UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-KSB
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x
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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For
the fiscal year ended December 31, 2007
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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For
the transition period from _________ to ________
AMERICAN
RACING CAPITAL, INC.
(Exact
name of registrant as specified in charter)
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Nevada
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87-0631750
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(State
or other jurisdiction of
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(IRS
Employer
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incorporation
or organization)
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Identification
Number)
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P.O.
Box 22002 San Diego, California
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(Address
of principal executive offices) (Zip Code)
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Issuer’s
telephone number:
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(570)
807-5230
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Securities
registered pursuant to Section 12(g) of the Act:
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Title
of each class
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None
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Name
of each exchange on which registered
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None
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Securities
registered pursuant to Section 12(b) of the Act:
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Common
Stock, par value $0.001 per
share
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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. 1. Yes
x
No
o
2.
Yes
x
No
o
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 the 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
x
Indicate
by check mark if the registrant is a shell company as defined in Rule 12b-2
of
the Exchange Act Yes
x
No
o
State
Issuer’s Revenues for its most recent fiscal year:
$485,335
State
the aggregate market value of the voting stock held by nonaffiliates of the
registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within the past 60 days.
The
market value of shares held by nonaffiliates is $239,281 based on the bid price
of $0.61 per share of our common stock at April 4, 2008.
As
of December 31, 2007, the Company had 27,353,285 shares of its common stock
issued and outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
None
TABLE
OF CONTENTS
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PART
I
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1
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I
TEM
1.
D
ESCRIPTION
O
F
B
USINESS
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1
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I
TEM
2.
D
ESCRIPTION
O
F
P
ROPERTIES
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8
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I
TEM
3.
L
EGAL
P
ROCEEDINGS
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8
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I
TEM
4.
S
UBMISSION
O
F
M
ATTERS
T
O
A
V
OTE
O
F
S
ECURITIES
H
OLDERS
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8
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PART
II
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9
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I
TEM
5.
M
ARKET
F
OR
C
OMMON
E
QUITY
A
ND
R
ELATED
S
TOCKHOLDER
M
ATTERS
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9
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I
TEM
6.
M
ANAGEMENT
’
S
D
ISCUSSION
A
ND
A
NALYSIS
O
R
P
LAN
O
F
O
PERATION
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10
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I
TEM
7.
F
INANCIAL
S
TATEMENTS
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12
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I
TEM
8.
C
HANGES
I
N
A
ND
D
ISAGREEMENTS
W
ITH
A
CCOUNTANTS
O
N
A
CCOUNTING
A
ND
F
INANCIAL
D
ISCLOSURE
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13
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ITEM
8B. OTHER INFORMATION
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14
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PART
III
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15
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I
TEM
9.
D
IRECTORS
A
ND
E
XECUTIVE
O
FFICERS
,
P
ROMOTERS
,
A
ND
C
ONTROL
P
ERSONS
;
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C
OMPLIANCE
W
ITH
S
ECTION
16(a)
O
F
T
HE
E
XCHANGE
A
CT
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15
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I
TEM
10.
E
XECUTIVE
C
OMPENSATION
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16
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I
TEM
11.
S
ECURITY
O
WNERSHIP
O
F
C
ERTAIN
B
ENEFICIAL
O
WNERS
A
ND
M
ANAGEMENT
AND
RELATED
STOCKHOLDER
MATTERS
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17
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I
TEM
12.
C
ERTAIN
R
ELATIONSHIPS
A
ND
R
ELATED
T
RANSACTIONS
A
ND
D
IRECTOR
I
NDEPENDENCE
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18
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I
TEM
13.
E
XHIBITS
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19
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I
TEM
14.
P
RINCIPAL
A
CCOUNTING
F
EES
A
ND
S
ERVICES
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20
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PART
I
Forward-Looking
Statements
This
Form
10-KSB contains “forward-looking statements” relating to American Racing
Capital, Inc. (formerly Altrimega Health Corporation) (the “
Company
”
or
“American Racing Capital”) which represent the Company’s current expectations or
beliefs including, but not limited to, statements concerning the Company’s
operations, performance, financial condition and growth. For this purpose,
any
statements contained in this Form 10-KSB that are not statements of historical
fact are forward-looking statements. Without limiting the generality of the
foregoing, words such as “may”, “anticipation”, “intend”, “could”, “estimate”,
or “continue” or the negative or other comparable terminology are intended to
identify forward-looking statements. These statements by their nature involve
substantial risks and uncertainties, such as losses, dependence on management,
variability of quarterly results, and the ability of ARC to continue its growth
strategy and competition, certain of which are beyond the Company’s control.
Should one or more of these risks or uncertainties materialize or should the
underlying assumptions prove incorrect, actual outcomes and results could differ
materially from those indicated in the forward-looking statements.
Any
forward-looking statement speaks only as of the date on which such statement
is
made, and the Company undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of
each
such factor on the business or the extent to which any factor, or combination
of
factors, may cause actual results to differ materially from those contained
in
any forward-looking statements.
ITEM
1. DESCRIPTION OF BUSINESS
History
And Organization
General
The
Company
was
incorporated
under the laws of the State of Nevada on September 8, 1998 as Mega Health
Corporation. On June 23, 1999, the name of the corporation was changed to
Altrimega Health Corporation (“
Altrimega
”).
On
July 25, 2002, the Company entered into a non-binding letter of intent with
Creative Holdings, Inc., a South Carolina corporation (“
Creative
Holdings
”).
Pursuant to that Letter of Intent and upon the consummation of a definitive
agreement, Altrimega was to acquire Creative Holdings. A Merger Agreement was
executed on August 15, 2002, between the Company, Altrimega Acquisition Company,
a Nevada corporation, Creative Holdings, and the shareholders of Creative
Holdings. On September 2, 2002, the Company, Creative Holdings and the
shareholders of Creative Holdings amended the Merger Agreement and restructured
the merger into a stock exchange transaction, whereby Creative Holdings would
become a wholly-owned subsidiary of the Company. The share exchange was
completed on October 17, 2002, at which time, Creative Holdings became a wholly
owned subsidiary of the Company.
Pursuant
to the share exchange transaction (effective retroactively as of August 15,
2002), with Creative Holdings and it’s shareholders, the shareholders of
Creative Holdings exchanged with and delivered to the Company 100% of the issued
and outstanding capital stock of Creative Holdings in exchange for 20,000,000
shares of common stock of the Company and 1,000,000 shares of Series A
Convertible Preferred Stock of the Company. Each share of Series A Convertible
Preferred Stock was convertible into 300 shares of common stock of the Company.
Between December 21, 2004 and January 5, 2005, the Company entered into
releases with each holder of the Company’s 1,000,000 shares of Series A
Preferred Stock, which resulted in the cancellation of all of the Company’s
outstanding shares of Series A Preferred Stock.
Also
on
October 17, 2005, the Company entered into a Share Exchange Agreement, by and
among the Company, American Racing Capital, Inc., a Nevada company
(“
ARCI
”)
and
the shareholders of ARCI, pursuant to which, the ARCI shareholders exchanged
with, and delivered to the Company all of the issued and outstanding common
stock of ARCI in exchange for 150,000,000 shares of the Company’s common stock
and 1,000,000 shares of Series A Preferred Stock, which can be converted at
any
time into three hundred (300) fully paid, nonassessable shares of the Company’s
common stock. As a result of the Share Exchange Agreement, on October 19, 2005,
ARCI became a wholly-owned subsidiary of the Company and the shareholders of
Fast One, Inc., DJ Motorsports, Inc. and ARCI became the controlling
shareholders of the Company.
