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


                                   FORM 10-KSB


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

                            For the fiscal year ended
                                December 31, 2002

                        Commission File Number: 000-30771


                           INTERACTIVE MOTORSPORTS AND
                               ENTERTAINMENT CORP.
                   f.k.a. Pacific International Holding, Inc.
               (Exact name of registrant as specified in charter)


                                     Indiana
         (State or other jurisdiction of incorporation or organization)

                                   87-0678630
                           (I.R.S. Employer I.D. No.)

               5624 West 73rd Street, Indianapolis, Indiana 46278
                    (Address of principal executive offices)

                                 (317) 295-3500
              (Registrant's telephone number, including area code)


Indicate by checkmark  whether the Issuer:  (1) filed all reports required to be
filed by section 13 or 15 (d) of the  Exchange Act during the past 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. (1)
Yes [x] No [] (2) Yes [x] No []

Issuer's Revenues for its most recent fiscal year: $9,636,278.

As of December 31, 2002, the aggregate  market value of the voting stock held by
non-affiliates of the Issuer,  43,204,733  shares,  was $12,097,325.  The market
value of Common Stock of the Issuer,  par value $0.0001 per share,  was computed
by  reference to the average of the closing bid and asked prices of one share on
such date which was $0.28.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the last practicable date. Class outstanding as of March 31,
2003: Common Stock, par value $0.0001, 61,330,000 shares issued and outstanding.

DOCUMENTS  INCORPORATED BY REFERENCE:  The Consolidated  Financial Statements of
Perfect Line, LLC as filed in Form 8-K/A on October 1, 2002 are  incorporated by
reference into Part II of this Form 10-KSB.


<PAGE>





                      INDEX TO ANNUAL REPORT ON FORM 10-KSB
                                                                         Page
Section                                                                 Number

BASIS OF PRESENTATION.....................................................4

                                     PART I

Item 1.    Description of Business........................................5
Item 2.    Description of Properties......................................8
Item 3.    Legal Proceedings..............................................8
Item 4.    Submission of Matters to a Vote of Security Holders............8

                                     PART II

Item 5.    Market for Common Equity and Related Stockholder Matters.......8
Item 6.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations............................9
Item 7.    Financial Statements and Notes to Financial Statements
             Consolidated Balance Sheets at December 31, 2002 and
             December 31, 2001...........................................15
           Consolidated Statements of Operations for the Year
             Ended December 31, 2002 and the Period from
             Inception to December 31, 2001..............................16
           Consolidated Statements of Changes in Shareholders' Equity
             for the Year Ended December 31, 2002 and Period from
             Inception to December 31, 2001..............................17
           Consolidated Statements of Cash Flows for the Year
             Ended December 31, 2002 and the Period from Inception
             to December 31, 2001 .......................................18
           Notes to Consolidated Financial Statements....................19
           Report of Independent Auditors................................26
Item 8.    Changes In and Disagreements with Accountants on
             Accounting and Financial Disclosure ........................27

                                    PART III

Item 9.    Directors, Executive Officers, Promoters and Control Persons..27
Item 10.   Executive Compensation........................................28
Item 11.   Security Ownership of Certain Beneficial owners
             and Management..............................................29
Item 12.   Certain Relationships and Related Transactions................30
Item 13.   Exhibits and Reports on Form 8-K..............................30
Item 14.   Internal Controls and Procedures..............................31


SIGNATURES...............................................................31

CERTIFICATIONS...........................................................32

EXHIBITS.................................................................34




<PAGE>





                       NOTE ON FORWARD-LOOKING INFORMATION

This Form  10-KSB and other  statements  issued or made from time to time by the
Company  or  its  representatives  contain  statements,   which  may  constitute
"forward-looking  statements"  within the meaning of the  Securities Act of 1933
and the  Securities  Exchange Act of 1934, as amended by the Private  Securities
Litigation  Reform Act of 1995,  15  U.S.C.A  Sections  77z-2 and  78u-5.  Those
statements  include  statements   regarding  the  intent,   belief,  or  current
expectations  of the Company and members of its  management  team as well as the
assumptions on which such statements are based. All statements,  trend analyses,
and other  information  contained  in this  report  relative  to markets for the
Company's  products  and/or  trends in the  Company's  operations  or  financial
results,  as well as other  statements which include words such as "anticipate,"
"could,"  "feel(s),"   "believes,"   "plan,"  "estimate,"   "expect,"  "should,"
"intend,"  "will," and other  similar  expressions,  constitute  forward-looking
statements and are subject to known and unknown risks,  uncertainties  and other
factors  that may cause actual  results to be  materially  different  from those
contemplated by the  forward-looking  statements.  Such factors  include,  among
other things:  (i) general  economic  conditions  that may impact the disposable
income and spending  habits of consumers;  (ii) the  availability of alternative
entertainment  for  consumers;  (iii)  the  ability  of the  company  to  obtain
additional  capital;  (iv)  the  receipt  of a going  concern  opinion  from the
Company's independent public accountants;  and (v) the ability of the company to
control costs and execute its business plan.

The  reader  is  cautioned  that any  such  forward-looking  statements  are not
guarantees of future performance and involve risks and  uncertainties,  and that
actual  results  may  differ   materially   from  those   contemplated  by  such
forward-looking statements. Important factors currently known to management that
could cause actual results to differ  materially  from those in  forward-looking
statements are set forth herein.  The Company undertakes no obligation to update
or  revise  forward-looking  statements  to  reflect  changed  assumptions,  the
occurrence of unanticipated  events or changes to future operating  results over
time.


<PAGE>




                              BASIS OF PRESENTATION

Effective  August  2,  2002,  Pacific  International   Holding,   Inc.,  a  Utah
corporation  ("PIH"),  which was originally organized in 1986, changed its state
of  domicile  and name by  merging  with and into  Interactive  Motorsports  and
Entertainment   Corp.  (the  surviving  entity),  an  Indiana  corporation  (the
"Company"), pursuant to an Agreement and Plan of Reorganization.  Per the merger
agreement,  each share of PIH common stock outstanding  immediately prior to the
effective  date of the merger was cancelled  and  converted  into four shares of
Interactive  Motorsports and Entertainment  Corp. common stock.  Although it had
been in a variety of  businesses  for over 15 years,  at the time of the merger,
PIH had limited operations.

Subsequent to the merger and effective as of the same date, the Company acquired
pursuant to a Plan and  Agreement of Exchange all of the issued and  outstanding
shares of common stock and  preferred  stock of Perfect  Line,  Inc., an Indiana
corporation  ("Perfect Line"), from the Perfect Line shareholders in exchange on
a "share-for-share" basis for shares of the Company's common stock and preferred
stock. As a result of the share exchange,  the Perfect Line shareholders hold as
of August 2, 2002 Company shares representing  approximately  eighty-two percent
(82%) of the Company's  capital stock.  Also effective as of August 2, 2002, the
members of the Board of  Directors  of Perfect  Line were elected to replace the
members of the  Company's  Board of  Directors  and the  executive  officers  of
Perfect Line became the executive officers of the Company.

As Perfect Line had revenues,  operations,  and business activity, for financial
reporting purposes,  Perfect Line is considered the acquirer,  and therefore the
predecessor,  and the Company is  considered  the  acquiree for  accounting  and
reporting  purposes.  Due to the fact  that the  merger  is being  treated  as a
reverse  acquisition,  the  equity of the  Company  has been  recapitalized  for
financial  reporting  purposes.  The operations of Interactive  Motorsports  and
Entertainment  Corp.  have been  included in  consolidation  from August 2, 2002
until December 31, 2002.

All  information  in this  Form  10-KSB is  presented  from the  perspective  of
Interactive  Motorsports and Entertainment Corp. and its subsidiary Perfect Line
and not from the perspective of PIH.




<PAGE>


                                     PART I

ITEM 1. Description of Business

Overview

Interactive  Motorsports and Entertainment  Corp. ("IMTS" or the "Company"),  an
Indiana  corporation,  through its wholly owned subsidiary,  Perfect Line, Inc.,
owns and operates NASCAR Silicon Motor Speedway  ("NSMS")  racing  centers,  the
largest chain of NASCAR branded  entertainment and retail stores. NSMS customers
experience  driving in a NASCAR race car that  simulates the motion,  sights and
sounds  of an  actual  NASCAR  event.  Located  in high  profile,  high  traffic
locations,  IMTS's 12 racing  centers  include up to 14 racecar  simulators  per
location and offer the best selling NASCAR driver  merchandise  available to the
market.

The Company  plans to  leverage  its  strategic  relationships  and  proprietary
assets,  which include (a) sophisticated  racing simulation  technology,  (b) an
exclusive licensing agreement with NASCAR, and (c) license agreements with other
racing entities including race tracks, race teams, and race sponsors to create a
dynamic, diversified business.

For the year ended  December 31, 2002,  its first full year of operations  since
the  acquisition  of these centers,  the Company's 12 racing  centers  generated
revenue of approximately  $9.6 million.  Operating without the necessary capital
to properly market and merchandise these stores, sales performance fell short of
expectation,  resulting  in a net loss of  approximately  $2.2  million for this
period. With proper funding,  the Company plans to increase the revenue from the
existing centers by increasing the average  transaction value, the percentage of
sales generated from group events, and improving the retention level of existing
customers by enhancing the gaming  experience.  The Company will do this through
marketing initiatives and systems and technology improvements.

IMTS's 12 company owned racing centers are located in high traffic, high profile
mall locations.
<TABLE>

<S>     <C>                        <C>                     <C>                <C>
             Location                      Market              Sq. Ft.          Simulators
       --------------------         ------------------      -----------         ----------
1)       Mall of America            Minneapolis, MN           5,899             12 racecars
2)       Concord Mills              Charlotte, NC             7,875             14 racecars
3)       Mall of Georgia            Atlanta, GA               5,895             12 racecars
4)       Katy Mills                 Houston, TX               6,048             12 racecars
5)       RiverTown Crossing         Grand Rapids, MI          6,101             10 racecars
6)       Crossgates Mall            Albany, NY                4,167              8 racecars
7)       Riverchase Galleria        Birmingham, AL            6,188             10 racecars
8)       Universal CityWalk         Los Angeles, CA           5,067             12 racecars
9)       Opry Mills                 Nashville, TN             5,992             12 racecars
10)      Woodfield                  Chicago, IL               6,044             12 racecars
11)      Palisades Center           Nyack, NY                 5,700             12 racecars
12)      Arbor Place                Douglasville, GA          5,055             10 racecars
</TABLE>

The current racing centers average about 5,850 sq. ft. Each racing center has up
to 800 square feet of retail merchandise space, or a total of more than 6,000
square feet of retail area for the Company. According to statistics maintained
by each mall, a total of approximately 178 million consumer visits are made
annually to these 12 mall locations.

An individual race costs $8.50 and quantity discounts are offered with purchases
of multiple  races.  Customers pay an average of $25 per hour to use a simulator
during  leagues and  competitions.  Depending  on the  program or  package,  the
targeted yield for group sales  averages  between $300 and $800 per hour for the
use of the entire racing center.  Prices of merchandise range from $16 for a hat
up to $200 for high-end leather jackets. Prices for the die-cast and collectable
cars range between $15 and $65.

History

Perfect Line,  LLC, the  predecessor  of the Company's  wholly owned  subsidiary
Perfect Line, Inc.  ("Perfect  Line"),  was formed in 2001 as a Delaware limited
liability company and merged with and into Perfect Line, Inc. on August 1, 2002.
Perfect  Line  is in  the  business  of  owning  and  operating  simulated  race
facilities and selling racing related merchandise.
<PAGE>

NSMS  racing   centers   were   originally   owned  and   developed  by  Silicon
Entertainment,  Inc.  ("SEI").  SEI opened its first site in August  1997 at the
Mall of  America  in  Bloomington,  Minnesota,  the  largest  mall in the United
States.  SEI raised large sums of initial  capital,  of which,  according to SEI
internal  documents,  approximately  $6.5  million  was  utilized  to create its
proprietary  software  technology and  approximately $25 million was utilized to
produce  approximately 170 simulators and complete the build-out of 15 stores in
high traffic malls.  SEI was unable to secure  additional long term financing to
support its capital  expansion,  and was liquidated through Chapter 7 bankruptcy
in April 2001.  Perfect Line's assets were primarily  acquired from creditors of
Silicon Entertainment, Inc. ("SEI") and as a result of SEI's bankruptcy, Perfect
Line was able to purchase the assets of SEI at a price substantially below SEI's
cost.

Perfect  Line  re-opened  12 of the racing  centers,  which  utilize  136 of the
simulators,  between July 2001 and August 2002.  The Company has  warehoused  32
simulators  for future  deployment  and 2  simulators  are used for research and
development  purposes  at  the  Company's  technology  center  in  Santa  Clara,
California.  The proprietary technology includes two U.S. Patents, which combine
to create  what  management  believes to be one of the  world's  most  realistic
simulation of the sights, sounds and motions experienced by driving in an actual
NASCAR race. The proprietary motion-based platform that the racecar simulator is
mounted on is among the other assets that were  acquired and licensed as part of
the transaction.

