Attached files
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended June 30, 2010
-OR-
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities And Exchange Act of 1934 for the transaction period from
_________ to________
Commission File Number 333-39942
Dale Jarrett Racing Adventure, Inc.
--------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-3564984
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification Number)
1313 10th Avenue Lane SE, Hickory, NC 28602
(Address of principal executive offices, Zip Code)
(888) 467-2231
(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer (1) 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 [x] No [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (section 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerate filer, or a small
reporting company as defined by Rule 12b-2 of the Exchange Act):
Large accelerated filer [ ] Non-accelerated filer [ ]
Accelerated filer [ ] Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [x]
The number of outstanding shares of the registrant's common stock,
July 31, 2010:
Common Stock - 24,510,502
2
DALE JARRETT RACING ADVENTURE, INC.
FORM 10-Q
For the quarterly period ended June 30, 2010
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 13
Item 4T. Controls and Procedures 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 1A. Risk Factors 15
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 15
Item 3. Defaults upon Senior Securities 15
Item 4. Removed and Reserved 15
Item 5. Other Information 15
Item 6. Exhibits 15
SIGNATURES
3
PART I
Item I - FINANCIAL STATEMENTS
Dale Jarrett Racing Adventure, Inc.
Condensed Balance Sheets
June 30, December 31,
2010 2009
------- -----------
(Unaudited)
ASSETS
Current assets:
Cash $ 394,094 $ 544,563
Accounts receivable 114,267 58,484
Spare parts and supplies 152,350 149,844
Prepaid expenses and other current assets 54,914 64,494
----------- -----------
Total current assets 715,625 817,385
----------- -----------
Property and equipment, net of
accumulated depreciation of $816,930
and $757,747 509,389 574,368
----------- -----------
Other assets 11,630 3,600
----------- -----------
$ 1,236,644 $ 1,395,353
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt $ 24,129 $ 23,627
Accounts payable 106,916 152,422
Accrued expenses 24,262 34,026
Deferred revenue 1,197,383 1,153,313
----------- -----------
Total current liabilities 1,352,690 1,363,388
----------- -----------
Long-term debt 37,935 48,182
----------- -----------
Stockholders' deficit:
Preferred stock, $.0001 par value,
5,000,000 shares authorized - -
Common stock, $.0001 par value,
200,000,000 shares authorized,
24,510,502 shares issued and
23,886,752 and 24,216,002 shares
outstanding at June 30, 2010 and
December 31, 2009, respectively 2,451 2,451
4
Additional paid-in capital 6,184,480 6,184,480
Treasury stock, 623,750 and 294,500
shares, at cost (36,711) (17,867)
Accumulated (deficit) (6,304,201) (6,185,281)
----------- -----------
(153,981) (16,217)
----------- -----------
$ 1,236,644 $ 1,395,353
=========== ===========
See accompanying notes to unaudited condensed financial statements.
5
Dale Jarrett Racing Adventure, Inc.
Condensed Statements of Operations
For The Three Months and Six Months Ended June 30, 2010 and 2009
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
2010 2009 2010 2009
---- ---- ---- ----
(Restated) (Restated)
Sales $687,582 $847,166 $1,286,219 $1,294,653
Cost of sales and services 288,963 338,411 574,849 584,751
---------- ---------- ---------- ----------
Gross profit 398,619 508,755 711,370 709,902
---------- ---------- ---------- ----------
Expenses
General and administrative - non
cash stock compensation 990 66,000 990 66,000
General and administrative 441,422 417,858 807,960 784,585
---------- ---------- ---------- ----------
442,412 483,858 808,950 850,585
---------- ---------- ---------- ----------
Income (loss) from operations (43,793) 24,897 (97,580) (140,683)
Other income and (expense):
Interest income 448 200 1,001 748
Loss on disposal of assets (18,252) - (18,252) -
Interest expense (2,917) (1,413) (4,089) (2,949)
---------- ---------- ---------- ----------
(20,721) (1,213) (21,340) (2,201)
---------- ---------- ---------- ----------
Income (loss) before taxes (64,514) 23,684 (118,920) (142,884)
Income taxes - - - -
---------- ---------- ---------- ----------
Net income (loss) $ (64,514) $ 23,684 $ (118,920) $ (142,884)
========== ========== ========== ==========
Per share information:
Basic and diluted income
(loss) per share $ (0.00) $ 0.00 $ (0.00) $ (0.01)
========== ========== ========== ==========
Weighted average shares outstanding
- basic and diluted 23,978,851 24,310,502 24,008,741 24,410,502
========== ========== ========== ==========
See accompanying notes to unaudited condensed financial statements.