On
October 18, 2005, the Company entered into a Share Exchange Agreement, by and
among the Company, ARC Development Corporation, a Nevada corporation
(“
ARCD
”)
and
the shareholders of ARCD. Pursuant to the Share Exchange Agreement, the ARCD
shareholders exchanged with, and delivered to, ARC the issued and outstanding
common stock of ARCD in exchange for 135,000,000 shares of the Company’s Common
Stock, and 1,000,000 shares of Series A Preferred Stock, which can be converted
at any time into three hundred (300) fully paid, nonassessable shares of the
Company’s Common Stock. As a result of the Share Exchange Agreement, on October
19, 2005, ARCD became a wholly-owned subsidiary of the Company.
As
a
result of the share exchange transactions, in October 2005, the Company adopted
a new strategy which seeks to integrate race track design and development
operations with a professional racing team and a national driving school network
to leverage the popularity and growth of the motor sports industry.
On
March
20, 2006, the Board of Directors of the Company, pursuant to unanimous written
consent, approved a one for one hundred (1-for-100) reverse stock split of
the
Company’s issued and outstanding, which became effective on March 30, 2006.
As a result of this reverse stock split, on March 20, 2006, the Company’s issued
and outstanding common stock was reduced based on the 1-for-100
ratio.
On
October 27, 2006, the Company entered in a Settlement Agreement and General
Release with D. Davy Jones whereby it returned the shares of Fast One, Inc.
and
Davy Jones Motorsports, Inc. to Mr. Jones for 1,500,000 shares of its common
stock and 1,000,000 shares of its preferred stock. As additional consideration
for termination of his employment contract, the Company agreed to pay Mr. Jones
$240,000 over 24 months. The Company is in default of its obligations under
the
Settlement Agreement and General Release.
Business
Operations
American
Racing Capital’s intended core business is racetrack development and facilities
management. The Company has a three-pronged approach to growth in this market
segment.
1
)
Short-track acquisitions,
2
)
Short-track design and development venues coupled with events sanctioned by;
CHAMPCAR, INDYCAR, NASCAR, or other major participating organizations, and
3
)
the
Company intends to solicit corporations seeking to utilize motorsports as a
revenue-generating promotional opportunity, providing motorsports marketing,
and
product licensing.
By
agreement on February 2, 2007, the Company retained Frost Motorsports LLC.,
to
compile a comprehensive search on available speedway properties. Frost
Motorsports specializes in the location and valuation of motorsports facilities.
Hiring Frost Motorsports will play an intricate role in developing the Company’s
growth initiatives as they offer multi-faceted services custom designed to
the
client’s needs. Frost Motorsports and its strategic partners provide expert
analysis and innovative financial solutions within the motorsports
industry. They consult on; valuation, feasibility, transactional,
operational, and strategic planning projects for track owners, race sanctioning
bodies, professional team owner and other motorsports participants.
American
Racing Capital intends to attempt to position itself to acquire a network of
companies. American Racing Capital intends to focus on racetrack development
and
facilities management throughout the continental the United States. Through
it’s
subsidiaries, the Company will attempt to
a
)
secure
financial interests in established track facilities which may also include
race
management contracts,
b
)
engage
in the re-design, development, and management of race track facilities through
controlling interests or wholly owned acquisitions, and
c
)
acquire
associated companies that compliment our projected motorsports holdings.
The
Company is seeking to acquire several established short tracks with development
potential. The Company has a vision for a diverse project portfolio that
ranges from developing larger-scale racetrack multiplex facilities, to smaller
less elaborate race track facilities. The Company is evaluating racetracks
in
viable markets currently offered for sale. Assets, profitability and
profit potential, land development, facilities expansion, and ancillary
development are key guiding criteria. All of the Company’s plans are dependent
on the Company’s ability to raise sufficient financing. In the event the Company
does not obtain such financing, the Company will have to curtail or cease its
operations.
On
November 21, 2006, the Company entered into a Shareholders Agreement, by
and among Motorsports & Entertainment of Tennessee, Inc., a Nevada
corporation (“
MET
”)
and a
majority-owned subsidiary of ARC, and LJ&J Enterprises, Inc., a Pennsylvania
corporation. Simultaneously with the execution of the Shareholders Agreement,
MET entered into a Stock Purchase Agreement with LJ&J Enterprises of
Tennessee, Inc., a Tennessee corporation (“
LJ&J
”)
to
purchase eighty percent (80%) of common stock in LJ&J (the “
LJ&J
Stock
”).
LJ&J holds the management and concessions contract for auto racing and
special events at the “Music City Motorplex”, located on the Tennessee State
Fairgrounds in downtown Nashville, Tennessee. The Company completed the first
part of the acquisition whereby it acquired forty percent (40%) of the LJ&J
Stock, effective as of January 1, 2007. Music City Motorplex is a 5/8th’s
mile paved NASCAR sanctioned short-track, highly steeped in tradition. Located
on 115 acres of the Tennessee State Fairgrounds just two miles from the center
of downtown Nashville, this facility hosts NASCAR sanctioned events from March
through October.
Industry
and Marketplace
Motor
Sports Industry
Motor
sports are among the most popular and fastest-growing spectator sports in the
United States, with annual attendance at all U.S. motor sports events exceeding
20 million people. Many races broadcast live on network and cable
TV.
Given
its
high profile, auto racing is no longer just a sport. Management believes that
it
attracts big business and is one of the strongest marketing vehicles for
companies to utilize in investing marketing and advertising dollars.
The
motor
sports racing industry consists of several distinct categories of auto racing,
each with its own organizing/sanctioning body, with corresponding sanctioned
events. Sanctioning bodies are responsible for all aspects of race management
required to conduct a racing event, including: regulating racing, drivers,
safety and teams, providing officials to ensure fair competition, and
administering the race and series purses and other prize payments. Sanctioning
bodies typically derive revenues from merchandising, race sponsorships,
television distribution, and membership fees.
Of
the
sanctioning bodies in the United States, NASCAR, IRL, NHRA, and Grand Am are
among the more well known. The largest auto racing category in the United
States, in terms of media exposure and sponsorships, is stock car racing,
conducted by the National Association of Stock Car Auto Racing (NASCAR). Until
roughly ten years ago, NASCAR events and viewership were predominately confined
to the southeastern part of the US. Today, NASCAR races are held, and viewers
hail from, all over the country.
Motor
sport events are generally heavily promoted, with a number of supporting events
surrounding each main race event. Examples of supporting events include:
secondary races, qualifying time trials, practice sessions, driver autograph
sessions, automobiles and product expositions, catered parties, and other racing
related events designed to maximize the spectator’s overall entertainment
experience and enhance value to sponsors.
Motor
Sports Sales and Marketing
We
intend
to seek to finance new build-outs of multi-venue entertainment facilities and
acquire and upgrade existing racing facilities, including taking over certain
management contracts with current operating racetracks. We are also interested
in obtaining certain professional advanced driving schools which introduce
many
thousands of people to grass-roots motor sports programs.
Our
project plans will include involvement in many aspects of auto racing and motor
sports and will focus on NASCAR type short-oval paved racing
tracks.
Included
within the configuration of certain facilities are: Oval racing, Drag Racing,
Drifting, Autocross, Road Racing, Karting, Racing Schools, Motorcross &
Supercross, Atv and Pee-Wee Racing.
Competition
There
is
increased competition in the field of motor sports racing and entertainment.
The
field has in the recent past enjoyed vibrant growth of interest in auto racing.
