World Racing (WRGI) 10QSB 2007 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

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

For the quarterly period ended September 30, 2007

or

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

For the transition period from _____________ to _______________

0-18045

Commission File Number

DIRT Motor Sports, Inc. d/b/a World Racing Group

(Exact name of registrant as specified in its charter)

Delaware	90-0284113
(State of incorporation)	(IRS Employer Identification No.)

7575 West Winds Blvd, Suite D, Concord, North Carolina 28027

(Address of principal executive offices)

 (704) 795-7223

(Issuer’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes       No

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

There were 16,498,990 shares of common stock outstanding as of November 10, 2007.

Transitional Small Business Disclosure Format (Check one):            Yes o          No x

TABLE OF CONTENTS

	PAGE
PART I - FINANCIAL INFORMATION
Item 1.  Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets – September 30, 2007 and December 31, 2006		3
Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2007 and 2006		4
Condensed Consolidated Statement of Stockholders' Equity for the Nine Months Ended September 30, 2007		5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006		6
Notes to Condensed Consolidated Financial Statements		7
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3.  Controls and Procedures		28
PART II - OTHER INFORMATION
Item 1.  Legal Proceedings		29
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds		29
Item 4.  Submission of Matters to a Vote of Security Holders		29
Item 6.  Exhibits		29
Signatures		31

Rule 13a-14(a)/15d-14(a) Certification of Tom Deery

Rule 13a-14(a)/15d-14(a) Certification of Brian Carter

Section 1350 Certification of Tom Deery and Brian Carter

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PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

DIRT MOTOR SPORTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2007 and December 31, 2006

(Unaudited)

	September 30, 2007			December 31, 2006
ASSETS
Current assets
Cash and cash equivalents	$	6,180,476		$	532,230
Accounts receivable — trade		930,728			223,065
Inventory		61,391			110,077
Prepaid expenses and other current assets		1,839,267			330,943
Total current assets		9,011,862			1,196,315
Land, buildings and equipment, net		10,398,392			10,447,633
Trademarks		100,000			100,000
Goodwill, net of impairment of $10,320,537		—			—
Prepaid Expenses –  long term		41,666			166,667
Other assets, net of amortization of $69,002 in 2007 and $55,331 in 2006		645,727			140,122
Total assets	$	20,197,647		$	12,050,737
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	1,170,250		$	474,781
Accrued liabilities		3,085,269			1,147,749
Deferred revenues		532,206			129,424
Notes payable		185,368			713,008
Total current liabilities		4,973,093			2,464,962
Notes payable, long-term, net of discount of $2,795,517 at September 30, 2007		13,357,506			4,001,711
Total liabilities		18,330,599			6,466,673
Stockholders' Equity
Series D Preferred stock, $0.01 par value; 20,000 shares authorized;   17,684 and  17,875 shares issued and outstanding at September 30, 2007 and December 31, 2006,  respectively		53,844,452			53,624,538
Series E Preferred stock, $0.01 par value; 50,000 shares authorized; 3,374 shares issued and outstanding at September 30, 2007		34			—
Common stock, $0.0001 par value; 100,000,000 shares authorized; 16,498,990 and 14,374,496 shares issued and outstanding at September 30, 2007 and  December 31, 2006, respectively		1,650			1,438
Additional paid-in capital		17,364,500			12,684,051
Accumulated deficit		(69,343,588	)		(60,725,963	)
Total stockholders' equity		1,867,048			5,584,064
Total liabilities and stockholders' equity	$	20,197,647		$	12,050,737

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

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DIRT MOTOR SPORTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

	Three Months Ended:						Nine Months Ended:
	2007			2006			2007			2006
Revenues
Race sanctioning and event fees	$	3,764,432		$	2,470,954		$	7,395,722		$	4,242,586
Admission fees and ticket sales		2,259,395			2,601,057			5,814,994			5,671,771
Sponsorship and advertising revenue		1,844,047			694,370			3,043,977			1,646,940
Merchandise sales		237,730			240,632			422,517			506,835
Other revenue		11,810			126,386			69,586			215,299
Total revenues		8,117,414			6,133,399			16,746,796			12,283,431
Operating expenses
Track and event operations		8,589,833			7,592,261			18,860,886			16,446,929
Sales and marketing		405,860			446,737			1,284,036			945,926
Merchandise operations and cost of sales		98,958			257,835			235,848			724,317
General and administrative		473,948			431,731			1,749,351			2,246,878
Non-cash stock compensation		553,924			627,840			1,493,796			2,112,322
Depreciation and amortization		206,932			187,521			615,675			579,867
Total operating expenses		10,329,455			9,543,925			24,239,592			23,056,239
Loss from operations		(2,212,041	)		(3,410,526	)		(7,492,796	)		(10,772,808	)
Other (Expenses) Income
Interest expense, net		(180,652	)		(47,653	)		(1,124,829	)		(7,979,706	)
Total Other Expense		(180,652	)		(47,653	)		(1,124,829	)		(7,979,706	)
Net (Loss)	$	(2,392,693	)	$	(3,458,179	)	$	(8,617,625	)	$	(18,752,514	)
Dividends on preferred stock:
Stated dividends, Series D		(530,520	)		-			(792,146	)		-
Issuance costs, Series D Preferred Stock		-			-			-			(1,326,335	)
Exchange of Series C Preferred Stock		-			-			-			(1,250,000	)
Net loss applicable to common stock	$	(2,923,213	)	$	(3,458,179	)	$	(9,409,771	)	$	(21,328,849	)
Net loss applicable to common stock per common share — Basic and diluted	$	(0.20	)	$	(0.25	)	$	(0.64	)	$	(1.65	)
Weighted average common shares outstanding — Basic and diluted		14,729,873			14,042,408			14,619,777			12,890,746

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

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DIRT MOTOR SPORTS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

For the Nine Months Ended September 30, 2007

(Unaudited)

											Additional
	Preferred Stock						Common Stock				Paid-in			Accumulated
	Shares			Amounts			Shares		Amounts		Capital			(Deficit)			Total
Balance, December 31, 2006		17,875		$	53,624,538			14,374,496	$	1,438	$	12,684,051		$	(60,725,963	)	$	5,584,064
Value assigned to stock options, non-cash stock  compensation expense		—			—			—		—		1,462,745			—			1,462,745
Restricted stock issued in exchange for professional services		—			—			105,000		10		31,041			—			31,051
Series D conversions to common stock		(191	)		(572,232	)		190,744		19		572,213			—			—
Placement agent fees paid through the issuance of preferred stock		1,270			13			—		—		761,987			—			762,000
Value assigned to common stock issued in connection  with the issuance of notes payable		—			—			1,828,750		183		1,382,380			—			1,382,563
Value assigned to Series E Preferred Stock issued in  connection with the issuance of notes payable		2,104			21			—		—		1,262,229			—			1,262,250
Dividends, accrued but unpaid		—			792,146			—		—		(792,146	)		—			—
Net loss		—			—			—		—		—			(8,617,625	)		(8,617,625	)
Balance, September 30, 2007		21,058		$	53,844,486			16,498,990	$	1,650	$	17,364,500		$	(69,343,588	)	$	1,867,048

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

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DIRT MOTOR SPORTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2007 and 2006

(Unaudited)

	2007			2006
Cash flows from operating activities:
Net (loss)	$	(8,617,625	)	$	(18,752,514	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		615,675			579,867
Non-cash interest expense, notes payable		664,813			7,930,582
Non-cash stock compensation		1,493,796			2,112,322
Increase (decrease) in cash for changes in:
Accounts receivable		(707,663	)		(68,048	)
Inventory		48,686			58,001
Prepaid expenses and other current assets		(1,136,121	)		(147,424	)
Other non-current assets and long term prepaid expenses		119,186			124,999
Accounts payable		695,469			(481,760	)
Accrued liabilities		1,937,520			2,578,116
Deferred revenue		402,782			445,554
Net cash (used in) operating activities		(4,483,482	)		(5,620,305	)
Cash flows from investing activities:
Purchase of property, contract rights, trademarks and goodwill		(291,127	)		(322,439	)
Net cash (used in) investing activities		(291,127	)		(322,439	)
Cash flows from financing activities:
Payments on notes payable		(608,628	)		(1,863,493	)
Payments of placement agent fees and other issuance costs		(968,517	)		(1,326,335	)
Proceeds from issuance of preferred stock		-			12,000,000
Repayment of cash overdraft		-			(253,232	)
Proceeds from issuance of notes payable		12,000,000			1,943,211
Net cash provided by financing activities		10,422,855			10,500,151
Net increase (decrease) in cash and cash equivalents		5,648,246			4,557,407
Cash and cash equivalents, beginning of period		532,230			18,645
Cash and cash equivalents, end of period	$	6,180,476		$	4,576,052
Supplemental schedule of non-cash activities:
Purchase of vehicles and equipment through the issuance of notes	$	232,300		$	—
Cash payments for interest	$	357,223		$	360,869
Non-cash revenues and expenses, barter agreements	$	240,234		$	165,500
Stated dividends, Series D Preferred Stock, payable in common shares	$	792,146		$	—
Placement agent fees paid though the issuance of preferred stock	$	762,000		$	—
Value assigned to common stock issued in connection with the the issuance of notes payable	$	1,382,563		$	—
Value assigned to Series E Preferred Stock  issued in connection with the issuance of notes payable	$	1,262,250		$	—
Short term notes exchanged for Senior Secured Notes	$	2,350,000		$	—
Conversion of Preferred stock:  Series A to Series B	$	—		$	28,279,812
Conversion of notes payable into Series D Preferred Stock	$	—		$	13,201,777
Issuance of warrants with promissory notes	$	—		$	1,715,113
Issuance of warrants with promissory notes	$	—		$	—

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

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DIRT MOTOR SPORTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2007

NOTE 1 – DESCRIPTION OF BUSINESS

References in this document to “the Company,” “World Racing Group,” “DIRT,” “we,” “us” and “our” mean Dirt Motor Sports, Inc. and its wholly owned subsidiaries.  Subsequent to the acquisition of DIRT Motorsports, Inc. in 2004, the Company began operating under the d/b/a name DIRT MotorSports and in July 2005, the Company reincorporated in Delaware and changed the Company’s name from “Boundless Motor Sports Racing, Inc.” to “Dirt Motor Sports, Inc.” The Company has begun doing business as World Racing Group, and management expects to seek shareholder approval to change the name of the Company to World Racing Group, Inc. at its 2007 meeting of stockholders.

We are a leading marketer and promoter of motorsports entertainment in the United States.  We own and operate the two premier national touring series in dirt circle track racing:  the World of Outlaws Sprint Series and the World of Outlaws Late Model Series which compete in 140 events per year, a number of which are broadcast on national television.  We operate 7 dirt motorsports tracks (4 are owned and 3 facilities are under short term lease agreements) in New York, Pennsylvania and Florida hosting a combined 139 events in 2007. We own and manage a nationally based sanction body: DIRTcar Racing that sanctions nearly 4,000 events at 129 facilities and manages 14 regional touring series.

NOTE 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern. The Company incurred a net loss of $22.8 million for the year ended December 31, 2006 and a net loss of $8.6 million for the nine months ended September 30, 2007.  The Company has an accumulated deficit of $69.3 million as of September 30, 2007, which raises substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company is dependent on existing cash resources and external sources of financing to meet its working capital needs, and ultimately attain profitable operations.  To ultimately achieve profitability, management’s plan is to (i) increase the number of sanctioned events; (ii) leverage existing owned and leased tracks to generate ancillary revenue streams; (iii) partner with existing promoters to create additional marquis events; and (iv)  continue to build sponsorship, advertising and related revenue, including license fees related to the sale of branded merchandise.   If the Company is unsuccessful in its plan, we will be required to seek additional equity and/or debt capital to continue as a going concern.  Such capital may not be available to the Company on acceptable terms, if at all.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and clarification of recorded asset amounts or to the amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern.

