                                                  (1,602)           (88)          (941)
          Deposits                                                              --             --           (778)
                                                                         ---------      ---------      ---------
                 Net cash provided by (used in) operating activities       (69,276)       (21,700)        10,797

CASH FLOWS FROM INVESTING ACTIVITIES:
     Payments for purchase of Raceworks (net of cash acquired)                (833)            --             --
     Purchase of investments                                                (7,054)      (138,698)       (60,950)
     Proceeds from sale of investments                                      78,642        146,429         71,903
     Notes receivable                                                         (150)            --          2,682
     Acquisition of property and equipment                                  (3,949)        (7,050)          (880)
     Proceeds from sale of property and equipment                               81             27             86
     Acquisition of trademark                                                   --             --             (1)
                                                                         ---------      ---------      ---------
                 Net cash investing activities                              66,737            708         12,840

CASH FLOWS FROM FINANCING ACTIVITIES:
     Payments on notes payable                                              (1,023)            --             --
     Issuance of common stock                                                                  --            109
     Repurchase of common stock                                                                --        (15,485)
                                                                         ---------      ---------      ---------
                 Net cash (used in) financing activities                    (1,023)            --        (15,376)
                                                                         ---------      ---------      ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        (3,562)       (20,992)         8,261
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                               6,773         27,765         19,504
                                                                         ---------      ---------      ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                 $   3,211      $   6,773      $  27,765
                                                                         =========      =========      =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the year for:
            Income taxes                                                 $     489      $       1      $   3,189
                                                                         =========      =========      =========
            Interest                                                     $      --      $      --      $       5
                                                                         =========      =========      =========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>
                      CHAMPIONSHIP AUTO RACING TEAMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION AND CHAPTER 11 FILING

      CART, Inc., ("CART") (a Michigan corporation) was organized as a
not-for-profit corporation in 1978, with its main purpose being to promote the
sport of automobile racing, primarily open-wheel type racing cars. As of January
1, 1992, the entity became a for-profit corporation and continued to use the
CART name.

      In December 1997, Championship Auto Racing Teams, Inc., (a Delaware
corporation) was formed to serve as a holding company for CART and its
subsidiaries (the "Reorganization"). Each outstanding share of common stock of
CART was acquired in exchange for 400,000 shares of common stock of the Company.
References to the "Company" mean Championship Auto Racing Teams, Inc. and its
subsidiaries.

      Championship Auto Racing Teams, Inc., through CART, its wholly-owned
subsidiary, owned, operated and sanctioned the open-wheel motorsports series
known in 2003 as the Bridgestone Presents the Champ Car World Series Powered By
Ford. CART was responsible for organizing, marketing and staging each of the
races in the Champ Car World Series. The Company also acted as a promoter at
certain events. The Company staged events at four different types of tracks,
including superspeedways, ovals, temporary road courses and permanent road
courses, each of which required different skills and disciplines from the
drivers and teams.

      On August 18, 2003, we publicly announced that we had received a proposal
from Open Wheel Racing Series ("Open Wheel") related to the acquisition of the
Company and that we were engaged in negotiations regarding a possible
transaction with Open Wheel.

      On August 24, 2003, we publicly announced that our board of directors had
instructed management to continue negotiating with Open Wheel with respect to
all terms related to a possible acquisition of the Company. The Company, Open
Wheel and their respective advisors continued to engage in negotiations
regarding the terms of a possible transaction and related definitive agreements.

      On September 10, 2003, representatives of the Company, Open Wheel and Open
Wheel Acquisition Corp., a wholly-owned subsidiary of Open Wheel, executed and
delivered the merger agreement and other related agreements and issued a joint
press release announcing the proposed transaction.

      On December 2, 2003, we announced that representatives of Open Wheel had
informed us that Open Wheel believed that a number of conditions of the pending
merger between the parties would not be satisfied by the time of the special
meeting of stockholders that was scheduled for December 19, 2003.

      On December 15, 2003, we announced that we had entered into an Asset
Purchase Agreement ("the Agreement") with Open Wheel. The Agreement would allow
Open Wheel to purchase the assets of CART, Inc. needed to operate the Champ Car
World Series and the stock of Pro-Motion Agency, Inc., our subsidiary that
operates the Toyota Atlantics series and CART Licensed Products, Inc., our
subsidiary that operates our licensed merchandise function. In addition, Open
Wheel would assume from us and CART, Inc. the rights and obligations under
certain promoter, sponsor and other contracts. Open Wheel stated that it
intended to continue to operate the Champ Car World Series and the Toyota
Atlantic series. The total consideration that would be paid under the agreement
was $3.0 million less $1.5 million in 2003 prize money to teams who were not
affiliated with Open Wheel; which was an obligation of CART, Inc. that would be
assumed by Open Wheel. The Agreement terminated the previously announced merger
agreement that we had entered into with Open Wheel on September 10, 2003.

      On December 16, 2003, CART, Inc. filed a petition under Chapter 11 of the
U.S. Bankruptcy

                                      F-7
<PAGE>
Code in the United States Bankruptcy Court Southern District of Indiana (RE
CART, Inc., Case No. 03-23385-FJO-11, See Note 19).

      An Amendment by Interlineation (the "Amendment") with respect to the
Agreement was entered into on January 15, 2004 to reflect the change in
consideration and the assumption of certain claims.

      On February 13, 2004, the assets of CART, Inc, the stock of Pro-Motion
Agency, Inc. and CART Licensed Products, Inc., were sold to Open Wheel for total
cash consideration of $3.3 million, assumption of liabilities of $1.4 million in
2003 prize money to teams who were not affiliated with Open Wheel which was an
obligation of CART, Inc., forgiveness of $1.3 million in prize money due
principles of Open Wheel which was an obligation of CART, Inc. and the
assumption of certain promoter, sponsor and other contracts, pursuant to an
order of the bankruptcy court at a hearing held on January 28, 2004. CART, Inc.
continues to operate as debtor-in-possession under the Bankruptcy Code in order
to wind up its affairs. On July 23, 2004 CART, Inc. filed a Chapter 11 plan (the
"Plan") and disclosure statement (the "Disclosure Statement") with the
bankruptcy court (See Note 20).

      We currently intend to liquidate our remaining assets, pay off our
remaining liabilities, and complete the process of liquidation and winding up
the Company's affairs as soon as practicable. Our Board of Directors has not
adopted a plan of liquidation and dissolution at this time, but will consider
this option when the liquidation and bankruptcy of our subsidiary CART, Inc. is
complete and after approval by our shareholders. In the event that our Board of
Directors adopts a plan of liquidation and dissolution, we would expect to incur
liquidation expenses, in addition to payments of ongoing operating expenses and
settlement of existing or potential obligations. Liquidation expenses may
include, among others, employee salaries, severance and related costs, legal and
accounting fees, as well as payments to a liquidation trustee. While we cannot
currently make a precise estimate of the expenses, we believe that a significant
portion of our current cash may be required to pay the above expenditures.

      The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed above, the Company's
intention to liquidate the remaining assets, pay off the remaining liabilities,
and complete the process of liquidation and dissolution of the Company's affairs
raise substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

      Upon completion of the sale of substantially all of our operating assets
to Open Wheel in February 2004, most of our employees resigned and accepted
employment with Open Wheel and CART, Inc. ceased operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      PRINCIPLES OF CONSOLIDATION. The consolidated financial statements of the
Company include the financial statements of Championship Auto Racing Teams, Inc.
and its wholly-owned subsidiaries - CART, Inc., American Racing Series, Inc.
("ARS"), Pro-Motion Agency, Ltd., CART Licensed Products, Inc and as of March 7,
2003, Raceworks LLC (See Note 10). At the end of the 2001 season, the Company
discontinued the operations of American Racing Series, Inc. All significant
intercompany balances have been eliminated in consolidation.

      PROPERTY AND EQUIPMENT. Property and equipment have been written down to
their fair values (see asset impairment Note 12) and were depreciated using the
straight-line and accelerated methods over their estimated useful lives which
range from 3 to 20 years. Leasehold improvements are amortized over the shorter
of the life of the leases or the remaining useful life of the leasehold
improvements.

      ASSET IMPAIRMENTS. In accordance with Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), long-lived assets to be held and used by the Company are
reviewed for impairment when events or circumstances indicate costs may not be
recoverable. Impairment losses on long-lived assets are recognized when book
values exceed expected undiscounted future

                                      F-8
<PAGE>
cash flows with the impairment measured on a discounted future cash flow basis
(see asset impairment footnote 12).