In August 2002,  Perfect Line became a wholly owned subsidiary of IMTS,  through
an  exchange  of shares  that  resulted  in  Perfect  Line  shareholders  owning
approximately 82% of IMTS equity.  Simultaneous  with this event,  approximately
$2.6 million in private  equity  financing  was made  available to Perfect Line.
Half of the funding was used to retire the  Company's  bank note and the balance
was used for working capital.

The Company's Current Operations, Recent Developments and Plan for the Future

The  Company's  primary  focus  is to own  and  operate  the  largest  chain  of
officially-licensed,   NASCAR-branded  entertainment  and  retail  merchandising
stores in the world. The Company  believes that with the correct  combination of
marketing, location, and product upgrades, it can build a national following and
a profitable enterprise.

NASCAR racing is currently the #1 spectator sport in America. The Company has an
exclusive license agreement with NASCAR for location-based entertainment,  which
includes  the right to use the NASCAR  name within the  Silicon  Motor  Speedway
logo, on racing center signage,  within collateral sales materials,  on the NSMS
web site, and within the NSMS racing  simulator  software.  The Company has also
secured licenses with many popular racetracks in the United States, and the cars
driven by many of the race fans' favorite Winston Cup teams and drivers, ranging
from  established  stars such as Dale  Earnhardt,  Jr., Tony  Stewart,  and Dale
Jarrett,  to rising  stars like Matt  Kenseth  and Kurt Busch.  These  licensing
agreements and the use of NASCAR related  identities and marks provide immediate
name recognition, credibility, and authenticity to NSMS.

The  Company  has  integrated  these  license   agreements  with   sophisticated
proprietary  racing  simulator  technology  to create a chain of  NASCAR-themed,
family-oriented,  racing  entertainment  and  retail  merchandise  centers.  The
Company's  facilities are in some of America's premier shopping malls, giving us
access to over 178 million annual site visits from potential customers.

Simulator  races take place on famous  NASCAR  Winston  Cup  racetracks  such as
Daytona International Speedway,  Indianapolis Motor Speedway, Lowe's (Charlotte)
Motor  Speedway,  Atlanta Motor Speedway,  Bristol Motor Speedway,  and Richmond
International Raceway.

NSMS Racing  Centers are operated as combined  racing  entertainment  and retail
merchandise  stores. In addition to providing  customers with the opportunity to
drive Winston Cup racecars,  NSMS Racing Centers also feature a large  selection
of officially-licensed  NASCAR merchandise.  Research indicates that NASCAR fans
buy more merchandise than fans from almost any other sport and they are also the
most brand-loyal.  These characteristics  helped boost worldwide  NASCAR-branded
retail sales from approximately $82 million in 1990 to $1.4 billion in 2002. The
Company's  NSMS racing  centers are the largest  chain of  officially  licensed,
NASCAR-branded  interactive  entertainment  stores in the  world,  and offer its
customers the most popular NASCAR merchandise  available.  With these factors in
place,  the  Company  believes  it is  well-positioned  to  capitalize  on  this
billion-dollar market.

Tony Stewart, 2002 NASCAR Winston Cup Champion, was recently named spokesman and
technical  advisor for NASCAR  Silicon  Motor  Speedway.  He will be featured in
promotions,   advertising  and   point-of-sale   material  and  will  also  make
appearances at NSMS racing center locations throughout the country.
<PAGE>

The Company has entered into an agreement,  through its wholly owned subsidiary,
Perfect Line,  Inc.,  with NASCAR  SpeedPark and Burroughs and Chapin Company of
Myrtle Beach, SC for the installation of 10 proprietary simulators at the NASCAR
SpeedPark Smoky Mountains and the Myrtle Beach Pavilion  Amusement  Park's Ocean
Front Arcade.  Together,  both companies are studying  further  opportunities to
install these unique NASCAR simulators in other Burroughs and Chapin properties.

The Company has made technological improvements to the simulation,  resulting in
an enhanced racing experience. In addition, two popular racetracks,  Bristol and
Indianapolis,  were  introduced to the  simulation  experience  late in 2002 and
early in 2003. Other software  improvements were implemented,  including on-line
programs  such  as  MySpeedway.  MySpeedway  is  a  feature  on  IMTS's  website
(www.smsonline.com)  that allows  customers to find their recent lap times,  and
analyze their results to improve their  performance by comparing  their times to
those of other racers throughout the country.

Technological  improvements  that will be  introduced in the second half of 2003
are currently under development.  These include upgrading and enhancing the game
graphics,  upgrading the  underlying  operating  system in order to  accommodate
future developments, and significant revenue enhancing game features that target
the Company's core customers.

The Company is pursuing  additional  revenue  sharing  agreements  such as those
entered into with  Burroughs  and Chapin as described  above and plans to expand
this  activity,  based on its future  financing.  Revenue share  locations  will
provide  IMTS the  opportunity  to install  simulators  in  existing  or planned
entertainment  venues  and share  proportionately  in the sales  generated  with
owner-operator.  The Company will provide the simulators at cost (expected to be
financed  through  a  third  party  leasing  firm)  and  the  host  organization
(owner-operator) will provide the space, required site build-out, and day-to-day
operations  staffing.  The Company's first installation is scheduled for opening
in April 2003.

The Company plans,  based on future  financing,  to establish a division to sell
its motion-based  simulators to the commercial  entertainment/amusement  market.
Exploiting this opportunity may create another attractive revenue stream for the
Company.

Within its existing  racing  centers,  the Company  plans to improve each racing
center's  profitability  includes increasing the average price of a transaction,
the  amount  of group  sales  and  improving  the  retention  level of  existing
customers  by  enhancing  the gaming  experience.  Through  this  strategy  IMTS
believes it will be less reliant on the acquisition of new customers.

Racing Center Dynamics

Simulator  Racing - The racing centers  generate  revenues from repeat customers
that  currently   represent   approximately   65%  of  IMTS's  total   revenues.
Approximately  50% of the  Company's  first  time  drivers  are  non-destination
walk-ins. A typical customer is a college-educated  male over the age of 20 with
household  income in excess of $50,000.  Repeat  customers  cite  challenge  and
competition as primary reasons for returning to its racing centers. Analysis has
shown that "Casual"  customers  race an average of 5.5 races as compared to only
1.4  races  for the first  time  customers.  More  importantly,  the  "frequent"
customers race an average of 23.5 races.

Merchandise - The sale of NASCAR licensed  merchandise at the Company's existing
racing centers extends beyond  customers  participating  in the race experience.
The most popular  price points are under $25,  predominantly  hats and t-shirts,
and represent a significant  portion of the merchandise sales, many of which are
simply  "souvenirs"  or impulse  pick-up  items  purchased  by  passers-by.  The
"collectibles"  portion of the inventory is generally sold to regular  customers
who  depend  on NSMS to  stock  the  collectable  die-cast  models  and  premium
merchandise.

Staffing -- A General Manager and one to two Assistant General Managers run each
racing center. A Supervisor  ensures the service level within its  entertainment
experience is executed at the highest level.  Each store also employs an on-site
Technical  Manager  who  ensures  the  computer  network  and  physical  racecar
simulators are maintained at all times.

Training -The Company provides  extensive  training  programs for both employees
and managers. New employees are given a thorough orientation on all policies and
procedures  during a three to five  day  training  program.  New  managers  must
complete an  extensive  training  program that covers all aspects of each racing
center.

Employees

As of March 31, 2003 the Company had 210  employees  including 121 full-time and
89  part-time.  The Company  considers  its  relations  with its employees to be
excellent.


<PAGE>


Item 2. Description of Properties

The Company is headquartered  at 5624 West 73rd Street in Indianapolis,  Indiana
where the Company leases  approximately 4,800 square feet. The facility consists
primarily  of office and  storage  areas and is leased from an  unrelated  third
party.  The  headquarters'  lease expires  September 14, 2003.  The Company also
maintains an engineering office at 3513 Ryder Street in Santa Clara,  California
where it leases approximately 1,800 square feet of office space. The engineering
office  lease  expired on February  28, 2003 and the Company is paying  month to
month. The Company  believes its headquarters and engineering  space is adequate
for the present time and is reviewing  options for  relocating  or extending its
leases at these locations.

The twelve  NASCAR  Silicon Motor  Speedway  stores are located in the following
major shopping malls:

                                                            Square
    Location                   Market                       Footage

    Mall of America            Minneapolis, Minnesota         5,899
    Universal CityWalk         Los Angeles, California        5,067
    Opry Mills                 Nashville, Tennessee           5,992
    Concord Mills              Charlotte, North Carolina      7,875
    Riverchase Galleria        Birmingham, Alabama            6,188
    Mall of Georgia            Atlanta, Georgia               5,895
    Katy Mills Mall            Houston, Texas                 6,048
    Rivertown Crossing         Grand Rapids, Michigan         6,101
    Crossgates Mall            Albany, New York               4,167
    Woodfield Mall             Chicago, Illinois              6,044
    Palisades Center           Suburban New York City         5,700
    Arbor Place                Atlanta, Georgia               5,055


Item 3. Legal Proceedings

From  time to time,  the  Company  may be party to  various  legal  actions  and
complaints  arising in the ordinary course of business.  As of December 31, 2002
and as of the filing of this Annual  Report on Form  10-KSB,  the Company is not
aware of any material legal actions directed against the Company.

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

None, not applicable.


                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Dividend Policy

To date, the Company has not paid dividends on its common stock.  The payment of
dividends,  if any, is within the  discretion  of the Board and will depend upon
the Company's earnings,  capital requirements and financial condition, and other
relevant  factors.  The Board does not intend to declare  any  dividends  in the
foreseeable future.

Holders of Record

As of March 31,  2003  there  were  approximately  240  holders of record of our
Common Stock consisting of 61,330,000 shares issued and outstanding.  The number
of holders of record was  calculated  by reference to reports from the Company's
stock transfer agent.

Share Price History

The   Company's   common   stock  (the   "Common   Stock")  has  traded  on  the
over-the-counter  market in what is commonly  referred  to as the "OTC  Bulletin
Board" or the "OTCBB" under the trading symbol "IMTS" since August 14, 2002. The
following  table sets forth the high and low bid prices of the Common  Stock for
the periods indicated. The price information contained in the table was obtained
from the OTCBB web site and other sources we consider  reliable.  Note that such
over-the-counter  market quotations reflect inter-dealer prices,  without retail
mark-up, markdown or commission and the quotations may not necessarily represent
actual transactions.
<PAGE>

                                          Common Stock Price
 Month Ended                 High                 Low                Close
 -----------                 ----                 ---                -----
 August 31, 2002 (1)         .90                 .15                 .45
 September 30, 2002          .52                 .20                 .45
 October 31, 2002            .67                 .27                 .48
 November 30, 2002           .62                 .28                 .45
 December 31, 2002           .67                 .27                 .28

(1)  Includes   information  as  of  August  14,  2002,  but  does  not  include
     information  of the  Registrant  prior to the merger of August 2, 2002 when
     the Company changed its operations materially.

Issuance of Securities

In connection  with the Company's  merger with and into PIH on August 2, 2002, a
total of 11,300,000 shares of Interactive  Motorsports and  Entertainment  Corp.
common stock were issued to  shareholders of PIH in exchange for their shares of
common stock of that company.

On August 2, 2002, 4,745,456 shares of the Company's Preferred Stock were issued
for cash consideration of $2,610,050.

In February 2003, 30,000 shares of common stock were issued under a Form S-8
filed on February 13, 2003 for consulting services.

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

The following  discussion and analysis  provides  information that we believe is
relevant to an  assessment  and  understanding  of the  consolidated  results of
operations and financial  condition of the Company.  The terms "Company",  "we",
"our" or "us" are used in this  discussion to refer to  Interactive  Motorsports
and  Entertainment  Corp. along with Interactive  Motorsports and  Entertainment
Corp.'s wholly owned  subsidiary,  Perfect Line, Inc., on a consolidated  basis,
except  where the  context  clearly  indicates  otherwise.  The  discussion  and
information  that follows concerns the Registrant as it exists today, as of this
filing,  including the  predecessor of the Company's  operations,  Perfect Line,
LLC. This  discussion  and analysis does not relate to the operations of Pacific
International  Holding,  Inc. which had limited  operations  prior to the merger
with the Company on August 2, 2002.

Overview

The Company has not generated a profit nor has it generated sufficient cash flow
since inception to fund operations.  Since inception on May 31, 2001 and through
December  31,  2002,  the  Company has  accumulated  aggregate  losses  totaling
$(2,909,074),  which includes the net loss of $(2,189,220) for the twelve months
ended  December  31,  2002 and the net loss of  $(719,854)  for the period  from
inception to December 31, 2001.