NOTE 3 – BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared in compliance with Rule 10-01 of Regulation S-X and U.S. generally accepted accounting principles, but do not include all of the information and disclosures required for audited financial statements. These statements should be read in conjunction with the condensed consolidated financial statements and notes thereto included in the Company’s latest Annual Report on Form 10-KSB for the year ended December 31, 2006. In the opinion of management, these statements include all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of operations, financial position and cash flows for the interim periods presented. Operating results for the three and nine month periods ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007 due to the seasonal nature of the Company’s business.

The factors discussed in Footnote 2 above raise substantial doubt about the Company's ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reclassifications

Certain amounts in prior periods presented have been reclassified to conform to the current financial statement presentation.  These reclassifications have no effect on previously reported net income or loss.

Use of Estimates

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

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Principles of Consolidation

The accompanying consolidated financial statements include the accounts of DIRT Motor Sports, Inc. and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition and Deferred Revenue

The Company derives its revenues from race sanctioning and event fees, admission fees and ticket sales, sponsorship and advertising, merchandise sales and other revenue. “Race sanctioning and event fees” includes amounts received from track owners and promoters for the organization and/or delivery of our racing series or touring shows including driver fees. “Admission fees and ticket sales” includes ticket sales for all events held at the Company’s owned or leased facilities and ticket sales for our touring shows where we rent tracks for individual events and organize, promote and deliver our racing programs. “Sponsorship and advertising” revenue includes fees obtained for the right to sponsor our motorsports events, series or publications, and for advertising in our printed publications or television programming. 

The Company recognizes race sanctioning and event fees upon the successful completion of a scheduled race or event. Race sanction and event fees collected prior to a scheduled race event are deferred and recognized when earned upon the occurrence of the scheduled race or event. Track operations, ticket and concession sales are recognized as revenues on the day of the event.  Income from memberships to our sanctioning bodies is recognized on a prorated basis over the term of the membership. The Company recognizes revenue from sponsorship and advertising agreements when earned in the applicable racing season as set forth in the sponsorship or advertising agreement either upon completion of events or publication of the advertising. Revenue from merchandise sales are recognized at the time of sale less estimated returns and allowances, if any. Revenues and related expenses from barter transactions in which the Company receives goods or services in exchange for sponsorships of motorsports events are recorded at fair value in accordance with Emerging Issues Task Force (“EITF”) Issue No. 99-17, Accounting for Advertising Barter Transactions. Barter transactions accounted for $240,000 and $166,000 of total revenues for the nine month period ended September 30, 2007 and 2006 respectively.

During 2006, we entered into a multi-year sponsorship and marketing agreement under which the Company began delivering services in 2007.  As of the date of this filing, the customer has breached its obligations and failed to cure such breaches under the agreement, including the failure to make scheduled payments. The Company will pursue its rights under the agreement, however, no revenue will be recognized under the agreement until such time that payments are received, if ever. We have discontinued providing services under this agreement and we are currently pursuing our rights under the agreement.

Expense Recognition and Deferral

Certain direct expenses pertaining to specific events, including prize and point fund monies, advertising and other expenses associated with the promotion of our racing events are deferred until the event is held, at which point they are expensed.  Annual points fund monies which are paid at the end of the racing season are accrued during the racing season based upon the races held and total races scheduled.

The cost of non-event related advertising, promotion and marketing programs are expensed as incurred.

Net Loss Per Share and Warrants Outstanding

Basic and diluted earnings per share (EPS) are calculated in accordance with FASB Statement No. 128, Earnings per Share. For the three and nine month periods ended September 30, 2007 and 2006, the net loss per share applicable to common stock has been computed by dividing the net loss by the weighted average number of common shares outstanding.

	Three months ended September 30:						Nine months ended September 30:
	2007			2006			2007			2006
Net (Loss)	$	(2,392,693	)	$	(3,458,179	)	$	(8,617,625	)	$	(18,752,514	)
Dividends on Preferred Stock:
Stated dividends, Series D Preferred		(530,520	)		-			(792,146	)		-
Issuance costs, Series D Preferred Stock		-			-			-			(1,326,335	)
Exchange of Series C Preferred stock		-			-			-			(1,250,000	)
Net loss applicable to common stock	$	(2,923,213	)	$	(3,458,179	)	$	(9,409,771	)	$	(21,328,849	)
Net loss applicable to common stock per common share — Basic and diluted	$	(0.20	)	$	(0.25	)	$	(0.64	)	$	(1.65	)
Weighted average common shares outstanding — Basic and diluted		14,729,873			14,042,408			14,619,777			12,890,746

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In addition, as of September 30, 2007, the Company’s Series D Preferred Stock was convertible into 17.9 million shares of common stock , the Company’s Series E Preferred Stock was convertible into 3.4 million shares of common stock and the Company had warrants outstanding to purchase 6.0 million common shares and options to purchase 2.2 million shares of common stock. None of these were included in the computation of diluted EPS because the Company had a net loss and all potential issuance of common stock would have been anti-dilutive.

The following table summarizes the Company’s common stock purchase warrant and certain stock options outstanding at September 30, 2007.  These warrants and stock options were not considered in computing diluted earnings per share as their effect would be anti-dilutive:

	Shares		Weighted Average Exercise Price		Weighted Average Contractual Life (years)
Promissory note warrants		1,948,510	$	4.50		3.6
Series D warrants		2,520,178	$	4.50		4.2
Placement agent warrants		581,266	$	2.99		3.7
UMP acquisition warrants		40,000	$	3.65		1.0
Warrants issued in exchange for the surrender of common stock		542,738	$	0.001		4.2
Other warrants		375,059	$	3.00		3.9
Stock options		2,163,000	$	3.45		3.6
Total warrants and stock options outstanding		8,170,751	$	3.74		3.8

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Inventories

Inventories of retail merchandise are stated at the lower of cost or market on the first in, first out method. Shipping, handling and freight costs related to merchandise inventories are charged to cost of merchandise.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided for financial reporting purposes using the straight-line method over the estimated useful lives of the related assets ranging from 3 to 40 years. Expenditures for maintenance, repairs and minor renewals are expensed as incurred; major renewals and betterments are capitalized. At the time depreciable assets are retired or otherwise disposed of, the cost and the accumulated depreciation of the assets are eliminated from the accounts and any profit or loss is recognized.

The carrying values of property and equipment are evaluated for impairment based upon expected future undiscounted cash flows. If events or circumstances indicate that the carrying value of an asset may not be recoverable, an impairment loss would be recognized equal to the difference between the carrying value of the asset and its fair value.

Purchase Accounting

The Company accounted for its acquisitions of assets in accordance with Statement of Financial Accounting Standards No. 141 (“SFAS No. 141”), Business Combinations and Statement of Financial Accounting Standards No. 142, Goodwill and Intangible Assets (“SFAS No. 142”). SFAS no. 141 requires that all business combinations entered into subsequent to September 30, 2001 be accounted for under the purchase method of accounting and that certain acquired intangible assets in a business combination be recognized and reported as assets apart from goodwill.

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Intangible Assets

Upon its inception, the Company adopted Statement of Financial Accounting Standard (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142 goodwill and intangible assets with indefinite lives are not to be amortized but are tested for impairment at least annually. Intangible assets with definite useful lives are to be amortized over the respective estimated useful lives or anticipated future cash flow streams when appropriate.

At least annually the Company tests for possible impairment of all intangible assets and more often whenever events or changes in circumstances, such as a reduction in operating cash flow or a dramatic change in the manner that the asset is intended to be used indicate that the carrying amount of the asset is not recoverable. If indicators exist, the Company compares the discounted cash flows related to the asset to the carrying value of the asset. If the carrying value is greater than the discounted cash flow amount, an impairment charge is recorded in the operating expense section in the statement of operations for amounts necessary to reduce the carrying value of the asset to fair value. The Company has chosen the fourth quarter of its fiscal year to conduct its annual impairment test.

Income Taxes

The Company accounts for income taxes under Financial Accounting Standards Number 109 (“SFAS 109”), “Accounting for Income Taxes”. Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to be reversed. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No 109 (FIN 48).  FIN 48 is intended to clarify the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes the recognition and measurement of a tax position taken or expected to be taken in a tax return.  FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Under FIN 48, evalutation of a tax position is a two step process.  The first step is to determine whether it is more-likely-than-not that a tax postion will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of the position.  The second step is to measure tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements.  A tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

The tax position that previously failed to meet the more-likely-than-not recognition threshold will be recognized in the first subsequent period in which the threshold is met.  Previously recognized tax positions that no longer meet the more-likely-than-not criteria will be de-recognized in the first subsequent reporting period in which the threshold is no longer met.

The adoptions of FIN48 on January 1, 2007 did not have a material effect on the Company’s financial position.

Concentration of Credit Risk

Due to the nature of the Company’s sponsorship agreements, the Company could be subject to concentration of accounts receivable within a limited number of accounts.  As of September 30, 2007 the Company had bank deposits in excess of FDIC insurance of approximately $6.0 million.

New Accounting Pronouncements

Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standard No. 123(R), Share-Based Payment, (“SFAS No. 123(R)”), using the modified prospective transition method. SFAS No. 123(R) requires equity-classified share-based payments to employees, including grants of employee stock options, to be valued at fair value on the date of grant and to be expensed over the applicable vesting period. Under the modified prospective transition method, share-based awards granted or modified on or after January 1, 2006, are recognized in compensation expense over the applicable vesting period. Also, any previously granted awards that are not fully vested as of January 1, 2006 are recognized as compensation expense over the remaining vesting period. No retroactive or cumulative effect adjustments were required upon The Company’s adoption of SFAS No. 123(R).

In February 2006, the FASB issued Statement No. 155,“Accounting for Certain Hybrid Financial Instruments” (“SFAS No. 155”), which amends FASB Statements No. 133 and 140. This Statement permits fair value remeasurement for any hybrid financial instrument containing an embedded derivative that would otherwise require bifurcation, and broadens a Qualified Special Purpose Entity’s (“QSPE”) permitted holdings to include passive derivative financial instruments that pertain to other derivative financial instruments. This Statement is effective for all financial instruments acquired, issued or subject to a remeasurement event occurring after the beginning of an entity’s first fiscal year beginning after September 15, 2006. This Statement has no current applicability to the Company’s financial statements.  Management adopted this Statement on January 1, 2007 and the initial adoption of this Statement did not have a material impact on the Company’s financial position, results of operations, or cash flows.

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In June 2006, the FASB issued Interpretation 48,“Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of FASB Statement No. 109,“Accounting for Income Taxes.”  FIN 48 clarifies the accounting and reporting for income taxes where interpretation of the law is uncertain. FIN 48 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of income tax uncertainties with respect to positions taken or expected to be taken in income tax returns. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company files tax returns in the United States and various state jurisdictions.  The Company’s 2003-2006 U.S. federal and state income tax returns remain open to examination by the Internal Revenue Service. The Company is continuing its practice of recognizing interest and/or penalties related to income tax matters as general and administrative expenses. The Company may have nexus in more states than it is currently filing tax returns.  Thus, upon examination, the company could be required to file additional tax returns.  Due to the losses incurred, it is unlikely that any additional filings would result in any additional income tax.  Management adopted this Statement on January 1, 2007 and the initial adoption of FIN 48 did not have a material impact on the Company’s financial position, results of operations, or cash flows.

