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, 2011
-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,
August 15, 2011:
Common Stock - 24,510,502
2
DALE JARRETT RACING ADVENTURE, INC.
FORM 10-Q
For the quarterly period ended June 30, 2011
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 4. Controls and Procedures 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 1A. Risk Factors 11
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 11
Item 3. Defaults upon Senior Securities 11
Item 4. (Removed and Reserved) 11
Item 5. Other Information 11
Item 6. Exhibits 11
SIGNATURES
3
PART I
Item 1. - FINANCIAL STATEMENTS (UNAUDITED)
DALE JARRETT RACING ADVENTURE, INC.
CONDENSED BALANCE SHEETS
June 30, December 31,
2011 2010
---------- ----------
(Unaudited)
ASSETS
------
Current assets:
Cash $ 394,431 $ 569,592
Accounts receivable 118,082 9,372
Spare parts and supplies 185,172 185,105
Prepaid expenses and other current assets 76,647 38,128
---------- ----------
Total current assets 774,332 802,197
---------- ----------
Property and equipment, at cost,
net of accumulated depreciation of
$945,895 and $883,659 389,836 452,072
---------- ----------
Other Assets 18,510 13,510
---------- ----------
$1,182,678 $1,267,779
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current liabilities:
Current portion of long-term debt $ 25,825 $ 25,142
Accounts payable 45,664 87,845
Accrued expenses 76,535 146,697
Deferred revenue 1,128,893 946,922
---------- ----------
Total current liabilities 1,276,917 1,206,606
---------- ----------
Long-term debt 12,003 25,055
---------- ----------
4
Stockholders' equity (deficit):
Preferred stock, $.0001 par value,
5,000,000 shares authorized - -
Common stock, $.0001 par value,
200,000,000 shares authorized,
24,510,502 issued and 23,838,852
shares outstanding 2,451 2,451
Additional paid-in capital 6,184,480 6,184,480
Treasury stock, 671,650 shares, at cost (39,009) (39,009)
Accumulated (deficit) (6,254,164) (6,111,804)
---------- ----------
Total stockholders' equity (deficit) (106,242) 36,118
---------- ----------
$1,182,678 $1,267,779
========== ==========
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, 2011 AND 2010
(UNAUDITED)
Three Months Six Months
2011 2010 2011 2010
---------- ---------- ---------- ----------
Sales $ 751,274 $ 687,582 $1,290,535 $1,286,219
Cost of sales and services 302,679 288,963 580,371 574,849
---------- ---------- ---------- ----------
Gross profit 448,595 398,619 710,164 711,370
---------- ---------- ---------- ----------
General and administrative
expenses 433,085 442,412 851,136 808,950
---------- ---------- ---------- ----------
Income (Loss)
from operations 15,510 (43,793) (140,972) (97,580)
Other income and (expense):
Interest income 198 448 377 1,001
Loss on disposal of assets - (18,252) - (18,252)
Interest expense (617) (2,917) (1,765) (4,089)
---------- ---------- ---------- ----------
(419) (20,721) (1,388) (21,340)
---------- ---------- ---------- ----------
Income (Loss) before taxes 15,091 (64,514) (142,360) (118,920)
Income taxes - - - -
---------- ---------- ---------- ----------
Net income (loss) $ 15,091 $ (64,514)$ (142,360)$ (118,920)
========== ========== ========== ==========
Per share information:
Basic and diluted
(loss) per share $ 0.00 $ (0.00)$ (0.01)$ (0.00)
========== ========== ========== ==========
Weighted average
shares outstanding 23,838,852 23,978,851 23,838,852 24,008,741
========== ========== ========== ==========
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, 2011 AND 2010
(UNAUDITED)
2011 2010
--------- --------
Net cash (used in) operating activities $(157,792) $(78,266)
--------- --------
Cash flows from investing activities:
Acquisition of property and equipment (5,000) (42,624)
--------- --------
Net cash (used in) investing activities (5,000) (42,624)
--------- --------
Cash flows from financing activities:
Repayment of long-term debt (12,369) (9,745)
Purchase of treasury stock - (19,834)
--------- --------
Net cash (used in) financing activities (12,369) (29,579)
--------- --------
(Decrease) in cash (175,161) (150,469)
--------- --------
Cash and cash equivalents, beginning of period 569,592 544,563
--------- --------
Cash and cash equivalents, end of period $ 394,431 $394,094
========= ========
Supplemental cash flow information:
Cash paid for interest $ 1,765 $ -
========= ========
Cash paid for income taxes $ - $ -
========= ========
See accompanying notes to unaudited condensed financial statements.