6
Dale Jarrett Racing Adventure, Inc.
Condensed Statements of Cash Flows
For The Six Months Ended June 30, 2010 and 2009
(Unaudited)
2010 2009
---- ----
(Restated)
Net cash used in operating activities $ (78,266) $(143,125)
--------- ---------
Cash flows from investing activities:
Acquisition of plant and equipment (42,624) (49,960)
--------- ---------
Net cash used in financing activities (42,624) (49,960)
--------- ---------
Cash flows from financing activities:
Repayment of notes payable (9,745) (15,754)
Purchase of treasury stock (19,834) -
--------- ---------
Net cash used in financing activities (29,579) (15,754)
--------- ---------
Decrease in cash (150,469) (208,839)
--------- ---------
Cash, beginning of period 544,563 522,695
--------- ---------
Cash, end of period $ 394,094 $ 313,856
========= =========
See accompanying notes to unaudited condensed financial statements.
7
DALE JARRETT RACING ADVENTURE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2010
(UNAUDITED)
(1) Basis Of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with U.S. generally accepted accounting principles
(GAAP) for interim financial information and Rule 8.03 of Regulation SX.
They do not include all of the information and footnotes required by GAAP
for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the financial statements of the Company as of and
for the year ended December 31, 2009, including notes thereto included in
the Company's Form 10-K.
(2) Recent Accounting Pronouncements
The following Accounting Standards Codification Updates have been
issued, or became effective, since the beginning of the current period
covered by these financial statements:
Pronouncement Issued Title
ASU No. 2010-01 January 2010 Equity (Topic 505): Accounting for
Distributions to Shareholders with
Components of Stock and Cash - a
consensus of the FASB Emerging
Issues Task Force
ASU No. 2010-02 January 2010 Consolidation (Topic 810):
Accounting and Reporting for
Decreases in Ownership of a
Subsidiary - a Scope Clarification
ASU No. 2012-03 January 2010 Extractive Activities - Oil and Gas
(Topic 932): Oil and Gas Reserve
Estimation and Disclosures
ASU No. 2010-04 January 2010 Accounting for Various Topics:
Technical Corrections to SEC
Paragraphs
ASU No. 2010-05 January 2010 Compensation - Stock Compensation
(Topic718): Escrowed Share
Arrangements and the Presumption of
Compensation
8
DALE JARRETT RACING ADVENTURE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2010
(UNAUDITED)
(2) Recent Accounting Pronouncements (Continued)
ASU No. 2010-06 January 2010 Fair Value Measurements and
Disclosures (Topic 820): Improving
Disclosures about Fair Value
Measurements
ASU No. 2010-07 January 2010 Not-for-Profit Entities (Topic
958): Not-for-Profit Entities -
Mergers and Acquisitions
ASU No. 2010-08 February 2010 Technical Corrections to Various
Topics
ASU No. 2010-09 February 2010 Subsequent Events (Topic 855):
Amendments to Certain Recognition
and Disclosure Requirements
ASU No. 2010-10 February 2010 Consolidation (Topic 810):
Amendments for Certain Investment
Funds
ASU No. 2010-11 March 2010 Derivatives and Hedging (Topic
815): Scope Exception Related to
Embedded Credit Derivatives
ASU No. 2010-12 April 2010 Income Taxes (Topic 740):
Accounting for Certain Tax Effects
of the 2010 Health Care Reform Acts
(SEC Update)
ASU No. 2010-13 April 2010 Compensation-Stock Compensation
(Topic 718): Effect of Denominating
the Exercise Price of a Share-Based
Payment Award in the Currency of
the Market in Which the Underlying
Equity Security Trades-a consensus
of the FASB Emerging Issues Task
Force
ASU No. 2010-14 April 2010 Accounting for Extractive
Activities-Oil & Gas-Amendments to
Paragraph 932-10-S99-1 (SEC Update)
ASU No. 2010-15 April 2010 Financial Services-Insurance (Topic
944): How Investments Held through
Separate Accounts Affect an
Insurer's Consolidation Analysis of
Those Investments-a consensus of
the FASB Emerging Issues Task Force
9
DALE JARRETT RACING ADVENTURE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2010
(UNAUDITED)
(2) Recent Accounting Pronouncements (Continued)
ASU No. 2010-16 April 2010 Entertainment-Casinos (Topic 924):
Accruals for Casino Jackpot
Liabilities-a consensus of the FASB
Emerging Issues Task Force
ASU No. 2010-17 April 2010 Revenue Recognition-Milestone
Method (Topic 605): Milestone
Method of Revenue Recognition-a
consensus of the FASB Emerging
Issues Task Force
ASU No. 2010-18 April 2010 Receivables (Topic 310): Effect of
a Loan Modification When the Loan
is Part of a Pool That is Accounted
for as a Single Asset-a consensus
of the FASB Emerging Issues Task
Force
ASU No. 2010-19 May 2010 Foreign Currency (Topic 830):
Foreign Currency Issues: Multiple
Foreign Currency Exchange Rates
ASU No. 2010-20 July 2010 Receivables (Topic 310): Disclosure
about the Credit Quality of
Financing Receivables and the
Allowance for Credit Losses
ASU No. 2010-21 August 2010 Accounting for Technical Amendments
to Various SEC Rules and Schedules
Amendments to SEC Paragraphs
Pursuant to Release No. 33-9026:
Technical Amendments to Rules,
Forms, Schedules and Codification
of Financial Reporting Policies
(3) Basic and Diluted Income (Loss) Per Share
The Company calculates basic and diluted income (loss) per share as
required by the FASB Accounting Standards Codification. Basic income
(loss) per share is calculated by dividing net income (loss) by the
weighted average number of common shares outstanding for the period.