 In September 2006, the FASB issued Statement No. 157,“Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, with earlier adoption permitted. Management is assessing the impact of the adoption of this Statement.

In September 2006, the FASB issued Statement No. 158,“Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (“SFAS No. 158”), an amendment of FASB Statements No. 87, 88, 106 and 132(R). SFAS No. 158 requires (a) recognition of the funded status (measured as the difference between the fair value of the plan assets and the benefit obligation) of a benefit plan as an asset or liability in the employer’s statement of financial position, (b) measurement of the funded status as of the employer’s fiscal year-end with limited exceptions, and (c) recognition of changes in the funded status in the year in which the changes occur through comprehensive income. The requirement to recognize the funded status of a benefit plan and the disclosure requirements are effective as of the end of the fiscal year ending after December 15, 2006. The requirement to measure the plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008.  This Statement has no current applicability to the Company’s financial statements.  Management adopted this Statement on December 31, 2006 and the adoption of SFAS No. 158 did not have a material impact to the Company’s financial position, results of operations, or cash flows. 

In September 2006, the Securities Exchange Commission issued Staff Accounting Bulletin No. 108 (“SAB No. 108”). SAB No. 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB No. 108 requires companies to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. When the effect of initial adoption is material, companies will record the effect as a cumulative effect adjustment to beginning of year retained earnings and disclose the nature and amount of each individual error being corrected in the cumulative adjustment. SAB No. 108 was effective beginning January 1, 2007 and the initial adoption of SAB No. 108 did not have a material impact on the Company’s financial position, results of operations, or cash flows.

In February 2007, the FASB issued Statement No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159). This statement permits companies to choose to measure many financial assets and liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of SFAS 159 on its consolidated financial statements.

Stock-Based Compensation

The Company’s 2004 Long Term Incentive Plan (the “Plan”) provides for the grant of share options and shares to its employees for up to 3,950,000 shares of common stock. Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant; those option awards generally vest based on 3 years of continuous service and have 5 year contractual terms. Share awards generally vest over 3 years. Certain option and share awards provide for accelerated vesting if there is a change in control, as defined in the Plan.

Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standard No. 123(R), Share-Based Payment, (“SFAS No. 123(R)”), using the modified prospective transition method. SFAS No. 123(R) requires equity-classified share-based payments to employees, including grants of employee stock options, to be valued at fair value on the date of grant and to be expensed over the applicable vesting period. Under the modified prospective transition method, share-based awards granted or modified on or after January 1, 2006, are recognized in compensation expense over the applicable vesting period. Also, any previously granted awards that are not fully vested as of January 1, 2006 are recognized as compensation expense over the remaining vesting period. No retroactive or cumulative effect adjustments were required upon the Company’s adoption of SFAS No. 123(R).

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table. Expected volatilities are based on the historical volatility of the market price of the Company’s common stock over a period of time ending on the grant date. Based upon historical experience of the Company, the expected term of options granted is equal to the vesting period. The risk-free rate for periods within the contractual life of the option is based on the U.S Treasury yield curve in effect at the time of the grant.

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The following table provides information relating to outstanding stock options for the year ended December 31, 2006 and the nine months ended September 30, 2007:

Expected volatility	58	%
Expected life in years	4.0
Weighted average risk free interest rate	4.66	%

The Company has not declared dividends and does not intend to do so in the foreseeable future, and thus did not use a dividend yield. In each case, the actual value that will be realized, if any, depends on the future performance of the common stock and overall stock market conditions. There is no assurance that the value an optionee actually realizes will be at or near the value estimated using the Black-Scholes model.

The fair value of restricted common stock awards is based on the closing price of the Company’s common stock on date of the grant. The Company issued 750,000 restricted shares of common stock in 2006 with a fair value of $2,737,500, which will be recorded as compensation expense over the three year vesting period of the restricted shares.

A summary of the status of stock options and related activity for the nine months ended September 30, 2007 is presented below:

	Shares		Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term
Options outstanding at December 31, 2006		2,040,000	$	3.54		4.2
Granted		123,000		1.83
Exercised		-		-
Forfeited/expired		-		-
Options outstanding at September 30, 2007		2,163,000	$	3.45		3.5
Options exercisable at September 30, 2007		998,333	$	3.65		3.0

Unrecognized compensation expense as of December 31, 2006 related to outstanding stock options and restricted stock grants was $3.7 million.  Unrecognized compensation expense as of September 30, 2007 related to outstanding stock options and restricted stock grants was $2.6 million.

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at September 30, 2007 and December 31, 2006:

	2007			2006			Depreciable Life
Land	$	6,916,338		$	6,916,338		N/A
Buildings and grandstands		3,444,624			3,288,759		7 - 40 years
Transportation equipment		1,655,227			1,491,179		5 - 7 years
Office furniture and equipment		671,333			467,819		3 - 7 years
		12,687,522			12,164,095
Less accumulated depreciation		(2,289,130	)		(1,716,462	)
Property and equipment, net	$	10,398,392		$	10,447,633

Depreciation is computed on a straight-line basis. Depreciation expense for the nine months ended September 30, 2007 and 2006 was $572,668 and $525,800, respectively.  Depreciation expense for the three months ended September 30, 2007 and 2006 was $192,597 and $180,748, respectively.

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NOTE 6 – GOODWILL AND OTHER INTANGIBLE ASSETS

As discussed in Note 4, the Company conducts an annual impairment test as required by SFAS No. 142. Under SFAS 142, goodwill impairment is deemed to exist if the carrying value of a reporting unit exceeds its estimated fair value. In calculating the impairment charge, the fair values of the reporting units were estimated using the expected present value of future cash flows from those units. The World of Outlaws acquisition, the DIRT acquisition, the UMP acquisition, the MARS acquisition, and the Lernerville acquisition were treated as separate reporting units for purposes of making these impairment calculations.  During the year ended September 30, 2004 an impairment of $2,954,978 was recorded related to 2004 acquisitions.  During the year ended December 31, 2005, impairments related to the goodwill associated with the acquisition of the World of Outlaws, UMP and Dirt was determined to be impaired by $2,027,248, $2,218,171 and $1,611,700 respectively.  In addition, the trademark associated with the World of Outlaws was determined to be impaired by $142,452.  These amounts were charged to current earnings for the quarter ended September 30, 2005.  The Company evaluated again in 2006 and it was determined that the remaining goodwill for each reporting unit was fully impaired and the remaining amounts recorded as goodwill were impaired and during the year ended December 31, 2006, an impairment of $1,508,440 was recorded related to the goodwill associated with the acquisitions of the UMP, MARS and Lernerville was determined to be impaired by $812,715, $148,000 and $547,725, respectively.

NOTE 7 – ACCRUED LIABILITIES

Accrued liabilities at September 30, 2007 and December 31, 2006 consisted of the following:

	September 30,		December 31,
	2007		2006
Points fund	$	2,026,710	$	453,150
Television production and programming		321,312		-
Interest		205,238		74,913
Salaries, wages and other compensation and benefits		208,458		195,770
Sales taxes		120,990		158,728
Office closure and relocation		36,305		114,611
Acquisition liabilities		15,000		42,532
Other accrued liabilities		151,256		108,045
Total accrued liabilities	$	3,085,269	$	1,147,749

NOTE 8 – DEFERRED REVENUE

Deferred revenues at September 30, 2007 and December 31, 2006 consisted of the following:

	September 30,		December 31,
	2007		2006
Sponsorship prepayments	$	212,566	$	8,650
Sanction fee advances		8,958		12,958
Season ticket  sales, advance ticket sales		287,924		107,816
Membership fees		22,758		-
Total deferred revenue	$	532,206	$	129,424

NOTE 9 – NOTES PAYABLE

From May 2005 through April 2006 we issued $12.4 million in promissory notes payable to existing shareholders.  These notes were classified as current, due and payable on the first to occur of:  (i) October 27, 2006 (ii) the completion of an equity or equity linked financing with gross proceeds of $9,000,000 or (iii) the acceleration of the obligations under the promissory notes.  These promissory notes bear interest at 8% for the first 6 months from the date of issuance and 12% for the next 6 months and was payable on a quarterly basis.  The Company issued warrants to purchase 1,948,510 shares of our common stock at an exercise price of $4.50 in connection with these notes.  The warrants were valued based on the Black-Scholes fair value method and the value was recorded as a non-cash debt discount and was being amortized over the life of the notes.  In connection with the Series D Preferred Stock financing in May 2006, we repaid $867,506 of these notes plus accrued interest and we exchanged the remaining $11.6 million in notes plus accrued interest into 4,401 shares of our Series D Preferred stock and issued Series D warrants to purchase 1,320,178 shares of our common stock at an exercise price of $4.50.  At the time of conversion, the company recognized the remaining unamortized debt discount as interest expense in 2006.  Additionally, the Company recognized interest expense for the conversion of the notes at 110% into Series D preferred stock (Note 10).

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During the first quarter of 2007, the Company entered into a line of credit agreement with one of its principal shareholders to provide the Company with working capital advances.  Amounts outstanding bear interest at 8%, no amounts are outstanding under the line of credit as of September 30, 2007.

Beginning in March 2007, the Company issued to several of its principal shareholders $2.3 million in short-term secured promissory notes payable. The short-term notes bear interest at 8% per year and were secured by the assets of the Company.  The proceeds from these notes were used to fund the working capital needs of the Company.   An estimate of the fair value of the common shares expected to be issued upon the completion of a secured note financing has been recorded as an increase in additional paid in capital and is recorded as a discount to these notes payable and was recognized as interest expense in the second quarter of 2007 in the amount of $0.7 million. In September 2007, the Company completed the initial closing of a secured note financing ("Note Financing"). At the closing, we issued $12.0 million principal amount of our senior secured promissory notes (the "Secured Notes") to a limited number of accredited investors pursuant to a Note Purchase Agreement by and among us and the investors (the "Note Purchase Agreement"). The purchase price consisted of $10,150,000 of cash proceeds and cancellation of $1,850,000 principal amount of outstanding short-term notes (the "Short-Term Notes"). We used approximately $470,000 of the proceeds to repay certain unsecured indebtedness, approximately $450,000 to repay the Short-Term Notes, and have allocated up to $2.4 million to repay outstanding amounts due on mortgages on Volusia Speedway Park and/or Lernerville Speedway. Under the terms of the Note Purchase Agreement, we may issue up to an additional $3.0 million principal amount of Secured Notes.

The Secured Notes are due March 15, 2010 and accrue interest at the rate of 12.5% per annum payable quarterly on each of December 15, March 15, June 15 and September 15. Upon issuance, we prepaid $1,167,347 of interest, representing the first three (3) interest payments. Commencing September 15, 2008, interest due under the Secured Notes is payable at our option in cash or additional Secured Notes that will accrue interest at 13.5% per annum. The Secured Notes are secured by substantially all of the assets of the Company and our subsidiaries, including our four race tracks, pursuant to a Security Agreement (the "Security Agreement") and mortgages (the "Mortgages") by and among us, certain of our subsidiaries, and the lenders. The Secured Notes contain various standard and customary covenants, including prohibitions on incurring additional indebtedness, except under certain limited circumstances, or granting a security interest in any of our properties. Our obligations under the Secured Notes are guaranteed by our principal operating subsidiaries pursuant to a Subsidiary Guarantee (the "Guarantee") by and among us, our principal operating subsidiaries, and the lenders.