Management believes that increased popular interest in this field has created
demand for additional services, such as those intended to be provided by the
Company. If these growth trends continue, the Company believes that there could
be adequate demand for the Company’s services.
In
respect to how the Company’s competitive position as compared to other motor
sports development companies in this geographic region, management believes
that
our position is considerably weaker than most other companies because of our
limited ability to raise funds. The lack of capital causes the Company to not
be
able to participate in many projects that are identified.
Employees
As
of
April 2, 2008, the Company has one employee. Mr. A. Robert Koveleski, is
the Company’s President, Chief Executive Officer, Interim Chief Financial
Officer and Principal Accounting Officer. In September of 2006, the Company
entered into formal employment agreement with Mr. Koveleski for a term of 3
years. He will receive a base salary of $120,000 annually , and will be entitled
to a discretionary bonus and stock option program to acquire up to 250,000
shares of Common Stock.
RISK
FACTORS
Risks
Related To Our Business
We
are subject to various risks that may materially harm our business, financial
condition and results of operations. You should carefully consider the risks
and
uncertainties described below and the other information in this filing before
deciding to purchase our common stock. If any of these risks or uncertainties
actually occurs, our business, financial condition or operating results could
be
materially harmed. In that case, the trading price of our common stock could
decline.
We
Have Historically Lost Money And Losses May Continue In The Future, And This
May
Adversely Impact Our Business
Since
our
inception, through December 31, 2007 we have not been profitable and have lost
money on both a cash and non-cash basis. For the year ended December 31, 2007,
we recorded a loss of operations of $6,598,156. Our accumulated deficit was
$11,960,153 as of December 31, 2007. Future losses are likely to occur, as
we
are dependent on spending money to evaluate and pursue motor sports development
projects. No assurances can be given that we will be successful in reaching
or
maintaining profitable operations. Accordingly, we may continue to experience
liquidity and cash flow problems.
We
Will Need To Raise Additional Capital Or Debt Funding To Sustain Operations,
And
Our Inability To Obtain Adequate Financing May Result In Us Curtailing or
Ceasing Our Business Operations
Unless
we
can become profitable, we will require additional capital to commence and
sustain operations and will need access to additional capital or additional
debt
financing to grow. In addition, we have a working capital deficit and we will
need to raise capital to repay the deficit and provide more working capital
to
permit growth in revenues. We cannot assure you that financing whether from
external sources or related parties will be available if needed or on favorable
terms. Our inability to obtain adequate financing will result in the need to
reduce the pace of implementing our business objectives. Any of these events
could be materially harmful to our business, which would force us to curtail
or
cease our business operations, thus resulting in a lower stock price.
We
Have Been The Subject Of A Going Concern Opinion From December 31, 2007 From
Our
Independent Auditors, Which Means That We May Not Be Able To Continue Operations
Unless We Can Become Profitable or Obtain Additional
Funding
Our
independent auditors have added an explanatory paragraph to their audit opinions
issued in connection with our financial statements for the year ended December
31, 2007, which states that the financial statements raise substantial doubt
as
to our ability to continue as a going concern. Our ability to make operations
profitable or obtain additional funding will determine our ability to continue
as a going concern. Our financial statements do not include any adjustments
that
might result from the outcome of this uncertainty. We will have to raise
additional funds to meet our current obligations and to cover operating expenses
through the year ending December 31, 2007. If we are not successful in raising
additional capital we may not be able to continue as a going concern.
We
Are Subject To A Working Capital Deficit, Which Means That Our Current Assets
On
December 31, 2006 Were Not Sufficient To Satisfy Our Current
Liabilities
We
had a
working capital deficit of $1,788,938 at December 31, 2007, which means that
our
current liabilities as of that date exceeded our current assets. Current assets
are assets that are expected to be converted to cash within one year and,
therefore, may be used to pay current liabilities as they become due. Our
working capital deficit means that our current assets on December 31, 2007
were
not sufficient to satisfy all of our current liabilities on that date. We will
have to raise capital or debt to fund the deficit or cease
operations.
Our
Limited Operating History Makes It Difficult Or Impossible To Evaluate Our
Performance And Make Predictions About Our Future
Due
to
our limited operating history, it is difficult to make an evaluation of our
future performance can be made. You should be aware of the difficulties normally
encountered by motorsports companies similarly situated to us and the high
rate
of failure of such enterprises. If we do not successfully address the risks
facing us, then our future business prospects will be significantly limited
and,
as a result, the trading price of our common stock would likely decline
significantly. You should consider the likelihood of our future success in
view
of our limited operating history, as well as the complications frequently
encountered by other companies in the early stages of development. If we
encounter problems, additional costs, difficulties, complications or delays
in
connection with our motorsports activities, it will have a material adverse
effect on its business, results of operations and financial condition, and
as a
result, we could be forced to cease our business operations.
Our
Common Stock May Be Affected By Limited Trading Volume And May Fluctuate
Significantly, And This May Adversely Affect Your
Investment
There
has
been a limited public market for our common stock and there can be no assurance
that a more active trading market for our common stock will develop. An absence
of an active trading market could adversely affect our shareholders’ ability to
sell our common stock in short time periods, or possibly at all. Our common
stock has experienced in the past, and is likely to experience in the future,
significant price and volume fluctuations, which could adversely affect the
market price of our common stock without regard to our operating performance.
In
addition, we believe that factors such as changes in the overall economy or
the
condition of the financial markets could cause the price of our common stock
to
fluctuate substantially. These fluctuations may also cause short sellers to
enter the market from time to time in the belief that we will have poor results
in the future. We cannot predict the actions of market participants and,
therefore, can offer no assurances that the market for our stock will be stable
or appreciate over time.
Our
Common Stock Is Deemed To Be “Penny Stock,” Which May Make It More Difficult For
Investors To Sell Their Shares Due To Suitability
Requirements
Our
common stock is deemed to be “penny stock” as that term is defined in
Rule 3a51-1 promulgated under the Securities Exchange Act of 1934, as
amended. These requirements may reduce the potential market for our common
stock
by reducing the number of potential investors. This may make it more difficult
for investors in our common stock to sell shares to third parties or to
otherwise dispose of them. This could cause our stock price to decline. Penny
stocks are stock:
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·
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With
a price of less than $5.00 per
share;
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·
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That
are not traded on a “recognized” national exchange;
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·
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Whose
prices are not quoted on the NASDAQ automated quotation system (NASDAQ
listed stock must still have a price of not less than $5.00 per share);
or
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·
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In
issuers with net tangible assets less than $2.0 million (if the issuer
has
been in continuous operation for at least three years) or $10.0
million (if in continuous operation for less than three years), or
with
average revenues of less than $6.0 million for the last three
years.
|
Broker/dealers
dealing in penny stocks are required to provide potential investors with a
document disclosing the risks of penny stocks. Moreover, broker/dealers are
required to determine whether an investment in a penny stock is a suitable
investment for a prospective investor.
Additional
Financing Will Likely Dilute The Value Of Our Stockholders’
Shares
We
will
need to raise additional capital to fund our anticipated future expansion and
implement our business plan. Any additional financing will likely also involve
dilution to our then-existing stockholders, which could result in a decrease
in
the price of our common stock.
We
Depend On Key Personnel And Our Failure To Attract Or Retain Key Personnel
Could
Harm Our Business
Our
success largely depends on the efforts and abilities of key executives and
consultants, including A. Robert Koveleski, our President and Chief Executive
Officer and Principle Accounting Officer. Steve Pinson resigned as Secretary
and
Board Member effective March 17, 2008. At present, Mr. Pinson will remain as
consultant to the Company. The loss of the services of Messrs. Pinson and
Koveleski could materially harm our business because of the cost and time
necessary to replace and train a replacement. Such a loss would also divert
management attention away from operational issues.