The Company has funded its retained  losses  through the initial  investment  of
$650,000 in May 2001,  $400,000 of capital  contributed  in February  2002,  and
approximately  $2.6  million  received in August 2002 from the sale of Preferred
Stock.  The Company is presently in the process of  soliciting  additional  debt
and/or  equity  financing to fund current  operating  deficits and the Company's
growth plan. See further  discussion under "Liquidity and Capital Resources" and
"Risk Factors" below.

During the twelve months ended December 31, 2002, the Company had total revenues
of $9,636,278  compared to $3,533,402  for the period from inception to December
31,  2001.  The  increase in revenue of 173% is  principally  attributed  to the
increased time period of operations in 2002.

Review of Consolidated Financial Position

Cash and Cash Equivalents: The Company had $582,905 in cash and cash equivalents
as of December 31, 2002  compared with $778,629 at December 31, 2001, a decrease
of $195,724.  This decrease in cash for the year ended December 31, 2002 relates
principally to the net loss of ($2,189,220).

Trade Accounts  Receivable:  These are primarily credit card receivables and the
higher  balance of $86,734 at December  31, 2002 versus  $51,684 at December 31,
2001 is due to the higher volume of business  transacted in December 2002 versus
December 2001.
<PAGE>

Merchandise Inventory:  At December 31, 2002, merchandise inventory increased by
$89,149 from December 31, 2001 due primarily to higher fourth quarter  purchases
made  possible  from the cash  received  in August  2002  from the May 10,  2002
private  placement of preferred stock as discussed in the notes to the financial
statements.

Accounts  Receivable from Related  Parties:  One hundred thousand dollars of the
balance at December 31, 2001 was receivable from Perfect Line Investments,  LLC,
a related party. The remainder was primarily due from a former member of Perfect
Line,  LLC who left the Company in July 2002 and repaid the amount at that time.
The  receivable  of $100,000 from Perfect Line  Investments,  LLC has been fully
reserved at December 31, 2002 as its  collection is deemed  unlikely.

Accounts Payable:  Due to the purchase of merchandise  inventory described above
and the  addition of two stores from  December  31,  2001,  accounts  payable at
December 31, 2002 has increased $126,710 from December 31, 2001.

Line of Credit and Notes Payable: Both the revolving line of credit and the bank
term loan were repaid in full in August 2002 using the proceeds from the May 10,
2002 private  placement of preferred stock.  Other than the Secured Bridge Notes
issued  in  March  2003  as  further  discussed  in  Note 8 to the  Consolidated
Financial  Statements,  the Company does not currently  have a revolving  credit
facility in place,  although it is in  discussions  with banks and other lending
institutions.

Other  Liabilities:  Accrued  payroll and payroll  taxes,  sales taxes  payable,
unearned  revenue,  and other  accrued  expenses  fluctuate  with the  volume of
business,  timing of payments, and the day of the week on which the period ends.
At December 31, 2001,  because of the timing of payday,  the payroll accrual was
approximately one half the next payroll,  while at December 31, 2002 the payroll
accrual was a week and a half payroll.  Gift  certificates  at December 31, 2002
decreased by $29,821  compared to December 2001. This decrease can be attributed
at least in  substantial  part to decreased  consumer  spending  during the 2002
holiday season.  Accrued  expenses are higher at December 31, 2002 due primarily
to  accrual  of  licensing  fees  to  NASCAR  of  $100,000  and the  accrual  of
approximately  $157,000 for Internet service,  gas, and electric  utilities that
have been in dispute.  The Company  believes the ultimate payment of these items
will be less than or equal to the amounts accrued.

Review of Consolidated Results of Operations

Sales for the twelve months ended December 31, 2002 were $6,102,876  higher than
the period from  inception  (May 31,  2001) to December  31, 2001 due  primarily
because the Company did not begin operations  until June 8, 2001.  Additionally,
most  of the  stores  were  closed  until  July or  August  2001  following  the
bankruptcy of SEI. During most of the twelve months ended December 31, 2002, the
Company  operated  eleven stores having opened the twelfth store in August 2002.
On a weighted  average  basis,  11.4 stores were open in the twelve months ended
December  31,  2002  versus 6.4  stores  open in the period  from  inception  to
December 31, 2001.  During 2002,  the Company has  experienced  a decline in the
average  sales per week per store on a  comparable  basis from  $18,140  for the
period from inception to December 31, 2001 to an average of $17,322 for the year
ended December 31, 2002.  This decrease is primarily  attributable  to a lack of
marketing  expenditures  and the positive  impact of seasonality in 2001, as the
stores were open only during the peak holiday shopping season.

Operating  expenses for the year ended December 31, 2002 were approximately 122%
of net sales and approximately 118% in 2001. Although the expense ratio remained
relatively  consistent in 2002 versus 2001, the net loss of $(2,189,220) in 2002
was  greater  than  the net loss of  $(719,854)  in 2001  due  primarily  to the
increased time period of operations in 2002.

Qualitative and Quantitative Disclosures of Market Risk

The fair value of the assets and liabilities  comprising the Company's condensed
consolidated  balance  sheet are not subject to an  inordinate  amount of market
risk.  The term  market  risk refers to the risk of loss  arising  from  adverse
changes in  interest  rates and other  relevant  market  rates and  prices.  The
Company's  primary  assets are the racing  simulators and the software that runs
them. As such, the Company does not believe it has any  significant  exposure to
market risk, as defined.

Critical Accounting Policies

The  Company's  critical  accounting  policies,  including the  assumptions  and
judgments underlying them, are disclosed in the Notes to Consolidated  Financial
Statements  for the year ended December 31, 2002 included in Item 7 in this Form
10-KSB.  The Company has  consistently  applied these policies in the year ended
December 31, 2002.  Management  does not believe  that  operations  to date have
involved uncertainty of accounting treatment, subjective judgment, or estimates,
to any significant degree.
<PAGE>

Internal Controls

Pursuant  to  Section  302 of the  Sarbanes-Oxley  Act of 2002,  management  has
reviewed  the  Company's  disclosure  controls  and  procedures  (as  defined in
Exchange  Act Rules 13a-14 and 15d-14) as of a date within 90 days prior to this
annual report (the "Evaluation Date").  Management believes that such disclosure
controls and procedures as of the  Evaluation  Date were adequate to ensure that
employees and others with material information relating to the Company make that
information  known to  management.  To  management's  knowledge,  there  were no
significant  changes  in  internal  controls  or in  other  factors  that  could
significantly affect internal controls subsequent to the Evaluation Date.

Liquidity and Capital Resources

The primary source of funds available to the Company are receipts from customers
for simulator and merchandise  sales,  proceeds from equity offerings  including
the $2,610,050  received in August 2002, loans from  shareholders,  and possible
future financings.

As of the  filing  of this Form  10-KSB,  the  equity  financing  of  $2,610,050
received in August 2002 has been depleted and the Company believes the projected
level  of cash  receipts  from  simulator  and  merchandise  sales  will  not be
sufficient  to fund the daily  operations of the business  through 2003,  unless
additional sources of funds are created through bank credit  facilities,  equity
infusions,  or other  financing  options.  The Company  received net proceeds of
$687,500 from the issuance of $700,000 of Secured  Bridge Notes in March 2003 as
previously  reported  in that Form 8-K filed with the  Securities  and  Exchange
Commission  on March  13,  2003.  Deterioration  in the  economy,  decreases  in
consumer  spending,  and the war in Iraq have created further  declines in sales
volume in March and April 2003.  The Company now expects the  proceeds  from the
Secured Bridge Notes to fund operating deficits only through the end of April or
the beginning of May 2003.  Management is in the process of obtaining additional
sources of short-term funds to continue  operations  until additional  long-term
equity and/or debt financing can be established.

Currently,  the Company is exploring  collateralized debt financing with several
sources and is in various  stages of  discussion  with each.  Additionally,  the
Company has entered  into an  agreement  with a New York based firm to assist in
raising equity  financing for up to $7.5 million.  It was through this firm that
the Company  successfully secured its recent "bridge" financing discussed above.
While the Company  believes  that at least one of these  financing  efforts will
occur, there are no assurances.

Since  inception,  the Company's  short-term  and long-term  plans have included
raising a level of  investment  adequate to  accomplish  the  objectives  of the
business.  The required  level of financing  has not yet been  achieved.  Absent
additional funding, the Company believes it may not have sufficient resources to
satisfy cash  requirements for the next twelve months.  The Company's ability to
raise the  necessary  financing  will  depend  on many  factors,  including  the
economic  and market  conditions  prevailing  at the time  financing  is sought.
Management  believes it can achieve the required  level of  financing;  however,
there can be no assurance  that  additional  financing  will be available or, if
available, that it will be on terms acceptable to the Company.

During the year ended December 31, 2002, the operating activities of the Company
used net cash of $(1,524,364)  compared to net cash provided of $189,611 for the
period from inception to December 31, 2001. The majority of the decrease in cash
provided by operations was due to an increase in net operating loss before taxes
of approximately $1,469,366.

During the twelve months ended December 31, 2002, the Company used $(143,510) of
net cash in investing  activities compared with $(1,648,228) of net cash used in
investing  activities  during the period from inception to December 31, 2001. In
2002, the net cash used relates  primarily to the  capitalization  of internally
developed software for the new Bristol Motor Speedway racetrack.

The Company  intends to use the equity  markets to raise  sufficient  capital to
fund its operating  deficits  while it refines its business model and technology
and then market the new offering to  customers.  The majority of the  $1,472,150
cash  provided  through  financing  activities  during the twelve  months  ended
December 31, 2002 represents the sale of the Company's preferred stock through a
private placement.
<PAGE>

As of December  31,  2002,  the Company had cash and cash  equivalents  totaling
$582,905  compared to $778,629 at December  31,  2001.  Current  assets  totaled
$860,804 at December 31, 2002  compared  with  $1,071,725  on December 31, 2001.
Current  liabilities  totaled  $1,286,533  on December  31, 2002  compared  with
$1,373,392  on December 31, 2001. As such,  these  amounts  represent an overall
decrease  in working  capital at December  31, 2002 as compared to December  31,
2001.  This decrease in working capital is largely due to a decrease of $764,796
in net cash provided by financing activities in 2002.

Inflation

We do not expect the impact of inflation on our operations to be significant.

Risk Factors

The  Company is subject to certain  risk  factors  due to the  organization  and
structure  of the  business,  the industry in which we compete and the nature of
our operations. These risk factors include the following:

Operating History, Operating Losses, and Accumulated Deficit

Perfect Line was formed in June 2001 for the purpose of acquiring certain of the
assets of SEI, a bankrupt corporation,  and modifying and improving the business
model under which SEI operated,  as more fully  described  under Overview above.
While the concept is a modification  and improvement  upon the prior model,  the
modified  business  model has only been in place for several  months,  and thus,
remains  to be  tested.  Perfect  Line has a limited  operating  history  and is
subject to  numerous  risks,  expenses,  problems,  and  difficulties  typically
encountered in establishing any business.  As of December 31, 2001, Perfect Line
generated net sales of $3,533,402 and had an accumulated  deficit of $(719,854).
As of December 31, 2002 and for the twelve  months then ended,  Perfect Line had
net sales of $9,636,278 generating a net loss of $(2,189,220).  This resulted in
an accumulated  deficit of $(2,909,074) as of December 31, 2002 for the Company.
Management believes the Company can become profitable in the future,  based upon
sales of its current  product  offerings,  increased  marketing,  updates to its
simulation  technology,  and the  introduction of new products.  There can be no
assurance  that the Company will be profitable  for fiscal 2003 or thereafter or
that the Company's cash flow will allow it to continue operations.

Dependence on Discretionary Consumer Spending and Competition

Much  of  the  revenue  anticipated  by  the  Company  will  be  the  result  of
discretionary  spending by  consumers.  If the  current  downturn in the economy
continues for an extended time or worsens, either overall or in the locations in
which Company stores are located,  the amount of  discretionary  spending may be
reduced  which  would  have a  negative  effect  on  the  Company  results  from
operations and its financial position.  In addition, if the popularity of NASCAR
diminishes, it is likely that the Company will experience a similar reduction in
simulator  usage and  merchandise  sales that will have a negative impact on the
Company and its future.

There is  considerable  competition  for  consumer  entertainment  dollars.  The
Company feels its patented technology, high-traffic, premium locations, licenses
with NASCAR and various  teams,  drivers,  and tracks  combined  with the NASCAR
retail  store-within-a-store  concept  create  significant  points of difference
between its competitors and NSMS. However,  there can be no assurance that these
factors will be sufficient to assure  successful  product  development  into the
marketplace.

