10QSB 1 a72695e10qsb.txt FROM 10QSB PERIOD END MARCH 31, 2001 1 Securities And Exchange Commission Washington, D.C. 20549 FORM 10-QSB [X] Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934 For The Quarterly Period Ended March 31, 2001. [ ] Transition Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934 For The Transition Period From ____________________ To ___________________. Commission File Number 333-31238 Grand Prix Sports, Inc. (Exact Name Of Registrant As Specified In Its Charter) Washington 52-2219677 (State Or Other Jurisdiction Of (I.R.S. Employer Incorporation Or Organization) Identification No.) c/o Randolf W. Katz 2020 Main Street , Suite 600 Irvine, CA 92614 (949) 223-7103 (Address, Including Zip Code, And Telephone Number, Including Area Code, Of Registrant's Principal Executive Offices) Check 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. Yes [X] No [ ] The number of outstanding shares of the issuer's common stock, $0.001 par value, as of March 31, 2001 was 15,000,000. 2 TABLE OF CONTENTS Part I Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . 1 Item 2. Management's Discussion and Analysis or Plan Of Operation . . 12 Part II Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 16 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 3 Part I Item 1. Financial Statements Unaudited Balance Sheets As At March 31, 2001 and 2000 . . . . . . . . 1 Unaudited Statements Of Operations And Accumulated Deficit For The Three Months Ended March 31, 2001 and 2000 and for the period June 3, 1999 (Date of Inception) to March 31, 2001 . . . . . . . . . . 2 Unaudited Statements Of Stockholders Equity For The Three Months Ended March 31, 2001 and 2000 and for the period June 3, 1999 (Date of Inception) to March 31, 2001 . . . . . . . . . . . . . . . . 3 Unaudited Statements Of Cash Flows For The Three Months Ended March 31, 2001 and 2000 . . . . . . . . . . . . . . . . . . . . . . . 4 Notes To Unaudited Financial Statements . . . . . . . . . . . . . . . 5 4 Grand Prix Sports, Inc. (A Development Stage Company) Balance Sheets (Unaudited) As At March 31, 2001 and 2000 ================================================================================
March 31, 2001 March 31, 2000 -------------- -------------- ASSETS CURRENT ASSETS Cash $ 631 $ 71,509 ----------- -------- TOTAL CURRENT ASSETS 631 71,509 ----------- -------- Furniture and Equipment (Note A) Cost 2,077 2,077 Accumulated depreciation (762) (346) ----------- -------- Abandonment of furniture and equipment (1,315) ----------- -------- Net 0 1,731 ----------- -------- License Agreement (Note B) Cost 500 10,000 Accumulated depreciation (256) (2,326) ----------- -------- Net 244 7,675 ----------- -------- Nordic Racing Limited Investment 1,194,420 ----------- -------- TOTAL ASSETS $ 1,195,295 $ 80,914 =========== ======== CURRENT LIABILITIES Loan from Shareholders $ 17,308 Accounts payable and accrued expenses 22,690 $ 5,000 ----------- -------- TOTAL CURRENT LIABILITIES $ 39,998 $ 5,000 ----------- -------- COMMITMENT (Note B) STOCKHOLDERS' EQUITY (Note C) Preferred stock, par value $0.001; 20,000,000 shares authorized; 0 issued and outstanding Common stock, par value $0.001; 100,000,000 shares authorized; issued and outstanding 15,000,000 and 12,300,000 at March 31, 2001 and March 31, 2000 respectively 12,500 12,300 Additional Paid in Capital 1,301,000 101,200 Deficit accumulated during the development stage (158,203) (37,586) ---------- -------- TOTAL STOCKHOLDERS' EQUITY 1,155,927 75,914 ---------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,195,295 $80,914 ========== ========
5 Prepared By Management Grand Prix Sports, Inc. (A Development Stage Company) Statements of Operations and Accumulated Deficit (Unaudited) for the three months ended March 31, 2001 and 2000 and For the period June 3, 1999 (Date of Inception) to March 31, 2001
Three Months Three Months June 3, 1999 Ended March 31, Ended March 31, (inception) to 2001 2000 March 31, 2001 --------------- --------------- -------------- REVENUE $ 10,000 COSTS AND EXPENSES Loss on investment $ 5,580 $ -- 5,580 Bank charges and interest 11 91 278 Communication -- -- 8,204 Consulting fees -- -- 16,043 Depreciation and amortization 802 802 5,879 Marketing and promotion -- 14,857 31,029 Office -- -- 13 Professional fees 36,384 2,900 76,931 Investor relations 2,509 2,509 Write-down of loss due to License Revisions 4,639 -- 4,639 Write-down of furniture and equipment 1,315 1,315 Travel -- -- 15,783 --------- --------- --------- TOTAL EXPENSES 51,240 18,650 168,203 $ (51,240) $ (18,650) $(158,203) --------- --------- --------- NET EARNINGS (LOSS) DEFICIT AT BEGINNING OF PERIOD (106,963) (18,936) --------- --------- --------- DEFICIT AT END OF PERIOD $(158,203) $ (37,586) $(158,203) ========= ========= ========= BASIC AND DILUTED LOSS PER SHARE (Note A) $ (0.003) $ (0.003) ========= ========= =========
