UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X]
[X] 15, ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 20102011
OR
[ ] 15, TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 000-27251
DALE JARRETT RACING ADVENTURE, INC.
(Exact
(Exact name of registrant in its charter)
FLORIDA 59-3564984
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
| | |
FLORIDA | | 59-3564984 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification) |
1313 10TH10th Avenue Lane, SE Hickory, NC 28602
(Address
(Address of principal executive offices) (Zip Code)
offices, including zip code)
Registrant's Telephone number, including area code: (888) 467-2231
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.0001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [x]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act
Yes [ ] No [x]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.406 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 [ ][X] No [ ]
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 during the preceding 12 months (or such shorter period that Dale the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the part 90 days.
Yes [x] No[ ]2
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained hereof, and will not be contained, to will be contained, to the best of registrant'sregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [x]
| | |
Large accelerated filer [ ] | | Accelerated filer [ ] |
Non-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]
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant'sregistrant’s most recently completed second fiscal quarter. The market value of the registrant'sregistrant’s voting $.0001 par value common stock held by non-affiliates of the registrant was approximately $496,519.
$837,285.95
Indicate the number of shares outstanding of each of the registrant'sregistrant’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the registrant's only class of common stock, as of March 28, 201129, 2012 was 24,510,50223,838,852 shares of its $.0001 par value common stock.
No documents are incorporated into the text by reference.3
2
Dale Jarrett Racing Adventure, Inc.
Form 10-K
For the Fiscal Year Ended December 31, 2010
2011
Table of Contents
| | |
| | Page |
Part I | | |
Item 1. Business | | 4 |
Item 1A. Risk Factors | | 7 |
Item 1B. Unresolved staff comments | | 7 |
Item 2. Properties | | 7 |
Item 3. Legal Proceedings | | 7 |
Item 4. Mine Safety Disclosures | | 7 |
| | |
Part II | | |
Item 5. Market for Registrant's Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities | | 8 |
Item 6. Selected Financial Data | | 9 |
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations | | 9 |
Item 7A. Quantitative and Qualitative Disclosures about Market Risk | | 12 |
Item 8. Financial Statements and Supplementary Data | | 13 |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | 28 |
Item 9A. Controls and Procedures | | 28 |
Item 9B. Other Information | | 29 |
| | |
Part III | | |
Item 10. Directors, Executive Officers and Corporate Governance | | 30 |
Item 11. Executive Compensation | | 33 |
Item 12. Securities Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 34 |
Item 13. Certain Relationships and Related Transactions, and Director Independence | | 36 |
Item 14. Principal Accountant Fees and Services | | 36 |
| | |
Part IV | | |
Item 15. Exhibits, Financial Statement Schedules | | 38 |
Signatures | | 39 |
PART I
ITEM 1. BUSINESS 4
ITEM 1A. RISK FACTORS 6
ITEM 1B. UNRESOLVED STAFF COMMENTS 6
ITEM 2. PROPERTIES 7
ITEM 3. LEGAL PROCEEDINGS 7
ITEM 4. (REMOVED AND RESERVED) 7
Part II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES 8
ITEM 6. SELECTED FINANCIAL DATA 9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK 12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 12
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 27
ITEM 9A. CONTROLS AND PROCEDURES 27
ITEM 9B. OTHER INFORMATION 28
Part III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, CONTROL
PERSONS AND CORPORATE GOVERANCE; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT 29
ITEM 11. EXECUTIVE COMPENSATION 31
ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDERS MATTERS 33
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE 35
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 35
Part IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 36
4
PART I
ITEM 1. BUSINESS
Dale Jarrett Racing Adventure, Inc. was formed as a C corporation and incorporated November 24, 1998 in the State of Florida. The Company is currently not involved with any proceedings, bankruptcy or receiverships.
We offer entertainment based oval driving schools and events. These classes are conducted at various racetracks throughout the country. We completed our first driving classes in Rockingham, NC in July of 1999. Since July 4th, 1999, we have run classes at over forty NASCAR tracks.
tracks, including our eastern hub at Talladega Superspeedway in Alabama.
The Company currently owns 15 racecars.racecars, and has recently purchased 6 additional racecars for our Las Vegas, NV “hub”. These racecars are classified as stock cars and are equipped for oval or round tracks only. They are fully loaded with race engines, six point harnesses, neck and head restraints, communications, track specific gears and complete safety cages. We have negotiated terms with over forty racetracks where, for a fee ranging from $0 to $10,000 a day, we can rent their tracks. On October 29, 2008, the Company introduced its new World War II
Adventure. Participants receive a three day opportunity to relive the
experience of a B-17 aviator heading out on a bombing mission over enemy
territory. Our debut adventure was February 27-March 1, 2009.
Products and Services. The Company offers five types of ride or drive programs for individuals and corporations. The "Qualifier" is a three lap ride with a professional driver which lasts about five minutes, depending on the length of the track. The "Season Opener" is a half day training class culminating in the student driving ten laps. The "Rookie Adventure" and "Happy Hour" are also half day driving classes with the students driving 20 or 30 laps, respectively. The "Advanced“Advanced Stock Car Adventure"Adventure” is a full day 60 lap class. The main purpose of each event is the thrill of actually driving the race car.
The operation is similar to that of a traveling show in that we transport the stock cars, the mechanics, the sales staff and the instructors from event to event.
The Company's objective is
Due to utilize this first "hub"the expiration of 15 racecars onan exclusive contract between the east coastRichard Petty Driving Experience and the Las Vegas Motor Speedway in December 2011, we have expanded our operations to their full potential. Our future plan is to add
another "hub" on the west coast oncecoast. The Company began running schools at the east coastLas Vegas Motor Speedway in January 2012. We have leased a garage on Speedway Blvd. in Las Vegas, which is being managed by Glenn Jarrett, an officer and director. This new hub becomes utilized
at least 15 days per monthestablishes a national presence for the Company. The Company plans to eventually service California, Arizona, and is profitable. This would require the
purchase of another ten racecars and the support equipment necessary to
maintain them.
5
Colorado through this hub.
4
The Company currently has 15 stock cars,racecars, with 6 more being ordered and manufactured, which had an original purchase price of approximately $50,000 per car. Staffing costs are approximately $20,000 per month at each active "hub".hub. We own a Miller Semi Tractor Trailer to haul the cars from track to track. The transporting of staff to the event and their food and lodging costs average $4,000 per day. We are required to maintain a minimum of $5,000,000 of liability insurance, worker'sworker’s compensation and property and casualty insurance.