Significant Capital Requirements and Need for Additional Financing

The  Company's   capital   requirements  have  been  and  will  continue  to  be
significant.  The Company is dependent upon the proceeds of additional stock and
debt offerings in order to fund its continued growth and related working capital
requirements.  The Company anticipates,  based upon its currently proposed plans
and  assumptions  relating to its  operations,  that the net financing  proceeds
received  to date by the  Company  will  only  provide  a  portion  of the funds
necessary in connection  with the  implementation  and  continuation of its long
term business plans.  Ongoing operations,  marketing and new product development
will require capital resources greater than the resources currently available to
the  Company.  To the  extent  that the  Company's  operations  do not  generate
sufficient  working capital for its long-term  business plans,  the Company will
need to obtain  additional  outside  financing.  There can be no assurance  that
additional  financial  resources necessary to permit the Company to implement or
continue its programs will be available.  See "Liquidity and Capital  Resources"
for further discussion of capital requirements.

Currently,  the Company is exploring  collateralized debt financing with several
sources and is in various  stages of  discussion  with each.  Additionally,  the
Company has entered  into an  agreement  with a New York based firm to assist in
raising equity  financing for up to $7.5 million.  It was through this firm that
the Company  successfully secured its recent "bridge" financing discussed above.
While the Company  believes  that at least one of these  financing  efforts will
occur, there are no assurances.


<PAGE>


Dependence on Updated Technology and Licenses/Leases

The  Company  will  likely  have a need to  routinely  update  and  upgrade  its
simulation  technology.  If  the  Company  is not  able  to  retain  appropriate
personnel with the skills and ability to maintain its simulators, it will likely
have a material  adverse  effect on the  Company.  The Company will also need to
routinely  upgrade the appearance of the simulators to closely  approximate that
of the then current NASCAR sponsors.  This updating may involve significant time
and expense and, in certain  instances,  require  additional  license agreements
from new teams and/or  sponsors.  The Company  will also need to renew  existing
licensing agreements with NASCAR teams and/or drivers. The Company currently has
executed either contracts or term sheets with fourteen teams and/or drivers. The
Company  will also need to, and is in the  process  of,  establishing  licensing
relationships with a significant number of racetracks at which NASCAR events are
held. At the present time the Company has license agreements with six tracks and
continues to pursue other tracks.  The Company believes it will be able to enter
into  agreements  with a number of  prominent  tracks,  although  no other final
agreements  have been  reached as of the date of this  filing.  The  Company has
entered into an exclusive entertainment license agreement with NASCAR to utilize
its logo. The license  agreement permits the continued use of the NASCAR logo in
the Las Vegas NASCAR Cafe and the Daytona USA  simulator and provides that it is
not a breach of the  exclusivity  clause for those two venues to continue to use
their current simulator experiences. The license requires the Company to utilize
its best  efforts  to  maintain  a minimum of eight  entertainment  stores.  The
Company's  confidential  licensing agreement with NASCAR requires annual royalty
payments  in 2002 and  quarterly  royalty  payments  in 2003  and 2004  based on
simulator,  merchandise,  food,  beverage,  sponsor, and remote site revenues at
varying  percentages.  The licensing agreement is subject to renewal on December
31, 2004.

Dependence on Small Number of Key Management Personnel

We do not have  employment  agreements  with any of our  employees.  Our  future
success  depends,  in  part,  on the  continued  service  of our key  executive,
management,  and technical personnel. If key officers or employees are unable or
unwilling to continue in their present  positions,  our business and our ability
to raise capital could be harmed.

Our business is especially dependent upon the continued services of our Chairman
and Chief Executive Officer,  William R. Donaldson.  Should we lose the services
of Mr. Donaldson,  our operations will be negatively  impacted.  The loss of the
services  of Mr.  Donaldson  would  have a  material  adverse  effect  upon  our
business.

Officers and Directors Have Limited Liability and Indemnification Rights

Our  officers  and  directors  are  required  to  exercise  good  faith and high
integrity in the management of our affairs. Our certificate of incorporation and
bylaws,  however,  provide,  that  the  officers  and  directors  shall  have no
liability to the stockholders for losses sustained or liabilities incurred which
arise from any transaction in their respective managerial capacities unless they
violated  their  duty  of  loyalty,  did  not  act in  good  faith,  engaged  in
intentional  misconduct  or  knowingly  violated  the law,  approved an improper
dividend  or  stock  repurchase,   or  derived  an  improper  benefit  from  the
transaction.  Our certificate of incorporation and bylaws also provide for us to
indemnify our officers and directors  against any losses or liabilities they may
incur as a result of the manner in which they  operate  our  business or conduct
our  internal  affairs,  provided  that the officers  and  directors  reasonably
believe such actions to be in, or not opposed to, our best interests,  and their
conduct does not constitute gross negligence,  misconduct or breach of fiduciary
obligations.

Market and Capital Risks

Future issuance of Common Stock of the Company may lead to dilution in the value
of our common stock, a reduction in shareholder voting power, and allow a change
in control.

Stock issuances may result in reduction of the book value or market price of our
outstanding  shares of common stock. If we issue any additional shares of common
or preferred stock, proportionate ownership of our common stock and voting power
will be reduced.  Further,  any new issuance of common or  preferred  shares may
prevent a change in our control or management.

Issuance  of our  preferred  stock  could  depress  the market  value of current
shareholders.  We have 10,000,000  authorized shares of preferred stock that may
be  issued  by action of our  Board of  Directors.  Our Board of  Directors  may
designate  voting control,  liquidation,  dividend and other preferred rights to
preferred  stock holders.  Our Board of Directors'  authority to issue preferred
stock  without  shareholder  consent may have a depressive  effect on the market
value of our common  stock.  The  issuance of  preferred  stock,  under  various
circumstances,  could have the effect of delaying or  preventing a change in our
control or other  take-over  attempt  and could  adversely  affect the rights of
holders of our shares of common stock.
<PAGE>

High-Risk Investment and Restrictions on Marketability

Our common stock has traded on the Over-the  Counter Bulletin Board since August
2002.  The bid price of our common  stock has been less than $5.00  during  this
period.  As such,  we are  subject  to the  penny  stock  rules  adopted  by the
Securities and Exchange  Commission  that require  brokers to provide  extensive
disclosure to its  customers  prior to executing  trades in penny stocks.  These
disclosure  requirements  may cause a reduction  in the trading  activity of our
common stock.

Broker-dealer  practices in  connection  with  transactions  in penny stocks are
regulated by certain  penny stock rules adopted by the  Securities  and Exchange
Commission.  Penny stocks  generally are equity  securities with a price of less
than $5.00.  Penny stock rules require a broker dealer prior to a transaction in
a penny stock not  otherwise  exempt from the rules,  to deliver a  standardized
risk disclosure  document that provides  information  about penny stocks and the
risks in the  penny  stock  market.  The  broker-dealer  also must  provide  the
customer  with  current  bid and  offer  quotations  for the  penny  stock,  the
compensation of the  broker-dealer  and its salesperson in the transaction,  and
monthly account  statements showing the market value of each penny stock held in
the customer's  account.  In addition,  the penny stock rules generally  require
that prior to a transaction in a penny stock, the broker-dealer  makes a special
written  determination  that the penny  stock is a suitable  investment  for the
purchaser and receives the purchaser's written agreement to the transaction.

Because we are  subject to the penny stock  rules our  shareholders  may find it
difficult to sell their shares.

















             (The remainder of this page intentionally left blank.)


<PAGE>


Item 7. Financial Statements




         INTERACTIVE MOTORSPORTS AND ENTERTAINMENT CORP. AND SUBSIDIARY
            f.k.a. Pacific International Holding, Inc. and Subsidiary

                           CONSOLIDATED BALANCE SHEETS
                  As of December 31, 2002 and December 31, 2001

<TABLE>
                                                                                  December 31,       December 31,
                                                                                      2002               2001
                                                                                      ----               ----
     ASSETS
<S>                                                                                      <C>                <C>
     Cash and cash equivalents                                                           $582,905           $778,629
     Trade accounts receivable                                                             86,734             51,684
     Merchandise inventory                                                                161,459             72,310
     Prepaid insurance and other expenses                                                  29,706             30,804
     Accounts receivable from related parties                                                   -            138,298
                                                                                  ---------------       ------------
              Total current assets                                                        860,804          1,071,725
                                                                                  ---------------       ------------

     Property and equipment, net of accumulated depreciation                            1,061,464          1,270,792
                                                                                  ---------------       ------------

     Deposits                                                                             101,574             88,642
     Other intangible assets, net of accumulated amortization                              13,667             72,379
                                                                                  ---------------       ------------
              Total other assets                                                          115,241            161,021
                                                                                  ---------------       ------------

     Total assets                                                                      $2,037,509         $2,503,538
                                                                                       ==========         ==========

     LIABILITIES AND SHAREHOLDERS' EQUITY
     Liabilities:
          Accounts payable                                                               $349,210           $222,500
          Line of credit                                                                        -            350,000
          Accrued payroll and payroll taxes                                               162,894            100,958
          Sales tax payable                                                                65,423             94,622
          Gift certificates and customer deposits, net                                    141,617            171,438
          Accrued expenses                                                                524,197            369,776

          Accrued property taxes                                                           43,192                  -
          Accrued interest                                                                      -             37,900
          Current portion of long-term debt                                                     -             26,198
                                                                                  ---------------       ------------
              Total current liabilities                                                 1,286,533          1,373,392
                                                                                  ---------------       ------------

     Notes payable                                                                              -          1,200,000
                                                                                  ---------------       ------------

     Total liabilities                                                                  1,286,533          2,573,392
                                                                                  ---------------       ------------

     Shareholders' equity; Member's deficit:
          Common stock;  $0.0001 par value,  200,000,000  shares  authorized,
         61,300,000 shares issued and outstanding                                           6,130                  -
          Convertible  preferred stock, $0.0001 par value,  10,000,000 shares
         authorized, 4,745,456 shares issued and outstanding                                  475                  -
          Additional paid-in capital                                                    3,653,445                  -
          Member units                                                                          -            650,000
          Retained deficit                                                             (2,909,074)         (719,854)
                                                                                  ---------------       ------------
     Total shareholders' equity; Member's deficit                                         750,976            (69,854)
                                                                                  ---------------       ------------
     Total liabilities and shareholders' equity; Member's deficit                      $2,037,509         $2,503,538
                                                                                  ===============       ============
</TABLE>

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


<PAGE>


         INTERACTIVE MOTORSPORTS AND ENTERTAINMENT CORP. AND SUBSIDIARY
            f.k.a. Pacific International Holding, Inc. and Subsidiary

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              For the year ended December 31, 2002 and the Initial
                         Period Ended December 31, 2001

<TABLE>

                                                                                               2002             2001
                                                                                               ----             ----

<S>                                                                                           <C>             <C>
     Net sales                                                                                $9,636,278      $3,533,402

     Total operating expenses                                                                 11,730,301       4,180,177
                                                                                              ----------       ---------

     Operating loss                                                                           (2,094,023)       (646,775)

     Interest expense                                                                             95,197          73,079
                                                                                              ----------       ---------

     Earnings before income tax                                                               (2,189,220)      (719,854)


     Provision for income tax                                                                          -               -
                                                                                                       -               -

     Net loss                                                                                $(2,189,220)     $(719,854)
                                                                                             ============     ==========

     Net loss per Common Share:
              Basic                                                                              $(0.04)
                                                                                                 =======
              Diluted                                                                            $(0.04)
                                                                                                 =======
     Weighted average shares outstanding:
              Basic                                                                           61,300,000
                                                                                              ==========
              Diluted                                                                         61,300,000
                                                                                              ==========
</TABLE>

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


<PAGE>



         INTERACTIVE MOTORSPORTS AND ENTERTAINMENT CORP. AND SUBSIDIARY
            f.k.a. Pacific International Holding, Inc. and Subsidiary

                      CONSOLIDATED STATEMENTS OF CHANGES IN
              SHAREHOLDERS' EQUITY For the year ended December 31,
               2002 and the Initial Period Ended December 31, 2001

<TABLE>

                                                                                                              Total
                        Common Stock        Preferred Stock       Member     Additional                   Shareholders'
                        ------------        ---------------
                                                                Units and      Paid-In      Retained    Equity; Members'
                                                                 Dollars       Capital       Deficit         Deficit

                        Shares      Dollars    Shares    Dollars


Balance at May
31, 2001
<S>                    <C>          <C>        <C>      <C>       <C>             <C>          <C>           <C>
(Inception)                   -  $      -         -      $-        $650,000        $   -        $    -        $650,000



Net loss for 2001             -        -          -         -             -            -      (719,854)       (719,854)
                              -        -          -         -             -            -      ---------       ---------


Balance at
December 31, 2001             -        -          -         -       650,000            -     (719,854)        (69,854)


Conversion of
member loans to
equity                        -        -          -         -       400,000            -            -         400,000



Conversion of
member's equity
to Common Stock      61,300,000    6,130          -         -    (1,050,000)   1,043,870            -               -