6 Prepared By Management Grand Prix Sports, Inc. (A Development Stage Company) Statements of Shareholders' Equity (Unaudited) For the Three Months Ended March 31, 2001 and 2000 and For the Period June 3, 1999 (Date of Inception) to March 31, 2001
Common Stock ------------------------------- Additional Number of Shares Amount Paid-In Capital ---------------- ------- --------------- BALANCES June 3, 1999 -- $ -- $ -- Shares issued during the period ----------- ------ --------- Shares issued to acquire license (Note B) 10,000,000 10,000 -- ----------- ------ --------- BALANCES June 30, 1999 10,000,000 10,000 -- Shares issued during the period Shares issued for cash 2,300,000 2,300 101,200 BALANCES ----------- ------ --------- December 31, 1999 12,300,000 12,300 101,200 ----------- ------ --------- BALANCES ----------- ------ --------- December 31, 2000 12,300,000 12,300 101,200 ----------- ------ --------- Shares issued during the period Shares issued for Nordic acquisition 200,000 200 1,199,800 Shares canceled during the period Shares canceled for license (9,500,000) -- -- agreement revisions 5:1 forward stock split 5:1 BALANCES ----------- ------ --------- March 31, 2001 15,000,000 12,500 1,301,000 =========== ====== =========
7 Prepared By Management Grand Prix Sports, Inc. (A Development Stage Company) Statements of Cash Flows For the Three Months Ended March 31, 2001 and 2000 and For the Period June 3, 1999 (Date of Inception) to March 31, 2001
Three Three June 3, 1999 Months Ended Months Ended (inception) to March 31, 2001 March 31, 2000 March 31, 2001 -------------- -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (Loss) $ (51,240) $ (18,650) $(158,203) Adjustments to reconcile net earnings (loss) to net cash used by operating activities Depreciation and Amortization 802 802 5,879 Loss on write-down of license revisions 4,639 -- 4,639 Write-down of abandonment of furniture and equipment 1,315 1,315 Loss on investment 5,580 -- 5,580 CHANGES IN CURRENT ASSETS AND CURRENT LIABILITIES: Increase in current liabilities: Shareholders loan 17,308 -- 17,308 Accounts payable and accrued expenses 16,054 (14,143) 22,690 ----------- --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES (5,542) (31,991) (100,792) ----------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of furniture and equipment -- -- (2,077) ----------- --------- --------- NET CASH (USED) FOR INVESTING ACTIVITIES -- -- (2,077) ----------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Sale of Common Stock -- -- 103,500 ----------- --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES -- -- 103,500 ----------- --------- --------- NET INCREASE IN CASH Cash, beginning of period 6,173 (91,991) -- Cash, end of period 631 103,500 631 ----------- --------- --------- $ (5,542) $ 71,509 $ 631 =========== ========= ========= SUPPLEMENTAL DISCLOSURE: Noncash investing and financing activities $ 10,000 License agreement acquired by issue of common stock Nordic Racing Limited acquired by issue of common stock $ 1,200,000
No significant amount of interest or taxes were paid during the periods shown above. 8 Prepared By Management Grand Prix Sports, Inc. (A Development Stage Company) Notes To Financial Statements (Unaudited) For The Three Months Ended March 31, 2001 Note A - Organization And Summary Of Significant Accounting Policies Organization The Company has been in the development stage since its incorporation under the laws of the state of Washington on June 3, 1999. On June 3, 1999, the Company acquired from Reach Technologies, Inc. ("Reach"), the rights to distribute the Reach Digital Data Recorder product line for the purpose of selling the product in the telemetry and remote sensing marketplace. This license was capitalized based on the estimate of fair market value of the license received. The licensed product line consists of 0 to 40 Megabit per second Digital Data Recorders that are configured for laboratory and onsite use. Models consist of laboratory, rack mount and portable versions. The Company paid for the license by issuing 10,000,000 (pre-split) shares of its common stock to Glenn Jones, the President of Reach. Under the license with Reach, the Company had the exclusive right to distribute and market Reach's product line to the northeastern United States for a period of time beginning June 3, 1999 and ending January 31, 2003. To retain the license, the Company was required to purchase a minimum amount of product based on pricing established in the license agreement during each of the two years of its license, beginning February 1, 2000. The Company was required to purchase $50,000 of the product line by January 31, 2001, an additional $100,000 of the product line by January 31, 2002, and an additional $100,000 of the product line by January 31, 2003. The license agreement contained a provision that it could be renewed for additional three-year periods, so long as the Company was not in default. Any renewal agreement will be subject to the same minimum purchase requirements, except that the minimum purchase amount in each subsequent year would be calculated as the greater of $120,000 and 65% of the Company's prior year's audited revenue. On January 14, 2001, the Company and Reach amended the license agreement as it pertained to minimum purchase requirements. The parties agreed that, in exchange for a $5,000 promissory note in favor of Reach, Reach would not terminate the license agreement if the Company failed to 9 purchase $50,000 of the product line by January 31, 2001. All other terms of the license agreement remained the same, including the additional minimum purchase requirements. On March 9, 2001, the parties again amended the license agreement to provide that it would no longer be exclusive. In connection with this amendment, Glenn Jones returned 9,500,000 (pre-split) shares of the Company's common stock to the Company's treasury for cancellation. Effective March 9, 2001, the Company entered into an Agreement and Plan of Share Exchange (the "Exchange Agreement") with Damask International, Jonathan Iseson, R. Todd Stabler, and Dr. and Mrs. Robert J. Harman. Damask International and Jonathan Iseson constituted the record and beneficial owners of forty percent (40%), or 67 ordinary shares, of the issued and outstanding shares of the capital stock of Nordic Racing Limited, a British corporation ("Nordic"). Pursuant to the terms of the Exchange Agreement, the Registrant sold and issued an aggregate of 200,000 (pre-split) shares of its common stock -- 140,000 shares to Damask International, 30,000 shares to Jonathan Iseson, 20,000 shares to R. Todd Stabler, and 10,000 shares to Dr. and Mrs. Robert J. Harman. Subsequent to the closing of the Exchange Agreement, the Company effected a 5-for-1 forward stock split. Thus, all references to shares outstanding prior to the March 9, 2001 closing of the Exchange Agreement, including those in the Shareholders' Equity section of the Balance Sheet and in the Statements of Shareholders' Equity, are pre-split references. Nordic was incorporated in the United Kingdom on January 11, 1990, to operate a motor racing team. Since inception, Nordic has specialized in the FIA Formula 3000 International Championship racing series ("Formula 3000"). Formula 3000 is the training ground for the more widely known Formula 1 race series. Recently, the authorized number of teams participating in Formula 3000 was reduced from 18 to 14. Nordic remained one of the authorized teams. If a new team wishes to enter the Formula 3000 arena, it must purchase an already existing team. Currently, Nordic's team consists of two drivers and two race cars, as well as the requisite machinery, mechanics, tools, and engineers required to maintain and improve the team. At the end of the 2000 race season, Nordic was ranked 5th overall on the Formula 3000 circuit and was the highest finishing independently owned race team in Formula 3000. In 2001, Nordic and the other Formula 3000 teams are scheduled to compete at 12 of the venues where Formula 1 teams will compete. Nordic, like all Formula 3000 teams, has obtained sponsors who wish their products to be marketed to the Formula 3000 audience through the exchange of cash contributions (used to operate the team) for placement of logos and other advertising on the team's uniforms, race cars, and transporters. In early 2001, Nordic signed a sponsorship agreement with the Coca-Cola Company for a "title sponsorship" position - meaning that Coca-Cola has the most prominently displayed logo of Nordic's sponsors. As a result, the team is now referred to as "Coca-Cola Nordic Racing." Nordic also has a sponsorship agreement with "Eurosport" - the pan-European sports television channel. The Company's principal business plan is to seek immediate earnings by exploiting the license agreement with Reach Technologies, Inc. The Company plans to conduct market analysis, hire sales staff and begin marketing the Digital Data Recorder product line. It is the Company's intention to 10 grow through generating sales. However, to support existing operations, the Company plans to seek additional financing, acquire shareholder capital, reduce operating expenses and obtain additional sponsors. Summary of Significant Accounting Principles a. Accounting estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. b. Basic earnings per share Basic earnings (loss) per share have been calculated in conformity with Financial Accounting Standards Board Statement No. 128 "Earnings per Share". The Company has a simple capital structure with no significant potential common shares. Basic earnings (loss) per share are calculated weighted on the average number of common shares (pre-split) outstanding each period (2001-15,000,000; 2000-12,300,000; 1999-12,300,000). c. Office furniture and equipment Office furniture and equipment purchases were capitalized and the cost depreciated over the estimated useful lives of the related assets, generally five to seven years. Office furniture and equipment abandoned is written off at the time of the abandonment. As the office furniture and equipment were abandoned during