The Company also offers a number of add-on sale items, including CDs from its Adventure Cam located in the car, clothing, souvenirs and photography.
The Company also offers a World War II Adventure. Participants receive
a three day opportunity to relive the experience of a B-17 aviator
heading out on a bombing mission over enemy territory.
Vendor Agreement. During 2009, we entered into an agreement with a vendor, who provides video equipment and video recording services, which enables us to sell video recordings to our students. Under the agreement, we arewere entitled to a 60% allocation of revenue for all video products and services sold. The agreement is in effectsold through December 31, 2011. Beginning January 1, 2012, the agreement was extended through December 31, 2013 and amended to provide for payments by us to the vendor of $30 for driving adventures, and $11 for riding adventures for which the recording is purchased by the student.
On August 19, 2010, we 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 is renewable annually thereafter.
stock car driving experiences to paying students at Talladega Superspeedway. Under the terms of the agreement, we 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.
During October 2011, we entered into a new agreement with Talladega Superspeedway, LLC to allow Dale Jarrett Racing Adventure exclusivity during 2012 in providing stock car ride along programs and stock car driving experiences to paying students at Talladega Superspeedway. Under the terms of the agreement, we agreed to rent a minimum of 60 days during 2012 for $438,000 payable in four payments of $109,500 due at the end of each quarter during 2012. We will also be required to pay Talladega Superspeedway the greater of a set amount of each experience provided or 20% of all DJRA revenues on five designated racing days at the track.
On October 18, 2011, we signed an agreement with Las Vegas Motor Speedway to allow us to provide 34 event dates at the speedway during 2012. We will pay $271,000 to Las Vegas Motor Speedway over the course of 2012 for use of the speedway.
Marketing. We offer our products and services at various tracks throughout the country. We employ a marketing director who is primarily responsible for closing the prospects created through promotion. These services are sold as both corporate outings and directly to the public through various marketing and advertising mediums with an emphasis on radio and the internet.
5
Promotional and Licensing Agreements. In December 1998, we entered into promotional and licensing agreements with Dale Jarrett, Ned Jarrett, Glenn Jarrett, Jason Jarrett and Brett Favre whereby these individuals have granted us the use of their names and likeliness in advertising, products and promotional materials, as well as an agreed upon number of appearances per year and an agreed upon number of radio and/or television commercials as set out in each agreement. Ned Jarrett is the father of Dale Jarrett and Glenn Jarrett. Dale Jarrett is the father of Jason Jarrett.
Pursuant to these agreements, we issued an aggregate of 5,500,000 common shares of the Company. The term of each agreement was ten years and expired in December 2008. These individuals have verbally agreed to continue their relationship with us without a written agreement and will be compensated for future services only when they are rendered.6
Competition. The driving schools industry is currently experiencing a limited degree of competition with regard to availability, price, service, quality and location. There is one well-established market leader, Richard Petty Driving Experience, that is nationally recognized and which possess substantially greater financial, marketing personnel and other resources than us. There are also a small number of local or regional schools. Virtual reality driving experiences are also becoming more realistic and a growing competitor. It is also likely that other competitors will emerge in the near future. There is no assurance that we will compete successfully with other established driving schools. We shall compete on the basis of availability, price, service, quality and location. Inability to compete successfully might result in increased costs, reduced yields and additional risks to the investors herein.
Employees. The Company employs seventhree full time employees responsible for securing the Driving Adventure locations, procurement of equipment, racecars, and the development and implementation of our marketing plan. Each active location has up to 25 contract personnel including but not limited to a mechanic, four to ten driving instructors, two administrators, a flagman and a site manager. Additional employees or independent contractors will be obtained as required.
Seasonal Nature of Business Activities. The Company's operations have shown to be seasonal partly because some track locations may only operate on certain days or certain times of the year. Primarily, this is due to the weather. Our plan is to run more tracks in the south during the winter to maintain a steady revenue stream in the future.
Government Regulation. The Company does not currently need any government approval of our services and are not aware of any existing or probable governmental regulations on our business or industry.
6
ITEM 1A. RISK FACTORS
Not applicable to a smaller reporting company.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.7
ITEM 2. PROPERTIES
The Company'sCompany’s executive offices which consist of 1,500 square feet are located at 1313 10th10th Avenue Lane, SE, Hickory, North Carolina. In October 2009, the Company entered into an operating lease for use of this office space. The lease requires a monthly payment of $1,830 and expires in November, 2012. Once this lease is up, we plan to procure new executive offices at an estimated monthly rent payment of $2,000. Subsequent to December 31, 2011 we entered into a lease for office space in Las Vegas, NV which requires monthly payments of $1,510 and continues through February 28, 2013. Future minimum payments under thisthese lease agreementagreements are as follows: $22,212$35,461 in 20112012 and $20,361$3,020 in 2012.2013. The Company also leases various office and warehouse space on a month to
monthmonth-to-month basis or under terms that are less than one year, including our garage facility in Talladega, AL. Our rent expense amounted towas $62,559 and $66,287
and $55,800 for the years ended December 31, 2011 and 2010, and 2009,
respectively.
ITEM 3. LEGAL PROCEEDINGS.
On June 28, 2010, we paid $20,000 to settle
There is no litigation related to an
alleged breach of contract in the circuit court of Talladega County,
Alabama. We had previously accrued $17,500 related to this proceeding
and expensed a further $2,500 during 2010.
pending or threatened by or against Dale Jarrett Racing Adventure.
ITEM 4. (REMOVED AND RESERVED)
8
MINE SAFETY DISCLOSURES.
Not applicable
7
PART II
ITEM 5. MARKET FOR REGISTRANT'SREGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Item 5(a)
a) Market Information. The Company began trading publicly on the NASD Over the Counter Bulletin Board on June 22, 2000 under the symbol "DJRT".
The following table sets forth the range of high and low bid quotations for our common stock. The quotations represent inter-dealer prices without retail markup, markdown or commission, and may not necessarily represent actual transactions.