Issuance of
preferred stock
with warrants                 -        -  4,745,456       475             -    2,609,575            -       2,610,050


Net loss for 2002             -        -          -                       -                (2,189,220)     (2,189,220)
                     ----------    -----  ---------      ----     ---------    ---------   ----------       ---------


Balance at
December 31, 2002    61,300,000   $6,130  4,745,456      $475        $    -   $3,653,445  $(2,909,074)        $750,976
                     ==========   ======  =========      ====        ======   ==========  ============        ========
</TABLE>


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


<PAGE>


         INTERACTIVE MOTORSPORTS AND ENTERTAINMENT CORP. AND SUBSIDIARY
            f.k.a. Pacific International Holding, Inc. and Subsidiary

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                For the year ended December 31, 2002 and Initial
                         Period Ended December 31, 2001

<TABLE>

                                                                                              2002              2001
                                                                                              ----              ----

     Cash flows from operating activities
<S>                                                                                         <C>                <C>
          Net loss                                                                          $(2,189,220)       $(719,854)
         Adjustments to reconcile net loss to net cash provided by (used
          in)               operations:
           Depreciation, amortization, and other                                                398,618          188,494
           Provision for related party receivable                                               100,000                -
         Net changes in operating assets and liabilities:
          Trade accounts receivable                                                             (35,050)         (51,684)
          Merchandise inventory                                                                 (89,149)         (55,310)
          Prepaid expenses and other current assets                                               1,098          (30,804)
          Accounts payable                                                                      126,710          222,500
          Accrued payroll and payroll taxes                                                      61,936          100,958
          Sales tax payable                                                                     (29,199)          94,622
          Gift certificates and customer deposits                                               (29,821)         171,438
          Accrued expenses                                                                      154,421          243,488
          Accrued property taxes                                                                 43,192                -
          Accrued interest                                                                      (37,900)          37,900

          Other assets and liabilities                                                                -          (12,137)
                                                                                             -----------         --------
                  Net cash provided by (used in) operations                                  (1,524,364)         189,611
                                                                                             -----------         --------

     Cash flows from investing activities:
           Increase in deposits                                                                 (12,932)        (188,642)
           Purchase of property and equipment                                                  (130,578)      (1,459,586)
                                                                                             -----------      -----------
                  Net cash used in investing activities                                        (143,510)      (1,648,228)
                                                                                             -----------      -----------

     Cash flow from financing activities:
           Loans from and (repayments to) related parties                                        38,298          (38,298)
           Net borrowings on line of credit                                                    (350,000)         350,000
           Net borrowings on bank loan                                                         (826,198)       1,275,244
           Proceeds from issuance of preferred stock with warrants                            2,610,050                -

           Capital contributions by members                                                           -          650,000
                                                                                                      -        ----------
                  Net cash provided by financing activities:                                  1,472,150        2,236,946
                                                                                             -----------       ----------

     Increase (decrease) in cash and cash equivalents                                          (195,724)         778,629

     Cash and cash equivalents, beginning of period                                             778,629                -
                                                                                             -----------               -
     Cash and cash equivalents, end of period                                                  $582,905         $778,629
                                                                                             ===========       ==========

     Supplemental disclosure of non-cash transactions:

     Conversion of member loans to equity                                                      $400,000           $    -
                                                                                             ===========       ==========
</TABLE>


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




<PAGE>


         INTERACTIVE MOTORSPORTS AND ENTERTAINMENT CORP. AND SUBSIDIARY
            f.k.a. Pacific International Holding, Inc. and Subsidiary

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - MERGER AND BASIS OF PRESENTATION

Effective  August  2,  2002,  Pacific  International   Holding,   Inc.,  a  Utah
corporation  ("PIH"),  which was originally organized in 1986, changed its state
of  domicile  and name by  merging  with and into  Interactive  Motorsports  and
Entertainment   Corp.  (the  surviving  entity),  an  Indiana  corporation  (the
"Company"), pursuant to an Agreement and Plan of Reorganization.  Per the merger
agreement,  each share of PIH common stock outstanding  immediately prior to the
effective  date of the merger was cancelled  and  converted  into four shares of
Interactive  Motorsports and Entertainment  Corp. common stock.  Although it had
been in a variety of  businesses  for over 15 years,  at the time of the merger,
PIH had limited operations.

Subsequent to the merger and effective as of the same date, the Company acquired
pursuant to a Plan and  Agreement of Exchange all of the issued and  outstanding
shares of common stock and  preferred  stock of Perfect  Line,  Inc., an Indiana
corporation  ("Perfect Line"), from the Perfect Line shareholders in exchange on
a "share-for-share" basis for shares of the Company's common stock and preferred
stock. As a result of the share exchange,  the Perfect Line shareholders hold as
of August 2, 2002 Company shares representing  approximately  eighty-two percent
(82%) of the Company's  capital stock.  Also effective as of August 2, 2002, the
members of the Board of  Directors  of Perfect  Line were elected to replace the
members of the  Company's  Board of  Directors  and the  executive  officers  of
Perfect Line became the executive officers of the Company.

As Perfect Line had revenues,  operations,  and business activity, for financial
reporting purposes,  Perfect Line is considered the acquirer,  and therefore the
predecessor, and the Company is considered the acquiree for accounting reporting
purposes.  Due to the  fact  that  the  merger  is being  treated  as a  reverse
acquisition,  the equity of the Company  has been  recapitalized  for  financial
reporting purposes. The operations of Interactive  Motorsports and Entertainment
Corp. have been included in consolidation from August 2, 2002 until December 31,
2002.

Perfect Line owns and operates the NASCAR  Silicon Motor  Speedway  store chain,
which offers licensed  NASCAR-branded  entertainment  products. A predecessor of
Perfect  Line  commenced  operations  on June 8,  2001  when  it  completed  the
acquisition of the assets,  naming rights and  intellectual  property related to
NASCAR Silicon Motor Speedway for  $1,050,000.  The Company also completed asset
acquisitions  of $124,320 in August 2001 and $250,000 in December  2001.  Of the
total  acquisition  price of $1,424,320,  $500,000 was paid in cash and $924,320
was financed with debt (Note 5). In addition,  Perfect Line granted  warrants to
the sellers as part of these  transactions  (Note 3).  These  acquisitions  were
accounted for by the purchase method.

Since  inception,  the Company's  short-term  and long-term  plans have included
raising a level of  investment  adequate to  accomplish  the  objectives  of the
business.  The  required  level  of  financing  has not yet been  achieved.  The
accompanying   financial  statements  have  been  prepared  in  accordance  with
accounting  principles  generally  accepted in the United  States of America and
contemplate  the  Company's  ability  to  continue  as  a  going  concern.   The
consolidated  financial  statements  do not include any  adjustments  that might
result  if  the  Company  is  unable  to  obtain  additional  financing.  Absent
additional  funding,  the Company may not have  sufficient  resources to satisfy
cash requirements for the next twelve months. The Company is currently reviewing
several alternatives for raising additional financing;  however, there can be no
assurance that additional financing will be available or, if available,  that it
will be on terms acceptable to the Company.  See Note 8 - Subsequent  Events and
Note 15 - Management's Plans for further discussion

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

b.   SIGNIFICANT  ESTIMATES:  The most significant  estimates made by management
     are determining the estimated useful lives of the fixed assets, determining
     the obsolescence of merchandise inventory, and assessing the realization of
     deferred  tax  benefits  relating  to  the  Company's  net  operating  loss
     carryforwards.
<PAGE>

c.   LONG-LIVED ASSETS:  Long-lived assets are reviewed for impairment  whenever
     events or changes in circumstances  indicate that the carrying amount of an
     asset may not be recoverable.  Recoverability  is measured by comparison of
     the carrying  amount to future net  undiscounted  cash flows expected to be
     generated  by the  related  asset.  If such  assets  are  considered  to be
     impaired,  the  impairment  to be  recognized  is measured by the amount by
     which the carrying  amount exceeds the fair market value of the assets.  To
     date, no adjustments to the carrying amount of long-lived  assets have been
     required.

d.   MERCHANDISE INVENTORY:  Merchandise inventories are carried at the lower of
     cost or market as determined by the first-in,  first-out (FIFO) method. The
     Company  reduces the stated value of  inventory  for excess  quantities  or
     obsolescence  in an  amount  equal to the  difference  between  the cost of
     inventory  and the  estimated  market  value based upon  assumptions  about
     future  demand and market  conditions.  If actual  future  demand or market
     conditions  are  less   favorable  than  those   projected  by  management,
     additional reductions in stated value may be required.

e.   PROPERTY AND EQUIPMENT:  The Company  records its property and equipment at
     cost and  depreciates  it using the straight line method over the estimated
     useful lives of the respective asset classes as follows:

             Software                                   3 Years
             Furniture, fixtures, and equipment         5 to 7 Years

f.   DIVIDENDS:  The Company has not paid any dividends  and any dividends  that
     may be paid in the future will depend upon the  financial  requirements  of
     the Company and other  relevant  factors.  The Company  does not  presently
     intend to pay dividends at any point in the foreseeable future.

g.   CONSOLIDATION:  The consolidated  financial statements at December 31, 2002
     and 2001 include the accounts of the Company and its wholly owned operating
     subsidiary,  Perfect Line, Inc. Intercompany transactions and balances have
     been eliminated in consolidation.

h.   EARNINGS (LOSS) PER SHARE: The computation of net earnings (loss) per share
     of  common  stock  is  based  on the  weighted  average  number  of  shares
     outstanding during the periods presented.  The Company calculates  earnings
     (loss) per share  pursuant to Statement of Financial  Accounting  Standards
     No. 128 ("SFAS 128"),  Earnings Per Share.  Basic earnings (loss) per share
     are computed based upon the weighted average number of common shares issued
     and outstanding during each year. Diluted earnings (loss) per share amounts
     assume  conversion,  exercise,  or issuance of all  potential  common stock
     instruments  (stock  options,  warrants and convertible  preferred  stock).
     Potentially  dilutive  securities  including warrants and stock options are
     excluded  from  diluted  earnings  (loss) per share during net loss periods
     because these securities would be anti-dilutive.

i.   INCOME TAXES:  The Company provides for income taxes based on the liability
     method,  which requires  recognition of deferred tax assets and liabilities
     based on  differences  between  the  financial  reporting  and tax bases of
     assets and  liabilities  measured using enacted tax rates and laws that are
     expected to be in effect when the differences  are expected to reverse.  At
     December 31, 2002 and 2001,  the  Company's net deferred tax asset is fully
     offset by a valuation allowance.

j.   REVENUE  RECOGNITION AND UNEARNED REVENUE:  The Company  recognizes revenue
     for its services at the time the services have been  rendered.  In the case
     of gift certificates and customer deposits for group events,  these amounts
     are deferred and recognized  when the  associated  services are rendered or
     upon expiration.

k.   CASH AND CASH EQUIVALENTS: For purposes of the statement of cash flows, the
     Company  considers all demand  deposit  balances and all highly liquid debt
     instruments  purchased  with  maturity  of three  months or less to be cash
     equivalents.

l.   ADVERTISING:  Advertising  expenses  were $168,118 and $60,495 for the year
     ended  December 31, 2002 and the initial  period  ended  December 31, 2001,
     respectively.

m.   RECLASSIFICATIONS:  Certain  prior year amounts have been  reclassified  to
     conform to the current year presentation.
<PAGE>

NOTE 3 - EQUITY TRANSACTIONS AND WARRANTS ON COMMON STOCK

At June 30, 2002,  Perfect Line had placed with  investors  4,745,456  shares of
convertible preferred stock (the, "Preferred Stock") totaling $2,610,050 under a
private placement  memorandum dated May 10, 2002. These funds were to be held in
escrow until a  transaction  such as that  described  in Note 1 above  occurred.
Simultaneous  to the  exchange of stock with PIH on August 2, 2002,  these funds
were  released from escrow and  subsequently  transferred  to Perfect Line.  The
proceeds of this offering were used to pay down debt and other  liabilities  and
to provide  working  capital  funds for the  business.  The  Preferred  Stock is
mandatorily  convertible  one year after issuance into one share of Common Stock
or one dollar worth of Common Stock as of the conversion  date, as calculated by
the  10-day  trailing  average  of the bid and ask  price  prior to  conversion,
whichever is more favorable to the shareholder.

For every two shares of Preferred Stock, the investor  received one warrant (the
"Preferred  Stock  Warrants")  to purchase  Common Stock at a price of $1.50 per
share  expiring  three  years from the date of  issuance.  The  Preferred  Stock
Warrants  are  callable  by the Company for $0.10 per warrant at any time at the
option of the  Company.  At December 31, 2002 and as of the date of this filing,
all  2,372,728 of the Preferred  Stock  Warrants  were  outstanding.  Management
assigned no value to the Preferred Stock Warrants.

