-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Iqj3MH6cBhCrlOIR2IWDYhJCPthUPykH5FX9mFhBuVNVxLDgtLi4slKFW/lWx+qL 8wOjQmeGxfk2R3WbkCPl5A== 0001095811-01-000702.txt : 20010207 0001095811-01-000702.hdr.sgml : 20010207 ACCESSION NUMBER: 0001095811-01-000702 CONFORMED SUBMISSION TYPE: 10KSB40/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20010206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEL CERRO ENTERPRISES INC CENTRAL INDEX KEY: 0001114708 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-RACING, INCLUDING TRACK OPERATION [7948] IRS NUMBER: 880453649 FILING VALUES: FORM TYPE: 10KSB40/A SEC ACT: SEC FILE NUMBER: 000-30669 FILM NUMBER: 1525957 BUSINESS ADDRESS: STREET 1: 3428 TROPHY DR. CITY: LA MESA STATE: CA ZIP: 91941 BUSINESS PHONE: 6196922141 MAIL ADDRESS: STREET 1: 3428 TROPHY DR. CITY: LA MESA STATE: CA ZIP: 91941 10KSB40/A 1 a69201a1e10ksb40a.txt FORM 10KSB40 AMENDMENT NO.1 FISCAL YEAR 09/30/2000 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB 1st Amendment ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE YEAR ENDED SEPTEMBER 30, 2000 COMMISSION FILE NUMBER 0-30669 DEL CERRO ENTERPRISES, INC. (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER) NEVADA 88-0453649 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 2635 Camino Del Rio South, Suite 211, San Diego, CA 92108 - --------------------------------------------------- ---------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (619) 692-2171 - -------------- (ISSUER'S TELEPHONE NUMBER) SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT: Common Stock - .001 Par Value ----------------------------- (Title of Class) 1 2 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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 [ ] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. Yes [X] No [ ] The issuer had no revenues for the year ended September 30, 2000. As of September 30, 2000, the registrant had 8,449,000 shares of common stock, $.001 par value, issued and outstanding. 2 3 PART 1 ITEM 1 DESCRIPTION OF THE BUSINESS BUSINESS DEVELOPMENT Form And Year Of Organization Del Cerro Enterprises, Inc. was incorporated in Nevada on March 10, 1999 for the purpose of developing a high performance driving school in conjunction with annual nationwide open road races. We received our initial funding through the sale of common stock to investors from the period of approximately March 15, 1999 until March 31, 1999. We offered and sold 59,000 common stock shares at $0.10 per share to non-affiliated private investors. From inception until the date of this filing we have had no material operating activities. Any Bankruptcy, Receivership, Or Similar Proceeding There have been no bankruptcy, receivership or similar proceedings. Any Material Reclassification, Merger, Consolidation, Or Purchase Or Sale Of A Significant Amount Of Assets Not In The Ordinary Course Of Business There have been no material reclassifications, mergers, consolidations, or purchase or sale of a significant amount of assets not in the ordinary course of business. BUSINESS OF THE COMPANY Principal Products Or Services And Their Markets The Company intends to offer high speed driving courses at local road racing facilities in conjunction with established open road races. The extensive instruction will include a structured curriculum of classroom and track sessions that will provide an understanding of the fundamentals of road racing. Classroom sessions will emphasize techniques, racing lines, equipment preparation, technical inspections and safety procedures. For those participating in the open road races, sessions will also be offered to cover timing, driver/navigator team participation, pre-run videos and detailed course notes. Track time will be an intensive series of slalom, braking and downshifting exercises that give the participant the opportunity to utilize the techniques and skills discussed in the classroom in a systematic and controlled environment. Additional track time will allow the instructor to critique the racer's skill application in a series of lapping sessions at progressively higher speeds, utilizing radio communication between instructor and student. 3 4 The Company will initially focus on the participants in the three established open road races organized by Rodger Ward's Classic Auto Racing Society: Big Bend Open Road Race US Highway 285, Fort Stockton - Sanderson - Ft. Stockton, Texas. 120 mile "boomerang" event held each April. Gambler's Run Twin 50's Nevada State Route 225, Elko - Wild Horse - Elko, Nevada. 100 mile "boomerang" event held each June. Pony Express Open Road Race Nevada State Route 305, Battle Mountain - Austin, Nevada. 84 mile event held each September. Open Road Races are conducted on a section of State or Federal Highway, generally 50 miles or more in length. The participants race the entire distance at a target speed that they have qualified for based upon the tech speed of their vehicle. The cars are started in a staggered format with the faster cars starting first at two to three minute intervals. There is virtually no passing and no wheel to wheel competition. Participants are required to show proof of completion of an approved high speed driving course. Awards are given to participants who come closest to averaging their target speed. Speed divisions are differentiated by vehicle safety equipment and driver's racing experience - Touring: 95-110mph, Grand Touring: 115-130mph, Grand Sport: 135-160mph, Super Sport: 170-180mph, and Unlimited: 180+ mph. Utilizing Management's experience in and knowledge of the motorsport industry, the Company will conduct multi-day courses at a selection of the more than 25 road courses located in the states surrounding the open road races. While the company has not begun race track rental discussions or signed rental agreements with any course to date, management has identified primary race track facilities that may include: Arizona Firebird Intl. Raceway Chandler 1.6 mile Phoenix Intl. Raceway Mesa 1.51 mile California Holtville