New
Business Ventures Or Acquisitions That We May Undertake Would Involve A Number
Of Inherent Risks, Any Of Which Could Cause Us Not To Realize The Benefits
Anticipated To Result.
We
intend
to seek to expand our operations through acquisitions of businesses and assets.
These transactions involve various inherent risks, such as:
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·
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uncertainties
in assessing the value, strengths, weaknesses, contingent and other
liabilities and potential profitability of acquisition or other
transaction candidates;
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·
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the
potential loss of key personnel of an acquired
business;
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·
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the
ability to achieve identified operating and financial synergies
anticipated to result from an acquisition or other
transaction;
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·
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problems
that could arise from the integration of the acquired or new
business;
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·
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unanticipated
changes in business, industry or general economic conditions that
affect
the assumptions underlying the acquisition or other transaction rationale;
and
|
|
|
·
|
unexpected
development costs that adversely affect our
profitability.
|
Any
one
or more of these factors could cause us not to realize the benefits anticipated
to result from the acquisition of businesses or assets or the commencement
of a
new business venture.
We
Are Subject To New Corporate Governance And Internal Controls Reporting
Requirements, And Our Costs Related To Compliance With, Or Our Failure To Comply
With Existing And Future Requirements Could Adversely Affect Our
Business.
We
face
new corporate governance requirements under the Sarbanes-Oxley Act of 2002,
as
well as new rules and regulations subsequently adopted by the SEC. These laws,
rules and regulations continue to evolve and may become increasingly stringent
in the future. In particular, we will be required to include management and
auditor reports on internal controls as part of our annual report for the year
ended December 31, 2006 pursuant to Section 404 of the Sarbanes-Oxley Act.
We
cannot assure you that we will be able to fully comply with these laws, rules
and regulations that address corporate governance, internal control reporting
and similar matters. Failure to comply with these laws, rules and regulations
could materially adversely affect our reputation, financial condition and the
value of our securities.
Shareholders
Must Rely On Management For The Operation Of The Company.
All
decisions with respect to the operation of ANRC and development, production
and
marketing of our services, will be made exclusively by management. Our success
will, to a large extent, depend on the quality of the management of the Company.
In particular, we will depend on the services of our board members and officers.
Shareholders will have no right or power to take part in the management of
the
Company, for the most part, except to the extent of voting for the members
of
the Board of Directors each year. Accordingly, no person should purchase any
of
the stock offered hereby unless such prospective purchaser is willing to entrust
all aspects of the management of the Company to management and has evaluated
management’s capabilities to perform such functions.
We
May Issue Additional Preferred Stock In The Future, And The Terms Of The
Preferred Stock May Reduce The Value Of Your Common Stock.
We
are
authorized to issue up to 10,000,000 shares of preferred stock in one or more
series. Our Board of Directors will be able to determine the terms of preferred
stock without further action by our stockholders. We have designated 2,000,000
shares of preferred stock as Series A Convertible Preferred Stock which is
convertible into 300 shares of common stock, 1,000,000 of which were issued
to
management and are outstanding as of March 31, 2008. To the extent we issue
preferred stock, it could affect your rights or reduce the value of your common
stock. In particular, specific rights granted to future holders of preferred
stock could be used to restrict our ability to merge with or sell our assets
to
a third party. These terms may include voting rights, and may include
preferences as to dividends and liquidation, conversion and redemption rights,
and sinking fund provisions.
We
Have Not, And Currently Do Not Anticipate, Paying Dividends On Our Common Stock.
We
have
never paid any dividend on our common stock and do not plan to pay dividends
on
our common stock for the foreseeable future. We currently intend to retain
future earnings, if any, to finance operations, capital expenditures and to
expand our business.
There
Is A Limited Market For Our Common Stock Which Makes It Difficult For Investors
To Engage In Transactions In Our Securities.
Our
common stock is quoted on the Over the Counter Bulletin Board under the symbol
“AMRA.”
There
is
a limited trading market for our common stock. If public trading of our common
stock does not increase, a liquid market will not develop for our common stock.
The potential effects of this include difficulties for the holders of our common
shares to sell our common stock at prices they find attractive. If liquidity
in
the market for our common stock does not increase, investors in our company
may
never realize a profit on their investment.
Our
Stock Is Thinly Traded, Which Can Lead To Price Volatility And Difficulty
Liquidating Your Investment.
The
trading volume of our stock has been low, which can cause the trading price
of
our stock to change substantially in response to relatively small orders. In
addition, during the last two fiscal years and interim quarters, our common
stock has traded post-split as low as $0.08 and as high as $24.50. Both volume
and price could also be subject to wide fluctuations in response to various
factors, many of which are beyond our control, including actual or anticipated
variations in quarterly and annual operating results and general market
perception. An absence of an active trading market could adversely affect our
shareholders’ ability to sell our common stock in short time periods, or
possibly at all. In addition, we believe that factors such as changes in the
overall economy or the condition of the financial markets could cause the price
of our common stock to fluctuate substantially. These fluctuations may also
cause short sellers to enter the market from time to time in the belief that
we
will have poor results in the future. We cannot predict the actions of market
participants and, therefore, can offer no assurances that the market for our
stock will be stable or appreciate over time.
A
Sale Of A Substantial Number Of Shares Of Our Common Stock May Cause The Price
Of Our Common Stock To Decline.
If
our
shareholders sell substantial amounts of our common stock in the public market,
including shares issued upon the exercise of outstanding options or warrants,
the market price of our common stock could fall. These sales also may make
it
more difficult for us to sell equity or equity-related securities in the future
at a time and price that we deem reasonable or appropriate.
ITEM
2. DESCRIPTION OF PROPERTIES
The
Company’s corporate offices are located in the home of the Company’s secretary
at Stroudsburg, Pennsylvania. The Company is currently seeking to relocate
into
a new executive office.
ITEM
3. LEGAL PROCEEDINGS
On
February 4, 2008, Besser Kapital Fund, LTD. ("Besser") filed a Notice of Motion
for Summary Judgment in lieu of Complaint with the Supreme Court of the State
of
New York, County of New York against the Company, Motorsports and
Entertainment of Tennessee, Inc. and ARC Development Corp. (collectively
"Defendants"). The Notice of Motion alleged that ARC defaulted on a Senior
Secured Convertible Note issued to it by Besser. The Notice of Motion
sought $180,000.00 plus interest, costs and attorney's fees.
Defendants
entered into a Stipulation of Settlement with Besser that provided that
Defendants shall pay Besser a total of $220,373.69 on or before May 15,
2008. If payment is made on or before May 15, 2008, the parties will
exchange mutual releases, and Besser shall file a Stipulation of Discontinuance
with the Court. If Defendants do not make full payment on or before May
15, 2008, Besser is entitled to an Entry of Judgment upon Default without
further notice to the Defendants.
On
March
4, 2008, Davy Jones and the Company verbally agreed to a settlement that will
resolve all claims brought by Jones against the Company in the present
action. Pursuant to the settlement agreement, the Company will issue
shares to Jones in exchange for dismissal of all claims. The parties are
now in the process of exchanging and reviewing the written settlement documents
that will memorialize the settlement agreement. Counsel expects that the
written settlement agreement will be finalized and executed before the end
of
April, 2008.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
HOLDERS
None.
