SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended June 30, 2006
- -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.
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(Exact name of registrant as specified in its charter)
FLORIDA 59-3564984
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(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization
3604 Denver Drive, Denver, NC 28037
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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)
Check 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 [ ]
The number of outstanding shares of the registrant's common stock,
June 30, 2006: Common Stock - 19,362,376
2
PART I -- FINANCIAL INFORMATION
Dale Jarrett Racing Adventure, Inc.
Item 1. Financial Statements
Balance Sheet,
June 30, 2006(unaudited)
Statements of Operations for the
Three months and
Six months ended
June 30, 2006 and 2005
(unaudited)
Statements of Cash Flows for the
Six months ended June 30, 2006
and 2005 (unaudited)
Notes to financial statements
3
Dale Jarrett Racing Adventure, Inc.
Balance Sheet
June 30, 2006
(Unaudited)
ASSETS
------
Current assets:
Cash $ 224,313
Inventory 8,606
Prepaid expenses and other current assets 126,936
----------
Total current assets 359,855
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Property and equipment, at cost, net of
accumulated depreciation of $680,412 215,524
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$ 575,379
==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
---------------------------------------
Current liabilities:
Note payable $ 60,061
Current portion of long-term debt 18,384
Accounts payable 52,239
Accrued expenses 106,167
Accrued salaries - officers 137,285
Deferred revenue 902,868
Shareholder advances 286,544
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Total current liabilities 1,563,548
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Long-term debt 964
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Stockholders' (deficit):
Common stock, $.01 par value, 100,000,000 shares
authorized, 19,362,376 shares issue and outstanding 191,624
Additional paid-in capital 3,986,378
Deferred services (70,500)
Accumulated (deficit) (5,096,635)
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(989,133)
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$ 575,379
==========
See accompanying notes to financial statements.
4
Dale Jarrett Racing Adventure, Inc.
Statements of Operations
For The Three Months and Six Months Ended June 30, 2006 and 2005
(Unaudited)
Three Months Six Months
2006 2005 2006 2005
---------- ---------- ---------- ----------
<s> <c> <c> <c> <c>
Sales $ 565,760 $ 562,058 $ 716,922 $ 782,733
Cost of sales and services 230,383 303,809 341,719 448,103
---------- ---------- ---------- ----------
Gross profit 335,377 258,249 375,203 334,630
---------- ---------- ---------- ----------
Expenses
General and administrative
- non cash stock compensation 29,250 - 29,250 12,000
General and administrative 267,055 230,771 540,589 503,150
---------- ---------- ---------- ----------
296,305 230,771 569,839 515,150
---------- ---------- ---------- ----------
Income (loss) from operations 39,072 27,478 (194,636) (180,520)
Other income and (expense):
Interest income 726 - 1,448 -
Other income - - 450 404
Interest expense (5,821) (4,997) (13,469) (11,170)
---------- ---------- ---------- ----------
(5,095) (4,997) (11,571) (10,766)
---------- ---------- ---------- ----------
(Loss) before taxes 33,977 22,481 (206,207) (191,286)
Income taxes - - - -
---------- ---------- ---------- ----------
Net (loss) $ 33,977 $ 22,481 $ (206,207) $ (191,286)
========== ========== ========== ==========
Per share information:
Basic and diluted (loss)
per share $ 0.00 $ 0.00 $ (0.01)
$ (0.01)
========== ========== ========== ==========
Weighted average shares
outstanding 19,108,209 18,196,876 19,054,043 18,196,876
========== ========== ========== ==========
See accompanying notes to financial statements.
5
Dale Jarrett Racing Adventure, Inc.
Statements of Cash Flows
For the Six Months Ended June 30, 2006 and 2005
(Unaudited)
2006 2005
---------- ----------
Net cash provided by (used in)
operating activities $ 51,903 $ (104,189)
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Cash flows from investing activities:
Acquisition of plant and equipment (70,622) (8,946)
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Net cash (used in) financing activities (70,622) (8,946)
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Cash flows from financing activities:
Repayment of officer advance - (35,000)
Repayment of notes payable (57,939) (7,525)
Repayment of long-term debt (12,605) (17,258)
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Net cash (used in) financing activities (70,544) (59,783)
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(Decrease) in cash (89,263) (172,918)
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Cash and cash equivalents,
beginning of period 313,576 263,200
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Cash and cash equivalents, end of period $ 224,313 $ 90,282
========== ==========
See accompanying notes to financial statements.
6
DALE JARRETT RACING ADVENTURE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006
(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 Item 310(b) of Regulation
S-B. 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, 2005, 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) Stockholders? Equity
During the period ended June 30, 2006, the Company issued 162,500
shares of common stock for services. The shares were valued at their
fair market value of $$29,250. In addition, the Company issued 200,000
shares of common stock subscribed for at December 31, 2005.