Raceway Holtville 1.43 mile Buttonwillow Raceway Buttonwillow 3 mile Laguna Seca Monterey 2.24 mile Sears Point Raceway Sonoma 2.52 mile Willow Springs Motorsports Park Rosamond 2.5 mile Colorado Pueblo Motorsports Park Pueblo 2.2 mile Aspen Sports Car Club Woody Creek 1.1 mile LaJunta Raceway LaJunta 1.6 mile 4 5 Mountain View Motor Sport Park Mead 1.8 mile Pikes Peak Intl Raceway Fountain 1.3 mile Second Creek Raceway Denver 1.7 mile Nevada Las Vegas Motor Speedway Las Vegas 2.5 mile Reno-Fernley Raceway Fernley 15 mile Texas Cabaniss N.A.S. Corpus Cristi 2.6 mile Texas Motor Speedway Fort Worth 2.5 mile Texas World Speedway College Stn. 3.1 mile Abilene Municipal Airport Abilene 1.7 mile Oak Hill Raceway Henderson 1.8 mile Additional courses for those not participating in the open road races will also be offered. These will include High Performance Driving - a course combining advanced street driving skills with techniques refined through years on the racetrack; Highway Survival Training - emphasizing defensive driving skills and elements of car control such as accident avoidance, skid control and high-speed braking; and Teenage Defensive Driving - teaching teens skills such as accident avoidance, skid control, advanced braking and ABS techniques. Management is familiar with the operating procedures and rental availability of all of the racing facilities for planned use in the company's road course racing and driving instruction. These facilities are available throughout the year on rental schedules. However, if scheduling conflicts arise at these facilities, management believes they will be able to arrange rental dates at alternate suitable racing facilities as there are eighteen race tracks in Arizona, ninety in California, twenty- four in Colorado, twenty-two in Nevada, and eighty-eight in Texas. Management is confident, based upon prior experience, that they will be able to secure rental racing facilities at either primary or alternate race courses suitable for the company's planned multi-day driving and instructions courses. In management's opinion and experience the popularity of open road racing is increasing along with other forms of motorsport. Open road racing had it's beginnings in the 19th century and experienced a revival in the years following World War II. In recent years the number and types of open road races have increased including a new motorsports sanctioning body, the Grand American Road Racing Association. The Company's business plan proposes to utilize its founders' backgrounds to develop its racing school. The business plan requires the Company during the first six months of 2001 to raise capital of $2,500,000 through the sale of common stock in a private placement. After raising the projected capital, the Company has a planned budget for months seven through twelve of $957,000 for development of its school to include $215,000 for five track vehicles and one pre-run van, $240,000 for one equipment hauler, $80,000 for two full-time instructors, $30,000 for temporary track personnel, $180,000 for facility rentals - including insurance and safety personnel, $25,000 for one marketing manager, $17,000 for one office staff assistant, $25,000 for purchase of computers and 5 6 fixed assets, $75,000 for advertising, $20,000 for travel expenses, and $50,000 for rent and other operating expenses. In addition, based upon management's experience and the company's business plan, the company will budget approximately $60,000 per year for property and injury insurance coverage of $5,000,000. Management believes this level of insurance is adequate as race track facilities include insurance coverage in their rental rates, and all driving participants will be required to sign property damage and injury disclaimers related to the inherent risks in high speed driving activities. There are no assurances that the company's planned sale of $2,500,000 of common stock will be successful. If no funding is received during the next twelve months, we will be forced to rely on its existing cash in the bank and funds loaned by the directors and officers. The officers and directors have no formal commitments or arrangements to advance or loan funds to the company. In such a restricted cash flow scenario, we would be unable to complete our business plan steps, and would, instead, delay all cash intensive activities. Without necessary cash flow, we may be dormant during the next twelve months, or until such time as necessary funds could be raised in the equity securities market. Distribution Methods Of Products Or Services For the first two years of its business plan, the Company will advertise its driving school through it's Directors' web site, www.openroadracing.com. In addition, the Company will advertise in publications, such as AutoWeek, AutoRacingDigest, and Grassroots Motorsports, maintain links on Internet web pages such as racingschools.com, TheRaceNet.com, and RacingPress.com. Ads in local newspapers and track publications surrounding the open road races will be placed prior to each event. Sponsorships for drivers in local events will also be considered. Status Of Any Publicly Announced New Product Or Service The Company has no new product or service planned or announced to the public. Competitive Business Conditions And The Small Business Issuer's Competitive Position In The Industry And Methods Of Competition The size and financial strength of the Company's primary competitors, The Bondurant School, Richard Petty Driving Experience and Skip Barber Racing School are substantially greater than those of the Company. In examining major competitors, Management has concluded none offer a driving school in conjunction with a competitive open road race. The Bondurant and Barber racing schools target the amateur and professional race car driver seeking to improve specific areas of their driving and racing techniques. The Petty Driving Experience targets racing enthusiasts with programs designed to provide them the opportunity to drive a race car in a controlled environment. However, the Company's competitors have longer operating histories, larger customer bases, and greater brand recognition than the Company. Management is not aware of any significant barriers to the Company's entry into the motorsport market, however, the Company at this time has no market share of this market. 