      REVENUE RECOGNITION. Substantially all of the Company's revenue is derived
from sanction fees, promotion revenues, sponsorship revenues, television
revenues, engine leases and other miscellaneous revenue. Sanction fee revenues
are fees paid to the Company by track promoters to sanction a Champ Car event at
the race venue and to provide the necessary race management. In 2003 and 2002,
the Company self-promoted certain events. Revenues received for events the
Company promotes are recorded as race promotion revenues. The Company receives
sponsorship revenues from companies who desire to receive brand and product
exposure in connection with Champ Car races. Pursuant to broadcast agreements,
the Company generates revenues from advertising sales and for the right to
broadcast the races, with revenues based upon viewership with a minimum
guarantee for contracts through 2001 and for certain international contracts in
2002. In 2003 and 2002, the Company bought the air-time and paid for production
for certain races and received the advertising inventory for certain races. The
Company also receives revenues from royalty fees paid for licenses to use
service marks of the Company, various drivers, teams, tracks and industry
sponsors for merchandising programs and product sales.

      Recognition of revenue from race sanction agreements is deferred until the
event occurs. Sponsorship revenue and engine lease revenue are recognized
ratably over the period covered by the agreement. Barter revenue is recognized
at the time of the event. Television revenue for rights sales is recognized
ratably over the race schedule and television advertising revenue is recognized
when the advertising is aired. Other revenues include membership and entry fees,
contingency awards money, rights fees and royalty income. Membership and entry
fees and contingency award money are recognized ratably over the race schedule.
Royalty income is recognized as the related product sales occur or on a monthly
basis based on a minimum guarantee.

      CASH AND CASH EQUIVALENTS. Cash and cash equivalents include investments
with original maturities of three months or less at the date of original
acquisition.

      SHORT-TERM INVESTMENTS. The Company's short-term investments are
categorized as available-for-sale, as defined by Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". Unrealized holding gains and losses are reflected
as a net amount in a separate component of stockholders' equity as accumulated
other comprehensive income (loss) until realized. For the purpose of computing
realized gains and losses, cost is identified on a specific identification
basis.

      GOODWILL. In June 2001, the FASB issued SFAS No. 142, "Goodwill and
Intangible Assets". The statement requires companies to discontinue amortizing
goodwill and certain intangible assets with indefinite useful lives. Instead,
goodwill and intangible assets with indefinite useful lives will be tested for
impairment upon adoption of the statement and annually thereafter. The Company
performs an annual impairment review for intangible assets during the fourth
quarter of each year, commencing with the fourth quarter of 2002. As a result of
adoption, the Company no longer records amortization expense related to goodwill
or intangible assets with indefinite useful lives.

      The Company adopted SFAS No. 142, effective January 1, 2002, which
resulted in a one-time, non-cash charge of $1.5 million, or $956,000 net of tax
benefit of $514,000, to write-off the value of its goodwill. The goodwill was
recorded under the purchase method of accounting for the purchases of Pro-Motion
Agency, Inc. and CART Licensed Products, LP, on April 10, 1998 and January 1,
1999, respectively. Such charge is non-recurring in nature and is reflected as a
cumulative effect of an accounting change in the accompanying consolidated
statements of operations. Previous to the adoption of SFAS No. 142, the Company
had accounted for its goodwill and intangible assets in accordance with the
accounting standards existing at the time, and the Company's analyses did not
result in recognition of any impairment loss prior to the adoption of SFAS No.
142, except as discussed in Note 10.

      Under SFAS No. 142, goodwill impairment is deemed to exist if the carrying
value of a reporting unit exceeds its estimated fair value. In calculating the
impairment charge, the fair values of the reporting units were estimated using a
discounted cash flow methodology.


                                      F-9
<PAGE>
      A reconciliation of net loss and loss per share, adjusted to exclude
amortization expense, net of tax, for the period prior to adoption and the
cumulative effect of accounting change recognized in the year of adoption, is as
follows:

<TABLE>
<CAPTION>
                                                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                                 FOR THE YEARS ENDED
                                                             DECEMBER 31, 2003    DECEMBER 31, 2002    DECEMBER 31, 2001
                                                             -----------------    -----------------    -----------------
<S>                                                          <C>                  <C>                  <C>
Reported net loss                                               $    (92,352)             (14,517)        $       (950)
Add back: Goodwill amortization, net of tax                               --                   --                   27
Add back: Trademark amortization, net of tax                              --                   --                   17
Cumulative effect of accounting change, net of tax                        --                  956                   --
                                                                ------------         ------------         ------------
Pro Forma net loss                                              $    (92,352)        $    (13,561)        $       (906)
                                                                ============         ============         ============

Basic and Diluted:
     Reported net loss per share                                $      (6.27)        $      (0.99)        $      (0.06)
     Amortization, net of tax                                             --                   --                   --
     Cumulative effect of accounting change, net of  tax                  --                 0.07                   --
                                                                ------------         ------------         ------------
     Pro Forma loss per share                                   $      (6.27)        $      (0.92)        $      (0.06)
                                                                ============         ============         ============
</TABLE>

      In the first quarter of 2003, the Company recorded goodwill in conjunction
with the purchase described in Note 10 - Acquisition of Raceworks, LLC.

      Operating results and cash flows of Raceworks, LLC were significantly
lower than expected during the quarter ended September 30, 2003 as a result of
the event promoted by Raceworks, LLC in September in Miami. Based on those
results and other qualitative information, the future earnings forecasts were
revised. As a result of management's analysis, the Company recognized a non-cash
asset impairment charge of $1,262,000 to write-off goodwill and other intangible
assets related to the purchase of Raceworks, LLC. The fair value of the
reporting unit was estimated using the present value of expected future cash
flows. Under SFAS No. 142, goodwill impairment is deemed to exist if the
carrying value of a reporting unit exceeds its estimated fair value. The
Company's reporting units are generally consistent with the operating segments
identified in Note 16 - Segment Reporting. Raceworks, LLC, a wholly-owned
subsidiary included in the race promotions segment, is also a reporting unit.

      MANAGEMENT ESTIMATES. The preparation of the consolidated 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 amounts of assets and liabilities and disclosure of
contingent assets and liabilities at December 31, 2003 and 2002, and the
reported amounts of revenues and expenses during the periods presented.
Specifically, management made significant estimates in assets and liabilities
pursuant to the Asset Purchase Agreement and bankruptcy filing for the
year-ended December 31, 2003. The actual outcome of the estimates could differ
from the estimates made in the preparation of the consolidated financial
statements.

      STOCK BASED COMPENSATION. On December 31, 2002, the FASB issued SFAS No.
148, "Accounting for Stock-Based Compensation-Transition and Disclosure." This
statement amends SFAS Statement No. 123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for a voluntary
change to the fair value based methods of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure requirements of
SFAS 123 to require prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results.

      As permitted by SFAS No. 123, the Company has chosen to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB No. 25") in accounting for its stock options granted to employees and
directors. Under APB No. 25, the Company does not recognize compensation expense
on the issuance of its stock options because the option terms are

                                      F-10
<PAGE>
fixed, and the exercise price equals the market price of the underlying stock on
the grant date.

      However, as required by SFAS No. 123, the Company has calculated pro forma
information as if it had determined compensation cost based on the fair value at
the grant date for its stock options granted to employees and directors. There
were no options granted for the year-ended December 31, 2003. In accordance with
SFAS No.123, for the year ended December 31, 2002, the fair value of option
grants is estimated on the date of grant using the Black-Scholes option pricing
model for pro-forma purposes with the following assumptions used for all grants:
expected volatility of 71%, expected dividend yield of 0%, risk-free interest
rate of 3% and an expected life of 10 years. For the year ended December 31,
2001, the fair value of option grants is estimated on the date of grant using
the Black-Scholes option-pricing model for pro forma purposes with the following
assumptions used for all grants: expected volatility of 30%, expected dividend
yield of 0%, risk-free interest rate of 4% and an expected life of 10 years. Had
the Company determined compensation cost based on the fair value at the grant
date for its stock under SFAS No. 123, net loss and diluted loss per share would
have been reduced to the pro forma amounts indicated below for the years ended
December 31:

<TABLE>
<CAPTION>
                                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
NET LOSS                                                                2003            2002            2001
                                                                     ----------      ----------      ----------
<S>                                                                  <C>             <C>             <C>
As reported                                                          $  (92,352)     $  (14,517)     $     (950)
Total stock-based employee compensation expense determined under
   the fair value based method, net of related tax effects               (2,200)         (2,065)         (1,715)
                                                                     ----------      ----------      ----------
Pro forma                                                            $  (94,552)     $  (16,582)     $   (2,665)
                                                                     ==========      ==========      ==========

DILUTED LOSS PER SHARE
As reported                                                          $    (6.27)     $    (0.99)     $    (0.06)
Total stock-based employee compensation expense determined under
   the fair value based method, net of related tax effects                (0.15)          (0.14)          (0.11)
                                                                     ----------      ----------      ----------
Pro forma                                                            $    (6.42)     $    (1.13)     $    (0.17)
                                                                     ==========      ==========      ==========
</TABLE>

      ACCOUNTING PRONOUNCEMENTS. On July 30, 2002, the FASB issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities". The
statement addresses financial accounting and reporting for costs associated with
exit or disposal activities and nullifies Emerging Issues Task Force (EITF)
Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." SFAS 146 is effective for exit or disposal activities that are
initiated after December 31, 2002. This statement did not have a material effect
on the consolidated financial statements.