PART
II
I
TEM
5.
M
ARKET
F
OR
C
OMMON
E
QUITY
A
ND
R
ELATED
S
TOCKHOLDER
M
ATTERS
Our
common stock has been quoted on the NASD’s OTC
Bulletin Board since November 1, 2000. The table below sets forth, for the
respective periods indicated, the prices for our common stock in the
over-the-counter market as reported by the NASD’s OTC Bulletin
Board.
As
of
December 31, 2007, the Company has 26,391,398 shares of common stock and
1,000,000 shares of preferred stock outstanding. The Company’s authorized
capital stock consists of 500,000,000 shares of common stock and 10,000,000
shares of preferred stock.
The
following table reflects high and low quarterly bid prices for the fiscal year
ended December 31, 2007, and the subsequent period up to the filing of this
Annual Report. This information has been provided to the Company by Pink Sheets,
LLC. These quotations reflect inter-dealer prices, without retail mark-ups
or
mark-downs or commissions. These quotations may not necessarily reflect actual
transactions.
|
YEAR
2007
|
|
High
Bid
|
|
Low
Bid
|
|
|
1
st
Quarter Ended March 31
|
|
$
|
1.90
|
|
$
|
0.13
|
|
|
2
nd
Quarter Ended June 30
|
|
$
|
1.06
|
|
$
|
0.08
|
|
|
3
rd
Quarter Ended September 30
|
|
$
|
0.71
|
|
$
|
0.05
|
|
|
4
th
Quarter Ended December 31
|
|
$
|
0.40
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
YEAR
2006
|
|
|
High
Bid
|
|
|
Low
Bid
|
|
|
1
st
Quarter Ended March 31
|
|
$
|
3.10
|
|
$
|
2.50
|
|
|
2
nd
Quarter Ended June 30
|
|
$
|
3.50
|
|
$
|
2.00
|
|
|
3
rd
Quarter Ended September 30
|
|
$
|
3.50
|
|
$
|
2.50
|
|
|
4
th
Quarter Ended December 31
|
|
$
|
24.50
|
|
$
|
2.10
|
|
At
December 31, 2007, we had approximately 108 shareholders of record.
Dividends
The
Company has not declared or paid cash dividends since its inception and do
not
anticipate paying such dividends in the foreseeable future. The payment of
dividends may be made at the discretion of the Board of Directors and will
depend upon, among other factors, on the Company’s operations, capital
requirements, and overall financial condition.
Recent
Sales of Unregistered Securities
During
the year ended December 31, 2007, the Company issued the following unregistered
securities:
On
August
20, 2007, the Company issued Thirteen Million Five Hundred Thousand (13,500,000)
shares of common stock One Million (1,000,000) shares of preferred stock for
One
Hundred Ninety-Six (196) shares of Millennium Motorsports of Pennsylvania.
|
|
|
Number
Of
Securities
To
Be Issued
Upon
Exercise
Of
Outstanding Options, Warrants And Rights
|
|
Weighted-Average
Exercise
Price
Of
Outstanding Options,
Warrants
And Rights
|
|
Number
Of
Securities
Remaining
Available
For
Future Issuance
Under
Equity Compensation Plans
(Excluding
Securities Reflected
In
Column (a))
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
Equity
compensation plans approved by security holders
|
|
|
0
|
|
|
—
|
|
|
0
|
|
|
Equity
compensation plans not approved by security holders
|
|
|
0
|
|
|
—
|
|
|
0
|
|
|
TOTAL
|
|
|
0
|
|
|
—
|
|
|
0
|
|
ITEM
6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
General
When
used in this Form 10-KSB, the words “anticipated”, “estimate”, “expect”, and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks, uncertainties and assumptions including
the possibility that the Company will fail to generate projected revenues.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from
those anticipated, estimated or projected.
The
following discussion of the financial condition, changes in financial condition
and results of operation of the Company for the fiscal years ended December
31,
2007 and December 31, 2006 should be read in conjunction with the financial
statements of the Company and related notes included therein.
Going
Concern
As
reflected in the Company’s financial statements for the twelve months ended
December 31, 2007, the Company’s accumulated deficit of $11,960,153 and its
working capital deficiency of $1,788,938 raise substantial doubt about its
ability to continue as a going concern. As of April 8, 2008, the Company’s cash
on hand was $7,390. The ability of the Company to continue as a going concern
is
dependent on the Company’s ability to raise additional debt or capital. The
financial statements for December 31, 2007 do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
Critical
Accounting Policies And Estimates
Management’s
discussion and analysis of the Company’s financial condition and results of
operations are based upon the Company’s consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of these financial statements
requires that we make estimates and judgments that affect the reported amounts
of assets, liabilities, revenues and expenses. At each balance sheet date,
management evaluates its estimates. The Company based its estimates on
historical experience and on various other assumptions that are believed to
be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions. The estimates and critical
accounting policies that are most important in fully understanding and
evaluating our financial condition and results of operations include those
listed below.
Revenue
Recognition
The
Company recognizes revenue when services have been provided and collection
is
reasonably assured.
Stock-based
compensation
The
Company has traditionally accounted for stock-based compensation under the
recognition and measurement principles of APB Opinion No. 25,
Accounting
for Stock Issued to Employees, and related Interpretations
.
Accordingly, no compensation cost is recognized in the financial statements,
when options granted under those plans have an exercise price equal to or
greater than the market value of the underlying common stock on the date of
grant. The Company issued no compensatory options to its employees during the
years ended December 31, 2007 and 2006.
In
December 2005, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 123R, although this statement had no effect on the
Company’s 2008 financial statements.
Results
Of Operations For The Year Ended December 31, 2007 Compared To The Year Ended
December 31, 2006
Revenues
We
had no
revenues from continuing operations for the year ended December 31, 2006 and
revenues of $485,335 for the fiscal year ending 2007 from the operations of
LJ&J. We began consolidating the operations of LJ&J as of July 1,
2007.
Operating
Expenses
.
Operating expenses for the year ended December 31, 2006 were $6,257,102.
Operating expenses for the year ended December 31, 2007 were $5,974,915. We
disposed of our operating subsidiaries in a settlement agreement with our former
president Davy Jones on October 27, 2006. Operating expenses in 2006 consisted
of $6,008,581 in consulting fees, $99,415 in travel expenses and payroll
expenses of $24,318. $5,711,510 of the consulting fees were paid in shares
of
our common stock because we have limited cash resources for engaging the people
we need to build our business. Operating expenses in 2007 consisted of
$4,463,796 in consulting fees, $324,628 in legal and professional fees and
salaries and wages of $205,777. $3,952,460 of the consulting fees were paid
in
shares of our common stock because we have limited cash resources for engaging
the people we need to build our business.
Net
Loss
.
The
Company had a loss from continuing operations of $5,186,557 for the year ended
December 31, 2006 and a gain from discontinued operations of $1,257,298, as
compared to a loss from operations of $6,598,156 for the year ended December
31,
2007.
Liquidity
And Capital Resources
The
Company’s financial statements have been prepared on a going concern basis that
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. The Company incurred a net loss
from operations of $5,186,557 and $6,598,156 for the years ended December 31,
2006 and December 31, 2007, respectively. We have an accumulated deficit of
$11,960,153 at December 31, 2007. As of December 31, 2007, the Company’s had
assets of $1,105,434 and liabilities of $1,806,328, a difference of $700,894.