6 7 Sources And Availability Of Raw Materials And The Names Of Principal Suppliers Management will rely on their combined experience and knowledge in the auto racing business to arrange for the acquisition of vehicles for the racing school. The Company will utilize road race chassis builders to design and assemble its vehicles and purchase engines from motorsport engine builders to be installed in the cars. While the Company has no current contracts with chassis or engine builders, Management is aware of chassis builders such as Neely Motorsports, Hutcherson- Pagan Enterprises and S&W Race Cars, and engine builders such as Gustaf Engine & Machine, Draime Racing Engines and Skip Govia Motorsports, Inc. Miscellaneous parts and safety equipment are available from many suppliers such as Trac Dynamics, Simpson Racing, BSR Products and Port City Racing. Management is also aware of opportunities to purchase turn-key vehicles from professional race teams at auctions held annually throughout the U.S. and will consider the most cost-efficient means for the acquisition of the vehicles while meeting all safety specifications. The Company will enter into agreements with chassis and engine builders per its business plan after raising capital during the first six months of 2001 per its plan. Dependence On One Or A Few Major Customers We will not depend on any one or a few major customers. Our target market is the millions of auto racing fans and competition drivers in the U.S. There are currently 1,585 race tracks located in the United States, 286 of those located in the states surrounding the road races organized by Del Cerro's Directors. Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements Or Labor Contracts, Including Duration The Company has no current plans for any registrations such as patents, trademarks, copyrights, franchises, concessions, royalty agreements or labor contracts. When the Company has sufficient funding, management will seek legal council to determine if any such registrations would be in its best interests. Need For Government Approval Of Principal Products Or Services The Company is not required to apply for or have any government approval for its products or services. Open Road Races are organized with State or Federal Highway officials allowing promoters to shut down a designated section of highway for a period of 8 to 10 hours. Drivers participating in the school will be required to show a valid state, military or international driver's license. Effect Of Existing Or Probable Governmental Regulations On The Business The Company's business is not subject to material regulation by federal governmental agencies. The Company will be required to meet all state and local safety standards for the vehicles used 7 8 in its driving schools. Management personnel are familiar with all state and local safety requirements based on their experience operating open road racing events. Estimate Of The Amount Spent During Each Of The Last Two Fiscal Years On Research And Development Activities, And If Applicable The Extent To Which The Cost Of Such Activities Are Borne Directly By Customers The Company has not expended funds for research and development costs since inception. Costs And Effects Of Compliance With Environmental Laws The Company has not expended any funds for compliance with environmental laws and does not anticipate its business plan will encompass any such compliance requirements. Number Of Total Employees And Number of Full Time Employees The Company's only current employees are its two officers who will devote as much time as the board of directors determines is necessary to manage the affairs of the Company. The officers intend to work on a full time basis when the Company raises capital per its business plan. The Company's business plan calls for hiring four new employees during the next twelve months. Risks Investors in Del Cerro should be particularly aware of the inherent risks associated with the company's business plan. These risks include but are not limited to: WE ARE IN THE DEVELOPMENT STAGE OF OUR BUSINESS. DEL CERRO HAS NO OPERATING HISTORY, NO MATERIAL CURRENT OPERATIONS, AND NO PROFITS. AT THIS STAGE OF OUR BUSINESS PLAN, EVEN WITH OUR GOOD FAITH EFFORTS, OUR SHAREHOLDERS ARE ACCEPTING A HIGH PROBABILITY OF LOSING THEIR INVESTMENT. While we fully intend to meet our goals per our business plan, our plan may not work. In such a scenario, we could remain as a start-up company with no material operations, revenues, or profits. Although management has been successful in planning and operating other auto racing businesses and events and believes their plan for Del Cerro will generate revenue and profit, there is no guarantee their past experiences will provide Del Cerro with similar future successes. OUR BUSINESS STRATEGY REQUIRES US TO RAISE FUNDS OF $2,500,000 THROUGH A PRIVATE PLACEMENT. WITHOUT FUNDING, WE COULD REMAIN AS A START-UP COMPANY WITH NO MATERIAL OPERATIONS, REVENUES, OR PROFITS. Although we intend to implement our business plan through the foreseeable future and will do our best to mitigate the risks associated with the business plan, there can be no 8 9 assurance that our efforts will be successful. Depending upon the amount of additional funding we receive, we may be only partially successful or completely unsuccessful in implementing our business plan, and our shareholders may lose part or all of their investment. OUR COMPETITORS ARE WELL-ESTABLISHED AND HAVE SUBSTANTIALLY GREATER FINANCIAL, MARKETING, PERSONNEL AND OTHER RESOURCES THAN WE DO. SHOULD WE BE UNABLE TO ACHIEVE ENOUGH CUSTOMER MARKET SHARE IN OUR INDUSTRY, WE MAY EXPERIENCE LESS REVENUE THAN ANTICIPATED AND A SIGNIFICANT REDUCTION IN OUR PROFIT. We plan to capitalize