The Secured Notes were issued together with 275,000 shares of common stock, $.0001 par value per share ("Common Stock"), for each $1.0 million principal amount of Secured Notes purchased. If the foregoing issuance would result in any investor becoming the beneficial owner of more than 4.99% of our Common Stock, such investor was issued shares of our Series E Convertible Preferred Stock, $.01 par value per share, convertible into a like number of shares of Common Stock ("Series E Shares"). We issued an aggregate of 1,828,750 shares of Common Stock and 2,103.75 Series E Shares convertible into an aggregate of 2,103,750 additional shares of Common Stock. Pursuant to prior agreement, at the closing we also issued an aggregate of 632,500 shares of Common Stock to the holders of the Short-Term Notes.   The fair value of the Common Stock and Series E shares was recorded as an increase in additional paid in capital and is recorded as a discount to these notes payable and will be recognized as interest expense through the maturity of the Secured Notes.

Notes payable at September 30, 2007 consisted of the following:

· $2,340,000 notes payable issued in connection with the purchase of Lernerville Speedway, bearing interest at 7% payable annually each November. The balance is due upon maturity on November 7, 2008.  This note is secured by a mortgage on the Lernerville Speedway Facility.

· $2,000,000 note payable issued in connection with the purchase of Volusia Speedway, bearing interest at one percent over prime and payable in fifty-nine equal monthly installments commencing at $24,000 per month and adjusted quarterly for changes in interest rates with the balance of the outstanding principal and accrued interest due on June 30, 2010.  The outstanding principal balance on this note was $1,714,529 as of September 30, 2007.  This note is secured by a mortgage on the real property, and security agreement covering the other assets acquired from Volusia Speedway.

· $283,863 in various vehicle and equipment notes payable, bearing interest at an average rate of 6.25% and due in monthly installments of principal and interest through February 2011.

· $12,000,000 in Secured Notes issued in September 2007 bearing interest at 12.5% per year and due on March 15, 2010.  These promissory notes are secured by the assets of the Company subject to existing mortgages at the date of issuance.

The aggregate amounts of debt payments (principal and interest) during each of the years ending December 31, 2007 through 2011 and thereafter are:

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Remainder of 2007	$	42,229
2008		2,529,216
2009		206,738
2010		13,421,380
2011 and thereafter		138,828
	$	16,338,391
Less, discount on notes payable		2,795,517
Notes payable, net of discount	$	13,542,874

NOTE 10 – STOCKHOLDERS’ EQUITY

Effective September 22, 2005, the Company and Glenn Donnelly (Consultant) entered into a Business Relationship Termination Agreement (the “Termination Agreement”).  The Termination Agreement provided for, among other things, the payment by the Company to Mr. Donnelly of $1,000,000 cash, a note payable in the amount of $500,000, the cancellation of 768,999 issued shares of common stock of the Company owned by Mr. Donnelly, and 500,000 shares currently held by Donnelly to be re-issued.  In addition, as part of the Termination Agreement, Mr. Donnelly agreed for a period of two-years not to compete against the Company in the business of dirt track motor sports racing or the promotion and/or sanctioning of dirt track motor sports racing.  As of September 30, 2005 the cash payment due to Mr. Donnelly remained unpaid.  Subsequent to year end this settlement amount was reduced to $1,290,000.  The Company has retroactively reflected the $210,000 reduction in the termination agreement as of September 30, 2005.  The entire $1,290,000 settlement was treated as the cost of retiring the 768,999 shares of stock returned by Glenn Donnelly and cancelled. During 2006, the Company amended the Business Relationship Termination Agreement to provide for a cash payment of $1.0 million and the issuance of a note payable of $423,000 which is payable on demand as of June 30, 2007.  The cash payment of $1.0 million was made in May 2006.  The note for $423,000 was repaid in September 2007.

Preferred Stock

In series of transactions completed on May 19, 2006, effective May 16, 2006, the Company entered into a Series D Convertible Preferred Stock Purchase Agreement pursuant to which the Company issued and sold 4,000 shares of Series D Convertible Preferred Stock (the “Series D Stock”) and warrants to purchase 1,200,000 shares of our common stock, $0.0001 par value per share (the “Series D Warrants”), for an aggregate purchase price of $12,000,000.

The Series D Stock is convertible into an aggregate of 4,000,000 shares of common stock, representing a conversion price of $3.00 per share. The Series D Stock will automatically convert into shares of common stock on the date at least one hundred eighty (180) days following the effective date of a registration statement covering the shares of common stock into which the Series D Stock is convertible (“Registration Statement”), if (a) the closing bid price of our common stock is equal to or greater than $7.50 per share for ten consecutive trading days, (b) the dollar trading volume for each of the ten trading days exceeds $1,000,000, and (c) the Registration Statement is and has been effective without lapse or suspension of any kind, for a period of sixty consecutive calendar days or the shares of common stock into which the Series D Stock is convertible may be sold to the public pursuant to Rule 144(k) under the Securities Act of 1933, as amended.

The Company also entered into exchange agreements pursuant to which each of its issued and outstanding shares of Series B Convertible Preferred Stock, par value $.01 per share (“Series B Stock”), and Series C Convertible Preferred Stock, par value $.01 per share (“Series C Stock”), were exchanged for an aggregate of 9,843.3 shares of the Company’s Series D Stock. The shares of Series D Stock issued in this exchange are convertible into 9,843,270 shares of common stock, the same number of shares of our common stock as the original Series B Stock and Series C Stock could have been converted.

The Company also issued 4,400 shares of Series D and 1,320,178 Series D Warrants in pursuant to the exchange of $12,001,616 of short term promissory notes in connection with the Series D financing. Further, warrants to purchase an aggregate of 5,839,701 shares of common stock, at exercise prices ranging from $3.00 to $5.00 per share, were cancelled and exchanged into an aggregate of 917,187 shares of our common stock and warrants to purchase 542,738 shares of our common stock at $.001 exercise price with a term of five years.

The Series D Warrants have a term of five years and are exercisable at an exercise price of $4.50 per share. The Company may call the Series D Warrants at any time following the effective date of the Registration Statement covering the shares of common stock issuable upon exercise of the Series D Warrants, at a price of $0.001 per warrant, if (a) the per share market value our common stock is equal to or greater than $10.00 per share for ten consecutive trading days, (b) the dollar trading volume for each of the ten trading days exceeds $500,000, and (c) the Registration Statement is and has effective been, without lapse or suspension of any kind, for a period of sixty consecutive calendar days.

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We agreed to file the Registration Statement covering the resale of the shares of common stock to be issued upon conversion of the Series D Stock and the Series D Warrants. In the event the Registration Statement was not (a) filed on or before the fifteenth (15^th) day following the filing of the Company’s Form 10-QSB for the fiscal quarter ended March 31, 2006, but in no event later than May 30, 2006, or (b) declared effective on the date that is the earlier of (i) the ninetieth (90^th) day following the filing date or the date which is within three (3) business days of the date on which the Commission informs the Company (A) that the Commission will not review the Registration Statement, or (B) that the Company may request the acceleration of the effectiveness of the Registration Statement and the Company makes such request, then, in either event, the Company will be obligated to pay liquidated damages to the holders of the Series D Stock in the amount equal to two percent (2%) for the first calendar month (prorated for shorter periods) and one percent (1%) per calendar month there after (prorated for shorter periods) of the holder’s initial investment in the preferred shares, until such time as the Registration Statement is filed or declared effective, as the case may be; provided, however, that in no event shall liquidated damages payable to any holder resulting from any event that is within the control of the Company exceed ten percent (10%) of the holder’s initial investment.   The registration statement was effective in accordance with the requirements of the purchase agreement.

As of September 30, 2007, the Registration Statement on Form SB-2, which was declared effective on July 11, 2006 has not been updated due to the Company’s capital raising activities and therefore is not currently effective.  The shares registered under the Registration Statement are currently transferable under Rule 144 of the Securities Act of 1933.  Management plans to re-register the shares under a new registration statement following the completion of our annual meeting we anticipate will be held in the fourth quarter.  The Company has in the past received the necessary waivers to avoid the payment of liquidated damages and at this time management does not anticipate nor has any investor indicated any intention to pursue liquidated damages under the May 2006 Registration Rights agreement and no liability has been recorded on the Company’s financial statements related to penalties that might be incurred as a result of the Company’s election not to keep the registration statement effective.

Beginning on May 16, 2007, shares of the Series D preferred stock are entitled to receive a dividend of four percent of the liquidation preference of the shares. This dividend increases to six percent beginning May 16, 2008. The dividend is payable semi-annually in cash or, if certain requirements are met, we can chose to pay the dividend in shares of our common stock. Dividends on the Series D preferred stock will accrue, whether or not the dividend is declared by our board of directors. So long as shares of our Series D preferred stock are outstanding, we may not pay any dividend on our common stock unless we have first paid all accrued and unpaid dividends on the outstanding shares of Series D preferred stock.

On September 28, 2007, we amended our Certificate of Incorporation to designate 50,000 shares of our preferred stock, $.01 par value per share, as Series E Shares.   Upon liquidation of the Company, holders of our Series E Shares share ratably with holders of our Common Stock with respect to the assets available for distribution to such holders, are paid dividends when as and if declared on our Common Stock, have no redemption rights, and other than as provided by applicable Delaware law, have no voting rights. Each Series E Share is convertible at the option of the holder thereof into 1,000 shares of Common Stock, subject to adjustment for certain organizational changes including stock splits, stock dividends and recapitalizations. The Series E Shares contain a blocker provision prohibiting conversion if conversion would result in the holder beneficially owning more than 4.99% of our outstanding Common Stock.  As of September 30, 2007 we had 3,374 shares of our Series E Preferred Stock Outstanding.

NOTE 11 – INCOME TAXES

The Company accounts for income taxes under Financial Accounting Standards Number 109 (“SFAS 109”), “Accounting for Income Taxes”. Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to be reversed.

At December 31, 2006, the Company had net operating loss carry forwards of approximately $34.9 million for federal income tax purposes.

The statutory income tax benefit resulting from the Company’s net operating loss carry forwards has been fully reserved.  The valuation allowance has been provided due to the uncertainty that the Company will generate future profitable operations to utilize this net operating loss carry forward.

NOTE 12 – COMMITMENTS

In addition to its owned racing facilities, the Company leases three racing facilities, the Canandaigua Speedway, the Syracuse Fairgrounds Race Track, and the Orange County Fair Speedway.

The Canandaigua Speedway is leased on an annual basis, $22,000 per year, through November 1, 2011.  The track is located at the Ontario County Fairgrounds in Canandaigua, Ontario County, New York.

The Syracuse Fairgrounds Race Track is leased for the Super Dirt Week series of races held annually during October.  The track is located in Syracuse, New York.  The track is leased on a year-to-year basis for one week per year at a rental rate of $100,000.

The Orange County Fair Speedway is leased on an annual basis at a rate of $115,000 per year.  The track is located in Middletown, New York.

Our corporate office was located in Norman, Oklahoma until March 2007.  It was leased on a month-to-month basis, $4,664 per month for approximately 3,855 square feet of office space.  Our new corporate facility in Concord, North Carolina contains  approximately 9,000 square feet of office and 7,000 square feet of warehouse space.  It is leased under a 62 month lease for $9,492 per month for the first year escalating annually to $10,275 in year five.

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Total scheduled future minimum lease payments, under these operating leases are as follows:

	Payment Due by Period
			Remainder of
	Total		2007		2008		2009		2010		Thereafter
Operating leases	$	784,885	$	48,984	$	257,616	$	139,931	$	142,285	$	196,069

Rent expense, including track, equipment and office rental, for the nine months ended September 30, 2007 and 2006 was $296,394 and $564,422, respectively.  Rent expense for the three months ended September 30, 2007 and 2006 was $132,577 and $253,841, respectively.