      In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46")
"Consolidation of Variable Interest Entities." and during December 2003 issued
Interpretation 46 ("FIN 46R") "Consolidation of Variable Interest Entities, and
Interpretation of ARB 51". The term "variable interest" is defined in FIN 46 as
"contractual, ownership or other pecuniary interests in an entity that change
with changes in the entity's net asset value." Variable interests are
investments or other interests that will absorb a portion of an entity's
expected losses if they occur or receive portions of the entity's expected
residual returns if they occur. FIN 46R defers the effective date of FIN 46 for
certain entities and makes several other changes to FIN 46. The Company does not
expect the recognition provisions of FIN 46R to have a material impact on the
Company's financial position or results of operations.

      In April 2003, the FASB amended and clarified financial accounting and
reporting for derivative instruments, including certain derivative instruments
embedded in other contracts and hedging activities under SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities, "through the
issuance of SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments
and Hedging Activities."SFAS No. 149 is effective for contracts entered into or
modified after June 30, 2003 and for hedging relationships designated after June
30, 2003. The Company's adoption of SFAS No. 149 in fiscal 2003 did not have a
material impact on its financial position or results of operations.

      In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments

                                      F-11
<PAGE>
with Characteristics of both Liabilities and Equity."SFAS No. 150 modifies the
accounting for certain financial instruments that, under previous guidance,
issuers could account for as equity. SFAS No. 150 requires that those
instruments be classified as liabilities in statements of financial position.
The Company's adoption of SFAS No. 150 in fiscal 2003 did not have a material
impact on its financial position or results of operations.

      RECLASSIFICATIONS. Certain reclassifications have been made to the 2002
and 2001 consolidated financial statements in order for them to conform to the
2003 presentation.

3. SHORT-TERM INVESTMENTS

      The following is a summary of the estimated fair value of
available-for-sale short-term investments by balance sheet classification at
December 31:

<TABLE>
<CAPTION>
                                                              GROSS UNREALIZED
                                                              ----------------
(IN THOUSANDS)                     COST      FAIR VALUE      GAIN         LOSS
                                   ----      ----------      ----         ----
<S>                              <C>         <C>           <C>          <C>
2003
U.S. agencies securities         $  7,306     $  7,356     $     50     $     --
                                 ========     ========     ========     ========

2002
Letters of credit                $     30     $     30     $     --     $     --
Corporate bonds                     2,538        2,556           18           --
U.S. agencies securities           76,003       76,903          900            2
                                 --------     --------     --------     --------
Total short-term investments     $ 78,571     $ 79,489     $    918     $      2
                                 ========     ========     ========     ========
</TABLE>

      Proceeds from sales of investments were approximately $78.6 million and
$146.4 million in 2003 and 2002, respectively. In 2003 and 2002, gross gains and
losses on such sales were not significant.

      Contractual maturities range from less than one year to two years. The
weighted average maturity of the portfolio does not exceed one year.

4. NOTES RECEIVABLE

      In May 2003, the Company entered into an agreement with a third party
whereby we paid for the costs of capital improvements retained by the third
party necessary to stage an event which we promoted. We accepted an unsecured
note of $750,000 for said improvements, to be collected, without interest over
five years. The note was to be repaid over the life of the agreement at $75,000
per year and a final payment of $450,000 due in the fifth year. The Company
imputed interest on the note at a rate of 6% and recorded a discount which
reduced the note by $46,000. In November 2003, the Company terminated the
agreement and according to the terms of the contract the note was forgiven. The
note was written-off in during the year end December 31, 2003.

      In June 2003, the Company entered into an amendment to a sanction
agreement with a promoter where we accepted a note in the amount of $400,000 as
payment for a portion of the sanction fee. This note is payable in 36 equal
monthly installments, bearing interest at 10% per annum, beginning January 1,
2004. The note is collateralized by all products and proceeds of all other
events staged by the promoter at the promoter's facility. We have not received
any payments on the note which were to begin on January 1, 2004. After an
assessment of the financial condition of the promoter and other considerations,
it was determined that the note should be been written-down to management's
estimate of its fair value of $150,000 and a loss has been recorded in asset
impairment and strategic charges in the amount of $320,139.


                                      F-12
<PAGE>
5.  PROPERTY AND EQUIPMENT

      Property and equipment consists of the following at December 31:

<TABLE>
<CAPTION>
                                               (IN THOUSANDS)            USEFUL LIFE
                                            2003           2002          (IN YEARS)
                                            ----           ----          ----------
<S>                                       <C>            <C>             <C>
Engines                                   $  2,273       $  4,000            2
Equipment                                    5,251          7,242           5-20
Furniture and fixtures                         248            425            10
Vehicles                                     2,377          4,065           5-7
Other                                          154            268            5 (except leasehold improvements)
                                          --------       --------

Total                                       10,303         16,000

Less accumulated depreciation               (5,318)        (5,597)
                                          --------       --------


Property and equipment (net)              $  4,985       $ 10,403
                                          ========       ========
</TABLE>

Property and equipment were written down as of December 31, 2003 to their
fair-values pursuant to an Asset Purchase Agreement entered into with Open Wheel
Racing Series, LLC. (See Note 12). Depreciation expense recorded was $3.84
million, $1.44 million, and $1.49 million for the years ended December 31, 2003,
2002, and 2001 respectively.

6.  CAPITAL STOCK

      In 2003 and 2002, there were no repurchases or retirements of common
stock.

      During the year ended December 31, 2001, the Company repurchased and
retired 1,054,000 shares of its common stock for an aggregate cost of $15.5
million, pursuant to its stock repurchase program authorized by the Board of
Directors in April 2001. The program allows the Company to repurchase up to 2.5
million shares of its outstanding common stock from time to time in open market
or privately negotiated transactions. Repurchases under the program will be made
at the discretion of management based upon market, business, legal, accounting
and other factors. Currently, the Company has no intention to purchase any of
its outstanding shares.

7.  OPERATING LEASES

      The Company had entered into two operating leases for office space, one in
Indianapolis, Indiana and one, with a former director, in Miami Florida, which
have terms through 2010. In December 2003, the lease in Miami was canceled in
exchange for a payment of $44,000 and forfeiture of the security deposit of
$16,000. The Indianapolis lease was sublet to Open Wheel Racing Series, LLC., at
substantially the same terms as our lease, and we retain office space for our
use at no cost, however, we remain liable on the lease. Total rent expense for
operating leases were approximately $361,493, $491,173 and $638,000 for 2003,
2002 and 2001, respectively.

      Approximate future minimum lease payments under the non-cancelable
operating lease are as follows:



                                      F-13
<PAGE>
<TABLE>
<CAPTION>
Years Ending December 31:              (In Thousands)
<S>                                    <C>
    2004                                  $   309
    2005                                      309
    2006                                      309
    2007                                      309
    2008                                      309
    2009 and thereafter                       566
                                          -------
Total                                       2,111
Less sublease revenue                      (2,111)
                                          -------
Total                                     $    --
                                          =======
</TABLE>

8.  INCOME TAXES

      Deferred income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized.

      SFAS No. 109 requires that net deferred tax assets be reduced by a
valuation allowance if, based on the weight of available evidence, it is more
likely than not that some portion or all of the net deferred tax asset will not
be realized. The Company has tax assets from U.S. net operating loss
carryforwards and foreign tax credit carryforwards of $81.4 million and $.5
million, respectively. The carryforward items expire over the next 5 to 20
years. Failure to achieve taxable income within the carryforward period would
affect the ultimate realization of the net deferred tax assets. Due to the
financial condition of the Company described in Note 1, Management does not
believe that the deferred tax assets will be realized. The tax benefit for
current year losses and net deferred tax assets recorded at December 31, 2003
has been reduced by a $35.4 million valuation allowance. As a result, income tax
expense was $427,000 for the twelve month period ended December 31, 2003.