on our management's contacts in auto racing and name recognition among competition drivers and auto racing fans. While we believe we will be able to successfully compete against other similar auto racing companies, there is no assurance we will be successful in attracting enough competition drivers and auto racing fans to be a competitive force in our industry. THE CURRENT OFFICERS, RODGER WARD AND SHERRIE WARD, ARE THE SOLE OFFICERS AND DIRECTORS OF THE COMPANY, AND AT THE SAME TIME, THEY ARE INVOLVED IN OTHER BUSINESS ACTIVITIES. DEL CERRO'S NEEDS FOR THEIR TIME AND SERVICES COULD CONFLICT WITH THEIR OTHER BUSINESS ACTIVITIES. THIS POSSIBLE CONFLICT OF INTEREST COULD RESULT IN THEIR INABILITY TO PROPERLY MANAGE DEL CERRO'S AFFAIRS, RESULTING IN DEL CERRO REMAINING A START-UP COMPANY WITH NO MATERIAL OPERATIONS, REVENUES, OR PROFITS. We have not formulated a plan to resolve any possible conflicts that may arise. While Del Cerro and its officers and directors have not formally adopted a plan to resolve any potential or actual conflicts of interest that exist or that may arise, they have verbally agreed to limit their roles in all other business activities to roles of passive investors and devote full time services to Del Cerro after we raise capital of $2,500,000 through the sale of securities through a private placement and are able to provide officers' salaries per our business plan. THERE IS NO CURRENT PUBLIC MARKET FOR DEL CERRO'S SECURITIES. WE HAVE NO CURRENT PUBLIC OFFERING AND NO PROPOSED PUBLIC OFFERING OF OUR EQUITY. AS OUR STOCK IS NOT PUBLICALLY TRADED, INVESTORS SHOULD BE AWARE THEY PROBABLY WILL BE UNABLE TO SELL THEIR SHARES AND THEIR INVESTMENT IN OUR SECURITIES IS NOT LIQUID. We plan to file for trading on the OTC Electronic Bulletin Board which is sponsored by the National Association of Securities Dealers, the NASD. While this could create liquidity for our shareholders through public trading by securities dealers, we do not know when we will be able to file for trading, and there is no guarantee of trading volume or trading price levels sufficient for investors to sell their stock, recover their investment in our stock, or profit from the sale of their stock. IF THE COMPANY BECOMES LISTED FOR TRADING ON THE OTC ELECTRONIC BULLETIN BOARD THE TRADING IN THE COMPANY'S SHARES MAY BE REGULATED BY SECURITIES AND EXCHANGE COMMISSION RULE 15G-9 WHICH ESTABLISHED THE DEFINITION OF A "PENNY STOCK." The Securities and Exchange Commission Rule 15g-9 establishes the definition of a "penny stock", for the purposes relevant to the Company, as any equity security that has a market 9 10 price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. The effective result of this Rule 15g-9, is that if the share price is below $5.00 there will be less purchasers qualified by their brokers to purchase shares of the company, and therefore a less liquid market for the securities. Year 2000 Disclosure Before 2000, business users of computers were aware that time-sensitive software might cause their computer systems to recognize a date using "00" as the year 1900 rather than the year 2000. Computer users were concerned that this software date problem might result in system failures or miscalculations causing disruption of normal business activities, primarily in the first weeks of 2000. The Company's Management has hands-on familiarity with all of the software that will be utilized in its business plan and has experienced no Year 2000 related systems problems as of the date of this filing. Management has discussed Year 2000 computer systems issues with proposed goods and services suppliers for the Company's business plan and they have confirmed their computer related systems are already Year 2000 compatible. As of the date of this filing, Management has made no Year 2000 compliance plans, other than to plan purchases of computer systems and software which are already Year 2000 compatible. Management has no Year 2000 contingency plans and does not intend to prepare future contingency plans related to Year 2000 compliance worst case scenarios. Reports To Security Holders We provide an annual report that includes our financial information to our shareholders. The Company is voluntarily filing this Form 10-KSB in order to make its financial information equally available to any interested parties or investors. The Company is subject to the disclosure rules of Regulation S-B for a small business issuer under the Securities Act of 1933 and the 10 11 Securities Exchange Act of 1934. The Company is required to file Form 10-KSB annually and Form 10-QSB quarterly. In addition, the Company will be required to file Form 8 and other proxy and information statements from time to time as required. The public may read and copy any materials the Company files with the Securities and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 450 Fifth Street, N. W., Washington D. C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with SEC. ITEM 2 DESCRIPTION OF PROPERTY The Company's principal executive office address 2635 Camino Del Rio South, Suite 211, San Diego, CA. The principal executive office and telephone number are provided by an officer of the corporation. The costs associated with the use of the telephone and mailing address were deemed by management to be immaterial as the telephone and mailing address were almost exclusively used by the officer for other business purposes. Management considers the Company's current principal office space arrangement adequate until such time as the Company achieves its business plan goal of raising capital of $2,500,000 and then begins hiring new employees per its business plan. ITEM 3 LEGAL PROCEEDINGS The Company is not currently involved in any legal proceedings and is not aware of any pending or potential legal actions. ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the fourth quarter of the fiscal year ended September 30, 2000, there were no submissions of matters to a vote of security holders. PART II ITEM 5 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER SHAREHOLDER MATTERS The Company plans to file for trading on the OTC Electronic Bulletin Board which is sponsored by the National Association of Securities Dealers (NASD) as soon as the Securities and Exchange 11 12 commission notifies us that our SB-2 Registration Statement is effective. The OTC Electronic Bulletin Board is a network of security dealers who buy and sell stock. The dealers are connected by a computer network which provides information on current "bids" and "asks" as well as volume information. As of the date of this filing, there is no public market for the Company's securities. As of September 30, 2000, the Company had 61 shareholders of record. The Company has paid no cash dividends. The Company has no outstanding options. The Company has no plans to register any of its securities under the Securities Act for sale by security holders. There is no public offering of equity and there is no proposed public offering of equity. ITEM 6 PLAN OF OPERATION The Company's current cash balance is $1,554. Management believes the current cash balance is sufficient to fund the current minimum level of operations through the third quarter of 2001, however, in order to advance the Company's business plan the Company must raise capital through the sale of equity securities. We are a development stage company and have generated no revenue to date. To date, the Company has sold $5,900 in equity securities and used approximately $4,346 for audit and bank fees. Sales of the Company's equity securities have allowed the Company to maintain a positive cash flow balance. We have received a going concern opinion of our financial statements that raises substantial doubt as to our ability to continue as a going concern. The Company's business plan encompasses the following steps to implement its goals: during months one through six of 2001 raise capital of $2,500,000 through the sale of common stock in a private placement; during months seven through twelve budget $957,000 for development of its school to include $215,000 for five track vehicles and one pre-run van, $240,000 for one equipment hauler, $80,000 for two full-time instructors, $30,000 for temporary track personnel, $180,000 for facility rentals - including insurance and safety personnel, $25,000 for one marketing manager, $17,000 for one office staff assistant, $25,000 for purchase of computers and fixed assets, $75,000 for advertising, $20,000 for travel expenses, and $50,000 for rent and other operating expenses. The Company will only be able to advance its business plan after it receives capital funding through the sale of equity securities. After raising capital, Management intends to hire employees, rent commercial space in La Mesa, California, purchase furniture and equipment, and begin development of its operations. The Company intends to use its equity capital to fund the Company's business plan during the next twelve months as cash flow from sales is not estimated to begin until year two of its business plan. The Company will face considerable risk in each of its business plan steps, such as difficulty of hiring competent personnel within its budget, difficulty in securing track facility rental, and a shortfall of funding due to the Company's inability to raise capital in the equity securities market. If no funding is received during the next twelve months, the Company will be forced to rely on its existing cash in the bank and funds loaned by the directors and officers. The Company's officers and directors have no formal commitments or arrangements to advance or loan funds to the Company. In such a restricted cash flow scenario, the Company would be unable to complete its business plan steps, and would, instead, delay all cash intensive activities. Without necessary cash flow, the Company may be dormant during the next twelve months, or until such time as necessary funds could be raised in the equity securities market. 12 13 There are no current plans for additional product research and development. The Company plans to purchase approximately $25,000 in furniture, computers, and software during the next twelve months from proceeds of its equity security sales. The Company's business plan provides for an increase of four employees during the next twelve months. ITEM 7 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The required financial statements begin on page F-1 of this document. ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING CONTROL AND FINANCIAL DISCLOSURE None. 13 14 DEL CERRO ENTERPRISES, INC. (A Development Stage Company) FINANCIAL STATEMENTS SEPTEMBER 30, 2000 SEPTEMBER 30, 1999 15 TABLE OF CONTENTS
PAGE # ------ INDEPENDENT AUDITORS REPORT F1 - ------------------------------------------------------------------------------------ ASSETS F2 - ------------------------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY F3 - ------------------------------------------------------------------------------------ STATEMENT OF OPERATIONS F4 - ------------------------------------------------------------------------------------ STATEMENT OF STOCKHOLDERS' EQUITY F5 - ------------------------------------------------------------------------------------ STATEMENT OF CASH FLOWS F6 - ------------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS F7-F11 - ------------------------------------------------------------------------------------