Diluted income (loss) per share is calculated by dividing net income
(loss) by the weighted average number of common shares and dilutive
common stock equivalents outstanding. During periods when we report a net
loss, anti-dilutive commons stock equivalents are not considered in the
computation. We did not have any dilutive common stock equivalents for
the three months ended June 30, 2009.
10
DALE JARRETT RACING ADVENTURE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2010
(UNAUDITED)
(4) Spare Parts and Supplies
Spare parts and supplies include engine parts, tires, and other supplies
used in the racecar operation and are recorded at cost.
(5) Property and Equipment
Property and equipment are recorded at cost and are depreciated using
the straight-line method over the estimated useful lives of the
respective assets, ranging from 3 to 10 years. Major additions are
capitalized, while minor additions and maintenance and repairs, which
do not extend the useful life of an asset, are expensed as incurred.
(6) Stockholders' Deficit
During the six months ended June 30, 2010, the Company purchased a
total of 329,250 shares of its common stock for cash aggregating
$19,834, which is classified as treasury stock in the accompanying
condensed balance sheet as of June 30, 2010 and recorded at cost.
Further, the Company reissued 20,000 shares of treasury stock with a
fair value of $990 to an employee for services during the period then
ended. During July 2010, the company purchased an additional 35,900
shares of its common stock for cash aggregating $1,701.
(7) Legal Proceedings
On June 28, 2010, the Company paid $20,000 to settle litigation related
to an alleged breach of contract in the circuit court of Talladega
County, Alabama. The Company had previously accrued $17,500 related to
this proceeding and expensed a further $2,500 during the three months
ended June 30, 2010.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Trends and Uncertainties. Demand for the Corporation's services and
products are dependent on, among other things, general economic
conditions which are cyclical in nature. Inasmuch as a major portion
of the Corporation's activities are the receipt of revenues from its
driving school services and products, the Corporation's business
operations may be adversely affected by the Corporation's competitors
and prolonged recessionary periods.
There are no known trends, events or uncertainties that have or are
reasonably likely to have a material impact on the corporation's short
term or long term liquidity. Sources of liquidity both internal and
external will come from the sale of the corporation's services and
products as well as the private sale of the Corporation's stock. There
are no trends, events or uncertainties that have had or are reasonably
expected to have a material impact on the net sales or revenues or
income from continuing operations. There are no significant elements
of income or loss that do not arise from the Corporation's continuing
operations. There are no known causes for any material changes from
period to period in one or more line items of the corporation's
financial statements.
The Corporation currently has classes planned through December 2010.
Capital Resources and Source of Liquidity. The Corporation currently
has no material commitments for capital expenditures. The Corporation
has no plans for future capital expenditures, such as additional race
cars, at this time.
The Corporation believes that there will be sufficient capital from
revenues to conduct operations for the next twelve (12) months.
Presently, the Corporation's revenue and cash comprises one hundred
(100) percent of the total cash necessary to conduct operations.
Future revenues from classes and events will determine the amount of
additional financing necessary to continue operations.
The board of directors has no immediate offering plans in place. The
board of directors shall determine the amount and type of financing as
the Corporation's financial situation dictates.
For the six months ended June 30, 2010, the Corporation acquired plant
and equipment of $42,624 resulting in net cash used in investing
activities of $42,624.
Comparatively, for the six months ended June 30, 2009, the Corporation
acquired plant and equipment of $49,960 resulting in net cash used in
investing activities of $49,960.