      The tax effects of temporary differences giving rise to deferred tax
assets and liabilities at December 31 are as follows:

<TABLE>
<CAPTION>
                                                          2003           2002
                                                          ----           ----
<S>                                                     <C>            <C>
Non-current deferred tax assets (liabilities):
     Basis difference in fixed assets                   $  1,730       $   (678)
     State tax net operating loss carryforward             2,716            682
     Goodwill                                                828            438
     Charitable contribution carryforwards                   134            150
     Tax credit carryforwards                             28,157             --
     State taxes                                              --            (34)
     Indianapolis lease deferral                              59             67
     Bad debt                                              1,699             --
     Deferred compensation                                    23             --
                                                        --------       --------
          Non-current deferred tax asset                  35,346            625
     Valuation allowance                                 (35,346)          (682)
                                                        --------       --------
          Net non-current deferred tax liability        $     --       $    (57)
                                                        ========       ========
</TABLE>

      The provision (benefit) for income taxes consists of the following for the
years ended December 31:



                                      F-14
<PAGE>
<TABLE>
<CAPTION>
                                                             (IN THOUSANDS)
                                                    2003          2002          2001
                                                    ----          ----          ----
<S>                                               <C>           <C>           <C>
Current                                           $   484       $(8,927)      $   671
Deferred                                              (57)        1,111        (1,183)
                                                  -------       -------       -------
             Total                                $   427       $(7,816)      $  (512)
                                                  =======       =======       =======

Tax expense (benefit) from operations             $   427       $(7,302)      $  (512)
Tax expense (benefit) from accounting change           --          (514)           --
                                                  -------       -------       -------
             Total                                $   427       $(7,816)      $  (512)
                                                  =======       =======       =======
</TABLE>

The reconciliation of income tax expense (benefit) computed at the U.S. federal
statutory tax rate to the Company's effective income tax rate is as follows:

<TABLE>
<CAPTION>
                                                2003          2002          2001
                                                ----          ----          ----
<S>                                           <C>           <C>           <C>
Tax at U.S. federal statutory rate             (34.0%)       (35.0%)       (35.0%)
State income tax, net of federal benefit        (1.7%)        (0.9)         (0.3)
Meals and entertainment                          0.1           0.6           8.9
Tax exempt interest                               --            --            --
Valuation allowance                             37.5           3.0            --
Other                                           (1.9)         (2.7)         (8.6)
                                              ------        ------        ------
          Total                                 (0.0%)       (35.0%)       (35.0%)
                                              ======        ======        ======
</TABLE>

9.  EMPLOYEE BENEFIT PLANS

      The Company offers a 401(k) savings plan. Contributions to the plan are in
the form of employee salary deferral, subject to discretionary employer-matching
contributions. The Company's contributions to the plan were approximately
$71,000, $81,000, and $86,000 in 2003, 2002, and 2001, respectively. In February
2004, this plan was assumed by Open Wheel and the Company has no future
obligations under the plan.

10. ACQUISITION OF RACEWORKS, LLC

      On March 7, 2003, the Company acquired one hundred percent (100%) of the
membership interests in Raceworks, LLC ("Raceworks"). The results of Raceworks'
operations have been included in the consolidated financial statements since
that date. Raceworks is a motorsports promotion company and holds a revocable
license agreement to annually conduct a street race in downtown Miami through
2017, with an option to extend for an additional ten (10) years. The aggregate
purchase price was $1.2 million including $473,000 of cash and a promissory note
of $722,000. In December 2003, the Company entered into an agreement for full
and final settlement of the note for a cash payment to the note holders of
$361,250.

      The following table summarizes the estimated fair values, at the time of
acquisition, of the assets acquired and liabilities assumed as part of the
acquisition.

<TABLE>
<S>                                                                 <C>
Current assets                                                      $   449,000
Property and equipment                                                4,120,000
Other assets                                                             36,000
Intangible assets including goodwill                                  1,262,000
                                                                    -----------
      Total assets acquired                                           5,867,000
                                                                    -----------
Current liabilities                                                  (1,916,000)
Long-term debt                                                       (2,778,000)
                                                                    -----------
      Total liabilities assumed                                      (4,694,000)
                                                                    -----------
Net assets acquired                                                 $ 1,173,000
                                                                    ===========
</TABLE>




                                      F-15
<PAGE>
      The acquisition was accounted for using the purchase method of accounting.
Under purchase accounting, the total purchase price was allocated to the
tangible and intangible assets and liabilities of Raceworks based upon their
respective fair values as of the date of the acquisition. An allocation of the
purchase price has been made to major categories of assets and liabilities based
on available information at the date of acquisition.

      In December 2003, Raceworks' operations were discontinued and a wind-up of
business is currently under way due to CART, Inc.'s bankruptcy filing and the
subsequent sale of its assets to Open Wheel and Open Wheel's decision not to
acquire the rights to race in Miami. This resulted in the intangible and
long-lived assets of Raceworks being written down to their estimated fair values
and an impairment charge of $5.1 million being incurred for the year ended
December 31, 2003. (See Note-2 Goodwill and Note-12 Asset Impairment)

      In 2004, settlements have been negotiated with certain Raceworks, LLC.,
creditors which resulted in reductions to trade account payables of
approximately $520,000.

11.  DEBT

      At December 31, 2002 the Company had an unused bank line of credit of $1.5
million. There were no amounts outstanding at December 31, 2002 and 2001.
Advances on the line of credit were payable on demand, with interest at the
bank's prime rate. The line of credit was secured by the Company's deposits with
the bank. In September 2003, the Company canceled the line of credit.

      In July 2002, the Company guaranteed a $1.8 million commercial term loan
in connection with the operations of Raceworks, LLC. The Company subsequently
assumed this loan in conjunction with the acquisition of Raceworks, LLC. The
principal on the loan shall be paid quarterly, commencing on October 31, 2003
and on the last day of each January, April, July and October thereafter, in the
amount of $50,000 per quarter. The Company made the October 2003 and January
2004 scheduled payments.

      At December 31, 2003, the Company was in default of certain financial
covenants of the loan. As a result, the entire amount of the note has been
classified as current.

      On May 10, 2004, The Company entered into an assignment and release
agreement that was for full and final settlement of any and all obligations
related to the loan in exchange for a cash payment from the Company of the
remaining principal balance of $1,700,000.

12.  ASSET IMPAIRMENT AND STRATEGIC CHARGES

      Dayton Indy Lights Championship. During the third quarter of 2001, the
Board of Directors of the Company adopted a formal exit plan with respect to the
discontinuance of the Dayton Indy Lights Championship ("DILC") effective at the
conclusion of the 2001 race season. This decision resulted from an in-depth
analysis of the Company's development series conducted by management of the
Company and Bain & Company, an independent consulting company. The analysis was
initiated to determine the future viability of the DILC, operated by ARS. This
analysis included discussions with DILC team owners and employees and
discussions with Toyota Atlantics Championship ("TAC") team owners and
employees. The TAC was operated by Pro-Motion. The analysis was completed in
July, 2001.

      The Company reviewed the financial and operational performance of the DILC
and the TAC. Based upon such analysis, and based upon the information gathered
in discussions with team owners and employees, management of the Company
concluded that due to the current environment for open-wheel racing in the
United States, CART can only support one development series at this level. CART
had many discussions with sponsors of the DILC and the TAC and concluded that
the support of Toyota with the TAC and the equipment contracts in place for TAC
supported the decision to discontinue the DILC at the conclusion of the 2001
race season to focus its support and efforts on one development series.


                                      F-16
<PAGE>
      In 2001, the Company recorded charges of $8.5 million related to the
formal exit plan for the discontinuance of operations of the DILC. The Company
recorded charges of $7.6 million related to the impairment of goodwill ($5.6
million) and a write-down of the carrying value of property and equipment ($2.0
million). The carrying value of the property and equipment that has been
impaired primarily relates to engines owned by ARS and used in the DILC. The
Company has fully depreciated and disposed of the engines.

      The Company also recorded charges of $885,000 in 2001 resulting from
management's estimate of certain expenses following the decision by the Company
to discontinue the DILC operations. These charges included provisions for
doubtful accounts, severance payments and other settlement charges.

      Raceworks, LLC. Operating results and cash flows of Raceworks, LLC were
significantly lower than expected, which we considered to be an indication of
impairment. Based on operating results and other qualitative information, the
future earnings forecasts were revised and the fair value determined. The
Company recognized a non-cash asset impairment charge of $1,262,000 to write-off
goodwill and other intangible assets related to the purchase of Raceworks, LLC.
The fair value of the reporting unit was estimated using the present value of
expected future cash flows.

      The Company reviewed the carrying value of the long-lived assets of
Raceworks, using estimated cash flows. The carrying values of the long-lived
assets were considered impaired. In the absence of quoted market prices, the
fair values of the long-lived assets were determined using estimates of amounts
at which the assets could be sold to third parties in current transactions, less
any sale costs. The Company recognized a non-cash asset impairment charge of
$2,038,000 for the period ended September 30, 2003 to reduce the carrying value
of the property and equipment of Raceworks, LLC.

      In December of 2003, after the merger agreement with Open Wheel was
terminated as described in Note 1, it was determined that Open Wheel had no
interest in the assets of Raceworks, LLC or continuing to race in the city of
Miami. The Company initiated a plan to wrap-up the affairs of Raceworks by
closing the office and liquidating its remaining assets. The assets were
written-down to their estimated fair value and the Company recognized an asset
impairment charge of $1,755,000 in the quarter-ended December 31, 2003.