16 INDEPENDENT AUDITORS' REPORT Board of Directors October 23, 2000 DEL CERRO ENTERPRISES, INC. San Diego, California I have audited the accompanying Balance Sheets of DEL CERRO ENTERPRISES, INC. (A Development Stage Company), as of September 30, 2000, and September 30, 1999, and the related statements of operations, stockholders' equity and cash flows for the year ended September 30, 2000, and the period March 10, 1999, (inception), to September 30, 1999. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of DEL CERRO ENTERPRISES, INC. (A Development Stage Company), as of September 30, 2000, and September 30, 1999, and the related statements of operations, stockholders' equity and cash flows for the year ended September 30, 2000, and the period March 10, 1999, (inception), to September 30, 1999, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note #5 to the financial statements, the Company has suffered recurring losses from operations and has no established source of revenue. This raises substantial doubt about its ability to continue as a going concern. Management's plan in regard to these matters is described in Note #5. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Barry L. Friedman - --------------------------- Barry L. Friedman Certified Public Accountant 1582 Tulita Drive Las Vegas, NV 89123 (702) 361-8414 - F1 - 17 DEL CERRO ENTERPRISES, INC. (A Development Stage Company) BALANCE SHEET ASSETS
SEPTEMBER SEPTEMBER 30, 2000 30, 1999 -------------- -------------- CURRENT ASSETS CASH $ 1,554 $ 5,900 -------------- -------------- TOTAL CURRENT ASSETS $ 1,554 $ 5,900 -------------- -------------- OTHER ASSETS $ 0 $ 0 -------------- -------------- TOTAL OTHER ASSETS $ 0 $ 0 -------------- -------------- TOTAL ASSETS $ 1,554 $ 5,900 -------------- --------------
The accompanying notes are an integral part of these financial statements - F2 - 18 DEL CERRO ENTERPRISES, INC. (A Development Stage Company) BALANCE SHEET LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER SEPTEMBER 30, 2000 30, 1999 -------------- -------------- CURRENT LIABILITIES $ 0 $ 0 -------------- -------------- TOTAL CURRENT LIABILITIES $ 0 $ 0 -------------- -------------- STOCKHOLDERS' EQUITY (Note #4) Common stock Par value $0.001 Authorized 50,000,000 shares Issued and outstanding at September 30, 1999- 119,000 shares $ 119 September 30, 2000- 8,449,000 shares $ 8,449 Additional Paid-In Capital +3,451 +11,781 Deficit accumulated during The Development stage -10,346 -6,000 -------------- -------------- TOTAL STOCKHOLDERS' EQUITY $ 1,554 $ 5,900 -------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,554 $ 5,900 -------------- --------------
The accompanying notes are an integral part of these financial statements - F3 - 19 DEL CERRO ENTERPRISES, INC. (A Development Stage Company) STATEMENT OF OPERATIONS
YEAR MAR. 10, MAR. 10, 1999 ENDED 1999, TO (INCEPTION) SEP. 30, SEPT. 30, TO SEP. 30, 2000 1999 2000 ------------- ------------- --------------- INCOME Revenue $ 0 $ 0 $ 0 ------------- ------------- --------------- EXPENSES General, Selling and Administrative $ 4,346 $ 6,000 $ 10,346 ------------- ------------- --------------- TOTAL EXPENSES $ 4,346 $ 6,000 $ 10,346 ------------- ------------- --------------- NET PROFIT/LOSS (-) $ -4,346 $ -6,000 $ -10,346 ------------- ------------- --------------- Net Profit/Loss(-) per weighted share (Note #1) $ Nil $ Nil $ Nil ------------- ------------- --------------- Weighted average Number of common shares outstanding 8,449,000 8,449,000 8,449,000 ------------- ------------- ---------------
The accompanying notes are an integral part of these financial statements - F4 - 20 DEL CERRO ENTERPRISES, INC. (A Development Stage Company) STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Additional Accumu- Common Stock paid-in lated Shares Amount Capital Deficit --------- --------- --------- --------- March 24, 1999 Issued For Services 60,000 $ 60 $ 5,940 April 2, 1999 Issued For Cash 59,000 59 5,841 Net loss year ended March 10, 1999 (Inception) to September 30, 1999 $-6,000 --------- --------- --------- --------- Balance, September 30, 1999 119,000 $ 119 $ 11,781 $-6,000 March 15, 2000 Forward Stock Split 70 for 1 8,330,000 +8,330 -8,330 Net Loss Year Ended September 30, 2000 -4,346 --------- --------- --------- --------- Balance, September 30, 2000 8,449,000 $ 8,449 $ 3,451 $-10,346 --------- --------- --------- ---------
The accompanying notes are an integral part of these financial statements - F5 - 21 DEL CERRO ENTERPRISES, INC. (A Development Stage Company) STATEMENT OF CASH FLOWS
YEAR MAR. 10, MAR. 10, 1999 ENDED 1999, TO (INCEPTION) SEP. 30, SEPT. 30, TO SEP. 30, 2000 1999 2000 ------------ ------------ ------------ Cash Flows from Operating Activities Net Loss $ -4,346 $ -6,000 $ -10,346 Adjustment to Reconcile net loss To net cash provided by operating Activities Issue Common Stock For Services 0 +6,000 +6,000 Changes in assets and Liabilities 0 0 0 ------------ ------------ ------------ Net cash used in Operating activities $ -4,346 $ 0 $ -4,346 Cash Flows from Investing Activities 0 0 0 Cash Flows from Financing Activities Issuance of Common Stock for Cash 0 +5,900 +5,900 ------------ ------------ ------------ Net Increase (decrease) $ -4,346 $ +5,900 +1,554 Cash, Beginning of period +5,900 0 0 ------------ ------------ ------------ Cash, End of Period $ 1,554 $ 5,900 $ 1,554 ------------ ------------ ------------
The accompanying notes are an integral part of these financial statements - F6 - 22 DEL CERRO ENTERPRISES, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000, AND SEPTEMBER 30, 1999 NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY The Company was organized March 10, 1999, under the laws of the State of Nevada as DEL CERRO ENTERPRISES, INC. The Company currently has no operations and in accordance with SFAS #7, is considered a development company. In March 1999, the board of directors voted to seek capital and began developing a business plan. In March 1999 the Company received its initial funding through the sale of common stock. The company remains in a development stage until it completes its registration statement process with the U.S. Securities and Exchange Commission, is listed on a stock exchange, and secures equity funding. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Method The Company records income and expenses on the accrual method. 