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 March 31,September 30, 2008
- -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
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification Number)
120 A North Main Avenue, Newton, NC 28658
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(Address of principal executive offices, Zip Code)
(888) 467-2231
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(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 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,
May 15,October 31, 2008:
Common Stock - 25,245,502
2
DALE JARRETT RACING ADVENTURE, INC.
FORM 10-Q
For the quarterly period ended March 31,September 30, 2008
INDEX
Page
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 10
Item 4T. Controls and Procedures 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 1A. Risk Factors 12
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security
Holders 12
Item 5. Other Information 12
Item 6. Exhibits 12
SIGNATURES
3
PART I
Item I - FINANCIAL STATEMENTS
Dale Jarrett Racing Adventure, Inc.
Balance Sheets
March 31,September 30, 2008 December 31, 2007
(Unaudited)
ASSETS
- ------
Current assets:
Cash $ 872,205550,815 $1,323,215
Accounts receivable 92,96040,277 43,594
Inventory 7,510 7,510
Prepaid expenses and other current assets 132,613191,149 153,417
---------- ----------
Total current assets 1,105,288789,751 1,527,736
---------- ----------
Property and equipment, at cost, net of
accumulated depreciation 497,615640,226 393,531
---------- ----------
Other assets 52,5022,975 -
---------- ----------
$1,655,405$1,432,952 $1,921,267
========== ==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)EQUITY
---------------------------------------
Current liabilities:
Current portion of long-term debt $ 30,83532,518 $ 19,027
Accounts payable 142,391166,334 30,512
Accrued expenses 3,820 253,433
Accrued salaries - officers - 100,000
Accrued expenses 16,171 253,433
Deferred revenue 1,031,482876,788 832,166
Shareholder advances 169,37070,748 205,610
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Total current liabilities 1,377,8981,162,559 1,440,748
---------- ----------
Long-term debt 92,62475,694 42,562
---------- ----------
Stockholders' (deficit):equity:
Common stock, $.01 par value, 100,000,000 shares
authorized, 25,245,502 shares issue and outstanding 252,455 252,455
Additional paid-in capital 5,953,976 5,953,976
Deferred services (18,750)(6,250) (25,000)
Accumulated (deficit) (6,002,798)(6,005,482) (5,743,474)
---------- ----------
184,883194,699 437,957
---------- ----------
$1,655,405$1,432,952 $1,921,267
========== ==========
See accompanying notes to financial statements.
4
Dale Jarrett Racing Adventure, Inc.
Statements of Operations
For The Three Months and Nine Months Ended March 31,September 30, 2008 and 2007
2008 2007
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Sales $ 416,787 $ 321,225
Cost of sales and services 220,043 138,420
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Gross profit 196,744 182,805
---------- ----------
Expenses
General and administrative - non cash
stock compensation - 125,400
General and administrative expenses 458,733 273,620
---------- ----------
458,733 399,020
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(Loss) from operations (261,989) (216,215)
Other income and (expense):
Interest income 6,386 1,902
Other income - -
Interest expense (3,720) (4,560)
---------- ----------
2,666 (2,658)
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(Loss) before taxes (259,323) (218,873)
Income taxes - -
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Net (loss) $ (259,323) $ (218,873)(Unaudited)
Three Months Nine Months
2008 2007 2008 2007
---------- ---------- ---------- ----------
Sales $ 550,186 $ 724,786 $1,818,655 $1,857,709
Cost of sales and services 274,133 265,699 885,599 649,937
---------- ---------- ---------- ----------
Gross profit 276,053 459,087 933,056 1,207,772
---------- ---------- ---------- ----------
Expenses
General and administrative
- non cash stock compensation - 537,000 - 662,400
General and administrative 357,935 300,643 1,208,610 979,554
---------- ---------- ---------- ----------
357,935 837,643 1,208,610 1,641,954
---------- ---------- ---------- ----------
Income (loss) from operations (81,882) (378,556) (275,554) (434,182)
---------- ---------- ---------- ----------
Other income and (expense):
Interest income 11,589 4,030 22,326 7,230
Interest expense (3,131) (4,755) (8,781) (13,553)
---------- ---------- ---------- ----------
8,458 (725) 13,545 (6,323)
---------- ---------- ---------- ----------
Income (loss) before taxes (73,424) (379,281) (262,009) (440,505)
Income taxes - - - -
---------- ---------- ---------- ----------
Net income (loss) $ (73,424) $(379,281) $ (262,009) $ (440,505)
========== ========== ========== ==========
Per share information:
Basic and diluted (loss)
per share $ 0.00 $ 0.02 $ (0.01) $ (0.02)
========== ========== ========== ==========
Weighted average shares
outstanding- basic and
diluted 25,245,502 21,060,169 25,245,502 20,349,058
========== ========== ========== ==========
Per share information:
Basic and diluted (loss) per share $ (0.01) $ (0.01)
========== ==========
Weighted average shares outstanding 25,245,502 19,993,502
========== ==========
See accompanying notes to financial statements.