      CART, Inc., Promotion Agency, LTD., and CART Licensed Products, Inc. The
sale of certain assets and common stock to Open Wheel Racing Series, on February
13, 2004, pursuant to the court approved sale described in Note 1, established
fair value for such assets. Because the carrying value of such assets and common
stock at December 31, 2003 exceeded their fair values an impairment charge was
recognized as follows:

<TABLE>
<S>                                                                <C>
Value received:
     Cash                                                          $  3,260,000
     Liabilities assumed:
          Points Fund and Royalties Payable                           2,740,000
          Intercompany Debt                                             570,881
          Accounts Payable                                              191,751
          Other Liabilities                                              32,338
                                                                   ------------
Total value received                                                  6,794,970
Net book value of assets sold                                        11,000,937
                                                                   ============
Impairment recognized                                              $ (4,205,967)
                                                                   ============
</TABLE>

13.  COMMITMENTS AND CONTINGENCIES

      REVENUE AGREEMENTS. The Company has entered into promoter and sponsorship
agreements that extend through various dates, with the longest date expiring in
the 2008 racing season. Under the promoter agreements, the Company was obligated
to sanction Champ Car World Series racing events and provide related race
management functions. Under the sponsorship agreements, the Company granted
certain corporations official sponsorship status. In return the corporations
received recognition

                                      F-17
<PAGE>
and status rights, event rights and product category exclusivity rights. The
promoter and sponsor agreements still in effect as of December 31, 2003 were
assumed by Open Wheel Racing Series, LLC, as part of the "Asset Purchase
Agreement" discussed previously.

      Television agreements with various broadcast companies for production,
sales and worldwide distribution of the Company's events ended on December 31,
2003 .

      TEAM ASSISTANCE. Beginning in 2003 the Company provided assistance to
certain teams to ensure that there were a sufficient number of race cars
competing in the Company's series. The Company spent $31.8 million in team
assistance, spread out over the race season, to assure a sufficient number of
competitors for the 2003 season. The agreements ended on December 31, 2003.

      ENTRANT SUPPORT PROGRAM. Beginning in 2003, the Company provided financial
assistance to teams that participated in the Champ Car World Series, including
teams affiliated with our directors and/or 5% stockholders. The Entrant Support
Program ("ESP") provided up to $42,500 in cash payments to teams, per race, for
each car entered into the series. The agreements with the teams ended on
December 31, 2003.

      TELEVISION TIME BUYS. In 2003, the Company entered into a time buy
agreement for the 2003 and 2004 race season. However, as a result of the "Asset
Purchase Agreement" discussed previously, the Company is not in the race
promotion business for 2004. Therefore the obligation of both parties subject to
the time buy agreement is non-assertive for the 2004 race season.

      OFF BALANCE SHEET ARRANGEMENTS. In October 2002, the Company provided a
deposit of $550,000 and a letter of credit in the amount of $1.7 million for the
production of conversion kits for race car chassis for the 2003 season. The
letter of credit guarantees that at least 20 of the kits would be purchased by
the Company's race teams. As the kits are purchased, the letter of credit will
be reduced accordingly. All 20 race kits have been purchased by the Company's
race teams, and therefore, the deposit was refunded on February 27, 2003 and the
letter of credit was canceled.

      EMPLOYMENT AGREEMENTS. The Company has employment agreements with its
officers. The employment agreements expire on December 31, 2004.

      LITIGATION. On November 4, 2003, 88 Corp. filed suit against CART, Inc. in
the United States Federal District Court for the Central District of California.
88 Corp., the promoter of the CART Champ Car World Series race at the California
Speedway in Fontana, California, claimed that the race which was to be held on
November 2, 2003 was canceled due to a "force majeure" and requested a judicial
determination as to whether or not the organizational and rights fee of $2.5
million, previously paid by 88 Corp. to CART, minus reasonable expenses incurred
by CART, should be refunded to 88 Corp. As a result of the bankruptcy of CART,
this litigation was suspended. 88 Corp. has filed a proof of claim against CART
in the bankruptcy court proceedings requesting repayment of the $2.5 million,
imposition of a constructive trust, and such other relief as the bankruptcy
court deems appropriate. CART has objected to the claim and has asserted against
88 Corp. a claim for wrongful termination of the sanction agreement as it
relates to the 2003 and 2004 races in the amount of $5.2 million. These claims
are currently pending in bankruptcy court and we are unable to make a
determination as to the likelihood of an unfavorable outcome or estimate the
amount or range of the recovery or loss.

      On December 16, 2003, CART, Inc., the Company's wholly owned subsidiary,
filed for protection under Chapter 11 of the Bankruptcy Code in the United
States Bankruptcy Court, Southern District of Indiana, Indianapolis Division.
CART, Inc.'s Chapter 11 Plan has been filed with the Bankruptcy Court. Based
upon filings by creditors of CART, Inc., there may be claims by creditors
against CART, Inc. which could result in litigation against CART, Inc. in
Bankruptcy Court. The Company is currently unable to determine the extent of
these asserted claims and whether or not they will ultimately result in
litigation involving CART, Inc.

      On December 12, 2003, S. R. Holdings Co., filed an action against the
Company and Raceworks, LLC, its wholly owned limited liability company, for an
alleged breach of contract to

                                      F-18
<PAGE>
provide concession services at the Champ Car World Series race held in Miami,
Florida in 2003 and in future years. The case was filed in the Circuit Court of
Miami, Dade County, Florida. The Company filed answer denying all allegations.
Raceworks filed an answer denying all allegations and asserted a counterclaim
for breach of the agreement by S.R. Holdings for failure to make a minimum
payment to Raceworks. The Company is unable to make a determination as to the
likelihood of an unfavorable outcome or estimate of the amount or range of
possible loss.

      On August 5, 2004 the Company was served with a complaint to avoid and
recover preferential transfers filed on behalf of WorldCom, Inc. and MCI, Inc.,
in the United States Bankruptcy Court for the Southern District of New York. The
action alleges that the Company received $1,500,000 in July of 2002 which was a
payment within 90 days of the date that WorldCom, Inc. and its subsidiaries
commenced their bankruptcy by filing under Chapter 11 of the Bankruptcy Code.
The Company has not filed an answer at this point in time and is unable to make
a determination as to the likelihood of an unfavorable outcome. The range of the
possible loss is up to $1,500,000.

      We are party to several lawsuits. We cannot predict the outcome of the
litigation, and at this time, management is unable to estimate the impact that
ultimate resolution of these matters may have on our financial position or
results of operations.

14.  SEVERANCE EXPENSE

      During 2001, the Company recorded severance expense relating to the
voluntary and involuntary resignation of certain employees, including the
Company's President/CEO. These expenses amounted to $4.3 million and are
included in administrative and indirect expenses.

      At December 31, 2003 and 2002, severance payments of $0 and $2.3 million,
respectively, are accrued.

15.  STOCK OPTION PLANS

      1997 STOCK OPTION PLAN. In December 1997, the Board of Directors of the
Company (the "Board") authorized, and the stockholders of the Company approved,
a stock incentive plan for executive and key management employees of the Company
and its subsidiaries, including a limited number of outside consultants and
advisors, effective as of the completion of the initial public offering ("IPO")
(the "1997 Stock Option Plan"). Under the 1997 Stock Option Plan, key employees,
outside consultants and advisors (the "Participants") of the Company and its
subsidiaries (as defined in the 1997 Stock Option Plan) may receive awards of
stock options (both Nonqualified Options and Incentive Options, as defined in
the Stock Option Plan). A maximum of 2,000,000 shares of common stock are
subject to the 1997 Stock Option Plan. Options granted vest pro-rata over a
three-year period. No stock option is exercisable after ten years from the date
of the grant, subject to certain conditions and limitations. The purpose of the
1997 Stock Option Plan was to provide the Participants (including officers and
directors who are also key employees) of the Company and its subsidiaries with
an increased incentive to make significant contributions to the long-term
performance and growth of the Company and its subsidiaries.

      In addition, in December 1997, the Board and the stockholders of the
Company approved a Director Option Plan permitting the granting of non-qualified
stock options ("Director NQSOs") for up to 100,000 shares of common stock to
directors of the Company who are neither employees of the Company nor affiliates
of a race team which participates in CART race events (an "Independent
Director"). Each person who is first elected or appointed to serve as an
Independent Director of the Company is automatically granted an option to
purchase 10,000 shares of Company common stock. In addition, each individual who
is re-elected as an Independent Director is automatically granted an option to
purchase 5,000 shares of Company common stock each year on the date of the
annual meeting of stockholders. Each of the options automatically granted upon
election, appointment or re-election as an Independent Director are exercisable
at a price equal to the fair market value of the common stock on the date of
grant. In addition, each Independent Director may elect to receive stock options
in lieu of any director's fees payable to such individuals.