12
For the six months ended June 30, 2010, the Corporation reduced its
outstanding debt by repaying notes payable of $9,745 and purchased
treasury stock of $19,834. As a result, the Corporation had net cash
used in financing activities of $29,579 for the six months ended June
30, 2010.
Comparatively, for the six months ended June 30, 2009, the Corporation
reduced its outstanding debt by repaying notes payable of $15,754. As
a result, the Corporation had net cash used in financing activities of
$15,754 for the six months ended June 30, 2009.
On a long term basis, liquidity is dependent on continuation of
operation and receipt of revenues.
Results of Operations. For the three months ended June 30, 2010, the
registrant had sales of $687,582 with cost of sales of $288,963 for a
gross profit of $398,619.
Comparatively, for the three months ended June 30, 2009, the registrant
had sales of $847,166 with cost of sales of $338,411 for a gross profit
of $508,755. The decrease in revenue of $159,584, or 18.8%, resulted
in a decrease in cost of sales of $49,448, or 14.6%, due to decreased
customers and decreased costs to service less customers. The gross
profit percentage decreased from 60.0% to 58.0% because of decreased
sales and relatively fixed track and race equipment costs.
For the three months ended June 30, 2010, the registrant had general
and administrative expenses of $411,422 and non cash stock compensation
of $990. Comparatively, for the three months ended June 30, 2009, the
registrant had general and administrative expenses of $417,858 and non
cash stock compensation of $66,000. The percentage of general and
administrative expenses to revenues for the three months ended June 30,
2010 increased to 64.34% from 57.11% for the three months ended June
30, 2009 due to decreased revenues.
For the six months ended June 30, 2010, the registrant had sales of
$1,286,219 with cost of sales of $574,849 for a gross profit of
$711,370.
Comparatively, for the six months ended June 30, 2009, the registrant
had sales of $1,294,653 with cost of sales of $584,751 for a gross
profit of $709,902. The decrease in revenue of $8,434, or 0.65%,
resulted in a decrease in cost of sales of $9,902, or 1.69%, due to
decreased customers and decrease costs to service less customers. The
gross profit percentage increased slightly from 54.83% to 55.31%
because of decreased sales with relatively fixed track and race
equipment costs.
For the six months ended June 30, 2010, the registrant had general and
administrative expenses of $807,960 with non cash stock compensation of
$990. Comparatively, for the six months ended June 30, 2009, the
registrant had general and administrative expenses of $784,585 and non
cash stock compensation of $66,000. The percentage of general and
13
administrative expenses to revenues for the six months ended June 30,
2010 decreased to 62.89% from 65.70% for the three months ended June
30, 2009 due to decreased revenues.
Plan of Operation. The Corporation may experience problems; delays,
expenses and difficulties sometimes encountered by an enterprise in the
Corporation's stage, many of which are beyond the Corporation's
control. These include, but are not limited to, unanticipated problems
relating to additional costs and expenses that may exceed current
estimates and competition.
The Corporation is not delinquent in any of its obligations even though
the Corporation has generated limited operating revenues. The
Corporation intends to market its products and services utilizing cash
made available from operations. The Corporation's management is of the
opinion that future revenues will be sufficient to pay its expenses for
the next twelve months.
The Corporation is not currently pursuing financing for its operations.
The Corporation is seeking to expand its revenue base. Failure to expand
its revenue base may result in the Corporation depleting its available
funds and not being able pay its obligations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for smaller reporting companies.
Item 4T. Controls and Procedures
During the three months ended June 30, 2010, there were no changes in
our internal controls over financial reporting (as defined in Rule 13a-
15(f) and 15d-15(f) under the Exchange Act) that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management,
including our chief executive officer and chief financial officer, we
conducted an evaluation of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) and Rule 15d-15(e)
promulgated under the Securities Exchange Act of 1934, as amended, as
of June 30, 2010. Based on this evaluation, our chief executive
officer and chief principal financial officers have concluded such
controls and procedures to be effective as of June 30, 2010 to ensure
that information required to be disclosed by the issuer in the reports
that it files or submits under the Act is recorded, processed,
summarized and reported, within the time periods specified in the
Commission's rules and forms and to ensure that information required to
be disclosed by an issuer in the reports that it files or submits under
14
the Act is accumulated and communicated to the issuer's management,
including its principal executive and principal financial officers, or
persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
Not applicable for smaller reporting companies
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Removed and Reserved
Item 5. Other Information
None
Item 6. Exhibits
Exhibit 31 - Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32 - Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: August 13, 2010
DALE JARRETT RACING ADVENTURE, INC.
By: /s/Timothy Shannon
---------------------------
Timothy Shannon, Principal Executive Officer