7
DALE JARRETT RACING ADVENTURE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2011
(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, 2010, including notes
included in the Company's Form 10-K.
(2) Recent Accounting Pronouncements
There are no new accounting pronouncements for which adoption is
expected to have a material effect on our financial statements in
future accounting periods.
(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 common stock equivalents are not considered in
the computation. We did not have any dilutive common stock equivalents
during each of the three and six months ended June 30, 2011 and 2010.
(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.
8
DALE JARRETT RACING ADVENTURE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2011
(UNAUDITED)
(6) Stockholders' Equity (Deficit)
During the six months ended June 30, 2011 and 2010, the Company
purchased a total of zero and 329,250 shares, respectively, of its own
common stock for cash aggregating $0 and $19,834, which is recorded at
cost and classified as treasury stock in the accompanying condensed
balance sheets.
(7) Commitments
On August 19, 2010, the Company entered into an agreement with
Talladega Superspeedway, LLC to allow Dale Jarrett Racing Adventure
exclusivity during 2011 in providing stock car ride along programs and
stock car driving experiences to paying customers at Talladega
Superspeedway. Under the terms of the agreement, the Company agreed to
rent a minimum of 60 days during 2011 for $450,000 payable in four
payments of $112,500 due at the end of each quarter during 2011. The
Company may also use additional days at a cost of $7,500 per day during
2011.
(8) Subsequent Events
During July 2011 the Company extended the employment agreement of its
Chief Executive Officer through June 2016 at a base salary of $150,000,
with cost of living adjustments to be made on the first day of each
year.
10
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 June 2012.
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, 2011, the Corporation purchased
property and equipment of $5,000 resulting in net cash used in
investing activities of $5,000.
Comparatively, 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.
9
For the six months ended June 30, 2011, the Corporation reduced its
outstanding debt by repaying notes payable of $12,369. As a result,
the Corporation had net cash used in financing activities of $12,369
for the six months ended June 30, 2011.
Comparatively, 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.
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, 2011, the
registrant had sales of $751,274 with cost of sales and services of
$302,679 for a gross profit of $448,595.
Comparatively, 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. The increase in revenue of $63,692, or 9.26%, resulted in
a increase in cost of sales of $13,716, or 4.75%, due to a reduced
number of customers purchasing longer rides. The gross profit
percentage increased from 57.97% to 59.71% because of increased sales
and relatively fixed track and race equipment costs.
For the three months ended June 30, 2011, the registrant had general
and administrative expenses of $433,085. Comparatively, for the three
months ended June 30, 2010, the registrant had general and
administrative expenses of $442,412. The percentage of general and
administrative expenses to revenues for the three months ended June 30,
2011 decreased to 57.6% from 64.34% for the three months ended June 30,
2010 due to cost control measures.
For the six months ended June 30, 2011, the registrant had sales of
$1,290,535 with cost of sales and services of $580,371 for a gross
profit of $710,164.
Comparatively, 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. The increase in revenue of $4,316 or .34%,
resulted in an increase in cost of sales of $5,522 or .96%, due to a
slight increase in customers. The gross profit percentage remained
approximately the same from 55.31% to 55.03% because of increased sales
and relatively fixed track and race equipment costs.
For the six months ended June 30, 2011, the registrant had general and
administrative expenses of $851,136. Comparatively, for the six months
ended June 30, 2010, the registrant had general and administrative
expenses of $808,950. The percentage of general and administrative
expenses to revenues for the six months ended June 30, 2011 increased
to 65.95% from 62.89% for the six months ended June 30, 2010 due to
increased revenues.
11
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 and believes that
its current cash and revenues will be sufficient to fund operations for
the following twelve months. 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 4. Controls and Procedures
During the period ended June 30, 2011, 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 principal 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, 2011. Based on this evaluation, our chief executive
officer and principal financial officers have concluded such controls
and procedures to be effective as of June 30, 2011 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, including its
principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions
regarding required disclosure.
11
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
101.INS** XBRL Instance Document
101.SCH** XBRL Taxonomy Extension Schema Document
101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF** XBRL Taxonomy Extension Definition Linkbase Document
101.LAB** XBRL Taxonomy Extension Label Linkbase Document
101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document
* Filed herewith
**XBRL (Extensible Business Reporting Language) information is
furnished and not filed or a part of a registration statement or
prospectus for purposes of Sections 11 or 12 of the Securities Act of
1933, as amended, is deemed not filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, and otherwise is not
subject to liability under these sections.
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 15, 2011
DALE JARRETT RACING ADVENTURE, INC.
By: /s/Timothy Shannon
---------------------------
Timothy Shannon
Chief Executive Officer
Principal Financial Officer