                                      F-19
<PAGE>
      All Director NQSOs are immediately exercisable upon grant. The exercise
price for all options may be paid in cash, shares of common stock of the Company
or other property. If an Independent Director dies or becomes ineligible to
participate in the Director Option Plan due to disability, his Director NQSOs
expire on the first anniversary of such event. If an Independent Director
retires with the consent of the Company, his Director NQSOs expire 90 days after
his retirement. In no event may a Director NQSO be exercised more than ten years
from the date of grant. As of December 31, 2003 and 2002, there were 25,000 and
25,000, respectively, Director NQSOs issued and outstanding.

      No further options will be granted under either the 1997 Stock Option Plan
or the Director's Stock Option Plan.

      The following table summarizes information about stock options under the
1997 Stock Option Plan and Directors Stock Option Plan during 2003, 2002 and
2001 as follows:

<TABLE>
<CAPTION>
                                                                 WEIGHTED
                                                                  AVERAGE      WEIGHTED
                                                  NUMBER OF      REMAINING      AVERAGE
1997 DIRECTOR & STOCK OPTION PLAN                  SHARES          LIFE     EXERCISE PRICE
---------------------------------
<S>                                               <C>            <C>        <C>
Options outstanding January 1, 2001                705,489            7.6      $  20.99
Exercised                                           (6,667)            --         16.00
Forfeited                                          (96,250)            --         24.18
                                                  --------       --------      --------
Options outstanding December 31, 2001              602,572            6.6         20.50
(402,477 are exercisable)
Forfeited                                         (337,302)            --         21.16
                                                  --------       --------      --------
Options outstanding December 31, 2002              265,270            4.1         19.67
(256,287 are exercisable)
Forfeited                                          (89,968)            --         17.51
                                                  --------       --------      --------
Options outstanding December 31, 2003              175,302            4.7      $  20.77
                                                  ========       ========      ========
(175,302 are exercisable) *
</TABLE>

*167,532 options were forfeited in May 2004, upon termination of certain
employees.

      The weighted average exercise price of exercisable options at December 31,
2003 was $20.77. Options outstanding at December 31, 2003 range in exercise
price from $16.00 to $29.00.

      2001 STOCK OPTION PLAN. In May 2001, the Company's Board of Directors
authorized and the stockholders of the Company approved a 2001 Long Term Stock
Incentive Plan ("2001 Stock Option Plan"), which provides for grants of stock
options to eligible participants including employees, officers, directors,
consultants and other key persons. The 2001 Long Term Stock Incentive Plan
authorizes the grant to participants of options to purchase up to 1,500,000
shares of the Company's common stock.

      No officer may be granted more than 500,000 options during any one year.
Options are granted only to employees, officers, directors, consultants and
other persons providing key services to the Company or a subsidiary and the
purchase price of each option granted cannot be less than 100% of the fair
market value of the common stock on the date of grant.

      Options granted under the Plan are incentive stock options or
non-qualified stock options as defined under the Internal Revenue Code of 1986,
as amended. The shares issued upon the exercise of options granted may be
previously unissued shares, reacquired shares, or shares bought in the market.
The purchase price for all shares purchased pursuant to options exercised must
be either paid in cash, or paid in full in common stock of the Company valued at
fair market value on the date of exercise, or a combination of cash and common
stock.

      The term of each option may not exceed ten years and, additionally, may
not exceed twelve months following the termination of providing services to the
Company, unless modified by the Compensation Committee.


                                      F-20
<PAGE>
<TABLE>
<CAPTION>
                                                             WEIGHTED        WEIGHTED        WEIGHTED
                                                              AVERAGE        AVERAGE         AVERAGE
                                             NUMBER          REMAINING       EXERCISE          FAIR
2001 STOCK OPTION PLAN                      OF SHARES          LIFE           PRICE           VALUE
----------------------                      ---------          ----           -----           -----
<S>                                        <C>              <C>             <C>             <C>
Options outstanding December 31, 2000              --               --              --              --
Granted                                       851,250              9.8      $    15.35      $     7.47
Forfeited                                      (2,800)              --           14.68              --
                                           ----------       ----------      ----------
Options outstanding December 31, 2001         848,450              9.8           15.30              --
 (40,000 are exercisable)
Granted                                       553,250              9.5            7.38            5.71
Forfeited                                    (265,650)              --           15.26              --
                                           ----------       ----------      ----------
Options outstanding December 31, 2002       1,136,050              9.2           11.49              --
 (217,016 are exercisable)
Forfeited                                    (106,750)              --            9.93              --
                                           ----------       ----------      ----------
Options outstanding December 31, 2003       1,029,300              8.2      $    11.65              --
(581,192 are exercisable)
</TABLE>

*226,800 options were forfeited in May 2004, upon termination of certain
employees.

      The weighted average price of exercisable options at December 31, 2003 was
$13.01. Options outstanding at December 31, 2003 range in exercise price from
$4.90 to $16.64. At December 31, 2003, 470,700 shares were reserved for issuance
under the 2001 Stock Option Plan.

16.  SEGMENT REPORTING

      The Company has two reportable segments, sanctioning and race promotions.
In 2003, the Company added "Race Promotions" as a reportable segment. There were
no prior period adjustments relating to the new reportable segment.

      Sanctioning encompasses all the business operations of organizing,
marketing and staging all of our open-wheel racing events when we act as a
sanctioning body as well as corporate expenses. We receive a sanction fee from
the event promoter for our services that is either fixed or is based upon a
profit sharing agreement. Sanction fees revenue, sponsorship revenue, television
revenue, engine lease revenue, race distributions and race expenses, television
expenses and administrative and indirect expenses are recognized in the
sanctioning segment.

      Race promotions encompasses all the business operations of marketing and
promoting our open-wheel racing events when we act as promoter and have
exclusive rights to the event. We receive the revenues from the event and are
responsible for the expenses of the event.

      The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company's long-lived assets
are substantially used in the sanctioning segment in the United States. The
Company evaluates performance based on income before income taxes.

<TABLE>
<CAPTION>
                                             YEARS ENDED DECEMBER 31,
                                             ------------------------
(In Thousands)                       SANCTIONING  RACE PROMOTION     OTHER*         TOTALS
--------------                       -----------  --------------     ------         ------
<S>                                   <C>            <C>            <C>            <C>
2003
Revenues                              $ 46,951       $  2,474       $    271       $ 49,696
Interest income                          1,266             --              8          1,274
Depreciation and amortization            3,790             --             51          3,841
Segment loss before income taxes
                                       (82,654)        (9,790)            92        (92,352)

2002
Revenues                              $ 57,146       $     --       $     99       $ 57,245
Interest income                          3,749             --             13          3,762
Depreciation and amortization            1,361             --             75          1,436
Segment loss before income taxes       (20,725)            --           (138)       (20,863)
</TABLE>


                                      F-21
<PAGE>
<TABLE>
<S>                                   <C>            <C>            <C>            <C>
2001
Revenues                              $ 69,915       $     --       $    348       $ 70,263
Interest income                          7,013             --             20          7,033
Depreciation and amortization            1,395             --             98          1,493
Segment loss before income taxes        (1,421)            --            (41)        (1,462)
</TABLE>

*Segment is below the quantitative thresholds for presentation as a reportable
segment. This segment is related to the Company's licensing royalties.

      Reconciliations to the consolidated balance sheets totals at December 31
are as follows:

<TABLE>
<CAPTION>
(In Thousands)
                                                      2003                2002
                                                      ----                ----
<S>                                                 <C>                 <C>
Race Operations                                     $ 18,925            $114,194
Race Promotion                                           894                  --
Other                                                    226                 257
                                                    --------            --------
Total consolidated assets                           $ 20,045            $114,451
                                                    ========            ========
</TABLE>

      Domestic and foreign revenues, which are allocated to each country based
on sanction fees, sponsorship revenues and television revenues, the three years
ended December 31 were as follows:

<TABLE>
<CAPTION>
(In Thousands)
                                           2003            2002            2001
                                           ----            ----            ----
<S>                                      <C>             <C>             <C>
United States                            $30,461         $33,820         $40,717
Canada                                     6,371           6,500           7,032
Mexico                                     5,175           6,704           2,590
Other foreign countries                    7,689          10,221          19,924
                                         -------         -------         -------
Total                                     49,696         $57,245         $70,263
                                         =======         =======         =======
</TABLE>


      Revenues from one promoter in 2003 and 2002 were $6.4 million and $6.5
million respectively, which exceeded 10% of total revenues.

17.  EARNINGS (LOSS) PER SHARE

      Basic earnings (loss) per share ("EPS") excludes dilution and is computed
by dividing net income (loss) by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution of
securities that could share in the earnings. Shares contingently issuable relate
to shares that would have been outstanding under certain stock option plans (see
Note 14) upon the assumed exercise of dilutive stock options.