In  connection  with the bank line of credit  agreement  (Note 5),  the  Company
granted  warrants to the Bank to purchase  up to $1.6  million of the  Company's
common  stock at a price  equal to 50% of the  value  per  share at the time the
warrants are exercised.  The warrants are  exercisable at any time prior to June
8, 2011,  upon the occurrence of certain  events.  Management has determined the
likelihood of  occurrence  of these  certain  events is remote and has therefore
assigned no value to these  warrants.  No warrants have been exercised as of the
date of this filing.

In connection  with a certain  asset  purchase  agreement  (Note 1), the Company
granted  warrants  to allow the seller to  purchase up to $2 million in value of
the  Company's  common stock at a price equal to the value per share at the time
the warrants are  exercised.  The warrants are  exercisable at any time prior to
December  14,  2011,  upon the  occurrence  of certain  events.  Management  has
determined  the  likelihood of occurrence of these certain  events is remote and
has  therefore  assigned  no value to these  warrants.  No  warrants  have  been
exercised as of the date of this filing.

In connection with the merger with and into Pacific International  Holding, Inc.
more  fully  described  in Note 1 above,  the  Company  paid a  finder's  fee of
2,000,000  shares  of Common  Stock to  Pacific  Management  Services,  Inc.  In
connection  with this fee, the Company  granted a Common  Stock Value  Assurance
Warrant for 300,000  Common  Shares to Pacific  Management  Services,  Inc.  The
holder may exercise this warrant and receive  300,000 shares of Common Stock for
no  additional  consideration  if the value of the  finder's  fee falls below $1
million within the period ending one year from the merger date (August 1, 2002).

NOTE 4 - PROPERTY AND EQUIPMENT

At December  31, 2002 and 2001,  property  and  equipment  was  comprised of the
following:

<TABLE>

                                                                    2002                            2001
                                                                    ----                            ----

<S>                                                              <C>                               <C>
    Furniture, fixtures and equipment                            $1,015,915                        $998,120
             Software                                                                               436,303
                                                                 ----------                      ----------
                                                                    549,086
                                                                  1,565,001                       1,434,423
             Less: Accumulated depreciation
             and                                                   (503,537)                       (163,631)
                                                                 ----------                      -----------
             amortization

                                                                 $1,061,464                      $1,270,792
                                                                 ==========                      ===========
</TABLE>

Depreciation expense for the year ended December 31, 2002 and the initial period
ended December 31, 2001 was $339,906 and $163,631, respectively.
<PAGE>

NOTE 5 - DEBT AND CREDIT ARRANGEMENTS

Until August 2, 2002, the Company had a revolving bank line of credit  available
for short-term borrowings up to $1 million.  However,  borrowings under the line
of credit  were  limited  based on the fair market  value of certain  securities
pledged as collateral by an affiliate of one of the Company's shareholders.  Due
to a  decline  in  the  market  value  of  the  underlying  pledged  securities,
borrowings  on the line of credit were limited to $350,000 at December 31, 2001.
The line of credit required  quarterly  payments of interest only imputed at the
Bank's prime  lending rate plus 3%. The line of credit also required the Company
to comply  with  certain  financial  and  non-financial  covenants.  The Company
granted  warrants to the Bank in connection with the line of credit (Note 3). In
April 2002,  the Company  entered  into a  forbearance  agreement,  which waived
certain covenant  violations and required  payment of certain accrued  interest,
aggregating approximately $55,000, by July 15, 2002.

The Company's revolving bank line of credit and long-term note payable were
repaid in full as of August 2, 2002 upon Perfect Line's receipt of the proceeds
from the private placement described above in Notes 1and 3.

NOTE 6 - LICENSING AND CONSULTING AGREEMENTS

The Company has a licensing  agreement with the National  Association  for Stock
Car Auto Racing, Inc. ("NASCAR") for location-based entertainment,  which allows
the  Company  to use the  NASCAR  name  and  logo.  The  Company's  confidential
licensing  agreement with NASCAR  requires  annual royalty  payments in 2002 and
quarterly  royalty  payments in 2003 and 2004 based on  simulator,  merchandise,
food, beverage,  sponsor,  and remote site revenues at varying percentages.  The
licensing agreement is subject to renewal on December 31, 2004.

The  Company  also has  licensing  agreements  with  several  NASCAR race teams,
drivers,  and racetracks that expire on various dates between  December 31, 2002
and December 31, 2003.

NOTE 7 - RENT COMMITMENTS

The  Company   rents   various   office  and  retail   space  under   long-term,
non-cancelable operating leases, some of which include renewal options, expiring
on various dates through 2010. The company also leases certain office  equipment
pursuant to a  non-cancelable  operating  lease with terms of three years.  Rent
expense approximated $2,903,034 in 2002.

At December 31, 2002,  the future  minimum  rental  payments  required under all
non-cancelable operating leases were as follows:

                         Payable In                   Rental Payments
                         ----------                   ---------------
                            2003                      $ 1,822,771
                            2004                        1,711,945
                            2005                        1,651,862
                            2006                        1,652,319
                            2007                        1,218,063
                         Later years                    2,777,087
                                                      -----------

                     Total Required Rental Payments   $10,834,047
                                                      ===========

NOTE 8 - SUBSEQUENT EVENTS

On March 7, 2003,  Perfect Line, Inc.,  issued Secured Bridge Notes due December
31, 2003 (the "Bridge Notes") in the aggregate  principal  amount of $700,000 to
one institutional investor and three related-party  investors.  Refer to Note 11
for further information on related parties.

Under the terms of the agreement  Ropart Asset  Management Fund, LLC ("Ropart"),
Tampa Bay Financial, Inc. (related-party),  William R. Donaldson (related-party)
and Erik R. Risman (related-party),  will receive the principal sum of $500,000,
$100,000, $50,000 and $50,000,  respectively on December 31, 2003. Interest will
be paid on the unpaid principal  balance existing prior to maturity at an annual
rate of twelve percent (12%).  Interest on the unpaid  principal under the Notes
is due and payable in arrears on the first day of each month,  commencing  April
1, 2003.

Ropart and Mr.  Risman also  received  warrants in the amounts of 2,941,176  and
294,118,  respectively,  entitling  them to  purchase  from the  Company,  at an
exercise  price of $0.17  Common  shares of the  Company at any time  before the
earlier of June 30, 2004 or six months  following  payment of the Bridge Note in
full.  Management has determined the value of the Ropart and Risman  warrants to
total $146,863.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

From  time to time,  the  Company  may be party to  various  legal  actions  and
complaints arising in the ordinary course of business.  As of December 31, 2002,
the Company is not aware of any  material  legal  actions  directed  against the
Company.



<PAGE>


NOTE 10 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Quarterly unaudited financial information is as follows:

<TABLE>
                                                                         2002
                                       First Qtr       Second Qtr      Third Qtr      Fourth Qtr        Total

<S>                                      <C>             <C>             <C>            <C>            <C>
    Net Sales                            $2,508,872      $2,199,589      $2,276,657     $2,651,160     $9,636,278
    Total operating expenses              2,504,375       2,836,415       3,034,499      3,355,012     11,730,301
                                          ---------       ---------       ---------      ---------     ----------
    Operating profit (loss)                   4,497       (636,826)       (757,842)      (703,852)    (2,094,023)
    Interest expense                         24,793          37,800          32,604              -         95,197
                                          ---------       ---------       ---------      ---------     ----------

    Earnings before income tax             (20,296)       (674,626)       (790,446)      (703,852)    (2,189,220)
    Provision for income tax                      -               -               -              -              -
                                          ---------       ---------       ---------      ---------    -----------

    Net loss                              $(20,296)      $(674,626)      $(790,446)     $(703,852)   $(2,189,220)
                                          =========      ==========      ==========     ==========   ============
</TABLE>
<TABLE>

                                                                          2001
                                     First Qtr (1)    Second Qtr (2)     Third Qtr      Fourth Qtr        Total
                                     -------------    --------------     ---------      ----------        -----

<S>                                  <C>                       <C>        <C>             <C>            <C>
    Net Sales                        $            -          $       -     $1,231,744      $2,301,658     $3,533,402
    Total operating expenses                                   142,508      1,769,270       2,268,399      4,180,177
                                     ---------------         ----------      ---------       ---------      ---------
     Operating profit (loss)                       -          (142,508)      (537,526)         33,259       (646,775)
    Interest expense                                                 -         23,274          49,805         73,079
                                     ---------------         ----------     ----------       ---------      ---------
    Earnings before income tax                    -           (142,508)      (560,800)        (16,546)      (719,854)
    Provision for income tax                                         -              -               -              -
                                     ---------------         ----------     ----------       ---------      ---------
    Net loss                         $            -         $ (142,508)     $(560,800)       $(16,546)     $(719,854)
                                     ---------------         ==========     ==========       =========     ==========
</TABLE>

(1)  There is no First  Quarter  data,  as the Company did not begin  operations
     until the third quarter of 2001.
(2)  Includes those expenses incurred during inception.

NOTE 11 - RELATED PARTY TRANSACTIONS

The balance in Accounts  Receivable from Related Parties at December 31, 2001 of
$100,000 is a receivable  from Perfect Line  Investments,  LLC, a related party.
This  receivable  has been fully reserved at December 31, 2002 as its collection
is deemed unlikely.

As  further  described  in Note 8, the  Company  issued  March 7,  2003 to three
related  parties a total of $200,000 of Secured  Bridge Notes.  These notes were
issued to Tampa Bay  Financial,  Inc., Mr.  William R.  Donaldson,  and Mr. Erik
Risman in the amounts of  $100,000,  $50,000,  and  $50,000,  respectively.  The
Chairman and Chief Executive  Officer of Tampa Bay Financial,  Inc., Mr. Carl L.
Smith,  is also a director of the  Company.  Mr.  Donaldson  is the Chairman and
Chief Executive Officer of the Company and Mr. Risman is the President and Chief
Operating Officer of the Company.

NOTE 12 -- INTANGIBLES

The components of intangibles as of December 31, 2002 and 2001 are as follows:

<TABLE>

                                                                              Gross Carrying         Accumulated
                                                                                  Amount            Amortization
     2002
     Amortized intangibles:
<S>                                                                          <C>                <C>
         Patents and name rights                                             $        20,000    $       (6,333)

     2001
     Amortized intangibles:
         Patents and name rights                                             $        20,000    $       (2,333)
         Capitalized loan costs                                                       77,242           (22,530)
</TABLE>
<PAGE>

Patents and name rights are being amortized using the straight-line  method over
the five-year term of the agreements.  The weighted-average  amortization period
for all amortized intangibles acquired is three years, with amortization expense
aggregating  $58,712 for the year ended  December 31, 2002. In 2002, the company
paid off the loans  related to the  capitalized  loan  costs,  and wrote off the
capitalized loan costs.

Estimated aggregate annual amortization  expense remaining under the patents and
name rights are as follows: 2003 - 4,000, 2004 - $4,000, 2005 - $4,000, and 2006
- $1,667.

NOTE 13 - INCOME TAXES

The deferred tax assets and liabilities at December 31, 2002 are as follows:

                                                                2002
           Deferred tax liabilities:
                State deferred liabilities                   $ 54,875

           Deferred tax assets:
                Valuation for investment                       41,535
                Book depreciation in excess of tax             34,974
                Net operating loss carryforward               852,155
                                                             ---------
                     Gross deferred tax assets                928,664
           Less valuation allowance                          (873,789)
                                                             ---------
                      Net deferred tax assets                  54,875

           Net deferred taxes                               $       -
                                                             =========

Net operating loss  carryforwards of approximately  $2,072,302 exist at December
31, 2002 which expire in 2022.  There were no deferred tax assets or liabilities
on December 31, 2001 as the company was a limited  liability  company  until the
merger on August 2, 2002 (See Note 1 for further details).

The  provision  for income taxes  consists of the  following  for the year ended
December 31, 2002:

                                                            2002

           Deferred federal income tax expense              $712,391
           Deferred state income tax expense                 161,398
           Change in valuation allowance                    (873,789)
                                                            ---------

           Income tax provision                             $      -
                                                            =========

NOTE 14 - RECENT ACCOUNTING PRONOUNCEMENTS

The Financial  Accounting  Standards  Board  ("FASB")  issued  Statement No. 143
"Accounting for Asset Retirement  Obligations"  which establishes  standards for
the initial  measurement and subsequent  accounting for  obligations  associated
with the sale,  abandonment,  or other type of disposal of  long-lived  tangible
assets arising from the acquisition,  construction, or development and/or normal
operation of such assets.  SFAS No. 143 is effective for years  beginning  after
June 15, 2002, with earlier  application  encouraged.  Management  believes this
pronouncement  will  not  have a  material  impact  on the  Company's  financial
statements.