Management recognizes that the Company must generate or obtain additional
capital to enable it to continue operations. The realization of assets and
satisfaction of liabilities in the normal course of business is dependent upon
the Company’s obtaining additional equity capital and ultimately obtaining
profitable operations. However, no assurances can be given that the Company
will
be successful in these activities. Should any of these events not occur, the
accompanying consolidated financial statements will be materially
affected.
The
Company incurred losses since inception until fiscal year ended December 31,
2007.
During
2007, $1,500,000 in working capital was raised through placements of convertible
debt. During 2006, $1,000,000 in working capital was raised through placements
of convertible debt.
On
July 25, 2006, the Company entered into a Securities Purchase Agreement
with New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
AJW
Offshore, Ltd. and AJW Partners, LLC (collectively, the “
Investors
”).
Under
the terms of the Securities Purchase Agreement, the Investors purchased an
aggregate of (i) $2,000,000 in callable convertible secured notes (the
“
Notes
”)
and
(ii) warrants to purchase 10,000,0000 shares of our common stock (the
“
Warrants
”).
The
Notes carry an interest rate of 6% per annum and a maturity date of July 25,
2009. The notes are convertible into the Company’s common shares at fifty
percent (50%) (the “
Applicable
Percentage
”)
of the
average of the lowest three (3) trading prices for our shares of common stock
during the twenty (20) trading day period prior to conversion. However, the
Applicable Percentage shall be increased to (i) 55% in the event that a
Registration Statement is filed within thirty days of the closing and (ii)
60%
in the event that the Registration Statement becomes effective within one
hundred and twenty days from the Closing. In addition, the Company has granted
the investors a security interest in substantially all of its assets and
intellectual property as well as registration rights. In connection with the
Securities Purchase Agreement, the Company issued to the Investors seven year
warrants to purchase 10,000,000 shares of our common stock at an exercise price
of $.30. As of December 31, 2006, the Company had convertible debt totaling
$1,000,000. As of December 31, 2006, the Company recorded a discount of $847,222
for the fair value of the beneficial conversion feature attached to the
convertible debt.
Cash
used
by operating activities was $471,520 for the year ended December 31, 2006,
compared to cash used of $1,174,327 for 2007. The increase in cash used was
due
primarily to the development of our motor sports consulting
business.
We
used
$450,000 of cash to invest in our unconsolidated subsidiary in 2006 and $250,000
in 2007.
Cash
provided by financing activities was $1,408,354 during fiscal year 2007,
compared to cash provided by financing activities of $896,633 during 2006.
This
difference was mainly due to an increase in convertible debt proceeds in
2007.
Plan
Of Operation for 2008
For
the
initial stages, we estimate a need for $1,500,000 to $2,500,000 to fund the
first year of event and administrative operations and provide working capital.
The Company’s plan of operations which seeks to integrate race track design and
development operations with a professional racing team and a national driving
school network to leverage the popularity and growth of the motor sports
industry.
Recent
Accounting Pronouncements
December
2007, the FASB issued SFAS 160, “Noncontrolling interests in Consolidated
Financial Statements - an amendment of ARB No. 51”. This Statement amends ARB 51
to establish accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that
a
noncontrolling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. This Statement is effective for fiscal years beginning
on
or after December 15, 2008. Early adoption is not permitted. Management is
currently evaluating the effects of this statement, but it is not expected
to
have any impact on the Company’s financial statements.
In
February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial
Assets and Financial Liabilities. SFAS 159 creates a fair value option allowing
an entity to irrevocably elect fair value as the initial and subsequent
measurement attribute for certain financial assets and financial liabilities,
with changes in fair value recognized in earnings as they occur. SFAS 159 also
requires an entity to report those financial assets and financial liabilities
measured at fair value in a manner that separates those reported fair values
from the carrying amounts of assets and liabilities measured using another
measurement attribute on the face of the statement of financial position.
Lastly, SFAS 159 requires an entity to provide information that would allow
users to understand the effect on earnings of changes in the fair value on
those
instruments selected for the fair value election. SFAS 159 is effective for
fiscal years beginning after November 15, 2007 with early adoption permitted.
The Company is continuing to evaluate SFAS 159 and to assess the impact on
its
results of operations and financial condition if an election
is made
to adopt the standard.
In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 157, “Fair Value Measurements” which defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expands disclosures about fair value
measurements. Where applicable, SFAS No. 157 simplifies and codifies
related guidance within GAAP and does not require any new fair value
measurements. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. Earlier adoption is encouraged. The Company does
not expect the adoption of SFAS No. 157 to have a significant effect on its
financial position or results of operation.
In
June
2007, the Financial Accounting Standards Board issued FAS No. 141R,
Business
Combinations
- This
Statement implements certain revisions to SFAS 141, including changes to the
measurement of purchase consideration, measurement of goodwill, capitalization
of in-process research and development, and definition of the acquisition date.
This statement is effective for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2008. The implementation of
this pronouncement had no effect on the Company’s consolidated financial
statements.
ITEM
7. FINANCIAL STATEMENTS
The
consolidated financial statements of the Company required by Regulation S-B
are
attached to this report. Reference is made to Item 13 below for an index to
the
financial statements.
|
ITEM
8.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
To
the
Company’s knowledge, the Company has had no disagreements with its certified
public accountants with respect to accounting practices or procedures of
financial disclosure.
ITEM
9A(T): CONTROLS AND PROCEDURES
(a)
Evaluation of Disclosure Controls and Procedures
Disclosure
controls and procedures are designed to ensure that information required to
be
disclosed in the reports that are filed or submitted under the Exchange Act
is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed
to
ensure that information required to be disclosed in the reports that are filed
under the Exchange Act is accumulated and communicated to management, including
the principal executive officer, as appropriate to allow timely decisions
regarding required disclosure. Under the supervision of and with the
participation of management, including the principal executive officer and
principal financial officer, the Company has evaluated the effectiveness of
the
design and operation of its disclosure controls and procedures as of December
31, 2007, and, Based on this evaluation, management concluded that the Company’s
internal control over financial reporting was not effective as of December
31,
2007, due to a lack of segregation of duties.
(b)
Changes in Internal Controls
There
have been no significant changes in internal controls or in other factors that
could significantly affect these controls subsequent to the date of the
evaluation described above, including any corrective actions with regard to
significant deficiencies and material weaknesses.
(c)
Management’s Annual Report on Internal Control Over Financial
Reporting
The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting and for the assessment of
the
effectiveness of internal control over financial reporting. As defined by the
SEC, internal control over financial reporting is defined in Rule 13a-15(f)
or
15d-15(f) promulgated under the Exchange Act as a process designed by, or under
the supervision of, the Company’s principal executive and principal financial
officers and effected by the Company’s board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. The
Company’s internal control over financial reporting is supported by written
policies and procedures that: (1) pertain to the maintenance of records that,
in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the Company’s assets; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and
that
receipts and expenditures of the Company are being made only in accordance
with
authorizations of the Company’s management and directors; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a
material effect on the financial statements.
The
Company’s internal control system was designed to provide reasonable assurance
to the Company’s management and board of directors regarding the preparation and
fair presentation of published financial statements. All internal control
systems, no matter how well designed, have inherent limitations which may not
prevent or detect misstatements. Therefore, even those systems determined to
be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management
conducted an evaluation of the effectiveness of the Company’s internal control
over financial reporting as of December 31, 2007. In making this assessment,
management used the framework set forth in the report entitled “Internal
Control-Integrated Framework” issued by the Committee of Sponsoring
Organizations of the Treadway Commission, or COSO. The COSO framework summarizes
each of the components of a company’s internal control system, including (i) the
control environment, (ii) risk assessment, (iii) control activities, (iv)
information and communication, and (v) monitoring. Based on this evaluation,
management concluded that the Company’s internal control over financial
reporting was not effective as of December 31, 2007, due to a lack of
segregation of duties.