Quarter Ended High Bid Low Bid
------------- -------- -------
3/31/09 .08 .04
6/30/09 .07 .04
9/30/09 .12 .03
12/31/09 .08 .04
3/31/10 .07 .04
6/30/10 .06 .04
9/30/10 .05 .03
12/31/10 .06 .01
| | | | |
Quarter Ended | | High Bid | | Low Bid |
3/31/10 | | 0.07 | | 0.04 |
6/30/10 | | 0.06 | | 0.04 |
9/30/10 | | 0.05 | | 0.03 |
12/31/10 | | 0.06 | | 0.01 |
| | | | |
3/31/11 | | 0.08 | | 0.04 |
6/30/11 | | 0.06 | | 0.03 |
9/30/11 | | 0.05 | | 0.03 |
12/30/11 | | 0.04 | | 0.03 |
b) Holders. At March 28, 2011,29, 2012, there were approximately 244312 shareholders of the Company.
c) Dividends. Holders of our common stock are entitled to receive such dividends as may be declared by our board of directors. No dividends on our common stock have ever been paid, and we do not anticipate that dividends will be paid on our common stock in the foreseeable future.
d) Securities authorized for issuance under equity compensation plans. No securities are authorized for issuance by the Company under equity compensation plans.
e) Performance graph. Not applicable.
f) Sale of unregistered securities. In April 2010, we reissued 20,000 shares of treasury stock with a fair
value of $990 to an employee for services.
Not applicable
Item 5(b) Use of Proceeds. Not applicable.
8
Item 5(c) Purchases of Equity Securities by the issuer and affiliated purchasers.
During 2010, and 2009, we purchased a total of 397,150 and 294,500 shares of itsour common stock for cash aggregating $22,132, and $17,867, which is classified as treasury stock in the accompanying balance sheets as of December 31, 20102011 and 2009.
9
2010.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable to a smaller reporting company.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Trends and Uncertainties. Demand for the Company's products are dependent on general economic conditions, which are cyclical in nature. Because a major portion of our activities are the receipt of revenues from our driving school services and products, our business operations may be adversely affected by competitors and prolonged recessionary periods.
There are no other known trends, events or uncertainties that have, or are reasonably likely to have, a material impact on our short term or long term liquidity. Sources of liquidity will come from the sale of our products and services, as well as the private sale of our 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 Company'sCompany’s continuing operations. There are no other known causes for any material changes from period to period in one or more line items of our financial statements.
We currently have classes planned through December 2011.
2012.
Capital and Source of Liquidity. The Company currently has no material commitments for capital expenditures and has no plans for future capital expenditures, suchother than as additional racecars,discussed above, at this time.
We believe that there will be sufficient capital from revenues to conduct operations for the next 12 months.
In 2010,2011, our revenue provided substantially all of the cash necessary to conduct operations.operations; however, our operations used $91,230 in cash during the year due to activities related to our expansion to Las Vegas. Future revenues from classes and events will determine the amount of additional financing necessary to continue and expand operations.10
9
The board of directors has no immediate offering plans in place and shall determine the amount and type of financing as our financial situation dictates.
For the year ended December 31, 2011, we acquired property and equipment, including racecars under construction, of $37,434 resulting in net cash used in investing activities of $37,434. For the year ended December 31, 2010, we acquired property and equipment of $53,919 resulting in net cash used in investing activities of $53,919. For the year ended December 31, 2009, we acquired property and
equipment of $96,381 resulting in net cash used in investing activities
of $96,381.
We continue to look for ways to decrease our cash expenditures and still
retain quality management and consultants. On October 22, 2004, our
board of directors approved the issuance of options to certain officers
and directors and a consultant for the purchase of 3,500,000 common
shares at an exercise price of $.15 per common share for a period of 5
years.
During April 2009, we extended the expiration date of 3,500,000
outstanding options for an additional five years. The exercise price
remained at $.15 per share and the options now expire on October 21,
2014. The incremental cost of the extension of these options was $50,000
and was charged to stock compensation expense during 2009.
The following table summarizes the stock option activity during the years ended December 31, 20102011 and 2009:
Stock Weighted-average
Options Price per Share
------------ ------------
Balance at December 31, 2008 3,500,000 $ 0.15
========= =========
Expired - -
--------- ---------
Balance at December 31, 2009 3,500,000 $ 0.15
========= =========
Expired - -
--------- ---------
Balance at December 31, 2010 3,500,000 $ 0.15
========= =========
2010:
| | | | |
| | StockOptions | | Weighted- average Price perShare |
Balance at December 31, 2009 | | 3,500,000 | | $0.15 |
| | ======= | | ==== |
Expired | | - | | - |
| | | | |
Balance at December 31, 2010 | | 3,500,000 | | $0.15 |
| | ======= | | ==== |
Expired | | - | | - |
| | | | |
Balance at December 31, 2011 | | 3,500,000 | | $0.15 |
| | ======= | | ==== |
At December 31, 2010,2011, we have the following options outstanding, all of which are exercisable:
Exercise price: $0.15; Outstanding: 3,500,000; Contractual life: 3.82.8 years
For the year ended December 31, 2011, we repaid long-term debt of $24,962. As a result, our net cash used in financing activities was $24,962 in 2011.
For the year ended December 31, 2010, we repaid long-term debt of $21,612. We also purchased treasury stock of an amount equaling $22,132. As a result, our net cash used in financing activities was $43,744 in 2010.
For the year ended December 31, 2009, we purchased treasury stock of an
amount equaling $17,867. We also repaid $28,652 of long-term debt. As
a result, our net cash used in financing activities was $46,519 in 2009.
11
Our long-term liquidity is dependent on the continuation of operations and receipt of revenues.
10
Results of Operations.
For the year ended December 31, 2010,2011, we had sales of $3,075,262,$2,875,602, which represented a 9% increase6% decrease over the 20092010 sales of $2,810,541.$3,075,262. Revenues increaseddecreased due to increased website traffic
resulting from an expansion of web-based advertising. Costgeneral economic distress in our market areas. The cost of sales increased only 5%3% to $1,320,718$1,355,924 from 2009the 2010 cost of sales of $1,257,365$1,320,718 due to an emphasis placed on controlling at-track expenses. This resulted in a 13% increasedecrease in gross profit from $1,553,176 in 2009 to
$1,754,544 in 2010.
2010 to $1,519,678 in 2011.
For the year ended December 31, 2010,2011, we had selling, general and administrative expenses of $1,676,550. The percentage of$1,849,847. This is an increase from the $1,676,550 in general and administrative expenses to revenues for the year ended December 31, 2010 decreased to
55% from 60% for the year ended December 31, 2009 because of management's ongoing effort to increase sales without increasing general
and administrative expenses.
10%.
Plan of Operation. The Company may experience problems, delays, expenses and difficulties, many of which are beyond the Company'sCompany’s control. These include, but are not limited to, unanticipated problems relating to additional costs and expenses that may exceed current estimates and competition.