7
(5) 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, 2006, the Company
incurred net losses of $5,096,635 and for the six months ended June 30,
2006, the Company incurred a net loss of $206,207. In addition, the
Company has working capital and stockholder deficits of $1,203,693 and
$989,133 at June 30, 2006.
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.
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ITEM 6. 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 that 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 2006.
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 comprises one hundred(100) percent
of the total cash necessary to conduct operations. Future revenues
from classes and events will determine the amount of offering proceeds,
if any, 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 offering as the Corporation's
financial situation dictates.
The Corporation had cash and cash equivalents at June 30, 2006 of
$224,313 compared to $313,376 at December 31, 2005. The decrease in
cash and cash equivalents at June 30, 2006 compared to December 31,
2005 was due principally to the net loss for the period and the
repayment of notes and other debt and the acquisition of equipment.
For the six months ended June 30, 2006, the Corporation acquired plant
and equipment of $70,622 resulting in net cash used in investing
activities of $70,662.
9
For the six months ended June 30, 2005, the Corporation acquired plant
and equipment of $8,946 resulting in net cash used in investing
activities of $8,946.
The Corporation was able to repay some its outstanding debt. For the
six months ended June 30, 2006, the Corporation did not make any
officer advance repayment compared to a $35,000 repayment for the six
months ended June 30, 2005. Additionally, the Corporation repaid notes
payable of $57,939 and repaid long-term debt of $12,605 compared to
$7,525 and $17,258, respectively for the six months ended June 30,
2005. As a result, the Corporation had net cash used in financing
activities of $70,544 for the six months ended June 30, 2006 compared
to $59,783 for the six months ended June 30, 2005.
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, 2006, the Corporation had sales of
$565,760 with cost of sales of $230,383 for a gross profit of $335,377.
Comparatively, for the three months ended June 30, 2005, the
Corporation had sales of $562,058 with cost of sales of $303,809 for a
gross profit of $258,249.
For the three months ended June 30, 2006, the Corporation had general
and administrative expenses of $267,055 and non cash stock compensation
of $29,250 compared to $230,771 and $0, respectively for the same
period in 2005. The amount of general and administrative expenses
increased for the three months ended June 30, 2006 compared to the same
period in 2005 due mainly to an increase in parts and supplies for the
racecars, non-cash stock compensation, an increase in professional
fees.
For the six months ended June 30, 2006, the Corporation had sales of
$716,922 with cost of sales of $341,719 for a gross profit of $375,203.
Comparatively, for the six months ended June 30, 2005, the Corporation
had sales of $782,733 with cost of sales of $448,103 for a gross profit
of $334,630.
For the six months ended June 30, 2006, the Corporation had general and
administrative expenses of $540,589 and non cash stock compensation of
$29,250 compared to $503,150 and $12,000, respectively for the same
period in 2005. The amount of general and administrative expenses
increased for the six months ended June 30, 2006 compared to the same
period in 2005 due mainly to an increase in parts and supplies for the
racecars, non-cash stock compensation, an increase in professional
fees.
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.
10
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
current revenues and cash made available from the private sale of its
securities, if any.
The Corporation's management is of the opinion that its revenues and
the proceeds of the sales of its securities, if any, 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 and has working capital and stockholder
deficiencies. These factors raise 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 secure additional financing, 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 pursuing financing for its operations and seeking
additional private investments. In addition, the Corporation is seeking
to expand its revenue base. Failure to secure such financing or to raise
additional equity capital and to expand its revenue base may result in
the Corporation depleting its available funds and not being able pay its
obligations.
Item 3. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our
chief executive officer, conducted an evaluation of our "disclosure
controls and procedures" (as defined in Securities Exchange Act of 1934
(the "Exchange Act") Rules 13a-14(c)). Based on his evaluation, our
chief executive officer and chief financial officer have concluded that
as of the Evaluation Date, our disclosure controls and procedures are
effective to ensure that all material information required to be filed
in this quarterly report on Form 10QSB has been made known to him in a
timely fashion.
Changes in Internal Controls
There have been no significant changes (including corrective actions
with regard to significant deficiencies or material weaknesses) in our
internal controls or in other factors that could significantly affect
these controls subsequent to the Evaluation Date set forth above.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings. Not applicable.
Item 2. Changes in Securities and Use of Proceeds.
The Corporation issued 162,500 shares of common stock for
services. The shares were valued at their fair market value of
$29,250. In addition, the Corporation issued 200,000 shares of
common stock subscribed for at December 31, 2005.
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 and Reports on Form 8-K.
(a) Reports on Form 8-K. none
(b) Exhibits. none
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 14, 2006
Dale Jarrett Driving Adventure, Inc.
By /s/ Timothy B. Shannon
------------------------
Timothy B. Shannon
President and Director