the quarter, $1,315 was written off. d. License agreement The license agreement with Reach Technologies Inc. was previously capitalized and amortized over the estimate useful life of the asset - three years and seven months, commencing June 3, 1999. However, under the renegotiated Non-Exclusive License Agreement, 9,500,000 (pre-split) shares of the 10,000,000 (pre-split) shares of the Company's common stock issued to Glenn Jones in exchange for the original Exclusive License Agreement were returned to the Company and canceled. Thus, the undepreciated value of the now non-exclusive license agreement was reduced from $10,000 to $500. e. Nordic Racing Limited Investment The investment with Nordic Racing Limited is being reported using the Equity Method of Accounting. The summarized assets and liabilities of the purchased company at December 31, 2000 in U.S. dollars are as follows: Cash $ 23,353 Property and equipment (net) 108,512 Notes receivable 134,724 -------- $266,589 ======== Current liabilities $ 29,487 Other liabilities 13,649 Net worth 223,453 -------- $266,589 ======== 11 f. Issuance of Common Stock The issuance of common stock for other than cash is recorded by the Company at Management's estimate of the fair value of the assets acquired or service rendered. g. Revenue Revenue is recognized when product is shipped to the customer. h. Income taxes No taxes are payable for the three months ended March 31, 2001. i. Functional currency The financial statements are stated in U. S. Dollars, which is the functional currency of the Company. Note B - License Agreement On June 3, 1999, the Company acquired from Reach Technologies, Inc. ("Reach") the rights to distribute the React Technologies Inc. Digital Data Recorder product line for the purpose of selling the product in the telemetry and remote sensing marketplace. This license was capitalized based on the estimate of fair market value of the license received. The licensed product line consists of 0 to 40 Megabit per second Digital Data Recorders that are configured for laboratory and onsite use. Models consist of laboratory, rack mount and portable versions. The Company paid for the license by issuing 10,000,000 (pre-split) shares of it common stock to Glenn Jones, the President of Reach. Under the license with Reach, the Company had the exclusive right to distribute and market Reach's product line to the northeastern United States for a period of time beginning June 3, 1999 and ending January 31, 2003. To retain the license, the Company was required to purchase a minimum amount of product based on pricing established in the license agreement during each of the two years of its license, beginning February 1, 2000. The Company was required to purchase $50,000 of the product line by January 31, 2001, an additional $100,000 of the product line by January 31, 2002 and an additional $100,000 of the product line by January 31, 2003. 12 The license agreement contained a provision that it could be renewed for additional three years periods, so long as the Company was not in default. Any renewal agreement will be subject to the same minimum purchase requirements, except that the minimum purchase amount in each subsequent year would be calculated as the greater of $120,000 and 65% of the Company's prior year's audited revenue. The agreement may be terminated by the Company at any time upon notice to Reach, and by Reach for any cause, which includes breach of the agreement, the bankruptcy or insolvency of the Company; or the conviction of the Company; its officers or directors, of any crime involving moral turpitude. On January 14, 2001, the Company and Reach amended the license agreement as it pertained to minimum purchase requirements. The parties agreed that, in exchange for a $5,000 promissory note, Reach would not terminate the license agreement for the Company's failure to purchase $50,000 of the product line by January 31, 2001. All other terms of the license agreement remained the same, including the additional minimum purchase requirements. On March 9, 2001, the parties again amended the license agreement to provide that it would no longer be exclusive. In connection with this amendment, Glenn Jones returned 9,500,000 (pre-split) shares of the Company's common stock to the Company's treasury for cancellation. Note C - Common Stock During the period ended March 31, 2001, the Company issued 200,000 (pre-split) shares common stock at $6.00 per share in exchange for the purchase of forty percent (40%) of Nordic Racing Limited. Note D - Net Operating Loss Carryforward The Company's net operating loss for the three months ended March 31, 2001 of $51,240 may be utilized through the year ended December 31, 2021. The Company's net operating loss for the year ended December 31, 2000 of $88,027 may be utilized through the year ended December 31, 2020. The Company's net operating loss for the seven months ended December 31, 1999 of $18,936 may be utilized through the year ended December 31, 2019. SFAS No. 