Critical Accounting Policies
The following accounting policies are considered critical by our management. These and other accounting policies require that estimates be made based on assumptions and judgment, which affect revenues, expenses, assets, liabilities and disclosure of contingencies in our financial statements. These estimates and assumptions are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. However, actual results may differ from these estimates under different and/or future circumstances.
Revenue Recognition
In general, we record revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the student is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenue streams of the Company:
Revenue is recognized at the time the product is delivered or the service is performed.
Deferred revenue is recorded for amounts received in advance of the time at which services are performed and included in revenue at the completion of the related services. Deferred revenue aggregated $946,922$1,172,821 and $1,153,313$946,922 at December 31, 2011 and 2010, and 2009, respectively.12
11
Property and Equipment
Property and equipment are recorded at cost and are depreciated based upon estimated useful lives using the straight-line method. Estimated useful lives range from three to ten years. At December 31, 2011, we believe the remaining carrying values of these assets are recoverable.
Stock-Based Compensation
We record stock based compensation in accordance with FASB ASC 718, Stock Compensation. ASC 718 requires that the cost resulting from all share-based transactions be recorded in the financial statements and establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement in accounting for share-based payment transactions with employees. The Statement also establishes fair value as the measurement objective for transactions in which an entity acquires goods or services from non-employees in share-based payment transactions.
Recent Pronouncements
We have determined that all recently issued accounting standards will not have a material impact on our financial statements, or do not apply to our operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Dale Jarrett Racing Adventure, Inc.
Index to the Financial Statements
Report of Independent Registered Public Accounting Firm
| | |
| | Page |
Report of Independent Registered Public Accounting Firm | | 14 |
| | |
Balance Sheets at December 31, 2011 and 2010 | | 15 |
| | |
Statements of Operations for the years ended December 31, 2011 and 2010 | | 17 |
| | |
Statements of Changes in Stockholders' Equity (Deficit) for the years ended December 31, 2011 and 2010 | | 18 |
| | |
Statements of Cash Flows for the years ended December 31, 2011 and 2010 | | 19 |
| | |
Notes to Financial Statements | | 20 |
13
Financial Statements of Dale Jarrett Racing Adventure, Inc.:
Balance Sheets as of December 31, 2010 and 2009 14
Statements of Operations For the Years
Ended December 31, 2010 and 2009 15
Statements of Stockholders' Equity (Deficit) For
the Years Ended December 31, 2010 and 2009 16
Statements of Cash Flows For the Years Ended
December 31, 2010 and 2009 17
Notes to Financial Statements 19
13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Dale Jarrett Racing Adventure, Inc.:
We have audited the accompanying balance sheets of Dale Jarrett Racing Adventure, Inc. (the Company) as of December 31, 20102011 and 2009,2010, and the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Dale Jarrett Racing Adventure, Inc. as of December 31, 20102011 and 2009,2010, and the results of its operations, and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Kingery & Crouse, P.A.
Certified Public Accountants
Tampa, Florida
March 28, 2011
29, 2012
14
DALE JARRETT RACING ADVENTURE, INC.
BALANCE SHEETS
DECEMBER 31, 20102011 and 2009
2010 2009
---- ----
ASSETS
----------
Current assets:
Cash
| | | |
| 2011 | | 2010 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ 415,966 | | $ 569,592 |
Accounts receivable | 68,993 | | 9,372 |
Spare parts and supplies | 142,862 | | 185,105 |
Prepaid expenses and other current assets | 80,958 | | 38,128 |
Total current assets | 708,779 | | 802,197 |
Property and equipment, at cost, net of | | | |
accumulated depreciation of $1,008,730 and $883,659 | 332,601 | | 452,072 |
Other assets | 45,345 | | 13,510 |
| $1,086,725 | | $1,267,779 |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | | |
Current liabilities: | | | |
Current portion of long-term debt | $ 22,840 | | $ 25,142 |
Accounts payable | 83,726 | | 87,845 |
Accrued expenses | 101,058 | | 146,697 |
Deferred revenue | 1,172,821 | | 946,922 |
Total current liabilities | 1,380,445 | | 1,206,606 |
| | | |
Long-term debt | 2,395 | | 25,055 |
| | | |
15
DALE JARRETT RACING ADVENTURE, INC.
BALANCE SHEETS
DECEMBER 31, 2011 and cash equivalents $ 569,592 $ 544,563
Accounts receivable 9,372 58,484
Spare parts and supplies 185,105 149,844
Prepaid expenses and other current assets 38,128 64,494
---------- ----------
Total current assets 802,197 817,385
---------- ----------
Property and equipment, at cost,
net of accumulated depreciation
of $883,659 and $757,747 452,072 574,368
---------- ----------
Other assets 13,510 3,600
---------- ----------
$1,267,779 $1,395,353
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current liabilities:
Current portion of long-term debt $ 25,142 $ 23,627
Accounts payable 87,845 152,422
Accrued expenses 146,697 34,026
Deferred revenue 946,922 1,153,313
---------- ----------
Total current liabilities 1,206,606 1,363,388
---------- ----------
Long-term debt 25,055 48,182
---------- ----------
Stockholders' equity (deficit):
Preferred stock, $.0001 par value,
5,000,000 shares authorized, none issued - -
Common stock, $.0001 par value, 200,000,000
shares authorized, 24,510,502 shares issued
and 23,838,852 and 24,216,002 shares
outstanding, respectively 2,451 2,451
Additional paid-in capital 6,184,480 6,184,480
Treasury stock, 671,650 and 294,500
shares, respectively, at cost (39,009) (17,867)
Accumulated deficit (6,111,804) (6,185,281)
---------- ----------
Total stockholders' equity (deficit) 36,118 (16,217)
---------- ----------
$1,267,779 $1,395,353
========== ==========
2010
(Continued)
| | | |
Stockholders' equity (deficit): | | | |
Preferred stock, $.0001 par value, | | | |
5,000,000 shares authorized, none issued | - | | - |
Common stock, $.0001 par value, | | | |
200,000,000 shares authorized, 24,510,502 shares | | | |
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) | (6,444,037) | | (6,111,804) |
Total stockholders' equity (deficit) | (296,115) | | 36,118 |
| $1,086,725 | | $1,267,779 |
See accompanying notes to financial statements.15
16
DALE JARRETT RACING ADVENTURE, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 20102011 AND 2009
2010 2009
---- ----
Sales $ 3,075,262 $ 2,810,541
Cost of sales and services 1,320,718 1,257,365
----------- -----------
Gross profit 1,754,544 1,553,176