The Company has employment agreements with its executive officers and other employees, the terms of which expire at various times over the next three years. The aggregate commitment for future salaries at September 30, 2007 was $0.8 million.

NOTE 13 – LITIGATION AND CONTINGENCIES

We are from time to time involved in various legal proceedings incidental to the conduct of our business. We believe that the outcome of all such pending legal proceedings will not, in the aggregate, have a material adverse effect on our business, financial condition, results of operations or liquidity.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

This Form 10-QSB includes certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act.  All statements, other than statements of historical fact, included in this Form 10-QSB that addresses activities, events or developments that the Company expects, projects, believes, or anticipates will or may occur in the future, including matters having to do with expected and future revenues, the Company’s ability to fund its operations and repay debt, business strategies, expansion and growth of operations and other such matters, are forward-looking statements.  These statements are based on certain assumptions and analyses made by our management in light of its experience and its perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate in the circumstances.  These statements are subject to a number of assumptions, risks and uncertainties, including general economic and business conditions, the business opportunities (or lack thereof) that may be presented to and pursued by the Company, the Company’s performance on its current contracts and its success in obtaining new contracts, the Company’s ability to attract and retain qualified employees, and other factors, many of which are beyond the Company’s control.  You are cautioned that these forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in such statements.

Nature of Business

We are a leading marketer and promoter of motorsports entertainment in the United States.  We own and operate the two premier national touring series in dirt circle track racing:  the World of Outlaws Sprint Series and the World of Outlaws Late Model Series which compete in 140 events per year, a number of which are broadcast on national television.  We operate 7 dirt motorsports tracks (4 are owned and 3 facilities are under short term lease agreements) in New York, Pennsylvania and Florida hosting a combined 139 events in 2007. We own and manage a nationally based sanction body: DIRTcar Racing that sanctions nearly 4,000 events at 129 facilities and manages 14 regional touring series.

On February 4, 2004, the Company completed the acquisition of substantially all the assets of the World of Outlaws, Inc. (“World of Outlaws”).  Prior to this event, the Company was devoting substantially all of its efforts to establishing the business and was therefore a development stage enterprise until February 4, 2004.

During the quarter ended December 31, 2004, the Company entered into a series of related transactions resulting in the acquisition of 100% of the outstanding stock of DIRT Motorsports, Inc. (“DIRT”) and two affiliated race tracks.

On December 5, 2004, the Company acquired all of the outstanding membership interest in United Midwestern Promoters Motorsports, LLC (“UMP”).

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On November 7, 2004, the Company entered into an Asset Purchase Agreement to acquire substantially all of the assets of Lernerville Speedway, Inc. (“LSI”).  This acquisition was completed in March 2005, and the total consideration for the assets acquired was $3,240,000.

On March 10, 2005, the Company entered into and consummated an Asset Purchase Agreement pursuant to which the Company acquired all of the assets related to the business of sanctioning and conducting the dirt track racing events known as the Mid America Racing Series (“MARS”).  The assets were acquired in exchange for an aggregate cash purchase price of $150,000.

On June 30, 2005, the Company acquired substantially all of the assets of Volusia Speedway Park, Inc., (“Volusia Speedway”) in exchange for an aggregate purchase price of $3,600,000.

Results of Operations – Impact of Seasonality and Weather on Quarterly Results

In 2006, we scheduled 79 World of Outlaw Sprint Series races, 40 World of Outlaw Late Model Series races, 32 Advance Auto Parts Big Block Modified events, and over 200 other major racing events in our other regional and touring racing series.   In 2007, we scheduled 84 World of Outlaw Sprint Series races, 56 World of Outlaw Late Model Series races, 27 Advance Auto Parts Big Block Modified events, and over 200 other major racing events in our other regional and touring racing series.  Most of these events are scheduled in the period from March to November each year.   As a result, our business has been, and is expected to remain, highly seasonal.

The concentration of racing events in any particular quarter, and the growth in our operations with attendant increases in overhead expenses, reduces operating income in quarters outside of our peak operating months.  Our racing schedules from year to year may change from time to time which can lessen the comparability of operating results between quarters of successive years and increase or decrease the seasonal nature of our motorsports business.

We market and promote outdoor motorsports events.  Weather conditions surrounding these events affect the completion of scheduled racing, the sale of tickets and the sale of merchandise and concessions.   Poor weather conditions can have a negative effect on our results of operations.   Additionally, our owned and operated tracks are currently primarily geographically concentrated in New York, Pennsylvania and Florida and adverse weather conditions in these regions could have a greater negative effect on our results of operations.

Results of Operations – Comparison of Nine Months Ended September 30, 2007 (“2007”) and 2006 (“2006”)

Revenues– Our total revenues increased to $16.7 million in 2007 from $12.3 million in 2006.

 Race sanctioning and event fees revenue increased to $7.4 million in 2007 from $4.2 million in 2006.  This increase is due to an increase in the number of sanctioned events and fees per event in 2007 compared to 2006.  In 2007 we completed 67 World of Outlaw Sprint Series sanctioned events at non-owned facilities and 8 events at our facilities. In 2006 we completed 59 World of Outlaws Sprint Series sanctioned events at non-affiliated facilities and 6 events at our facilities.   In 2007 we completed 51 World of Outlaw Late Model Series events and in 2006 we completed 32.  We expect sanction fees through the remainder of 2007 to increase relative to 2006 due to the  increase in the number of sanctioned events at non-affiliated facilities.

 During 2007 we generated $5.8 million in track operations, ticket and concession sales as compared to $5.7 million in 2006. These revenues are generated at events held at our owned or operated racetracks. The increase is due to the addition of several multi-day events at our owned racetracks during June 2007 and an increase in attendance at our weekly events, offset in part by a decrease in the number of events that we held at facilities that we leased on a nightly basis for events in 2006 that did not occur in 2007.  Our racing season at our race track in Florida begins in February each year and the season in New York and Pennsylvania typically begins in late March or early April each year but is dependent upon the weather in each region.  We expect our track operations, ticket and concession sales to remain higher for the remainder of 2007 compared to 2006 as a result of an increase in the number of  events scheduled during the remainder of the year.

Our sponsorship and advertising revenues increased to $3.0 million in 2007 from $1.6 in 2006.  The increase is due to sponsorship and advertising revenues for advertising within our television broadcasts which began to air in May 2007 and will air through November 2007. Sales of merchandise decreased to $422,517 in 2007 from $506,835 in 2006.  The decrease is principally due to new arrangements entered into with third parties to outsource our product sales at events other than at our World of Outlaw Sprint Series races.  We expect that our net operating cash generated from these new arrangements to increase due to the substantially lower costs associated with these arrangements;  however these arrangements will result in decreased gross revenues recorded.

Operating expenses– Our total operating expenses increased to $24.2 million in 2007 from $23.1 million in 2006.  The increases are due to the increase in the number of events held during the year as well as increased expenditures incurred to produce and air our television broadcasts.  These increases have been offset in part to efforts across all aspects of the Company to reduce operating costs while focusing on increasing our sponsorship and advertising revenue.

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 Track and event operations - Our track and event operations expenses include purses and other attendance fees paid to our drivers, personnel costs and other operating costs for the organization of our events and the operation of our tracks.  Track and event operations expense increased to $18.9 million in 2007 from $16.4 million in 2006.  This increase is due to increases in television programming and production costs of $2.6 million and increased prizes and awards at our additional events in 2007 as compared to 2006.  These increases were offset in part by decreases in personnel, contract labor cost and other costs at our events at Volusia Speedway and certain of our racing series and decreases in certain of prize and purse fund amounts for 2007 as compared to 2006.  We expect operating expenses in 2007 to continue at levels above those incurred in 2006 primarily due to the cost of television programming and production.

 Sales and marketing – Sales and marketing expenses includes expenses incurred by our sales, marketing and public relations departments.  The expenses are primarily personnel related to the pursuit of corporate and event sponsors along with professional fees and printing for our advertising publications and fulfillment under our sponsorship agreements.  Sales and marketing expense increased to $1.3 million in 2007 from $0.9 million in 2006, principally due to increased professional fees, promotion and advertising expenses.

 Merchandise operations and cost of sales – Merchandise operations and cost of sales includes all operating expenses related to the distribution of our merchandise which includes mobile store fronts that are present at our World of Outlaws sprint touring series events and the cost of goods sold during 2007.  Merchandise operations and cost of sales in 2006 included all operating expenses related to the distribution of our merchandise, including mobile store fronts that are present at all of our touring series events and the cost of goods sold. Beginning in 2007, we entered into arrangements to outsource the sale of branded merchandise at each of our touring series events other than at our World of Outlaws Sprint Series events.  These arrangements generally include the payment to the Company of a one-time rights fee and a percentage of sales over certain volume thresholds. These fees are recorded as sponsorship and advertising sales.

 General and administrative – Our general and administrative expenses decreased to $1.7 million in 2007 from $2.2 million in 2006. The decrease from 2006 represents decreases in the number of administrative personnel and decreased legal and professional fees offset in part by costs incurred in connection with the relocation of our corporate office from Oklahoma to North Carolina. Additionally, 2006 includes $0.1 million in severance and other employee termination costs not incurred in 2007.

Non-cash stock Compensation – Non-cash stock compensation of $1.5 million in 2007 and $2.1 million in 2006 represents the fair value of warrants and options issued to employees and non-employees now recognized as an expense due to the implementation of SFAS 123R effective January 1, 2006 and the fair value of restricted stock issued to employees.

 Depreciation and amortization  – Depreciation and amortization expense increased slightly to 2007 from 2006 due to the addition of equipment and leasehold and track improvements during 2007.

 Interest expense, net – Interest expense decreased to $1.1 million in 2007 from $8.0 million in 2006.  2006 includes the non-cash amortization of the discounts recorded for the value assigned to warrants granted in connection with the promissory notes issued during the fourth quarter of 2005 and in 2006 through the closing of our Series D financing. At the time of the note conversions in May 2006, any unamortized note discount was recorded as an increase in interest expense during 2006.  Interest expense for 2007 reflects the interest incurred on our notes and mortgages payable on our two tracks and various vehicle notes and any non cash interest expense for the amortization of the discounts recorded for the value assigned to the shares of common stock that were issued in connection with the secured promissory notes issued during late March through September 30, 2007.

Results of Operations – Comparison of Three Months Ended September 30, 2007 (“2007”) and 2006 (“2006”)

Revenues– Our total revenues increased to $8.1 million in 2007 from $6.1 million in 2006.

Race sanctioning and event fees revenue increased to $3.8 million in 2007 from $2.5 million in 2006.  This increase is due an increase in the number of sanctioned events in 2007 compared to  2006.  In 2007 we completed 32 World of Outlaw Sprint Series sanctioned events at non-owned facilities and 2 events at our facilities. In 2006 we completed 31 World of Outlaws Sprint Series sanctioned events at non-affiliated facilities and 3 events at our facilities.   In 2007 we completed 21 World of Outlaw Late Model events compared to 17 in 2006.  We expect sanction fees through the remainder of 2007 to increase relative to 2006 due to the increase in the number of sanctioned events at non-affiliated facilities.

 During 2007 we generated $2.3 million in track operations, ticket and concession sales as compared to $2.6 million in 2006. These revenues are generated at events held at our owned or operated racetracks. The decrease is due to the reduction of leased events held in 2007 as compared to 2006, primarily World of Outlaw Late Model Series events.  In 2006 we leased tracks for single World of Outlaw Late Model Series events whereas in 2007 we sanctioned each of those events.  These decreases were offset by increased attendance at our weekly events at our owned tracks, primarily Lernerville Speedway. Our racing season at our race track in Florida begins in February each year and the season in New York and Pennsylvania typically begins in late March or early April each year but is dependent upon the weather in each region.  We expect our track operations, ticket and concession sales to remain higher for the remainder of 2007 compared to 2006 as a result of an increase in the number of  events scheduled during the remainder of the year.