<TABLE>
<CAPTION>
                                                           YEARS ENDED DECEMBER 31,
                                                      2003           2002           2001
                                                      ----           ----           ----
                                                   (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S>                                                <C>             <C>            <C>
Net loss                                            $(92,352)      $(14,517)      $   (950)
                                                    ========       ========       ========

Basic and Diluted EPS:
    Weighted average common shares outstanding        14,718         14,718         15,289
                                                    --------       --------       --------
    Net loss per common share, basic                $  (6.27)      $  (0.92)      $  (0.06)
                                                    ========       ========       ========
</TABLE>

      Due to a loss from operations, 1,302,961, 1,426,171, and 1,078,255
incremental shares relating to the dilutive effect of stock options were
excluded from the calculation of diluted loss per share due to their
anti-dilutive effect in 2003, 2002 and 2001 respectively.

18.  RELATED PARTY TRANSACTIONS

      The Company has entered into transactions with entities that are
affiliated with the Company's directors and/or 5% stockholders (related
parties).


                                      F-22
<PAGE>
      Gerald R. Forsythe, a 22.9% stockholder of the Company, is one of three
principal members of Open Wheel Racing Series, LLC, the others being Mr.
Gentilozzi and Mr. Kalkhoven. Open Wheel purchased the operating assets of CART,
Inc. pursuant to the Asset Purchase Agreement, entered into in February 2004.
The consideration paid to CART, Inc. for the purchase of such assets, along with
the stock of Pro-Motion Agency, Ltd. and CART Licensed Products, Inc. was total
consideration of $3.3 million in cash, the assumption by the buyer of $1.4
million in prize money owed to teams not affiliated with the principals of Open
Wheel, forgiveness of $1.3 million in prize money due teams affiliated with
principals of Open Wheel, including Mr. Forsythe and the assumption of certain
promoter, sponsorship, and other contracts. The agreement was approved by order
of the bankruptcy court at a hearing held on January 28, 2004.

      The following related party transactions occurred during the three years
in the period ended December 31, 2003.

      The Company received sanction fees from promoters affiliated with related
parties. Total sanction fee revenue related to these entities for 2003, 2002 and
2001 was approximately $4.9 million, $10.6 million and $12.7 million,
respectively. No sanction fees from a single related entity provided more than
10% of the Company's revenues in 2003, 2001 and 2000.

      The Company rented track facilities from promoters affiliated with related
parties. Total track rental expense related to these entities for 2003, 2002,
and 2001 was approximately $0, $853,000 and $59,000, respectively.

      At December 31, 2003 and 2002, the Company has accounts receivable of
approximately $518,000 and $566,000, respectively, due from related parties. The
receivables relate to billings associated with sanction fees and miscellaneous
team and promoter charges.

      The Company receives entry fees and other race-related income to
participate in the Champ Car Series from teams affiliated with related parties.
Such fees received from teams amounted to $196,000, $655,000 and $710,000 in
2003, 2002 and 2001, respectively.

      The Company disburses purse winnings, awards and participation payments to
teams affiliated with related parties. Total purse winnings and awards related
to these teams for 2003, 2002 and 2001 were $14.0 million, $11.3 million and
$6.4 million, respectively.

      In 2003, the Company received engine lease revenue and provided financial
assistance to teams affiliated with related parties. Total engine lease income
and financial assistance related to the entities was $900,000 and $12.3 million,
respectively.

      As part of the race in Miami, Florida, a special promotion was undertaken
whereby a rock music concert was cross-promoted in conjunction with the race
event. An agreement was entered into with Motorock, LLC, a rock concert
promoter, whose principals are Mr. Gentilozzi and Mr. Kalkhoven, who are also
principals in Open Wheel Racing Series, LLC., which purchased the assets of
CART, Inc. pursuant to the Asset Purchase Agreement as discussed above. The
Company received $141,000 from Motorock, LLC., in exchange for tickets,
hospitality and advertising rights at the race.

      In 2004, the Company is sanctioning the races for Open Wheel Racing
Series, LLC., which is owned by Mr. Forsythe, a 22.9% owner of the Company
and Mr. Gentilozzi and Mr. Kalkhoven.  The Company receives $12,500 for
each domestic race it sanctions and is reimbursed for various expenses it
incurs in sanctioning the events. Based on the terms of the Sanctioning
Agreement between the Company and Open Wheel, the agreement will expire
December 31, 2004.

      The Company paid for at-track rights to promoters affiliated with related
parties in order to satisfy contractual obligations with certain sponsors. Total
at-track rights related to these entities for 2003, 2002 and 2001 were $0,
$400,000 and $500,000, respectively.



                                      F-23
<PAGE>
      The Company paid for marketing expenses to promoters affiliated with
related parties. Total marketing expenses related to these promoters for 2003,
2002 and 2001 were $0, $700,000 and $616,000, respectively.

      The Company pays royalties to teams and promoters affiliated with related
parties. Total royalty expense for these entities for 2003, 2002 and 2001 were
$33,000, $46,000 and $40,000, respectively.

      At December 31, 2003 and 2002, the Company has accounts payable and
royalties payable of approximately $33,000 and $46,000, respectively, due to
teams and promoters affiliated with related parties.

      A former officer of the Company is a principal in a law firm which
received fees for legal services provided to the Company. Such fees amounted to
approximately $57,000, $125,000 and $126,000 in 2003, 2002 and 2001,
respectively.

19. SUMMARIZED QUARTERLY DATA (UNAUDITED)

Following is a summary of the quarterly results of operations for the years
ended December 31, 2003 and 2002.

<TABLE>
<CAPTION>
(In Thousands, Except Per Share Data)                First         Second          Third         Fourth          Total
-------------------------------------                -----         ------          -----         ------          -----
<S>                                                <C>            <C>            <C>            <C>            <C>
2003
----
Total revenues                                     $  6,164       $ 14,408       $ 18,170       $ 10,954       $ 49,696
Operating (loss)                                    (14,405)       (29,394)       (34,900)       (14,900)       (93,599)
Net (loss)                                         $ (8,989)      $(34,513)      $(34,404)      $(14,446)      $(92,352)
                                                   ========       ========       ========       ========       ========
Net Loss per share
     Basic                                         $  (0.61)      $  (2.34)      $  (2.34)      $  (0.98)      $  (6.27)
                                                   ========       ========       ========       ========       ========
     Diluted                                       $  (0.61)      $  (2.34)      $  (2.34)      $  (0.98)      $  (6.27)
                                                   ========       ========       ========       ========       ========
</TABLE>

<TABLE>
<CAPTION>
(In Thousands, Except Per Share Data)                First         Second          Third         Fourth          Total
-------------------------------------                -----         ------          -----         ------          -----
<S>                                                <C>            <C>            <C>            <C>            <C>
2002
----
Total revenues                                     $  5,603       $ 19,292       $ 18,537       $ 13,813       $ 57,245
Operating loss                                       (2,001)        (6,759)       (13,667)        (2,224)       (24,651)
Net (loss) before effect of accounting change          (594)        (3,668)        (8,310)          (989)       (13,561)
Cumulative effect of accounting change                 (956)            --             --             --           (956)
Net (loss)                                         $ (1,550)      $ (3,668)      $ (8,310)      $   (989)      $(14,517)
                                                   ========       ========       ========       ========       ========
Loss per share before cumulative effect
  of accounting change:
     Basic                                         $  (0.04)      $  (0.25)      $  (0.56)      $  (0.07)      $  (0.92)
                                                   ========       ========       ========       ========       ========
     Diluted                                       $  (0.04)      $  (0.25)      $  (0.56)      $  (0.07)      $  (0.92)
                                                   ========       ========       ========       ========       ========
Net Loss per share:

     Basic                                         $  (0.11)      $  (0.25)      $  (0.56)      $  (0.07)      $  (0.99)
                                                   ========       ========       ========       ========       ========
     Diluted                                       $  (0.11)      $  (0.25)      $  (0.56)      $  (0.07)      $  (0.99)
                                                   ========       ========       ========       ========       ========
</TABLE>

20.  CART, INC. BANKRUPTCY AND SUBSEQUENT EVENTS

CART, Inc. Bankruptcy:

      On December 16, 2003, CART, Inc., the Company's largest subsidiary
that operated the Champ Car World Series filed a voluntary petition under
Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy
Court Southern District of Indiana (RE CART, Inc., Case No.
03-23385-FJO-11).

      In the Chapter 11 case substantially all of the liabilities as of the
filing date are subject to compromise. The following table sets forth a break
down of these liabilities:



                                      F-24
<PAGE>
<TABLE>
<CAPTION>
              LIABILITIES SUBJECT TO COMPROMISE                  IN THOUSANDS
              ---------------------------------                  ------------
<S>                                                              <C>
Accounts Payable                                                    $4,848
Accrued Payroll                                                         68
Other Accrued Payables                                                 710
                                                                    ------

Total liabilities subject to compromise                             $5,626
                                                                    ======
</TABLE>


      A court ordered payment of pre-petition debt for business insurance in the
amount of $40,768 was made subsequent to the filing of the bankruptcy petition
and prior to December 31, 2003.