----------- -----------
General and administrative expenses 1,676,550 1,692,290
----------- -----------
Income (loss) from operations 77,994 (139,114)
Other income (expense):
Interest income 1,538 8,872
Interest expense (6,055) (5,524)
----------- -----------
Income (loss) before income taxes 73,477 (135,766)
Income taxes - -
----------- -----------
Net income (loss) $ 73,477 $ (135,766)
=========== ===========
Per share information basic and diluted:
Income (loss) per share $ 0.00 $ (0.01)
=========== ===========
Weighted average shares outstanding 23,924,125 24,410,502
=========== ===========
| | |
| 2011 | 2010 |
| | |
Sales | $ 2,875,602 | $3,075,262 |
Cost of sales and services | 1,355,924 | 1,320,718 |
Gross profit | 1,519,678 | 1,754,544 |
Selling, general and administrative expenses | 1,849,847 | 1,676,550 |
| | |
Income (loss) from operations | (330,169) | 77,994 |
| | |
Other income(expense): | | |
Interest income | 942 | 1,538 |
Interest expense | (3,006) | (6,055) |
| | |
Income (loss) before income taxes | (332,233) | 73,477 |
Income taxes | - | - |
| | |
Net income (loss) | $(332,233) | $73,477 |
| | |
Per share information basic and diluted: | | |
| | |
Income (loss) per share | $ (0.01) | $ 0.00 |
| | |
Weighted average shares outstanding | 23,838,852 | 23,924,125 |
See accompanying notes to financial statements.16
17
DALE JARRETT RACING ADVENTURE, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 20102011 AND 2009
Common Stock Additional Treasury Stock
--------------- Paid-In Accumulated --------------
Shares Amount Capital Deficit Shares Amount Total
------ ------ ---------- ----------- ------ ------ ------
Balance December
31, 2008 24,995,502 $2,500 $6,118,431 $(6,049,515) - $ - $ 71,416
Shares issued
for services 400,000 40 15,960 - - - 16,000
Stock option
based compensation - - 50,000 - - - 50,000
Purchase of
treasury stock - - - - 294,500 (17,867) (17,867)
Shares retired (885,000) (89) 89 - - - -
Net loss - - - (135,766) - - (135,766)
---------- ------ ---------- ----------- -------- -------- --------
Balance December
31, 2009 24,510,502 2,451 6,184,480 (6,185,281) 294,500 (17,867) (16,217)
Shares issued
for services - - - - (20,000) 990 990
Purchase of
treasury stock - - - - 397,150 (22,132) (22,132)
Net income - - - 73,477 - - 73,477
---------- ------ ---------- ----------- ---------- -------- --------
Balance December
31, 2010 24,510,502 $2,451 $6,184,480 $(6,111,804) 671,650 $(39,009) $ 36,118
========== ====== ========== =========== ========== ======== ========
2010
| | | | | | | |
| | | Additional | | | | |
| Common | Stock | Paid-in | Accumulated | Treasury | Stock | |
| Shares | Amount | Capital | (Deficit) | Shares | Amount | Total |
| | | | | | | |
Balance December 31, 2009 | 24,510,502 | $2,451 | $6,184,480 | $(6,185,281) | 294,500 | $(17,867) | $(16,217) |
| | | | | | | |
Shares issued for services | - | | | | (20,000) | 990 | 990 |
Purchase of treasury stock | - | - | - | - | 397,150 | (22,132) | (22,132) |
Net income | - | - | - | 73,477 | - | - | 73,477 |
Balance December 31, 2010 | 24,510,502 | 2,451 | 6,184,480 | (6,111,804) | 671,650 | (39,009) | 36,118 |
| | | | | | | |
Net loss | - | - | - | (332,233) | - | - | (332,233) |
Balance December 31, 2011 | 24,510,502 | $2,451 | $6,184,480 | $(6,444,037) | 671,650 | $(39,009) | $(296,115) |
| | | | | | | |
See accompanying notes to financial statements.17
18
DALE JARRETT RACING ADVENTURE, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 20102011 AND 2009
2010 2009
---- ----
Net income (loss) $ 73,477 $(135,766)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 133,584 129,392
Common stock issued for services 990 16,000
Stock option based compensation - 50,000
Loss on disposal of assets 18,252 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 49,112 (16,759)
Increase in spare parts and supplies (20,792) (63,640)
(Increase) decrease in prepaid expenses
and other current assets 26,366 (4,293)
(Increase) decrease in note receivable - 10,000
Increase (decrease) in deferred revenue (206,391) 206,844
Increase (decrease) in accounts payable
and accrued expenses 48,094 (27,010)
--------- ---------
Total adjustments 49,215 300,534
--------- ---------
Net cash provided by operating activities 122,692 164,768
--------- ---------
Cash flows from investing activities:
Acquisition of property and equipment (53,919) (96,381)
--------- ---------
Net cash used in investing activities (53,919) (96,381)
--------- ---------
Cash flows from financing activities:
Purchase of treasury stock (22,132) (17,867)
Repayment of long-term debt (21,612) (28,652)
--------- ---------
Net cash used in financing activities (43,744) (46,519)
--------- ---------
Increase in cash and
cash equivalents 25,029 21,868
Cash and cash equivalents, beginning 544,563 522,695
--------- ---------
Cash and cash equivalents, ending $ 569,592 $ 544,563
========= =========
18
Supplemental cash flow information:
Cash paid for interest $ 6,055 $ 5,524
========= =========
Cash paid for income taxes $ - $ -
========= =========
Non-cash Investing and Financing Activities:
Property and equipment transferred to
parts and supplies $ 14,470 $ -
========= =========
| | |
| 2011 | 2010 |
| | |
Net income (loss) | $(332,233) | $ 73,477 |
Adjustments to reconcile net income (loss) to net | | |
cash provided by (used in) operating activities: | | |
Depreciation | 125,070 | 133,584 |
Common stock issued for services | - | 990 |
Loss on disposal of assets | - | 18,252 |
Changes in assets and liabilities: | | |
(Increase) decrease in accounts receivable | (59,621) | 49,112 |
(Increase) decrease in spare parts and supplies | 42,243 | (20,792) |
(Increase) decrease in prepaid expenses and other current assets | (42,830) | 26,366 |
Increase (decrease)in deferred revenue | 225,899 | (206,391) |
Increase (decrease) in accounts payable and | | |
accrued expenses | (49,758) | 48,094 |
Total adjustments | 241,003 | 49,215 |
Net cash provided by (used in) operating activities | (91,230) | 122,692 |
| | |
Cash flows from investing activities: | | |
Additions to racecars under construction Acquisition of property and equipment | (31,834) (5,600) | (9,910) (44,009) |
Net cash used in investing activities | (37,434) | (53,919) |
| | |
Cash flows from financing activities: | | |
Purchase of treasury stock | - | (22,132) |
Repayment of long-term debt | (24,962) | (21,612) |
Net cash used in financing activities | (24,962) | (43,744) |
| | |
Increase (decrease) in cash and cash equivalents | (153,626) | 25,029 |
Cash and cash equivalents, beginning | 569,592 | 544,563 |
Cash and cash equivalents, ending | $415,966 | $569,592 |
| | |
Supplemental cash flow information: | | |
Cash paid for interest | $ 3,006 | $ 6,055 |
Cash paid for income taxes | $ - | $ - |
| | |
Non-cash Investing and Financing Activities: | | |
Property and equipment transferred to parts and supplies | $ - | $ 14,470 |
See accompanying notes to financial statements.