This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permits us to provide only management’s report in this annual
report."
ITEM
8B. OTHER INFORMATION
None.
PART
III
|
ITEM
9.
|
DIRECTORS
AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS; COMPLIANCE
WITH
SECTION 16(A) OF THE EXCHANGE
ACT
|
General
The
following table sets forth certain information regarding the current directors
and executive officers of the Company:
|
Name
|
|
Age
|
|
Position(S)
With
The Company
|
|
Director
Since
|
|
A.
Robert Koveleski
|
|
53
|
|
President
, CEO, Interim CFO, and Principal Accounting Officer
|
|
October
2005
|
The
following information is furnished for each of the executive officers and
directors:
A.
Robert Koveleski
serves
as our President/CEO and Interim Principal Accounting Officer and is the sole
member of the board of directors since October 2005. During the past thirty-five
years, Koveleski has worked exclusively in the auto racing industry contracting
and consulting with professional race teams, racing drivers, automotive
manufacturers and automotive after-market companies. Utilizing his racing
background, he became vice president of operations at the
AutoWorld
catalog
mail order house. He was also president of the Chevrolet
Camaro
Connection,
a
catalog
company which Mr. Koveleski created and managed. During this time, he dealt
with
hundreds of suppliers and printed more than two and a half million automotive
racing catalogs a year. In 1980 he purchased half interest in a racing school
at
Pocono International Raceway. While promoting road racing at the track, he
secured sponsors and manufacturers as financial participants.
Family
Relationships
There
is
no family relationship between or among any Officer and/or Director of the
company.
Family
Relationships
There
is
no family relationship between or among any Officer and Director.
Term
of Office
The
directors named above will serve until the next annual meeting of our
stockholders. In absence of an employment agreement, officers hold their
positions at the pleasure of the Board of Directors.
Committees
of the Board of Directors
During
the year ended December 31, 2006, the Company did not establish any
committees.
The
Company does not currently have an audit committee, and the Board of Directors
serves this function. Both Davy Jones and A. Robert Koveleski qualify as audit
committee financial experts, as defined by Regulation S-B Item 401. Neither
Mr.
Jones nor Mr. Koveleski is an independent director, as that term is defined
under the Exchange Act.
Code
Of Ethics
On
May
10, 2004, the Board of Directors of the Company adopted a written Code of Ethics
designed to deter wrongdoing and promote honest and ethical conduct, full,
fair
and accurate disclosure, compliance with laws, prompt internal reporting and
accountability to adherence to the Code of Ethics. This Code of Ethics has
been
filed with the Securities and Exchange Commission as an Exhibit to this Form
10-KSB.
ITEM
10. EXECUTIVE COMPENSATION
The
following table sets forth the compensation awarded by the Company for the
fiscal years ended December 31, 2006 and 2007 to the following executives (the
“
Named
Executive Officers
”):
SUMMARY
COMPENSATION TABLE
(1)
|
|
|
|
|
ANNUAL
COMPENSATION
|
|
LONG-TERM
COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AWARDS
|
|
PAYOUTS
|
|
|
|
|
NAME
AND PRINCIPAL POSITION
|
|
YEAR
|
|
SALARY
($)
|
|
BONUS
($)
|
|
OTHER
ANNUAL COMPENSATION
($)
|
|
RESTRICTED
STOCK AWARD(S)
($)
|
|
SECURITIES
UNDERLYING OPTIONS/SARS
(#)
|
|
LTIP
PAYOUTS
($)
|
|
ALL
OTHER COMPENSATION
($)
|
|
|
D.
Davy Jones
(1)
|
|
|
2007
|
|
$
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
President
and Chief Executive Officer
|
|
|
2006
|
|
$
|
32,500
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.
Robert Koveleskis
(2)
|
|
|
2007
|
|
$
|
32,500
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Vice
President and Interim Principal Accounting Officer
|
|
|
2006
|
|
$
|
32,500
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
Mr.
D.
Davy Jones served as the Company’s President and Chief Executive Officer from
October 2005 until October 2006 . In July 2006, Mr. Jones and the Company
entered into an oral agreement whereby Mr. Jones would receive an annual salary
of $120,000, which compensation would commence upon the Company’s obtaining
funding. On July 25, 2006, upon the Company obtaining funding, Mr. Jones
received $12,500 in compensation In August 2006, the Company and Mr. Jones
entered into a definitive employment agreement, whereby an additional $20,000
was paid in 2006.
(2)
Mr.
A. Robert Koveleski has served as the Company’s Vice-President and Interim
Principal Accounting Officer since October 2005. In July 2006, Mr. Koveleski
and
the Company entered into an oral agreement whereby Mr. Koveleski would receive
an annual salary of $120,000, which compensation would commence upon the
Company’s obtaining funding. On July 25, 2006, upon the Company obtaining
funding, Mr. Koveleski received $12,500 in compensation. In August 2006, the
Company and Mr. Koveleski entered into a definitive employment agreement,
whereby an additional $20,000 was paid in 2006.
Employment
Agreements
As
described above, the Company entered into a written employment agreement with
Mr. Koveleski in August 2006. Since October of 2005, Mr. Koveleski has served
as
the Company’s Vice-President and Interim Principal Accounting Officer. Then
beginning on October 13
th
2006, as
the Company’s President and Chief Executive Officer and Interim Principal
Accounting Officer. Mr. Koveleski’s compensation from the Company is in the
amount of $120,000 plus a stock option plan.
Compensation
Pursuant To Plans
For
the
fiscal year ended December 31, 2007, and the subsequent period up to the date
of
the filing of this Annual Report, the Company did not adopt any plans, and
therefore there is no compensation to the Company’s executives pursuant to a
stock option plan or any other plans.
Compensation
Of Directors
For
the
fiscal year ended December 31, 2007, and the subsequent period up to the date
of
the filing of this Annual Report, the Company did not compensate directors
for
their services.
Termination
Of Employment And Change Of Control Arrangement
The
Company does not have compensatory plans or arrangements, including payments
to
be received from the Company, with respect to any persons which would in any
way
result in payments to any person because of his/her resignation, retirement,
or
other termination of such person’s employment by the Company, or any change in
our control, or a change in the person’s responsibilities following a changing
in the Company’s control.
|
ITEM
11.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
Security
Ownership Of Certain Beneficial Owners
As
of
December 31, 2007, there were 27,353,285 shares of our common stock issued
and
1,000,000 shares of preferred stock issued and outstanding
.
The
table
below sets forth information with respect to the beneficial ownership of our
common stock as of April 5, 2008, a date close to the filing of this Annual
Report for (i) any person who we know is the beneficial owner of more than
5% of
our outstanding common stock; (ii) each of our directors or those nominated
to be directors, and executive officers; and (iii) all of our directors and
executive officers as a group.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
|
|
|
|
|
|
|
|
|
|
|
|
Title
of Class
|
|
Name
and Address
of
Beneficial Owner
|
|
Amount
and Nature of Beneficial Ownership
|
|
Percentage
of
Class
(2)
|
|
|
Common
|
|
|
Fairhills
Capital
1275
Fairhills Drive
Ossining,
NY 10562
|
|
|
8,000,000
|
|
|
28.79
|
%
|
|
Common
|
|
|
SW
International LLC
401
B Street, Suite 1200
San
Diego, CA 92101
|
|
|
12,000,000
|
|
|
43.18
|
%
|
Security
Ownership Of Management Of American Racing Capital, Inc. (Common and Preferred
Stock)
|
SECURITY
OWNERSHIP OF MANAGEMENT OF THE COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
Title
of Class
|
|
Name
and Position
of
Officer and/or Director
|
|
Amount
and Nature of Beneficial Ownership
(1)
|
|
Percentage
of Class
(2)
|
|
|
Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.