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Our sponsorship and advertising revenues increased to $1.8 million in 2007 from $0.7 million in 2006.  The increase is due to sponsorship and advertising revenues for advertising within our television broadcasts which began to air in May 2007 and will air through November 2007. Additionally, sponsorship revenues increased for new sponsorship agreements for our sprint series and for our sanctioning bodies.  Sales of merchandise decreased slightly in 2007 from 2006, due principally to new arrangements entered into with third parties to outsource our product sales at events other than at our World of Outlaw Sprint Series races.  We expect that our net operating cash generated from these new arrangements to increase due to the substantially lower costs associated with these arrangements; however these arrangements will result in decreased gross revenues recorded.

Operating expenses– Our total operating expenses increased to $10.3 million in 2007 from $9.5 million in 2006.  The increases are due to the increase in the number of events held during the year and our cost to produce and air our television broadcasts.  These increases have been offset in part to efforts across all aspects of the Company to reduce operating costs while focusing on increasing our sponsorship and advertising revenue.

 Track and event operations - Our track and event operations expenses include purses and other attendance fees paid to our drivers, personnel costs and other operating costs for the organization of our events and the operation of our tracks.  Track and event operations expense increased to $8.6 million in 2007 from $7.6 million in 2006.  This increase is due to increases in television programming and production costs of $1.4 million and increased prizes and awards at our additional events in 2007 as compared to 2006.  These increases were offset in part by decreases in personnel, contract labor cost and other costs at our events and certain of our racing series and decreases in certain of prize and purse fund amounts for 2007 as compared to 2006.  We expect operating expenses in 2007 to continue at levels above those incurred in 2006 primarily due to the cost of television programming and production.

 Sales and marketing – Sales and marketing expenses include expenses incurred by our sales, marketing and public relations departments.  The expenses are primarily personnel related to the pursuit of corporate and event sponsors along with professional fees, and printing for our advertising publications and fulfillment under our sponsorship agreements.  Sales and marketing expenses were $0.4 million in 2007 and 2006.

 Merchandise operations and cost of sales – Merchandise operations and cost of sales includes all operating expenses related to the distribution of our merchandise which includes mobile store fronts that are present at our World of Outlaws sprint touring series event and the cost of goods sold during 2007.  Merchandise operations and cost of sales in 2006 included all operating expenses related to the distribution of our merchandise, including mobile store fronts that are present at all of our touring series event and the cost of goods sold. Beginning in 2007, we entered into arrangements to outsource the sale of  branded merchandise at each of our touring series events other than at our World of Outlaws Sprint Series events.  These arrangements generally include the payment to the Company of a one-time rights fee and a percentage of sales over certain volume thresholds. These fees are recorded as sponsorship and advertising sales.

 General and administrative – Our general and administrative expenses increased to $0.5 million in 2007 from $0.4 million in 2006. The increase from 2006 represents increased legal and professional fees offset in part by decreases in the number of administrative personnel.

Non-cash stock Compensation – Non-cash stock compensation of $0.6 million in 2007 and 2006 represents the fair value of warrants and options issued to employees and non-employees now recognized as an expense due to the implementation of SFAS 123R effective January 1, 2006 and the fair value of restricted stock issued to employees.

 Depreciation and amortization – Depreciation and amortization expense increased slightly to 2007 from 2006 due to the addition of equipment and leasehold and track improvements during 2007.

 Interest expense, net – Interest expense increased to $0.2 million in 2007 from $0.05 million in 2006.  Interest expense reflects the interest incurred on our notes and mortgages payable on our two tracks and various vehicle notes.   We will begin in incur non cash interest expense related to the amortization of the debt discount recorded for the value assigned to the common stock and Series E Preferred Stock issued in connection with the secured promissory notes issued during late March through June 30, 2007.

Liquidity and Capital Resources

The Company generated $16.7 million in revenues during the nine months ended September 30, 2007; however, we have not yet achieved a profitable level of operations. Our primary source of funding for our operating deficits during the quarter ended September 30, 2007 has been from the issuance of notes payable.

During the nine months ended September 30, 2007, the Company used $4.5 million in operating activities primarily the result of a net loss of $8.6 million, depreciation and amortization of $0.6 million, non-cash stock compensation of $1.5 million, non-cash interest expense of $0.7 million and other working capital changes, primarily accounts payable, accrued liabilities and deferred revenue.

During the nine months ended September 30, 2007, the Company used $0.3 million in investing activities primarily for track improvements and for leasehold improvements and equipment purchases for our new corporate offices in Concord, North Carolina.

During the nine months ended September 30, 2007, financing activities provided $10.4 million primarily through the issuance of $12.0 million in notes payable offset by repayment of $0.6 million in notes payable and payments of placement agent fees of $1.0 million.

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The Company incurred a net loss of $8.6 million for the period ended September 30, 2007.  The Company has an accumulated deficit of $69.3 million as of September 30, 2007, which raises substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company is dependent on existing cash resources and external sources of financing to meet its working capital needs, and ultimately attain profitable operations.  To ultimately achieve profitability, management’s plan is to (i) increase the number of sanctioned events; (ii) leverage existing owned and leased tracks to generate ancillary revenue streams; (iii) partner with existing promoters to create additional marquis events; and (iv)  continue to build sponsorship, advertising and related revenue, including license fees related to the sale of branded merchandise.   If the Company is unsuccessful in its plan, we will be required to seek additional equity and/or debt capital to continue as a going concern.  Such capital may not be available to the Company on acceptable terms, if at all.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and clarification of recorded asset amounts or to the amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern.

 During 2007, the Company has raised working capital from existing shareholders through the issuance of short term promissory notes and Senior Secured Notes. As part of the Company’s financing plan, the Company is currently negotiating with the holders of its Series D Preferred Stock (“Series D”) in connection with a proposed exchange of the Series D shares into common stock or common stock equivalents. If such an exchange occurs, we will eliminate in excess of $54.0 million of liquidation preference and accrued and future preferred dividends. If such exchange is completed, it will result in the issuance of common shares or common share equivalents in an amount significantly higher than the 17.9 million shares that are currently issuable upon conversion of the Series D. Therefore such an exchange will, if completed, result in significant additional dilution to our existing common shareholders.  No assurances can be given that the Company will be successful in the completion of the Series D Exchange.

 The following table summarizes our contractual obligations as of September 30, 2007:

	Payment Due by Period
			Remainder of								2011 and
Contractual obligations	Total		2007		2008		2009		2010		thereafter
Operating leases	$	784,885	$	48,984	$	257,616	$	139,931	$	142,285	$	196,069
Employment agreements		757,289		183,188		514,101		60,000		-		-
Notes payable and accrued interest		16,992,053		135,069		2,850,170		360,129		13,486,937		130,184

Operating lease expense for the nine months ended September 30, 2007 and 2006 was $168,435 and $131,576, respectively.

The Company’s significant accounting policies include:

Reclassifications

Certain amounts in prior periods presented have been reclassified to conform to the current financial statement presentation.  These reclassifications have no effect on previously reported net income or loss.

Use of Estimates

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

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition and Deferred Revenue

The Company derives its revenues from race sanctioning and event fees, admission fees and ticket sales, sponsorship and advertising, merchandise sales and other revenue. “Race sanctioning and event fees” includes amounts received from track owners and promoters for the organization and/or delivery of our racing series or touring shows including driver fees. “Admission fees and ticket sales” includes ticket sales for all events held at the Company’s owned or leased facilities and ticket sales for our touring shows where we rent tracks for individual events and organize, promote and deliver our racing programs. “Sponsorship and advertising” revenue includes fees obtained for the right to sponsor our motorsports events, series or publications, and for advertising in our printed publications or television programming. 

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The Company recognizes race sanctioning and event fees upon the successful completion of a scheduled race or event. Race sanction and event fees collected prior to a scheduled race event are deferred and recognized when earned upon the occurrence of the scheduled race or event. Track operations, ticket and concession sales are recognized as revenues on the day of the event.  Income from memberships to our sanctioning bodies is recognized on a prorated basis over the term of the membership. The Company recognizes revenue from sponsorship and advertising agreements when earned in the applicable racing season as set forth in the sponsorship or advertising agreement either upon completion of events or publication of the advertising. Revenue from merchandise sales are recognized at the time of sale less estimated returns and allowances, if any. Revenues and related expenses from barter transactions in which the Company receives goods or services in exchange for sponsorships of motorsports events are recorded at fair value in accordance with Emerging Issues Task Force (“EITF”) Issue No. 99-17, Accounting for Advertising Barter Transactions. Barter transactions accounted for $240,000 and $166,000 of total revenues for the respective nine month periods ended September 30, 2007 and 2006.

Expense Recognition and Deferral

Certain direct expenses pertaining to specific events, including prize and point fund monies, advertising and other expenses associated with the promotion of our racing events are deferred until the event is held, at which point they are expensed.  Annual points fund monies which are paid at the end of the racing season are accrued during the racing season based upon the races held and total races scheduled.

The cost of non-event related advertising, promotion and marketing programs are expensed as incurred.

Net loss Per Share

Basic and diluted earnings per share (EPS) are calculated in accordance with FASB Statement No. 128, Earnings per Share. For the nine months ended September 30, 2007, the net loss per share applicable to common stock has been computed by dividing the net loss by the weighted average number of common shares outstanding.

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As of September 30, 2007 the Company had the following warrants and stock options outstanding:

· Promissory note warrants to purchase 1,948,510 shares of common stock at an exercise price of $4.50

· Series D warrants to purchase 2,520,178 shares of common stock at an exercise price of $4.50

· Other warrants to purchase 542,738 shares of common stock at an exercise price of $0.001

· Placement Agent Warrants to purchase 581,266 shares of common stock at exercise prices ranging from $2.70 to $5.00

· Warrants to purchase 375,059 shares of common stock at an exercise price of $3.00

· Other warrants to purchase 40,000 shares of common stock issued at an exercise price  of $3.65

· Employee stock options to purchase 300,000 shares at an exercise price of $2.49 per share

· Employee stock options to purchase 75,000 shares at an exercise price of $2.50 per share

· Employee stock options to purchase 69,000 shares at an exercise price of $1.70 per share

· Employee stock options to purchase 54,000 shares at an exercise price of $2.00 per share

· Employee stock options to purchase 300,000 shares at an exercise price of $3.65 per share

· Employee stock options to purchase 600,000 shares at an exercise price of $3.75 per share

· Director stock options to purchase 375,000 shares at exercise prices ranging from $3.00 to $4.75 per share

· Other stock options totaling 390,000 shares at exercise prices ranging from $3.00 to $4.50 per share

In addition, as of September 30, 2007, the Company’s Series D Preferred Stock was convertible into 17.9 million shares of common stock. None of these were included in the computation of diluted EPS because the Company had a net loss and all potential issuance of common stock would have been anti-dilutive.

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Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Inventories

Inventories of retail merchandise are stated at the lower of cost or market on the first in, first out method. Shipping, handling and freight costs related to merchandise inventories are charged to cost of merchandise.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided for financial reporting purposes using the straight-line method over the estimated useful lives of the related assets ranging from 3 to 40 years. Expenditures for maintenance, repairs and minor renewals are expensed as incurred; major renewals and betterments are capitalized. At the time depreciable assets are retired or otherwise disposed of, the cost and the accumulated depreciation of the assets are eliminated from the accounts and any profit or loss is recognized.