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 revenue and expenses during the reporting period. Actual results could differ from estimates. Cash and equivalents The Company maintains a cash balance in a non-interest-bearing bank that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with the maturity of three months or less are considered to be cash equivalents. - F7 - 23 DEL CERRO ENTERPRISES, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2000, AND SEPTEMBER 30, 1999 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes Income taxes are provided for using the liability method of accounting in accordance with Statement of Financial Accounting Standards No. 109 (SFAS #109) "Accounting for Income Taxes". A deferred tax asset or liability is recorded for all temporary difference between financial and tax reporting. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Reporting on Costs of Start-Up Activities Statement of Position 98-5 ("SOP 98-5"), "Reporting on the Costs of Start-Up Activities" which provides guidance on the financial reporting of start-up costs and organization costs. It requires most costs of start-up activities and organization costs to be expensed as incurred. SOP 98-5 is effective for fiscal years beginning after December 15, 1998. With the adoption of SOP 98-5, there has been little or no effect on the company's financial statements. Loss Per Share Net loss per share is provided in accordance with Statement of Financial Accounting Standards No. 128 (SFAS #128) "Earnings Per Share". Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects per share amounts that would have resulted if dilative common stock equivalents had been converted to common stock. As of September 30, 2000, the Company had no dilative common stock equivalents such as stock options. - F8 - 24 DEL CERRO ENTERPRISES, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2000, AND SEPTEMBER 30, 1999 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Year End The Company has selected September 30th as its fiscal year-end. NOTE 3 - INCOME TAXES There is no provision for income taxes for the period ended September 30, 2000. The Company's total deferred tax asset as of September 30, 2000, is as follows: Net operation loss carry forward $ 10,346 Valuation allowance $ 10,346 Net deferred tax asset $ 0
The federal net operating loss carry forward will expire between 2019 and 2020. This carry forward may be limited upon the consummation of a business combination under IRC Section 381. - F9 - 25 DEL CERRO ENTERPRISES, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2000, AND SEPTEMBER 30, 1999 NOTE 4 - STOCKHOLDERS' EQUITY Common Stock The authorized common stock of the corporation consists of 50,000,000 shares with a par value $0.001 per share. Preferred Stock The Company has no preferred stock. On March 24, 1999, the Company issued 60,000 shares of its $0.001 par value common stock for services of $6,000 to its directors. On March 24, 1999, the State of Nevada approved the Company's restated Articles of Incorporation, which changed the par value from no par to $0.001. Also, the Company's authorized common stock was increased from 25,000 shares to 50,000,000 shares. On March 15, 2000, the Company approved a forward stock split on the basis of 70 for 1, thus increasing the common stock from 119,000 shares 8,449,000 shares. NOTE 5 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The Company hopes to raise operating capital through a private placement during the first seven months of its business plan, develop its facilities during months seven through twelve, and begin operations at the beginning of year two of its plan. The stockholders/officers and/or directors have informally committed to advancing the operating costs of the Company interest free, if necessary. - F10 - 26 DEL CERRO ENTERPRISES, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2000, AND SEPTEMBER 30, 1999 NOTE 6 - WARRANTS AND OPTIONS There are no warrants or options outstanding to acquire any additional shares of common stock. NOTE 7 - RELATED PARTY TRANSACTIONS The Company neither owns nor leases any real or personal property. An officer of the corporation provides office services without charge. Such costs are immaterial to the financial statements and accordingly, have not been reflected therein. The officers and directors of the Company are involved in other business activities and may in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. - F11 - 27 PART III ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS The Directors and Officers of the Company, all of those whose one year terms will expire 3/31/01, or at such a time as their successors shall be elected and qualified are as follows:
Name & Address Age Position Date First Elected Term Expires - ----------------------------------------------------------------------------- Rodger Ward 79 President, 3/15/99 3/31/01 3428 Trophy Drive Treasurer, La Mesa, CA 91941 Director Sherrie Ward 49 Secretary, 3/15/99 3/31/01 3428 Trophy Drive Director La Mesa, CA 91941
Each of the foregoing persons may be deemed a "promoter" of the Company, as that term is defined in the rules and regulations promulgated under the Securities and Exchange Act of 1933. Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified. The Directors, Rodger and Sherrie Ward, are husband and wife. No Executive Officer or Director of the Corporation has been the subject of any Order, Judgement, or Decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities. No Executive Officer or Director of the Corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending. No Executive Officer or Director of the Corporation is the subject of any pending legal proceedings. Resumes Rodger Ward, President, Treasurer & Director 1995 - Current President, Classic Auto Racing Society, El Cajon, California. Company specializes in staging open road competition races in various states. Responsible for staff and safety personnel training, public relations, 14 28 marketing, technical rule enforcement, technical inspection personnel training, course design and selection. 1980 - Current Racing Analyst, Speaker 1979 - 1984 Director of Special Events, Circus Circus Hotel & Casino, Las Vegas, NV Manager, Circus Circus Unlimited Hydroplane Racing Team 1975 - 1978 Owner/Promoter, Owasso Motor Speedway, Michigan 1969 - 1972 Director of Public Relations, Ontario Motor Speedway, California Indianapolis 500 Champion 1959 & 1962 USAC National Champion 1959 & 1962 Sherrie Ward, Secretary & Director 1994 - Current Secretary, Treasurer, Classic Auto Society, El Cajon, California. Company specializes in staging open road competition races in various states. Responsible for licensing, state and local permits, pre event planning and setup, administration, accounting, contract preparation, television broadcasting negotiations, event scheduling, sponsorships, and daily operations management. ITEM 10 EXECUTIVE COMPENSATION The company's current officers receive no compensation. SUMMARY COMPENSATION TABLE