In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No.
4, 44, and 64,  Amendment of FASB Statement No. 13, and Technical  Corrections."
The  provisions  of SFAS No. 145  relating to the  rescission  of SFAS No. 4 are
effective for financial  statements  issued for fiscal years beginning after May
15,  2002,  and  the  provisions  relating  to SFAS  No.  13 are  effective  for
transactions  occurring  after May 15, 2002.  SFAS No. 145 rescinds  SFAS No. 4,
"Reporting  Gains and Losses from  Extinguishment  of Debt," and an amendment of
that  Statement,   SFAS  No.  64   "Extinguishments  of  Debt  Made  to  Satisfy
Sinking-Fund  Requirements." SFAS No. 145 also rescinds SFAS No. 44, "Accounting
for Intangible  Assets of Motor  Carriers," and amends SFAS No. 13,  "Accounting
for  Leases".  The  adoption  of SFAS  No.  145 did not  have an  impact  on the
financial condition, results of operations or cash flows of the Company.

In July 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or  Disposal  Activities."  SFAS No. 146 revises  the  accounting  for
specified  employee and  contract  terminations  that are part of  restructuring
activities.  Companies will be able to record a liability for a cost  associated
with an exit or disposal activity only when the liability is incurred and can be
measured  at  fair  value.  Commitment  to an exit  plan  or a plan of  disposal
expresses only management's  intended future actions and therefore does not meet
the requirement for  recognizing a liability and related  expense.  SFAS No. 146
only applies to termination benefits offered for a specific termination event or
a specified  period.  It will not affect accounting for the costs to terminate a
capital  lease.  The  Company  is  required  to adopt  SFAS No.  146 for exit or
disposal  activities   initiated  after  September  30,  2002.  The  Company  is
evaluating  this new standard but expects that the effects of adoption,  if any,
would relate solely to exit or disposal activities undertaken in the future.
<PAGE>

In  November  2002,  the  FASB  published  interpretation  No,  45  "Guarantor's
Accounting  and  Disclosure  requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of  Others".  The  Interpretation  expands  on the
accounting  guidance of Statements No. 5, 57, and 107 and  incorporates  without
change the provisions of FASB  Interpretation No. 34, which is being superseded.
The Interpretation  elaborates on the existing disclosure  requirements for most
guarantees, including loan guarantees such as standby letters of credit. It also
clarifies  that at the time a  company  issues a  guarantee,  the  company  must
recognize  an initial  liability  for the fair value,  or market  value,  of the
obligations it assumes under that  guarantee and must disclose that  information
in its interim and annual financial statements.  The disclosure  requirements in
the Interpretation  are effective for financial  statements of interim or annual
periods  ending after  December 15, 2002. The adoption of this statement did not
have a material effect on the Company's current financial statements.

In March  2003,  the FASB  issued  SFAS No.  148,  "Accounting  for  Stock-Based
Compensation - Transition and  Disclosure."  This Statement amends SFAS No. 123,
"Accounting for Stock-Based  Compensation,"  to provide  alternative  methods of
transition  for a voluntary  change to the fair value based method of accounting
for  stock-based  employee  compensation.  In addition,  SFAS No. 148 amends the
disclosure requirements of SFAS No. 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. The Company does not expect to adopt SFAS No. 123, and therefore, adopt
the guidance of SFAS No. 148.

NOTE 15 - MANAGEMENT'S PLANS

For the year ended  December 31, 2002,  the first full year of operations  since
the  Company's  acquisitions  of the racing  centers,  the  Company's  12 racing
centers generated revenue of approximately  $9.6 million.  Operating without the
necessary  capital  to  properly  market and  merchandise  these  stores,  sales
performance fell short of expectation,  resulting in a net loss of approximately
$2.2  million for the year ended  December 31, 2002.  With proper  funding,  the
Company  plans to increase the revenue from the existing  centers by  increasing
the average  transaction  value,  the  percentage of sales  generated from group
events, and improving the retention level of existing customers by enhancing the
gaming  experience.  The Company will do this through marketing  initiatives and
systems and technology improvements.

As of April 15, 2003, the equity financing of $2,610,050 received in August 2002
has been depleted and the Company  believes the projected level of cash receipts
from  simulator and  merchandise  sales will not be sufficient to fund the daily
operations of the business through 2003, unless additional  sources of funds are
created through bank credit  facilities,  equity infusions,  or other financing.
The Company  received net proceeds of $687,500  from the issuance of $700,000 of
Secured Bridge Notes in March 2003 as previously reported in that Form 8-K filed
with the Securities and Exchange Commission on March 13, 2003.  Deterioration in
the economy,  decreases in consumer  spending,  and the war in Iraq have created
further  declines  in sales  volume in March and April  2003.  The  Company  now
expects the proceeds from the Secured  Bridge Notes to fund  operating  deficits
only through the end of April or the beginning of May 2003. Management is in the
process  of  obtaining  additional  sources  of  short-term  funds  to  continue
operations  until  additional  long-term  equity  and/or debt  financing  can be
established. (See Note 8 - Subsequent Events.)

Since  inception,  the Company's  short-term  and long-term  plans have included
raising a level of  investment  adequate to  accomplish  the  objectives  of the
business.  The required  level of financing  has not yet been  achieved.  Absent
additional funding, the Company believes it may not have sufficient resources to
satisfy cash  requirements for the next twelve months.  The Company's ability to
raise the  necessary  financing  will  depend  on many  factors,  including  the
economic  and market  conditions  prevailing  at the time  financing  is sought.
Management  believes it can achieve the required  level of  financing;  however,
there can be no assurance  that  additional  financing  will be available or, if
available, that it will be on terms acceptable to the Company.

Currently,  the Company is exploring  collateralized debt financing with several
sources and is in various  stages of  discussion  with each.  Additionally,  the
Company has entered  into an  agreement  with a New York based firm to assist in
raising equity  financing for up to $7.5 million.  It was through this firm that
the Company  successfully secured its recent "bridge" financing discussed above.
While the Company  believes  that at least one of these  financing  efforts will
occur, there are no assurances.


<PAGE>



Board of Directors and Shareholders of
Interactive Motorsports and Entertainment Corp. and Subsidiary
Indianapolis, Indiana

We have  audited the  accompanying  consolidated  balance  sheet of  Interactive
Motorsports  and  Entertainment  Corp.  and  Subsidiary  (the  "Company")  as of
December 31, 2002 and the related consolidated statements of operations, changes
in shareholders'  equity and cash flows for the year then ended. These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit. The financial statements of Interactive Motorsports and Entertainment
Corp.  and  Subsidiary as of December 31, 2001,  were audited by other  auditors
whose report  dated March 20, 2002  expressed  an  unqualified  opinion on those
statements.

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

In our opinion,  the 2002 consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
Interactive  Motorsports and  Entertainment  Corp. and Subsidiary as of December
31,  2002 and the  results  of its  operations  and cash flows for the year then
ended in conformity with accounting  principles generally accepted in the United
States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in Note 15 to the
consolidated  financial  statements,  the Company has suffered  recurring losses
from  operations and has an  insufficient  cash balance that raises  substantial
doubt about its ability to continue as a going  concern.  Management's  plans in
regard  to these  matters  are  also  described  in Note 15 to the  consolidated
financial statements.  The consolidated  financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


/s/ Crowe Chizek and Company LLC

Crowe Chizek and Company LLC
Indianapolis, Indiana
April 4, 2003


<PAGE>


Item 8.  Changes  In  and  Disagreements  With  Accountants  on  Accounting  and
         Financial Disclosure

None, not applicable.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        With Section 16(a) of the Exchange Act

The Board of  Directors  and  Executive  Officers of the Company  consist of the
persons  named in the table below.  Vacancies in the Board of Directors may only
be filled by the Board of  Directors by majority  vote at a Board of  Director's
meeting of which  stockholders  holding a majority of the issued and outstanding
shares of capital stock are present.  The directors are elected  annually by the
stockholders at the annual meetings. Each director shall be elected for the term
of one year, and until his or her successor is elected and  qualified,  or until
his earlier resignation or removal. The bylaws provide that we have at least one
director. The directors and executive officers of the Company are as follows:

Name                            Age     Position

William R. Donaldson             46     Chairman, Chief Executive Officer, and
                                        Secretary
Carl L. Smith, Sr.               60     Director
Fred Treadway                    50     Director
Cary Agajanian                   61     Director
Erik R. Risman                   58     President and Chief Operating Officer
Mark A. Paul                     35     Vice President, Chief Financial Officer,
                                        and Treasurer

Mr.  Donaldson has been a major influence in the  international  racing industry
for over 23 years. He served as the Executive Vice President of the Indianapolis
Motor  Speedway  ("IMS"),  the  largest  spectator  stadium  in the  world,  and
concurrently  served as President of IMS  subsidiaries,  IMS  Properties and IMS
Events.  At IMS, he was on the executive  management  team that  initiated  such
events as the NASCAR Brickyard 400, Indy FanFest, the Senior PGA Tournament held
at Brickyard Crossing,  the Indy 200 at Walt Disney World, and the launch of the
Indy Racing  League.  Donaldson  also managed the Inaugural  NASCAR  Winston Cup
event at Las Vegas  Motor  Speedway,  and he managed  the launch of the Petit Le
Mans at Road  Atlanta,  and the American  and  European Le Mans  Series.  He has
extensive experience with domestic and international television broadcasting. He
has a Bachelor of Arts degree from DePauw University in Greencastle, Indiana.

Mr. Smith is a successful entrepreneur,  whose business interests and ownerships
have  over his  professional  life,  spanned  a wide  variety  of  products  and
services.  With over 38 years of experience in business development,  marketing,
sales and finance, he provides a diverse level of knowledge and expertise to the
Company. He was the founder of Catalyst Marketing Corporation,  a public company
that,  under  his  leadership,  grew  to  become  one  of  the  most  successful
telecommunications  marketing  agencies  for  products  and services of industry
giant,  MCI, which was later acquired by WorldCom.  In 1991, he co-founded Tampa
Bay Financial, Inc., a venture capital firm that specializes in micro-cap, first
stage corporate investments and, one year later, was selected as a member of the
prestigious  "Who's  Who  of  American  Business  Executives".   Mr.  Smith  has
successfully  engineered the turn around and  revitalization of several troubled
public  companies  and has also been  involved in  capitalizing  and taking many
young private  companies public through a reverse merger strategy.  He presently
sits on the Board of Directors of NeoGenomics,  Inc.  (OTCBB:  NOGN) and several
private companies.

Mr. Treadway, a former recipient of Indiana's  "Entrepreneur of the Year" award,
was instrumental in the early development of the asbestos  abatement industry in
the 1970s before he founded Specialty  Systems,  Inc. ("SSI") in 1977. SSI is an
Indianapolis-based   multidisciplinary  environmental  management  company  that
provides a broad range of services in the hazardous remediation industry. Today,
SSI is  recognized as a world leader in the  environmental  industry and employs
more than 600 people in four states.  In 1986,  Mr.  Treadway  founded  American
Safety Insurance Group, Ltd. ("American  Safety"),  a casualty insurance company
specializing in  environmental  risks. He serves as the Chairman of the Board of
American Safety, which is traded on the New York Stock Exchange under the symbol
ASI.  Treadway  also owned an Indy  Racing  League  team that won the  legendary
Indianapolis 500 race in 1997.
<PAGE>

Mr.  Agajanian  literally  grew up in the sport of auto racing,  with his family
running  racing  teams  and  racetracks.  He  now  owns  Motorsports  Management
International,  a multi-faceted  company that is an industry leader in the areas
of event representation,  corporate consulting, and sponsorship negotiation. For
the past 10 years,  Mr.  Agajanian has served on Motorsports  boards such as the
Automobile  Competition  Committee of the United  States  (ACCUS),  the American
Motorcyclist Association (AMA, Vice-Chairman) and United States Auto Club (USAC)
Properties.  Mr.  Agajanian's  company has been involved in securing hundreds of
sponsorship  arrangements  and is the only company in the United States to offer
star race  drivers  premium  representation  services in  corporate  structures,
pension benefits,  trusts and estates and contract  negotiation.  NASCAR Winston
Cup  star  Tony  Stewart  has  been   represented  by   Motorsports   Management
International,  and  Agajanian  also  previously  represented  Jeff Gordon.  Mr.
Agajanian's car ownership  division has entered cars in the Indianapolis 500 for
36  consecutive  years and now owns one of the premier teams in the NASCAR Busch
Series.

Mr.  Risman  has over  twenty-five  years of  management  experience  in retail,
wholesale and consumer  products.  He has held the positions of Chief  Executive
Officer, Chief Operating Officer and Group Executive in various  entrepreneurial
and corporate organizations.  He has executed or directed the reorganization and
repositioning of businesses from $5 million to $300 million. Mr. Risman received
his BA from the  University  of North  Carolina  at Chapel  Hill with  Honors in
Writing and began his career with R.H. Macy & Co., Inc.