5
Dale Jarrett Racing Adventure, Inc.
Statements of Cash Flows
For The ThreeNine Months Ended March 31,September 30, 2008 and 2007
(Unaudited)
2008 2007
---------- ----------
Net cash provided by (used in) operating
activities $ (327,786)(480,192) $ 7,494(56,684)
---------- ----------
Cash flows from investing activities:
Acquisition of plantproperty and equipment (117,575) (50,569)(271,312) (137,271)
---------- ----------
Net cash (used in) investing activities (117,575) (50,569)(271,312) (137,271)
---------- ----------
Cash flows from financing activities:
Repayment of notes payable - (2,000)(4,497)
Issuance of common stock - 80,000
Repayment of long-term debt (5,649) (8,340)(20,896) (18,334)
---------- ----------
Net cash (used in) financing activities (5,649) (10,340)(20,896) 57,169
---------- ----------
(Decrease) in cash (451,010) (53,415)(772,400) (136,786)
---------- ----------
Cash and cash equivalents, beginning
of period 1,323,215 375,273
---------- ----------
Cash and cash equivalents,
end of period $ 872,205550,815 $ 321,858238,487
========== ==========
See accompanying notes to financial statements.
6
DALE JARRETT RACING ADVENTURE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31,SEPTEMBER 30, 2008
(UNAUDITED)
(1) Basis Of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with 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, 2007, including notes thereto
included in the Company's Form 10-KSB.
(2) Earnings Per Share
The Company calculates net income (loss) per share as required by
Statement of Financial Accounting Standards (SFAS) 128, "Earnings per
Share." Basic earnings (loss) per share is calculated by dividing net
income (loss) by the weighted average number of common shares
outstanding for the period. Diluted earnings (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 anti-dilutive commons stock equivalents are not
considered in the computation.
(3) Inventory
Inventory is valued at the lower of cost or market on a first-in
first-out basis and consists primarily of finished goods and includes
primarily promotional items that bear the Company's logo.
(4) Basis of Reporting
The Company's financial statements are presented on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business.
The Company has experienced a significant loss from operations as a
result of its investment necessary to achieve its operating plan, which
is long-range in nature. From inception to March 31,September 30, 2008, the
Company incurred net losses of $6,002,798$6,005,482 and for the threenine months ended
March
31,September 30, 2008, the Company incurred a net loss of $259,323.$262,009. In
addition, the Company has a working capital deficit of $272,610$372,808 at
March 31,September 30, 2008.
7
The Company's ability to continue as a going concern is contingent upon
its ability to attain profitable operations and secure financing. In
addition, the Company's ability to continue as a going concern must be
considered in light of the problems, expenses and complications
frequently encountered by entrance into established markets and the
competitive environment in which the Company operates.
The Company is pursuing equity financing for its operations. Failure to
secure such financing or to raise additional capital or attain
materially profitable operations may result in the Company depleting
its available funds and not being able pay its obligations.
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result
from the possible inability of the Company to continue as a going
concern.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Trends and Uncertainties. Demand for the Corporation's 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 products as well
as the private sale of the Corporation's stock. There are no material
commitments for capital expenditure at this time. 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 2008.
Capital 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 threenine months ended March 31,September 30, 2008, the Corporation acquired
plantproperty and equipment of $117,575$271,312 resulting in net cash used in
investing activities of $117,575.$271,312.
Comparatively, for the threenine months ended March 31,September 30, 2007, the
Corporation acquired plantproperty and equipment of $50,569$137,271 resulting in
net cash used in investing activities of $50,569.$137,271.
9
For the threenine months ended March 31,September 30, 2008, the Corporation reduced
its outstanding debt by repaying long-term debt of $5,649.$20,896. As a
result, the Corporation had net cash used in financing activities of
$5,649$20,896 for the threenine months ended March 31,September 30, 2008.