The carrying values of property and equipment are evaluated for impairment based upon expected future undiscounted cash flows. If events or circumstances indicate that the carrying value of an asset may not be recoverable, an impairment loss would be recognized equal to the difference between the carrying value of the asset and its fair value. As of September  30, 2006, the Company believes there is no impairment of property and equipment.

Purchase Accounting

The Company accounted for its acquisitions of assets in accordance with Statement of Financial Accounting Standards No. 141 (“SFAS No. 141”), Business Combinations and Statement of Financial Accounting Standards No. 142, Goodwill and Intangible Assets (“SFAS No. 142”). SFAS no. 141 requires that all business combinations entered into subsequent to June 30, 2001 be accounted for under the purchase method of accounting and that certain acquired intangible assets in a business combination be recognized and reported as assets apart from goodwill.

Intangible Assets

Upon its inception, the Company adopted Statement of Financial Accounting Standard (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142 goodwill and intangible assets with indefinite lives are not to be amortized but are tested for impairment at least annually. Intangible assets with definite useful lives are to be amortized over the respective estimated useful lives or anticipated future cash flow streams when appropriate.

At least annually the Company tests for possible impairment of all intangible assets and more often whenever events or changes in circumstances, such as a reduction in operating cash flow or a dramatic change in the manner that the asset is intended to be used indicate that the carrying amount of the asset is not recoverable. If indicators exist, the Company compares the discounted cash flows related to the asset to the carrying value of the asset. If the carrying value is greater than the discounted cash flow amount, an impairment charge is recorded in the operating expense section in the statement of operations for amounts necessary to reduce the carrying value of the asset to fair value. The Company has chosen the fourth quarter of its fiscal year to conduct its annual impairment test.

Income Taxes

The Company accounts for income taxes under Financial Accounting Standards Number 109 (“SFAS 109”), “Accounting for Income Taxes”. Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to be reversed. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Concentration of Credit Risk

Due to the nature of the Company’s sponsorship agreements, the Company could be subject to concentration of accounts receivable within a limited number of accounts.  As of September 30, 2007 the Company had bank deposits in excess of FDIC insurance of $6.0 million.

New Accounting Pronouncements

Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standard No. 123(R), Share-Based Payment, (“SFAS No. 123(R)”), using the modified prospective transition method. SFAS No. 123(R) requires equity-classified share-based payments to employees, including grants of employee stock options, to be valued at fair value on the date of grant and to be expensed over the applicable vesting period. Under the modified prospective transition method, share-based awards granted or modified on or after January 1, 2006, are recognized in compensation expense over the applicable vesting period. Also, any previously granted awards that are not fully vested as of January 1, 2006 are recognized as compensation expense over the remaining vesting period. No retroactive or cumulative effect adjustments were required upon The Company’s adoption of SFAS No. 123(R).

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In February 2006, the FASB issued Statement No. 155,“Accounting for Certain Hybrid Financial Instruments” (“SFAS No. 155”), which amends FASB Statements No. 133 and 140. This Statement permits fair value remeasurement for any hybrid financial instrument containing an embedded derivative that would otherwise require bifurcation, and broadens a Qualified Special Purpose Entity’s (“QSPE”) permitted holdings to include passive derivative financial instruments that pertain to other derivative financial instruments. This Statement is effective for all financial instruments acquired, issued or subject to a remeasurement event occurring after the beginning of an entity’s first fiscal year beginning after September 15, 2006. This Statement has no current applicability to the Company’s financial statements.  Management adopted this Statement on January 1, 2007 and the initial adoption of this Statement did not have a material impact on the Company’s financial position, results of operations, or cash flows.

 In June 2006, the FASB issued Interpretation 48,“Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of FASB Statement No. 109,“Accounting for Income Taxes.”  FIN 48 clarifies the accounting and reporting for income taxes where interpretation of the law is uncertain. FIN 48 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of income tax uncertainties with respect to positions taken or expected to be taken in income tax returns. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company files tax returns in the United States and various state jurisdictions.  The Company’s 2003-2006 U.S. federal and state income tax returns remain open to examination by the Internal Revenue Service. The Company is continuing its practice of recognizing interest and/or penalties related to income tax matters as general and administrative expenses. The Company may have nexus in more states than it is currently filing tax returns.  Thus, upon examination, the company could be required to file additional tax returns.  Due to the losses incurred, it is unlikely that any additional filings would result in any additional income tax.  Management adopted this Statement on January 1, 2007 and the initial adoption of FIN 48 did not have a material impact on the Company’s financial position, results of operations, or cash flows.

In September 2006, the FASB issued Statement No. 157,“Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, with earlier adoption permitted. Management is assessing the impact of the adoption of this Statement.

 In September 2006, the FASB issued Statement No. 158,“Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (“SFAS No. 158”), an amendment of FASB Statements No. 87, 88, 106 and 132(R). SFAS No. 158 requires (a) recognition of the funded status (measured as the difference between the fair value of the plan assets and the benefit obligation) of a benefit plan as an asset or liability in the employer’s statement of financial position, (b) measurement of the funded status as of the employer’s fiscal year-end with limited exceptions, and (c) recognition of changes in the funded status in the year in which the changes occur through comprehensive income. The requirement to recognize the funded status of a benefit plan and the disclosure requirements are effective as of the end of the fiscal year ending after December 15, 2006. The requirement to measure the plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008.  This Statement has no current applicability to the Company’s financial statements.  Management adopted this Statement on December 31, 2006 and the adoption of SFAS No. 158 did not have a material impact to the Company’s financial position, results of operations, or cash flows. 

In September 2006, the Securities Exchange Commission issued Staff Accounting Bulletin No. 108 (“SAB No. 108”). SAB No. 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB No. 108 requires companies to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. When the effect of initial adoption is material, companies will record the effect as a cumulative effect adjustment to beginning of year retained earnings and disclose the nature and amount of each individual error being corrected in the cumulative adjustment. SAB No. 108 was effective beginning January 1, 2007 and the initial adoption of SAB No. 108 did not have a material impact on the Company’s financial position, results of operations, or cash flows.

In February 2007, the FASB issued Statement No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159). This statement permits companies to choose to measure many financial assets and liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of SFAS 159 on its consolidated financial statements.

Stock-Based Compensation

Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standard No. 123(R), Share-Based Payment, (“SFAS No. 123(R)”), using the modified prospective transition method. SFAS No. 123(R) requires equity-classified share-based payments to employees, including grants of employee stock options, to be valued at fair value on the date of grant and to be expensed over the applicable vesting period. Under the modified prospective transition method, share-based awards granted or modified on or after January 1, 2006, are recognized in compensation expense over the applicable vesting period. Also, any previously granted awards that are not fully vested as of January 1, 2006 are recognized as compensation expense over the remaining vesting period. No retroactive or cumulative effect adjustments were required upon The Company’s adoption of SFAS No. 123(R).

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Prior to adopting SFAS No. 123(R), The Company accounted for its fixed-plan employee stock options using the intrinsic-value based method prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, (“APB No. 25”) and related interpretations. This method required compensation expense to be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price.

Unrecognized compensation expense as of September 30, 2007 related to outstanding stock options was $2.6 million.

The fair value of each option grant is estimated for disclosure purposes on the date of grant using the Black-Scholes option-pricing model with the expected lives equal to the vesting period. The weighted average contractual life of the outstanding options at September 30, 2007 was 3.5 years.

A summary of the status of stock options and related activity for the Nine month period ended September 30, 2007 is presented below:

Options outstanding at December 31, 2005	2,040,000	3.54
Granted	123,000	1.83
Exercised	—	—
Forfeited/expired	—	—
Options outstanding at September 30, 2007	2,163,000	3.45

Certain Risks

The Company’s business is subject to numerous risk factors, including the following:

We may need additional capital to continue as a going concern and successfully execute our business plan.

Revenues from operations are still significantly below levels necessary to achieve positive cash flow. From inception to September 30, 2007, our aggregate net loss is approximately $67.0 million. Our cash position is $6.2 million at September 30, 2007, and we expect the net losses and negative cash flow to continue throughout 2007. In the event we are unable to achieve profitable operations,  our known and likely short term cash requirements will exceed available cash resources. As a result, we will need additional equity and/or debt capital to successfully execute our business plan. Our short-term liquidity could disrupt our event and production schedule, which would adversely affect our results of operations.

Our independent accountants' opinion on our 2006 consolidated financial statements includes an explanatory paragraph indicating substantial doubt about our ability to continue as a going concern. To continue as a going concern, we will have to immediately obtain additional debt and/or equity capital, increase our sales from sponsorships and advertising, decrease costs, and possibly induce creditors to forebear or to convert to equity.  We can give no assurance that we will be successful in accomplishing these tasks, including obtaining adequate financing on favorable terms, if at all.  If our capital needs are met through the issuance of equity or convertible debt securities, the percentage ownership of our shareholders will be reduced.

We have a limited operating history.  As a result, evaluating our current business model and prospects may be difficult.

We began operations in February 2004 with the acquisition of World of Outlaws. Since then we have completed the acquisition of DIRT, UMP, LSI, MARS and Volusia Speedway.  Thus, we have only a limited operating history with which you can evaluate our current business model and our prospects, and our historical financial data may be of limited value in evaluating our future revenue and operating expenses.

Speculative nature of our proposed operations.

The success of our plan of operation will depend to a great extent on the operations, financial condition and management of targeted acquisitions and our ability to identify additional business opportunities.  If we cannot acquire additional business opportunities, we may not be able to grow our Company.  Further, our ability to successfully implement our business plan requires an effective plan for managing our future growth.  Future expansion efforts will be capital intensive and may significantly strain our managerial and other resources.  To manage future growth effectively, we must maintain and enhance our financial and accounting systems and controls, integrate new personnel and manage expanded operations. If we do not manage growth properly, it could harm our operating results and financial condition.

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Our failure to achieve or maintain profitability could force us to cease our operations.

We have not operated at a profit over the course of our brief history, and there can be no assurance that we will be able to achieve or maintain profitability.  Our recent acquisitions have resulted in operating losses since inception, and we expect to incur operating losses in future periods.  Our ability to attain profitability and positive cash flow is dependent upon a number of factors, including our ability to increase revenues while reducing costs per racing event. We may not be successful in increasing or maintaining revenues or achieving positive cash flow.  Even if we do maintain profitability, we may not be able to sustain or increase our profitability on a quarterly or annual basis.  If we fail to maintain profitability, we might ultimately be forced to discontinue our operations.

Our success depends upon sponsorship and advertising sales for our racing series and racing events.

Our business model depends on our ability to attract and maintain sponsorships and advertisers for our racing series and racing events.  A sponsor’s and advertiser’s willingness to enter into and continue their relationship with us is subject to many risks beyond our control, including: a) Competition for advertising and promotional dollars; b) general market and industry conditions that may affect our sponsors; and c) the introduction and success of competition for new racing events and racing series.

In the event we are not able to attract sponsors and advertisers, or retain current sponsorships and advertising relationships, we will  experience continued net losses, and those losses will be significant.

Our executive officers, directors and principal stockholders have substantial influence over us.

As of September 30, 2007, our executive officers, directors and principal stockholders together beneficially own approximately 25% of the outstanding shares of common stock. As a result, these stockholders, acting together, may be able to exercise substantial influence over all matters requiring approval by our stockholders, including the election of directors and approval of significant corporate transactions. The concentration of ownership may also have the effect of delaying or preventing a change in our control that may be viewed as beneficial by the other stockholders.