      A substantial dollar amount of claims were filed that are not included in
CART, Inc.'s liabilities as of December 31, 2003. The total amount of claims
filed by potential creditors and debtor scheduled amounts with the bankruptcy
court totaled $12.0 million, excluding the inter-company liability to CART,
Inc's parent company, Championship Auto Racing Teams, Inc. of $62.3 million. The
total claims exceed the liabilities recorded on CART's balance sheet because the
total claims represent not only accounts payable to each potential creditor but
also claims for future payments, disputed amounts owed to creditors, and
potential damages for contractual breaches. The following table sets forth
claims filed by potential creditors that are not included in CART, Inc.'s
liabilities as of December 31, 2003:

<TABLE>
<CAPTION>
 DISPUTED CLAIMS NOT INCLUDED IN LIABILITIES AT DECEMBER 31, 2003    IN THOUSANDS
<S>                                                                  <C>
88-Corporation-cancellation by promoter of Fontana race              $      2,500
Brands Hatch Circuits, Ltd.-termination of race promotion agreement         1,150
S.R. Holdings-concession contract for Raceworks, Inc.                    1,000
Employment related contracts                                                  500
IMG Motorsports-Cleveland, Inc.-Cleveland race promotion                      438
Stars of Tomorrow-Promotion agreement                                         325
Other Claims                                                                  500
                                                                     ------------
Total                                                                $      6,413
                                                                     ============
</TABLE>

      Championship Auto Racing Teams, Inc. the parent company of CART, Inc., has
entered into an agreement whereby it will subordinate its claim for the
inter-company liability to the other creditors in exchange for the agreement of
the unsecured creditors of CART releasing the Company from all claims that could
be asserted against the Company.

Bankruptcy Subsequent Events:

    In January 2004, the bankruptcy court approved payments related to
pre-petition employee expense reimbursements and health benefits in the amount
of $28,327.

    On February 13, 2004, the assets of CART, Inc, the common stock of
Pro-Motion Agency, Inc. and CART Licensed Products, Inc., were sold to Open
Wheel for total cash consideration of $3.3 million. The agreement also included
Open Wheel assuming $1.4 million in 2003 prize money to teams who were not
affiliated with Open Wheel and forgiveness of $1.3 million in prize money due
principals of Open Wheel; all of the 2003 prize money was an obligation of CART,
Inc., and included in trade accounts payable at December 31, 2003. In addition,
Open Wheel assumed certain promoter, sponsor and other contracts. Prior to
finalizing the sale, CART, Inc. paid pre-petition payables in the amount of
$492,106 related to the contracts assumed by Open Wheel. The sale agreement was
pursuant to an order of the bankruptcy court at a hearing held on January 28,
2004.



                                      F-25
<PAGE>
     CART, Inc. continues to operate as debtor-in-possession under the
Bankruptcy Code in order to wind up its affairs. On July 23, 2004 CART, Inc.
filed a Chapter 11 plan (the "Plan") and disclosure statement (the "Disclosure
Statement") with the bankruptcy court. The Plan provides for the distribution of
the asset sale proceeds and other currently available cash and the liquidation
and distribution of the remaining estate assets to CART, Inc.'s creditors. The
Disclosure Statement was approved by the bankruptcy court on August 3, 2004. The
Plan and Disclosure Statement were sent to CART Inc.'s creditors for voting; the
hearing on confirmation of the Plan will occur on September 13, 2004.

      The following reflects unaudited condensed balance sheet, statement of
operations and statement of cash flows as of and for the year ended December 31,
2003, for CART, Inc.:

                                   CART, INC.
                              DEBTOR IN POSSESSION
                             CONDENSED BALANCE SHEET
                             AS OF DECEMBER 31, 2003
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
Assets                                                                 UNAUDITED
                                                                       --------
<S>                                                                    <C>
 Current Assets
    Cash and Cash Equivalents                                          $  1,980
    Accounts Receivable                                                   1,326
    Current Portion of Notes Receivable                                     150
    Prepaid Expenses                                                      1,098
    Other Current Assets                                                     12
                                                                       --------
 Total Current Assets                                                     4,566

 Property and Equipment - Net                                             4,855
 Investment in Subsidiaries                                               1,176
 Other Assets                                                               298
                                                                       --------
 Total Assets                                                          $ 10,895
                                                                       ========
Liabilities and Stockholder's Deficiency
 Current Liabilities:
     Accounts Payable                                                  $    166
     Payroll                                                                 49
     Other                                                                   40
  Liabilities of CART, Inc. subject to compromise                         5,626
                                                                       --------
 Total Current Liabilities                                                5,881
 Inter-company Payable to Championship Auto Racing Teams, Inc.           62,251
                                                                       --------
Total Liabilities                                                        68,132
 Stockholder's Deficiency
 Common Capital Stock                                                       102
 Additional Paid In Capital                                              15,975
 Accumulated Deficit                                                    (73,314)
                                                                       --------
 Total Stockholder's Deficiency                                         (57,237)
                                                                       --------
 Total Liabilities and Stockholder's Deficiency                        $ 10,895
                                                                       ========
</TABLE>




                                      F-26
<PAGE>
                                   CART, INC.
                              DEBTOR IN POSSESSION
                        CONDENSED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2003
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                       Unaudited
                                                                       ---------
<S>                                                                   <C>
REVENUES:
Sanction fees                                                         $  24,660
Sponsorship revenue                                                       6,017
Television revenue                                                        1,889
Race promotion revenue                                                    8,298
Engine leases                                                             1,900
Other revenue                                                             1,672
                                                                      ---------
Total revenues                                                           44,436

EXPENSES:
Race distributions                                                       58,677
Race expenses                                                             7,798
Race promotion expense                                                   13,635
Television expense                                                       14,940
Administrative and indirect expenses                                     18,975
Asset impairment and strategic charges                                    4,481
Litigation expenses                                                       2,660
Depreciation and amortization                                             3,765
                                                                      ---------
Total expenses                                                          124,931
                                                                      ---------
OPERATING LOSS                                                          (80,495)
Realized gain on investments                                                 85
Interest income                                                             131
                                                                      ---------
LOSS BEFORE INCOME TAXES                                                (80,279)
INCOME TAX EXPENSE                                                          427
                                                                      ---------
NET LOSS                                                              $ (80,706)
                                                                      =========
</TABLE>




                                      F-27
<PAGE>
                                   CART, INC.

                        CONDENSED STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 2003
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                       UNAUDITED
                                                                       ---------
<S>                                                                    <C>
CASH FLOW FROM OPERATING ACTIVITIES:
   Net Loss                                                            $(80,706)
   Adjustments to reconcile net loss to cash
   provided by (used in) operating activities:
   Depreciation and amortization                                          3,765
   Loss from sale/disposal of property and
   equipment                                                                590
   Asset impairment and impairment of goodwill                            4,481
   Deferred income taxes                                                    705
   Changes in asset and liabilities that
   provided (used) cash:
       Accounts and notes receivable                                      2,345
       Prepaid expenses and other assets                                    483
       Refundable income tax                                             10,242
       Accounts payable                                                   3,401
       Accrued liabilities                                               (6,460)
       Deferred revenue                                                  (1,424)
                                                                       --------
Net cash used in operating activities                                   (62,578)

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sale of investments                                      7,577
   Notes receivable                                                        (150)
   Acquisition of property and equipment                                 (3,500)
   Acquisition of trademark                                                 (14)
                                                                       --------
Net cash provided by investing activities                                 3,913

CASH FLOWS FROM FINANCING ACTIVITIES:
   Inter-company payable                                                 58,948
                                                                       --------
Net cash provided by financing activities                                58,948

NET INCREASE IN CASH AND CASH EQUIVALENTS                                   283
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                            1,697
                                                                       --------
CASH AND CASH EQUIVALENTS AT END OF YEAR                               $  1,980
                                                                       ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
   Cash paid during the year for:
   Income taxes                                                        $    489
                                                                       ========
</TABLE>



                                      F-28
<PAGE>
                                   SCHEDULE II

                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                  YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
----------------------------------      ---------  ----------  ----------   ---------
            DESCRIPTION                 BEGINNING  CHARGED TO  DEDUCTIONS    BALANCE
                                        OF PERIOD    EXPENSE      (1)          END
                                                                            OF PERIOD
----------------------------------      ---------  ----------  ----------   ---------
<S>                                     <C>        <C>         <C>          <C>
Allowance for doubtful
   accounts (deducted from
   accounts receivable):
      Year Ended December 31, 2003       $1,282      $1,422      $  550      $2,154
      Year Ended December 31, 2002        7,388       1,223       7,329       1,282
      Year Ended December 31, 2001        6,539       1,177         328       7,388
Allowance for doubtful
   notes (deducted from
   notes receivable):
      Year Ended December 31, 2003       $   21      $  250      $   21      $  250
      Year Ended December 31, 2002          219          --         198          21
      Year Ended December 31, 2001           --         219           0         219
</TABLE>

            (1)   Accounts deemed to be uncollectible.



                                       S-1