109 requires a valuation allowance to be recorded when it is more likely than not that some or all of the deferred tax assets will not be realized. At March 31, 2001 a valuation allowance for the full amount of the net deferred tax asset was recorded because of uncertainties as to the amount of taxable income that would be generated in future years. Note E - Management's Plans As discussed in Note A, the Company has been in the development stage since its inception on June 3, 1999. It is the Company's intention to grow through generating sales. However, in order to support existing operations, the Company plans to seek additional 13 financing, acquire additional shareholder capital, and to reduce operating expenses. The ability to achieve these objectives raises substantial doubt about the Company's ability to continue as a going concern. Item 2. Management's Discussion and Analysis or Plan Of Operation This quarterly report on Form 10-QSB contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. You should not place undue reliance on forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimated", "predicts", "potential", or "continue" or the negative of such terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause Grand Prix Sports, Inc.'s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. These factors include, among other things, those discussed in this quarterly report on Form 10-QSB and in Grand Prix Sports, Inc.'s other filings with the SEC. Although Grand Prix Sports, Inc. believes that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are inherently uncertain, and Grand Prix Sports, Inc. cannot guarantee future results, levels of activity, performance, or achievements. Grand Prix Sports, Inc. is under no duty to update any of the forward-looking statements in this quarterly report on Form 10-QSB to conform forward-looking statements to actual results. All forward-looking statements should be considered in light of these risks and uncertainties. The Company has been in the development stage since its incorporation under the laws of the state of Washington on June 3, 1999. On June 3, 1999, the Company acquired from Reach Technologies, Inc. ("Reach"), the rights to distribute the Reach Digital Data Recorder product line for the purpose of selling the product in the telemetry and remote sensing marketplace. This license was capitalized based on the estimate of fair market value of the license received. The licensed product line consists of 0 to 40 Megabit per second Digital Data Recorders that are configured for laboratory and onsite use. Models consist of laboratory, rack mount and portable versions. The Company paid for the license by issuing 10,000,000 (pre-split) shares of its common stock to Glenn Jones, the President of Reach. Under the license with Reach, the Company had the exclusive right to distribute and market Reach's product line to the northeastern United States for a period of time beginning June 3, 1999 and ending January 31, 2003. To retain the license, the Company was required to purchase a minimum amount of product based on pricing established in the license agreement during each of the two years of its license, beginning February 1, 2000. The Company 14 was required to purchase $50,000 of the product line by January 31, 2001, an additional $100,000 of the product line by January 31, 2002, and an additional $100,000 of the product line by January 31, 2003. The license agreement contained a provision that it could be renewed for additional three-year periods, so long as the Company was not in default. Any renewal agreement will be subject to the same minimum purchase requirements, except that the minimum purchase amount in each subsequent year would be calculated as the greater of $120,000 and 65% of the Company's prior year's audited revenue. On January 14, 2001, the Company and Reach amended the license agreement as it pertained to minimum purchase requirements. The parties agreed that, in exchange for a $5,000 promissory note in favor of Reach, Reach would not terminate the license agreement if the Company failed to purchase $50,000 of the product line by January 31, 2001. All other terms of the license agreement remained the same, including the additional minimum purchase requirements. On March 9, 2001, the parties again amended the license agreement to provide that it would no longer be exclusive. In connection with this amendment, Glenn Jones returned 9,500,000 (pre-split) shares of the Company's common stock to the Company's treasury for cancellation. Effective March 9, 2001, the Company entered into an Agreement and Plan of Share Exchange (the "Exchange Agreement") with Damask International, Jonathan Iseson, R. Todd Stabler, and Dr. and Mrs. Robert J. Harman. Damask International and Jonathan Iseson constituted the record and beneficial owners of forty percent (40%), or 67 ordinary shares, of the issued and outstanding shares of the capital stock of Nordic Racing Limited, a British corporation ("Nordic"). Pursuant to the terms of the Exchange Agreement, the Registrant sold and issued an aggregate of 200,000 (pre-split) shares of its common stock -- 140,000 shares to Damask International, 30,000 shares to Jonathan Iseson, 20,000 shares to R. Todd Stabler, and 10,000 shares to Dr. and Mrs. Robert J. Harman. Subsequent to the closing of the Exchange Agreement, the Company effected a 5-for-1 forward stock split. Thus, all references to shares outstanding prior to the March 9, 2001 closing of the Exchange Agreement, including those in the Shareholders' Equity section of the Balance Sheet and in the Statements of Shareholders' Equity, are pre-split references. Nordic was incorporated in the United Kingdom on January 11, 1990, to operate a motor racing team. Since inception, Nordic has specialized in the FIA Formula 3000 International Championship racing series ("Formula 3000"). Formula 3000 is the training ground for the more widely known Formula 1 race series. Recently, the authorized number of teams participating in Formula 3000 was reduced from 18 to 14. Nordic remained one of the authorized teams. If a new team wishes to enter the Formula 3000 arena, it must purchase an already existing team. 15 Currently, Nordic's team consists of two drivers and two race cars, as well as the requisite machinery, mechanics, tools, and engineers required to maintain and improve the team. At the end of the 2000 race season, Nordic was ranked 5th overall on the Formula 3000 circuit and was the highest finishing independently owned race team in Formula 3000. In 2001, Nordic and the other Formula 3000 teams are scheduled to compete at 12 of the venues where Formula 1 teams will compete. Nordic, like all Formula 3000 teams, has obtained sponsors who wish their products to be marketed to the Formula 3000 audience through the exchange of cash contributions (used to operate the team) for placement of logos and other advertising on the team's uniforms, race cars, and transporters. In early 2001, Nordic signed a sponsorship agreement with the Coca-Cola Company for a "title sponsorship" position - meaning that Coca-Cola has the most prominently displayed logo of Nordic's sponsors. As a result, the team is now referred to as "Coca-Cola Nordic Racing." Nordic also has a sponsorship agreement with "Eurosport" - the pan-European sports television channel. The Company's principal business plan is to seek immediate earnings by exploiting the license agreement with Reach Technologies, Inc. The Company plans to conduct market analysis, hire sales staff and begin marketing the Digital Data Recorder product line. It is the Company's intention to grow through generating sales. However, to support existing operations, the Company plans to seek additional financing, acquire shareholder capital, reduce operating expenses and obtain additional sponsors. Results Of Operations Sales Grand Prix Sports, Inc. has not generated any revenues from operations during the periods covered by this Form 10-QSB. Losses Net losses for the three months ended March 31, 2001, increased to $51,240 from $18,650 for the three months ended March 31, 2000. The increase in losses was primarily attributable to professional fees for the Nordic Racing Limited acquisition, costs associated with SEC reporting requirements, costs associated with the five-for-one stock split and the loss associated with revision of the license Grand Prix Sports, Inc. expects to continue to incur losses at least through the end of its current fiscal year There can be no assurance that Grand Prix Sports, Inc. will achieve or maintain profitability, generate revenue or sustain future growth. 16 Liquidity And Capital Resources Grand Prix Sports, Inc. has funded its cash needs over the periods covered by this Form 10-QSB with cash on hand and cash advances from shareholders. It is anticipated that shareholder advances will be sufficient to satisfy cash requirements over the next twelve months. Capital Expenditures Grand Prix Sports, Inc. made no capital expenditures over the period covered by this report. There are no planned capital expenditures in the next twelve months. Employees Other than hiring one commission sales staff, Grand Prix Sports, Inc. expects no significant changes in its number of employees. 17 PART II Item 6. Exhibits And Reports On Form 8-K (A) Exhibits None. (B) Reports On Form 8-K. Filed April 5, 2001 discussing the transactions effective March 9, 2001, including the Exchange Agreement whereby DDR Systems, Inc. became Grand Prix Sports, Inc, the subsequent name change, the acquisition of a forty percent (40%) interest in Nordic Racing Limited and the revisions to the Reach Technologies License Agreement dated June 3, 1999 effecting a conversion from an exclusive license agreement to a non-exclusive license agreement. Signatures In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GRAND PRIX SPORTS, INC. Date: May 21, 2001 /s/ HARRYSEN MITTLER ------------------------------- Harrysen Mittler President and Director