19
Dale Jarrett Racing Adventure, Inc.
Notes to Financial Statements
December 31, 20102011 and 2009
2010
Note 1. Organization and Significant Accounting Policies
Dale Jarrett Racing Adventure, Inc. (referred to as "we"“we”, "us"“us”, "our"“our” or the "Company"“Company”) was incorporated in Florida on November 24, 1998. The Company offers the "NASCAR"“NASCAR” racing school to the public. The Company owns several "NASCAR"“NASCAR” type race carsracecars and has secured several racetrack locations at which it offers these services at various dates during the year.
Revenue Recognition
In general, we record revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the student is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenue streams of the Company:
Revenue is recognized at the time the product is delivered or the service is performed. Provision for sales returns will be estimated based on the Company'sCompany’s historical return experience; however sales returns have not been significant due to the nature of the services we provide.
Deferred revenue is recorded for amounts received in advance of the time at which services are performed and included in revenue at the completion of the related services. Deferred revenue aggregated $1,172,821 and $946,922 at December 31, 2011 and 2010, respectively.
Statement of Cash Flows
For purposes of the statement of cash flows, we consider all highly liquid investmentsinstruments purchased with a maturity of three months or less to be cash equivalents.
Accounts Receivable
Accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from students net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated and specific student issues are reviewed to arrive at appropriate allowances. There was no allowance at December 31, 20102011 and 2009.
2010.
20
Dale Jarrett Racing Adventure, Inc.
Notes to Financial Statements
December 31, 2010 and 2009
Note 1. Organization and Significant Accounting Policies (continued)
Spare Parts and Supplies
Spare parts and supplies inventories
Inventories are valued at the lower of cost or market on a first-in, first-out basis, which at December 31, 20102011 and 20092010 include approximately $178,600$138,245 and $138,700,$178,630, respectively, of spare parts and tires used in the racecar operation and finished goods, which are primarily promotional items that bear our logo, of approximately $6,500$4,617 and $11,100,$6,475, respectively.
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. Intangible Assets and At December 31, 2011, we believe the remaining carrying values of these assets are recoverable.
Long Lived Assets
We annually, review our long-lived assets and certain identifiable
intangibles for impairment or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.recoverable, review our long-lived assets for impairment. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. No such impairment losses have been identified by the Company for the years ended December 31, 20102011 and 2009.
2010.
Use of Estimates
The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Advertising Costs
Advertising costs are charged to operations when the advertising first takes place. Advertising costs charged to operations were $510,191$489,015 and $476,011$510,191 for the years ended December 31, 2011 and 2010, and 2009, respectively.
21
Dale Jarrett Racing Adventure, Inc.
Notes to Financial Statements
December 31, 2010 and 2009
Note 1. Organization and Significant Accounting Policies (continued)
Fair Value of Financial Instruments and Concentrations of Credit Risk
The Company'sCompany’s short-term financial instruments consist of cash and cash equivalents, accounts and notes receivable, accounts payable and accrued expenses and notes payable. The carrying amounts of these financial instruments approximate fair value because of their short-term maturities. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We continually monitor our positions with, and the credit quality of, the financial institutions in which we invest. As of December 31, 20102011 and 2009,2010, and periodically throughout such years, balances in various operating accounts exceeded federally insured limits. We have not experienced any losses in such accounts. We do not hold or issue financial instruments for trading purposes nor do we hold or issue interest rate or leveraged derivative financial instruments.
The carrying value of our long-term debt approximated its fair value based on the current market conditions for similar debt instruments.
Segment Information
The Company follows Financial Accounting Standards Board (FASB) ASC 280-
10,280-10, Segment Reporting. Under ASC 280-10, certain information is disclosed based on the way management organizes financial information for making operating decisions and assessing performance. We currently operate in a single segment and will evaluate additional segment disclosure requirements in the eventas we expand our operations.
Income Taxes
We compute income taxes in accordance with FASB ASC Topic 740, Income Taxes. Under ASC 740, provisions for income taxes are based on taxes
payable or refundable during each reporting period and changes in
deferred taxes. Deferred income taxes may arise from temporary
differences resulting from income and expense items reported for
financial accounting and tax purposes in different periods. Deferred
tax assets and liabilities are included in the financial statements at
currently enacted income tax rates applicable to the period in which theASC-740, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. Also, the effect on deferred taxes of a change in tax rates is recognized in income in the period that included the enactment date. Deferred taxes are classified as current or non-current depending on the
classifications of the assets and liabilities to which they relate.
Deferred taxes arising from temporary differences that are not related
to an asset or liability are classified as current or non-current
depending on the periods in which the temporary differences are expected
to reverse. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be22
Dale Jarrett Racing Adventure, Inc.
Notes to Financial Statements
December 31, 2010 and 2009
Note 1. Organization and Significant Accounting Policies (continued) realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
We follow the guidance in FASB ASC Topic 740-10, Accounting for Uncertainty in Income Taxes, which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.
22
For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.
Stock-Based Compensation
We recognize stock based compensation in accordance with FASB ASC 718, Stock Compensation. ASC 718 requires that the cost resulting from all share-based transactions be recorded in the financial statements. It establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement in accounting for share-based payment transactions with employees. The Statement also establishes fair value as the measurement objective for transactions in which an entity acquires goods or services from non-employees in share-based payment transactions.
Net Income (Loss) Per Common Share
We calculate net income (loss) per share in accordance with ASC Topic 260, Earnings per Share. Basic earnings (loss) per share are 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. Outstanding options were not dilutive in the period of income.