In addition, our certificate of incorporation does not provide for cumulative voting with respect to the election of directors. Consequently, our present directors, executive officers, principal stockholders and our respective affiliates may be able to control the election of the members of the Board of Directors. Such a concentration of ownership could have an adverse effect on the price of the common stock, and may have the effect of delaying or preventing a change in control, including transactions in which stockholders might otherwise receive a premium for their shares over then current market prices.

Our quarterly operating results may fluctuate significantly.

Our success depends on a number of factors, many of which are beyond our control. These factors include (1) the attendance at our racing events; (2) capital expenditures and other costs relating to the expansion of operations, (3) changes in our pricing policies and those of our competitors, (4) the number of racing events scheduled during the quarter, (5) weather that may effect attendance or cause us to cancel or postpone our racing events, (6) changes in operating expenses, (7) changes in strategy, (8) personnel changes, (9) the introduction of competitive racing events, (10) the timing and effect of potential acquisitions, and (11) other general economic factors.

Our operating results, cash flows and liquidity may fluctuate significantly. Our revenues depend on our ability to hold racing events and attract attendees. Our expense levels are based, in part, on our expectations regarding future revenues, which could be inaccurate. Moreover, our operations often require up-front expenses, but result in trailing revenues. To the extent that revenues are below expectations, we will be unable to reduce expenses proportionately, and operating results, cash flow and liquidity will be negatively affected.  Due to these and other factors, our operating results and/or growth rate may be below the expectations of analysts, management and investors. This, in turn, could cause the price of our common stock to drop.

Acquisitions of companies or joint venture investments may disrupt our business or dilute shareholder value.

We may acquire companies or enter into joint ventures. If we are unable to integrate these acquisitions with our existing operations, we may not receive the intended benefits of the acquisitions.  Also, acquisitions may subject us to unanticipated liabilities or risks. Any acquisition or joint venture may temporarily disrupt our operations and divert management's attention from day-to-day operations.  If we make future acquisitions, we may incur debt or issue equity securities to finance the acquisitions.  The issuance of equity securities for any acquisition could cause our shareholders to suffer significant dilution.  Also, our profitability may suffer due to acquisition-related expenses, additional interest expense or amortization costs for acquired goodwill and other intangible assets and operating losses generated by the acquired entity or joint venture.  Acquisitions and joint ventures that do not successfully complement our existing operations may harm our business.

Dependence on qualified and key personnel.

We believe our future success will depend in large part upon our ability to identify, attract and retain highly skilled managerial, sales and marketing, finance and operations personnel. Competition for personnel with the type of experience in these areas is intense, and we compete for personnel against numerous companies, including larger, more established companies with significantly greater financial resources. There can be no assurance we will be successful in identifying, attracting and retaining personnel.

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Illiquidity of our common stock.

Although there is a public market for our common stock, trading volume has been historically low which substantially increases your risk of loss.  We can give no assurance that an active and liquid public market for the shares of the common stock will develop in the future.  Low trading volume in our common stock could affect your ability to sell the shares of common stock. The development of a public trading market depends upon not only the existence of willing buyers and sellers, but also on market makers.  The market bid and asked prices for the shares may be significantly influenced by decisions of the market makers to buy or sell the shares for their own account, which may be critical for the establishment and maintenance of a liquid public market in the shares.  Market makers are not required to maintain a continuous two-sided market and are free to withdraw firm quotations at any time.  Additionally, in order to maintain our eligibility for quotation on the OTC Bulletin Board, we need to have at least one registered and active market maker. No assurance can be given that any market making activities of any additional market makers will commence or that the activities of current market makers will be continued.

Our common stock price has been volatile, which could result in substantial losses for stockholders.

Our common stock is currently traded on the OTC under the symbol DMSP. We have in the past experienced, and may in the future experience, limited daily trading volume. The trading price of our common stock has been and may continue to be volatile. This volatility often has been unrelated to the operating performance of the Company.  These broad market fluctuations may significantly affect the trading price of our common stock, regardless of our actual operating performance. The trading price of our common stock could be affected by a number of factors, including, but not limited to, changes in expectations of our future performance, changes in estimates by securities analysts (or failure to meet such estimates), quarterly fluctuations in our sales and financial results and a variety of risk factors, including the ones described elsewhere in this prospectus. Periods of volatility in the market price of a company’s securities sometimes result in securities class action litigation. If this were to happen to us, such litigation would be expensive and would divert management’s attention. In addition, if we needed to raise equity funds under adverse conditions, it would be difficult to sell a significant amount of our stock without causing a significant decline in the trading price of our stock.

Our stock price may decline if additional shares are sold in the market.

As of September 30, 2007, we had 16,498,990 shares of common stock outstanding.  In addition, as of September 30, 2007, the Company’s Series D Preferred Stock was convertible into 17,948,000 shares of common stock, the Company’s Series E Preferred Stock was convertible into 3,374,000 shares of common stock and we had warrants exercisable for 6,007,751 shares of common stock outstanding.  Future sales of substantial amounts of shares of our common stock by our existing stockholders in the public market, or the perception that these sales could occur, may cause the market price of our common stock to decline. We may be required to issue additional shares upon exercise of previously granted options and warrants that are currently outstanding.

Our articles and bylaws may delay or prevent a potential takeover of us.

Our Articles of Incorporation, as amended, and Bylaws, as amended, contain provisions that may have the effect of delaying, deterring or preventing a potential takeover of us, even if the takeover is in the best interest of our shareholders.  The Bylaws limit when shareholders may call a special meeting of shareholders.  The Articles also allow the Board of Directors to fill vacancies, including newly-created directorships.

No Dividends.

We have not paid any dividends on our common stock to date, and have no plans to pay any dividends on our common stock for the foreseeable future.  Further, so long as shares of our Series D Preferred Stock are outstanding, we may not pay any dividend on our common stock unless we have first paid all accrued and unpaid dividends on the outstanding shares of Series D.

We can give no assurance that we will ever pay any dividends in respect to our common stock.

ITEM 3. CONTROLS AND PROCEDURES

The Company’s Chief Executive Officer and the Company’s principal financial officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rule 13a-14(c) and 15d-14(c) as of the date of the financial statements included in this report on Form 10-QSB, have concluded that as of the evaluation date, the Company’s disclosure controls and procedures are adequate and effective to ensure that material information relating to the Company (including consolidated subsidiaries) required to be included in our periodic SEC filings would be made known to them by others within those entities.

There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s disclosure controls and procedures subsequent to the evaluation date, nor any significant deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions. As a result, no corrective actions were taken.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are from time to time involved in various legal proceedings incidental to the conduct of our business. We believe that the outcome of all such pending legal proceedings will not in the aggregate have a material adverse effect on our business, financial condition, results of operations or liquidity.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

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

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

The following documents are filed as part of this report:

(a) Exhibits

3.1	Certificate of Designation of Series E Convertible Preferred Stock, dated September 28, 2007 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 2, 2007)
4.1	Form of Series D Convertible Preferred Stock Purchase Agreement, dated as of May 16, 2006, by and among Dirt Motor Sports, Inc., a Delaware corporation, and the purchasers set forth therein. (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 23, 2006).
4.2	Certificate of Designation of the Relative Rights and Preferences of the Series D Convertible Preferred Stock. (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the Commission on May 23, 2006).
4.3	Form of Series D Warrant. (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed with the Commission on May 23, 2006).
4.4	Form of Series B Convertible Preferred Exchange Agreement, dated as of May 16, 2006, by and among Dirt Motor Sports, Inc., a Delaware corporation, and the holders set forth therein. (filed as Exhibit 4.4 to the Company’s Current Report on Form 8-K filed with the Commission on May 23, 2006).
4.5	Form of Series C Convertible Preferred Exchange Agreement, dated as of May 16, 2006, by and among Dirt Motor Sports, Inc., a Delaware corporation, and the holders set forth therein. (filed as Exhibit 4.5 to the Company’s Current Report on Form 8-K filed with the Commission on May 23, 2006).
4.6	Form of Warrant Exchange Agreement dated as of May 16, 2006, by and among Dirt Motor Sports, Inc., a Delaware corporation, North Sound Legacy Institutional Fund LLC, a Delaware limited liability company, and North Sound Legacy International Fund Ltd, a British Virgin Islands corporation. (filed as Exhibit 4.6 to the Company’s Current Report on Form 8-K filed with the Commission on May 23, 2006).
4.7	Form of Warrant Exchange Agreement dated as of May 16, 2006, by and among Dirt Motor Sports, Inc., a Delaware corporation, and Royal Bank of Canada. (filed as Exhibit 4.7 to the Company’s Current Report on Form 8-K filed with the Commission on May 23, 2006).
4.8	Form of Registration Rights Agreement dated as of May 16, 2006. (filed as Exhibit 4.8 to the Company’s Current Report on Form 8-K filed with the Commission on May 23, 2006).
4.9	Form of Mutual Release Agreement, dated as of May 19, 2006, by and between Dirt Motor Sports, Inc., a Delaware corporation, and Mr. Paul A. Kruger. (filed as Exhibit 4.9 to the Company’s Current Report on Form 8-K filed with the Commission on May 23, 2006).
4.10	Form of Lock-Up by between Dirt Motor Sports, Inc., a Delaware corporation and Paul A. Kruger. (filed as Exhibit 4.10 to the Company’s Current Report on Form 8-K filed with the Commission on May 23, 2006).
10.1	Form of Secured Promissory Demand Note (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 10, 2007).
10.2	Form of Note Purchase Agreement, dated September 28, 2007, by and among the Company and the Lenders (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 2, 2007)
10.3	Form of Promissory Note, dated September 28, 2007, made by the Company payable to the Lenders (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on October 2, 2007)
10.4	Form of Security Agreement, dated September 28, 2007, by and among the Company, Carter & Miracle Concessions, LLC, and the Lenders (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on October 2, 2007)
10.5	Form of Subsidiary Guaranty, dated September 28, 2007, by and among the Company, Boundless Racing, Inc., Carter & Miracle Concessions, LLC, Volusia Operations, LLC, and the Lenders (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on October 2, 2007)

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10.6	Pennsylvania Form of Mortgage and Security Agreement, dated September 28, 2007, by and among the Company and the Lenders (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the Commission on October 2, 2007)
10.7	New York Form of Mortgage and Security Agreement, dated September 28, 2007, by and among the Company and the Lenders (filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the Commission on October 2, 2007)
10.8	Florida Form of Mortgage and Security Agreement, dated September 28, 2007, by and among the Company and the Lenders (filed as Exhibit 10.7 to the Company’s Current Report on Form 8-K filed with the Commission on October 2, 2007)
31.1	Rule 13a-14(a)/15d-14(a) Certification of Tom Deery *
31.2	Rule 13a-14(a)/15d-14(a) Certification of Brian Carter *
32	Section 1350 Certification of Tom Deery and Brian Carter  *

______________________

*Filed herewith

(b) Reports on Form 8-K.

The Company filed a Current Report on Form 8-K, dated November 2, 2007, reporting pursuant to Items 1,2,3 and 5 of such Form that the Company had issued $12.0 million of Secured Notes, with detachable shares of unregistered Common Stock or Series E Shares, of which $10,150,000 was paid in cash and the balance paid by cancellation of $1,850,000 principal amount of outstanding Short-Term Notes.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DIRT MOTOR SPORTS, INC.
	(Registrant)
Date: November 14, 2007	/s/ Tom Deery
	Tom Deery, Chief Executive Officer
Date: November 14, 2007	/s/ Brian Carter
	Brian Carter, Chief Financial Officer

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