Name & Year Salary Bonus Other Restricted Options LTIP All other principle ($) ($) annual stock SARs Payouts compen- position compen- awards ($) ($) sation ($) sation ($) - ---------------------------------------------------------------------------------------------------- R Ward 1999 -0- -0- -0- 3,000 -0- -0- -0- Pres., Tres., 2000 -0- -0- -0- -0- -0- -0- -0- Director S Ward 1999 -0- -0- -0- 3,000 -0- -0- -0- Secretary, 2000 -0- -0- -0- -0- -0- -0- -0- Director
There are no current employment agreements between the Company and its executive officers. The Board agreed to pay Mr. Ward for administrative services 30,000 shares of the Company's common stock on March 12, 1999. The stock was valued at the price unaffiliated investors paid for stock sold by the Company, $.10 per share. On March 15, 2000, 2,100,000 shares of the Company's common stock were issued to him per a 71 for 1 stock split. 15 29 The Board agreed to pay Mrs. Ward for administrative services 30,000 shares of the Company's common stock on March 12, 1999. The stock was valued at the price unaffiliated investors paid for stock sold by the Company, $.10 per share. On March 15, 2000, 2,100,000 shares of the Company's common stock were issued to her per a 71 for 1 stock split. The terms of these stock issuances were as fair to the Company, in the Board's opinion, as could have been made with an unaffiliated third party. The officers currently devote an immaterial amount of time to manage the affairs of the Company. The Directors and Principal Officers have agreed to work with no remuneration until such time as the Company receives sufficient revenues necessary to provide proper salaries to all Officers and compensation for Directors' participation. The Officers and the Board of Directors have the responsibility to determine the timing of remuneration for key personnel based upon such factors as positive cash flow to include stock sales, product sales, estimated cash expenditures, accounts receivable, accounts payable, notes payable, and a cash balance of not less than $25,000 at each month end. When positive cash flow reaches $25,000 at each month end and appears sustainable the board of directors will readdress compensation for key personnel and enact a plan at that time which will that benefits the Company as a whole. At this time, management cannot accurately estimate when sufficient revenues will occur to implement this compensation, or the exact amount of compensation. There are no annuity, pension or retirement benefits proposed to be paid to officers, directors or employees of the Corporation in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the Corporation or any of its subsidiaries, if any. ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information on the ownership of the Company's voting securities by Officers, Directors and major shareholders as well as those who own beneficially more than five percent of the Company's common stock through the most current date - September 30, 2000:
Title Of Name & Amount & Percent Class Address Nature of owner Owned - ----- ------- --------------- ----- Common Rodger Ward 2,130,000 (a) 25% 3428 Trophy Drive La Mesa, CA 91941 Common Sherrie Ward 2,130,000 (b) 25% 3428 Trophy Drive La Mesa, CA 91941 Total Shares Owned by Officers & Directors As a Group 4,260,000 50%
16 30 (A) Mr. Ward received for administrative services 30,000 shares of the Company's common stock on March 12, 1999. 2,100,000 shares of the Company's common stock were issued to him per a 71 for 1 forward stock split on March 15, 2000. (B) Mrs. Ward received for administrative services 30,000 shares of the Company's common stock on March 12, 1999. 2,100,000 shares of the Company's common stock were issued to her per a 71 for 1 forward stock split on March 15, 2000. ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The principal executive office and telephone number are provided by Mr. Ward, an officer of the corporation. The costs associated with the use of the telephone and mailing address were deemed by management to be immaterial as the telephone and mailing address were almost exclusively used by the officer for other business purposes. ITEM 13 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K Exhibit 23 Consent of Experts and counsel Reports filed on Form 8-K: None Reports required to be filed by Regulation S-X: None 17 31 SIGNATURES ---------- Pursuant to the requirements of Section 13 and 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Del Cerro Enterprises, Inc. Date February 5, 2001 By /s/ Rodger Ward ----------------------------- Rodger Ward, President, Secretary & Director Date February 5, 2001 By /s/ Sherrie Ward ---------------------------- Sherrie Ward, Treasurer & Director EX-23 2 a69201a1ex23.txt EXHIBIT 23 1 EXHIBIT 23 To Whom It May Concern: January 18, 2001 The firm of Barry L. Friedman, P.C., Certified Public Accountant consents to the inclusion of their report of October 23, 2000, on the Financial Statements of DEL CERRO ENTERPRISES, INC., as of September 30, 2000, in any filings that are necessary now or in the near future with the U.S. Securities and Exchange Commission. Very truly yours, /s/ Barry L. Friedman - --------------------------- Barry L. Friedman Certified Public Accountant 1582 Tulita Drive Las Vegas, NV 89123 702-361-8414 -----END PRIVACY-ENHANCED MESSAGE-----