During periods in which we incur losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive or have no effect on earnings per share.
At December 31, 2010, the 3,500,000 outstanding options were not in-the-
money, and as such, were not included in the calculation of diluted
earnings per share.
23
Dale Jarrett Racing Adventure, Inc.
Notes to Financial Statements
December 31, 2010 and 2009
Note 1. Organization and Significant Accounting Policies (continued)
Recent Accounting Pronouncements
We have determined that all recently issued accounting standards will not have a material impact on our financial statements, or do not apply to our operations.
23
Note 2. Property and Equipment
Property and equipment consist of the following at December 31, 20102011 and 2009:
2010:
2011
2010 2009
------------ ------------
Office furniture and equipment $ 54,593 $ 54,593
Software
26,398 26,398
Shop and track equipment 278,267 272,667 260,407
Race vehicles
571,000 611,390
571,000
DJ graphics equipmentGraphics Equipment
24,271 -
24,271
Vehicles -– other
386,802 379,327
------------ ------------ _ 386,802
1,341,331 1,335,731 1,332,115
Less accumulated depreciation (883,659) (757,747)
------------ ------------
(1,008,730) (883,659)
$ 332,601 $ 452,072 $ 574,368
============ ============
Depreciation charged to operations was $133,584$125,071 and $129,392$133,584 for the years ended December 31, 20102011 and 2009,2010, respectively, of which $122,038$119,176 and $114,274, respectively,$122,038 is included in cost of sales and services for those years.
Note 3. Long-term Debt
At December 31, 20102011 and 2009,2010, long-term debt consists of obligations under vehicle purchase contracts having outstanding principal balances of $50,197$25,235 and $71,809,$50,197, respectively. The loans are payable in monthly installments of $2,306, including interest at rates ranging from 5.0% to 7.5% through March 2013, and are collateralized by three support vehicles.
Principal repayments are due as follows: $25,142 in 2011, $21,547$22,840 in 2012 and $3,508$2,395 in 2013.
Note 4. Stockholders'Stockholders’ Equity (Deficit)
During 2011 and 2010, and 2009, the Companywe purchased a total of 397,150zero and 294,500397,150 shares of itsour common stock for cash aggregating $22,132$0 and $17,867,$22,132, respectively, which is classified as treasury stock in the 24
Dale Jarrett Racing Adventure, Inc.
Notes to Financial Statements
December 31, 2010 and 2009
Note 4. Stockholders' Equity (Deficit) (continued)
accompanying balance sheets as of December 31, 20102011 and 2009.2010. Further in April 2010, the Companywe reissued 20,000 shares of treasury stock with a fair value of $990 to an employee for services.
During April 2009, the Company issued 400,000 shares of common stock to
an officer for services valued at $16,000. The valued assigned to the
shares issued was based upon the trading value of the Company's common
stock at the date the shares were authorized by the Company's Board of
Directors.
During 2008, the Company repurchased 855,000 shares of common stock for
cash aggregating $85,500. During January 2009, the Company retired
885,000 shares of common stock.
During December 1998, the Company negotiated personal service contracts
with certain members of the Jarrett family and Brett Favre. The Jarretts
and Favre have had a prior business relationship related to automobile
racing. The contracts required the individuals to provide personal
appearances and to participate in the advertising and promotional
efforts of the Company for a period of ten years. The Company issued an
aggregate of 5,500,000 shares in connection with the personal service
contracts. Services charged to expense during the year ended December
31, 2008 amounted to $25,000. The contracts expired in 2009. These
individuals have verbally agreed to continue their relationship with the
Company without a written agreement and will be compensated for future
services only when they are rendered.
24
The following table summarizes the stock option activity during the years ended December 31, 20102011 and 2009:2010:
Stock
Weighted-average
Options
Price per Share
------------ ------------
Balance at December 31, 2008 3,500,000 $ 0.15
============ ============
Expired - -
------------ ------------
Balance at December 31, 2009
3,500,000 $ 0.15
============ ============
$0.15
Expired
-
-
------------ ------------
Balance at December 31, 2010
3,500,000 $ 0.15
============ ============
$0.15
Expired
-
-
Balance at December 31, 2011
3,500,000
$0.15
At December 31, 2011, we have the following options outstanding, all of which are exercisable:
Exercise price: $0.15; Outstanding:3,500,000; Weighted average remaining contractual life: 2.8 years.
During April 2009, the Companywe extended the expiration date of 3,500,000 outstanding options for a period of five years. The exercise price remained at $.15 per share and the options now expire on October 21, 2014. The incremental cost of the extension of these options was $50,000 and was charged to stock option based compensation expense during 2009.25
Dale Jarrett Racing Adventure, Inc.
Notes to Financial Statements
December 31, 2010 and 2009
Note 5. Income Taxes
The Company has
We have not provided for income taxes during any period presented as a result of operating losses. The Company hasWe have a net operating loss carryforward at December 31, 20102011 of approximately $4,300,000 that will expire during various years through 2030.2031. The principal difference between the income (loss) for book purposes and as reported on the income tax return results primarily from stock-based compensation. The Company
hasWe have fully reserved the deferred tax asset that would arise from the loss carryforward since the Company believeswe believe that it is more likely than not that future income from operations will not be available to utilize the deferred tax asset. The approximate deferred tax asset and the related reserve are as follows:
Deferred tax asset
Tax benefit of net operating loss $ 1,460,000
Less valuation allowance (1,460,000)
-----------
Net deferred tax asset $ -
===========
The decrease in the reserve was approximately $37,000 during 2010.
| | | | |
Deferred tax asset | | 2011 | | 2010 |
Tax benefit of net operating losses | $ | 1,573,000 | $ | 1,460,000 |
Less valuation allowance | | (1,573,000) | | (1,460,000) |
Net deferred tax asset | $ | - | $ | - |
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes for the years ended December 31, 20102011 and 2009.2010. The sources and tax effects of the differences are as follows:
Income tax provision at the federal statutory rate 34%
Effect of operating losses (34)%
-----
0%
=====
25
| | | | |
| | 2011 | | 2010 |
Income tax provision at the federal statutory rate | | 34 % | | 34 % |
Effect of operating losses | | (34)% | | (34)% |
| | 0 % | | 0 % |
We have not taken any uncertain tax positions on any of our open income tax returns filed through the period ended December 31, 2010.2011. Our methods of accounting are based on established income tax principles in the Internal Revenue Code and are properly calculated and reflected within our income tax returns. Due to the carryforward of net operating losses, our federal and state income tax returns are subject to audit for varyingvarious periods beginning in 1998.