Mr. Paul served as Vice  President,  Chief  Financial  Officer and  Treasurer of
Symons  International  Group, Inc., a nonstandard  automobile  insurance holding
company traded over-the-counter, prior to joining the Company in September 2002.
Mr. Paul also served as  Controller  for The Steak n Shake  Company,  a 400-unit
restaurant chain based in Indianapolis from March 2000 to May 2001. From 1997 to
2000,  he held the position of Vice  President of Finance for Bank One Mortgage,
one of the  country's  largest  residential  mortgage  lenders.  Mr.  Paul  is a
Certified Public  Accountant in the State of Indiana and was a practicing public
accountant with the firm of PricewaterhouseCoopers LLP for seven years. Mr. Paul
received a Bachelor of Science degree in Accounting  from Indiana  University at
Bloomington, Indiana in 1990.

Our Executive  Officers are elected by the Board on an annual basis and serve at
the discretion of the Board.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires that our executive
officers,  directors  and  persons  who  beneficially  own more  than 10% of the
Company's  Common  Stock to file  initial  reports of  ownership  and reports of
changes in ownership with the SEC. Such persons are required by SEC  regulations
to furnish us with copies of all Section 16(a) forms filed by such persons.

Based  solely on our review of such forms  furnished  to us and  representations
from certain reporting persons,  filing requirements applicable to our executive
officers,  directors  and more than 10%  stockholders  have been  complied  with
during the twelve months ending December 31, 2002.

Item 10. Executive Compensation

The following table sets forth  information  concerning the compensation paid to
all persons serving as the Company's  chief executive  officer and the Company's
most  highly  compensated  executive  officers  other  than its chief  executive
officer who were  serving as  executive  officers at December 31, 2002 and whose
annual compensation exceeded $100,000 during such year (collectively, the "Named
Executive Officers").
<TABLE>

                                               Annual Compensation                    Long-Term Compensation Awards

                                                                                                  Securities
                                                              Other Annual      Restricted        Underlying
   Name and Principal      Year/                            Compensation (2)   Stock Awards    Options/SARs (#)     LTIP
        Position            Period     Salary      Bonus                                                          Payouts

<S>                          <C>       <C>                       <C>            <C>             <C>               <C>
William R. Donaldson,        2002      $147,115      -           $5,688              -                 -              -
Chairman and CEO

                            2001(1)           -      -           $1,620              -                 -              -
</TABLE>

(1)  Period is 7 months June 1, 2001 to December 31, 2001.
(2)  Includes cost of medical and life insurance.



<PAGE>


Director Compensation

Directors of the Company are currently not paid for their services; however, the
Company  intends to establish a compensation  plan utilizing stock awards versus
cash payments in 2003.

Indemnification for Securities Act Liabilities

Indiana  law  authorizes,  and the  Company's  Bylaws and  Indemnity  Agreements
provide for,  indemnification  of the Company's  directors and officers  against
claims,  liabilities,  amounts paid in  settlement  and expenses in a variety of
circumstances.  Indemnification  for  liabilities  arising  under the Act may be
permitted  for  directors,  officers  and  controlling  persons  of the  Company
pursuant to the  foregoing or otherwise.  However,  the Company has been advised
that,  in  the  opinion  of  the  Securities  and  Exchange   Commission,   such
indemnification  is  against  public  policy  as  expressed  in the  Act and is,
therefore, unenforceable.

Stock Options and Warrants

The  Company  plans to  establish  in 2003 stock  option  plans that will enable
management  and the  board to  issue to  officers,  directors,  consultants  and
employees  nonqualified  and incentive  options to purchase the Company's common
stock.  At December  31, 2002,  a total of  7,000,000  shares were  reserved for
issuance under such plans, but no options were issued or outstanding.

Compensation Committee Interlocks and Insider Participation

No executive officers of the Company serve on the Compensation  Committee (or in
a like capacity) for the Company or any other entity.

Item 11. Security Ownership of Certain Beneficial Owners and Management

Security Ownership of Certain Beneficial Owners

The  following  table  sets  forth  certain  information  with  respect  to  the
beneficial  ownership  of our Common  Stock as of February  28,  2003,  for each
person or entity that is known by us to beneficially  own more than 5 percent of
our Common Stock. As of February 28, 2003, the Company had 61,330,000  shares of
Common Stock outstanding.

<TABLE>

                                                             Amount of Beneficial
                                                                  Ownership          Nature of        Percent of
 Name and Address of Beneficial Owner                                                Ownership           Class

<S>                                                                <C>               <C>                <C>
  William R. Donaldson, Carmel, IN                                 17,923,982          Direct            29.23%
  Coldwater Capital, LLC, New York, NY                              7,089,594          Direct            11.56%
  Lucky Dog, LLC, New York, NY                                      7,089,252          Direct            11.56%
  Intersport Racing, Inc., Dublin, OH                               4,000,000          Direct             6.52%
  James Matheny, Cary, NC                                           3,933,935          Direct             6.41%
  Vikki Cook, Sarasota, FL                                          3,183,593          Direct             5.19%
                                                                    ---------                             -----

    Total                                                          43,220,356                            70.47%
                                                                   ==========                            ======
</TABLE>



<PAGE>


Security Ownership of Management

The  following  table  sets  forth  certain  information  with  respect  to  the
beneficial  ownership of our Common  Stock as of February 28, 2003,  for each of
our directors and each of our Named  Executive  Officers,  and all directors and
executive  officers  as a group.  As of  February  28,  2003,  the  Company  had
61,330,000 shares of Common Stock outstanding.
<TABLE>

                                                                     Amount of
                                                                    Beneficial       Nature of    Percent of
         Name, Position and Address of Beneficial Owner            Ownership (1)     Ownership       Class
         ----------------------------------------------            -------------     ---------       -----

<S>                                                                <C>               <C>            <C>
  William R. Donaldson, Chairman, Chief Executive Officer, and     17,923,982          Direct        29.23%
  Secretary; Carmel, Indiana
  Erik R. Risman, President and Chief Operating Officer;               52,553          Direct         0.08%
  Zionsville, Indiana
  Mark A. Paul, Vice President, Chief Financial Officer, and
  Treasurer; Indianapolis, Indiana                                          -           n/a               -
  Carl L. Smith, Director; Sarasota, Florida                                -           n/a               -
  Fred Treadway, Director; Las Vegas, Nevada                                -           n/a               -
  Cary Agajanian, Director; Los Angeles, California                                     n/a
                                                                 ------------                      --------

  All Executive Officers & Directors as a Group
  (6 persons)                                                      17,976,535                        29.31%
                                                                   ==========                      ========
</TABLE>

(1)  Beneficial  ownership  is  determined  in  accordance  with SEC  rules  and
     generally  includes holding voting and investment power with respect to the
     securities. Shares of Common Stock subject to options or warrants currently
     exercisable,  or  exercisable  within 60 days, are deemed  outstanding  for
     computing the percentage of the total number of shares  beneficially  owned
     by the designated  person, but are not deemed outstanding for computing the
     percentage for any other person.

Change in Control

We are  not  currently  engaged  in  any  activities  or  arrangements  that  we
anticipate will result in a change in control of the Company.

Item 12. Certain Relationships and Related Transactions

The Company has a receivable from a related party, Perfect Line Investments, LLC
that has been fully  reserved at December 31, 2002 as its  collection  is deemed
unlikely.

The Company  issued March 10, 2003 to three related  parties a total of $200,000
of Secured Bridge Notes as previously  disclosed in that Form 8-K filed on March
13,  2003.  These  notes  were  issued to Tampa Bay  Financial,  Mr.  William R.
Donaldson, and Mr. Erik Risman in the amounts of $100,000, $50,000, and $50,000,
respectively.  The Chairman and Chief Executive  Officer of Tampa Bay Financial,
Mr.  Carl L. Smith,  is also a director of the  Company.  Mr.  Donaldson  is the
Chairman  and Chief  Executive  Officer  of the  Company  and Mr.  Risman is the
President and Chief Operating Officer of the Company.

Item 13. Exhibits and Reports on Form 8-K

A.       Exhibits.

11.1     Computation of Earnings Per Share
23.1     Consent of Crowe Chizek and Company LLC
23.2     Consent of Katz Sapper & Miller LLP
99.1     Certification of William R. Donaldson pursuant to 18 U.S.C.
           Section 1350.
99.2     Certification of Mark A. Paul pursuant to 18 U.S.C. Section 1350.


<PAGE>



B.       Reports on Form 8-K.
<TABLE>

<S>      <C>       <C>                   <C>                          <C>
         1.         Form 8-K              Filed March 13, 2003         Describing credit agreement with Ropart Asset
                                                                       Management LLC, Tampa Bay Financial Inc.,
                                                                       William R. Donaldson, and Erik R. Risman

         2.         Form 8-K              Filed January 6, 2003        Current Report on Form 8-K disclosing under
                                                                       Item 5 the text of a newsletter describing the
                                                                       events from the formation of the Company in
                                                                       August 2002 through the date of the Form 8-K.
</TABLE>


ITEM 14. Controls and Procedures

The Principal  Executive  Officer  ("PEO") and the Principal  Financial  Officer
("PFO") of the  Company  have  evaluated  the  effectiveness  of its  disclosure
controls and  procedures  (as defined in Rule 13a-14 of the Exchange Act) within
90 days prior to the filing of this report.  Based on that  evaluation,  the PEO
and PFO have concluded that the Company's disclosure controls and procedures are
adequate and effective.  There have been no significant changes in the Company's
internal  controls,  or in factors  that  could  significantly  affect  internal
controls, subsequent to the most recent evaluation of such controls.


                                   SIGNATURES

Pursuant  to the  requirements  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.

                         INTERACTIVE MOTORSPORTS AND ENTERTAINMENT CORP.

Date: April 15, 2003     By: /s/ William R. Donaldson
                            ---------------------------------------------
                            William R. Donaldson
                            Chairman of the Board and Chief Executive Officer


Pursuant to the requirements of the Securities Exchange 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.


Date: April 15, 2003   By:  /s/ William R. Donaldson
                          -----------------------------------------------
                          William R. Donaldson
                          Chairman of the Board and Chief Executive Officer
                          (Principal Executive Officer)

Date: April 15, 2003   By:  /s/ Mark A. Paul
                          -----------------------------------------------
                          Mark A. Paul
                          Vice President, Chief Financial Officer and Treasurer
                          (Principal Financial Officer)

Date: April 15, 2003   By:  /s/ Carl L. Smith
                          -----------------------------------------------
                          Carl L. Smith
                          Director

Date: April 15, 2003   By:  /s/ Cary Agajanian
                          -----------------------------------------------
                          Cary Agajanian
                          Director



<PAGE>


                     CERTIFICATION OF WILLIAM R. DONALDSON

I, William R. Donaldson, certify that:

I have reviewed this annual report on Form 10-KSB of Interactive Motorsports and
Entertainment Corp.;

1.   Based on my  knowledge,  this  annual  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 annual report;

2.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual 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 annual report;

3.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a.   designed  such  disclosure  controls  and  procedures  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 annual report
          is being prepared;
     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and
     c.   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

4.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

5.   The  registrant's  other  certifying  officers and I have indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: April15, 2003      By:   /s/ William R. Donaldson
                            -----------------------------------------------
                            William R. Donaldson
                            Chairman and Chief Executive Officer


A signed  original of this written  statement has been  provided to  Interactive
Motorsports  and  Entertainment  Corp.  and  will  be  retained  by  Interactive
Motorsports and Entertainment Corp. and furnished to the Securities and Exchange
Commission or its staff upon request.


<PAGE>


                         CERTIFICATION OF MARK A. PAUL

I, Mark A. Paul, certify that:

I have reviewed this annual report on Form 10-KSB of Interactive Motorsports and
Entertainment Corp.;

1.   Based on my  knowledge,  this  annual  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 annual report;

2.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual 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 annual report;

3.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a.   designed  such  disclosure  controls  and  procedures  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 annual report
          is being prepared;
     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and
     c.   presented   in  this   annual   report  our   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

4.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

5.   The  registrant's  other  certifying  officers and I have indicated in this
     annual  report  whether or not there were  significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: April 15, 2003           By:  /s/ Mark A. Paul
                                  --------------------------------------------
                                  Mark A. Paul
                                  Vice President, Chief Financial Officer
                                  and Treasurer


A signed  original of this written  statement has been  provided to  Interactive
Motorsports  and  Entertainment  Corp.  and  will  be  retained  by  Interactive
Motorsports and Entertainment Corp. and furnished to the Securities and Exchange
Commission or its staff upon request.







<PAGE>


                                  EXHIBIT INDEX

Exhibits:

      11.1     Computation of Earnings (Loss) Per Share
      23.1     Consent of Crowe Chizek and Company LLC
      23.2     Consent of Katz Sapper & Miller LLP
      99.1     Certification of William R. Donaldson pursuant to 18 U.S.C.
               Section 1350.
      99.2     Certification of Mark A. Paul pursuant to 18 U.S.C. Section 1350