Robert Koveleski, Vice President, Interim
Principal Accounting Officer and Director
|
|
|
1,350,000
|
|
|
4.93
|
%
|
|
|
|
|
All
Officers and Directors as a Group (2 Persons)
|
|
|
1,350,000
|
|
|
4.93
|
%
|
|
(1)
|
Applicable
percentage of ownership is based on 27,353,285 shares of common stock
outstanding as of April 5, 2008 for each stockholder. Beneficial
ownership
is determined in accordance with the rules of the SEC and generally
includes voting of investment power with respect to securities. Shares
of
common stock subject to securities exercisable or convertible into
shares
of common stock that are currently exercisable or exercisable within
60
days of April 5, 2008 are deemed to be beneficially owned by the
person
holding such options for the purpose of computing the percentage
of
ownership of such persons, but are not treated as outstanding for
the
purpose of computing the percentage ownership of any other
person.
|
|
SECURITY
OWNERSHIP OF MANAGEMENT OF THE COMPANY (Preferred
Stock)
|
|
|
|
|
|
|
|
|
|
|
|
Title
of Class
|
|
Name
and Position
of
Officer and/or Director
|
|
Amount
and Nature of Beneficial Ownership
|
|
Percentage
of Class
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.
Robert Koveleski, Vice President, Interim Principal Accounting Officer
and
Director
|
|
|
1,000,000
|
|
|
100.00
|
%
|
|
|
|
|
All
Officers and Directors as a Group (1 Persons)
|
|
|
1,000,000
|
|
|
100.00
|
%
|
ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Transactions
With Management And Others
Except
as
indicated below, and for the periods indicated, there were no material
transactions, or series of similar transactions, since the beginning of the
Company’s last fiscal year, or any currently proposed transactions, or series of
similar transactions, to which we were or are a party, in which the amount
involved exceeds $60,000, and in which any director or executive officer, or
any
security holder who is known by us to own of record or beneficially more than
5%
of any class of our common stock, or any member of the immediate family of
any
of the foregoing persons, has an interest.
Indebtedness
Of Management
There
were no material transactions, or series of similar transactions, since the
beginning of our last fiscal year, or any currently proposed transactions,
or
series of similar transactions, to which we were or are a party, in which the
amount involved exceeds $60,000 and in which any director or executive officer,
or any security holder who is known to us to own of record or beneficially
more
than 5% of any class of our common stock, or any member of the immediate family
of any of the foregoing persons, has an interest.
Transactions
With Promoters
There
have no material transactions between us and our promoters or
founders.
Financial
Statements.
The
audited financial statements for 2007 and 2006 are attached to this
report.
Exhibits.
The
following exhibits are included as part of this report:
Exhibits:
|
Exhibit
Number
|
|
Title
of Document
|
|
Location
|
|
3.2
|
|
Certificate
of Designation of the Series A Convertible Preferred Stock of American
Racing Capital, Inc.
|
|
Incorporated
by reference as Exhibit 3.2 to Form 8-K filed on December 5,
2005
|
|
|
|
|
|
|
|
10.1
|
|
Share
Exchange Agreement, dated October 17, 2005, by and among the Company,
American Racing Capital, Inc., and the shareholders of American Racing
Capital, Inc.
|
|
Incorporated
by reference as Exhibit 99.1 to Form 8-K filed on October 17, 2005
|
|
|
|
|
|
|
|
10.2
|
|
Share
Exchange Agreement, dated October 18, 2005, by and among the Company,
ARC
Development Corporation, and the shareholders of ARC Development
Corporation
|
|
Incorporated
by reference as Exhibit 99.1 to Form 8-K filed on October 19,
2005
|
|
|
|
|
|
|
|
10.3
|
|
Securities
Purchase Agreement dated July 25, 2006, by and among the Company
and New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
AJW
Offshore, Ltd. and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.1 to Form 8-K filed on August 4,
2006
|
|
|
|
|
|
|
|
10.4
|
|
Form
of Callable Convertible Secured Note by and among New Millennium
Capital
Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd.
and AJW
Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.2 to Form 8-K filed on August 4,
2006
|
|
|
|
|
|
|
|
10.5
|
|
Form
of Stock Purchase Warrant issued to New Millennium Capital Partners
II,
LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners,
LLC
|
|
Incorporated
by reference as Exhibit 4.3 to Form 8-K filed on August 4,
2006
|
|
|
|
|
|
|
|
10.6
|
|
Registration
Rights Agreement dated July 25, 2006 by and among New Millennium
Capital
Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd.
and AJW
Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.4 to Form 8-K filed on August 4,
2006
|
|
|
|
|
|
|
|
10.7
|
|
Security
Agreement dated July 25, 2006 by and among the Company and New Millennium
Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
Ltd.
and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.5 to Form 8-K filed on August 4,
2006
|
|
|
|
|
|
|
|
10.8
|
|
Intellectual
Property Security Agreement dated July 25, 2006 by and among the
Company
and New Millennium Capital Partners II, LLC, AJW Qualified Partners,
LLC,
AJW Offshore, Ltd. and AJW Partners, LLC
|
|
Incorporated
by reference as Exhibit 4.6 to Form 8-K filed on August 4,
2006
|
|
|
|
|
|
|
|
31.1
|
|
Certification
by Chief Executive Officer pursuant to 15 U.S.C. Section 7241, as
adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Provided
herewith
|
|
Exhibit
Number
|
|
Title
of Document
|
|
Location
|
|
31.2
|
|
Certification
by Interim Principal Accounting Officer pursuant to 15 U.S.C. Section
7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of
2002
|
|
Provided
herewith
|
|
|
|
|
|
|
|
32.1
|
|
Certification
by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Provided
herewith
|
|
|
|
|
|
|
|
32.2
|
|
Certification
by Interim Principal Accounting Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of
2002
|
|
Provided
herewith
|
ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The
Company incurred the following principal accounting fees for the year ended
December 31, 2007 and December 31, 2006.
Audit
Fees.
The
aggregate fees billed for professional services rendered was $20,000 and $10,000
each for the audits of the Company’s annual financial statements for the fiscal
years ended December 31, 2007 and December 31, 2006, and the reviews of the
financial statements included in the Company’s annual and quarterly reports for
those fiscal years, respectively.
Audit-Related
Fees.
No fees
were billed in either of the last two fiscal years for assurance and related
services by the principal accountant.
Tax
Fees
.
No fees
were billed in either of the last two fiscal years for tax compliance, tax
advice of tax planning.
All
Other Fees.
No
other
fees were billed during the two fiscal years.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by
the
undersigned, thereunto duly authorized.
|
|
|
|
|
April
25, 2008
|
AMERICAN
RACING CAPITAL, INC.
|
|
|
|
|
|
By:
|
/s/
A.
Robert Koveleski
|
|
|
A.
Robert Koveleski
President,
Chief Executive Officer, and
Director
|
|
|
|
|
|
|
By:
|
/s/
A. Robert Koveleski
|
|
|
Secretary,
Principal Accounting
|
American Racing Capital (CE) (USOTC:AMRA)
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American Racing Capital (CE) (USOTC:AMRA)
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