Comparatively, for the threenine months ended March 31,September 30, 2007, the
Corporation reduced its outstanding debt by repaying notes payable of
$2,000$4,497 and long-term debt of $8,340.$18,334. For the nine months ended
September 30, 2007, the Corporation received proceeds from the issuance
of common stock of $80,000. As a result, the Corporation had net cash
used inprovided by financing activities of $10,340$57,169 for the threenine months ended
March 31,September 30, 2007.
On a long term basis, liquidity is dependent on continuation of
operation and receipt of revenues.
Results of Operations.
For the three months ended March 31,September 30, 2008, the Corporation had
sales of $416,787$550,186 with cost of sales of $220,043$274,133 for a gross profit of
$196,744.$276,053 or 50%.
Comparatively, for the three months ended September 30, 2007, the
Corporation had sales of $724,786 with cost of sales of $265,699 for a
gross profit of $459,087 or 63%.
The decrease in the gross profit percentage resulted primarily from the
significant downturn of domestic economic conditions.
For the three months ended March 31,September 30, 2008, the Corporation had
general and administrative expenses of $458,733.$357,935. For the three months
ended September 30, 2007, the Corporation had general and
administrative expenses of $300,643. The percentage of general and
administrative expenses to revenues for the three months ended
March
31,September 30, 2008 increased to 110%65% from 85%41% for the three months ended
March
31,September 30, 2007 resulted primarily from an increase in spiteradio and
internet advertising. In addition, the Corporation incurred stock
compensation of management's ongoing effort to maintain and/or
reduce these types of expenses.
For$537,000 during the three months ended March 31,September 30,
2007.
For the nine months ended September 30, 2008, the Corporation had sales
of $1,818,655 with cost of sales of $885,599 for a gross profit of
$933,056 or 51%.
Comparatively, for the nine months ended September 30, 2007, the
Corporation had sales of $321,225$1,857,709 with cost of sales of $138,420$649,937 for
a gross profit of $182,805.$1,207,772 or 65%.
The decrease in the gross profit percentage resulted primarily from the
doubling of event days in early January at our major venue, the
Talladega Superspeedway due to inclement weather and the significant
downturn in domestic economic conditions.
For the threenine months ended March 31,September 30, 2008, the Corporation had
general and administrative expenses of $1,208,610.
10
For the nine months ended September 30, 2007, the Corporation had
general and administrative expenses of $273,620$979,554 and non-cash stock
compensation of $662,400. The percentage of general and administrative
- - noncash stock compensationexpenses to revenues for the nine months ended September 30, 2008
increased to 66% from 53% for the nine months ended September 30, 2007
resulted primarily from the doubling of $125,400.
The non-cash stock compensationevent days in 2007 consisted of 380,000 shares of
common stock issued for services valuedearly January at
$125,400. The value assignedour major venue, the Talladega Superspeedway due to the shares issued was based upon the trading value of the
Corporation's common stock at the date the shares were authorized by the
Corporation's Board of Directors.inclement weather.
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 cash10
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.
Our auditors have expressed reservations concerning our ability to
continue as a going concern. The Corporation has incurred significant
losses from operations. This factor raises substantial doubt about our
ability to continue as a going concern.
Our ability to continue as a going concern is contingent upon our ability
to increase revenues, increase ownership equity and attain profitable
operations. In addition, the Corporation's ability to continue as a
going concern must be considered in light of the problems, expenses and
complications frequently encountered by entrance into established markets
and the competitive environment in which the Corporation operates.
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
We do not consider the effects of interest rate movements to be a
material risk to our financial condition. We do not hold any
derivative instruments and do not engage in any hedging activities.
Item 4T. Controls and Procedures.
During the three months ended March 31,September 30, 2008, there were no changes
in our internal controls over financial reporting (as defined in Rule
13a-
15(f)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.11
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 March 31,September 30, 2008. Based on this evaluation, our chief executive
officer and chief principal financial officers have concluded such
controls and procedures to be effective as of March 31,September 30, 2008 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
the Act is accumulated and communicated to the issuer's management,11
including its principal executive and principal financial officers, or
persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. not applicable.
Item 1A. Risk Factors. not applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
not applicable.
Item 3. Defaults Upon Senior Securities.
not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
not applicable.
Item 5. Other Information. not applicable.
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: May 15,October 30, 2008
DALE JARRETT RACING ADVENTURE, INC.
By: /s/Timothy Shannon
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Timothy Shannon, Principal Executive Officer