Note 6. Commitments and Contingencies
Operating Leases
In October 2009, the Companywe entered an operating lease for use of a building in Hickory, North Carolina. The lease requires a monthly payment of $1,830 and expires in November, 2012. Subsequent to December 31, 2011 we entered into a lease for office and warehouse space in Las Vegas, NV. The lease requires a monthly payment of $1,510 and expires February 28, 2013. Future minimum payments under thisthese lease agreementagreements are as follows: $22,212$35,461 in 20112012 and $20,361$3,020 in 2012.2013. The Company also leases various office and warehouse26
Dale Jarrett Racing Adventure, Inc.
Notes to Financial Statements
December 31, 2010 and 2009
Note 6. Commitments and Contingencies (continued) space on a month to month basis or under terms that are less than one year. Rent expense amounted to $66,287$62,559 and $55,800$66,287 for the years ended December 31, 2011 and 2010, and 2009, respectively.
Employment Agreements
During November 2008,July 2011, we extended the Companyemployment agreement of our 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.
Vendor Agreements
During 2009, we entered into an employment agreement with an officera vendor, who provides video equipment and video recording services, which enables the Company to sell video recordings to its students. Under the agreement, we were entitled to a 60% allocation of revenue for a periodall video products and services sold through December 31, 2011. Beginning January 1, 2012, the agreement was extended through December 31, 2013 and amended to provide for payments by us to the vendor of five years at a salary of $110,000 per
year.
Vendor Agreements
$30 for driving adventures, and $11 for riding adventures for which the recording is purchased by the student.
26
On August 19, 2010, the Companywe 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 students at Talladega Superspeedway. Under the terms of the agreement, the Companywe 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
During October 2011, we entered into a new agreement with Talladega Superspeedway, LLC to allow Dale Jarrett Racing Adventure exclusivity during 2012 in providing stock car ride along programs and stock car driving experiences to paying students at Talladega Superspeedway. Under the terms of the agreement, we agreed to rent a minimum of 60 days during 2012 for $438,000 payable in four payments of $109,500 due at the end of each quarter during 2012. We will also use
additionalbe required to pay Talladega Superspeedway the greater of a set amount of each experience provided or 20% of all DJRA revenues on five designated racing days at a cost of $7,500 per day during 2011.
During 2009, the Company entered intotrack.
On October 18, 2011, we signed an agreement with a vendor, who
provides video equipment and video recording services, which enablesLas Vegas Motor Speedway to allow us to provide 34 event dates at the Companyspeedway during 2012. We will pay $271,000 to sell video recordings to its students. UnderLas Vegas Motor Speedway over the agreement,course of 2012 for use of the Company is entitled to a 60% allocation of revenue for all video
products and services sold. The agreement is through December 31, 2011
and is renewable annually thereafter.
speedway.
Litigation
On June 28, 2010, the Companywe 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 furtheran additional $2,500 during 2010.
Note 7. Related Party Transactions
During the years ended December 31, 20102011 and 2009,2010, an officer of the Company paid approximately $167,000$95,000 and $114,000,$167,000, respectively, of
internet advertising expenses for the Company and has been reimbursed for those payments.
27
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
ITEM 9A. CONTROLS AND PROCEDURES
Controls and Procedures.
Evaluation of Disclosure Controls and Procedures:
We maintain disclosure controls and procedures, as defined in Rules 13a-
15(e)13a-15(e) and 15d-15(e) under the Exchange Act that are designed to insure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the Securities and Exchange Commission'sCommission’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, or the persons performing similar functions, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our CEO and CFO, or the persons performing similar functions, our management has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report. Based on that evaluation, our CEO and CFO, or the persons performing similar functions, concluded that our disclosure controls and procedures were effective as of December 31, 2010.
Management's2011.
Management’s Annual Report on Internal Control over Financial Reporting:
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is the process designed by and under the supervision of our CEO and CFO, or the persons performing similar functions, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America. Management has evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control over Financial Reporting -– Guidance for Smaller Public Companies.
28
Under the supervision and with the participation of our CEO and CFO, or the persons performing similar functions, our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2010,2011, and concluded that it is effective.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management'sManagement’s report was not subject to attestation by the registrant'sregistrant’s registered public accounting firm28 pursuant to temporary rules of the Securities and Exchange Commission that permit the registrant to provide only management'smanagement’s report in this annual report.
Evaluation of Changes in Internal Control over Financial Reporting:
Under the supervision and with the participation of our CEO and CFO, or those persons performing similar functions, our management has evaluated changes in our internal controls over financial reporting that occurred during the fourth quarter of 2010.2011. Based on that evaluation, our CEO and CFO, or those persons performing similar functions, did not identify any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Important Considerations:
The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.
ITEM 9B. OTHER INFORMATION
None
29
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Board of Directors. The following persons listed below have been retained to provide services as director until the qualification and election of his successor. All holders of common stock will have the right to vote for directors of the Company. The board of directors has primary responsibility for adopting and reviewing implementation of the business plan of the registrant, supervising the development business plan, review of the officers' performance of specific business functions. The board is responsible for monitoring management and from time to time, to revise the strategic and operational plans of the registrant. Directors receive no cash compensation or fees for their services rendered in such capacity.
Mr. Shannon is a full time employee of the Company.
The executive officers and directors are:
| | | | |
Name | | Position | | Term(s) of Office |
Timothy B. Shannon, age 48 49 | | President, Director | | Inception to Present |
| | Chief Executive Officer | | |
| | Chief Financial Officer | | June 1, 2005 to present |
| | | | |
Glenn Jarrett, age 58 Age 59 | | Vice President | | Inception to Present |
| | Director | | |
| | | | |
Kenneth J. Scott, age 55 56 | | Director | | January 26, 2007 to present |
Resumes:
Timothy B. Shannon. Mr. Shannon has been President, Director and Chief Executive Officer of the Company since its inception in 1998. Mr. Shannon became Chief Financial Officer in June 2005. Mr. Shannon spent six years as a systems engineer and marketing representative with IBM after graduating in 1983 from the University of South Florida'sFlorida’s Engineering College with a degree in Computer Science. From 1990 until 1994 Mr. Shannon was an investment advisor with Great Western Securities and Hearn Financial Services in Orlando, FL. In 1995, he co-founded Shannon/Rosenbloom Marketing with Brian Rosenbloom, a former director of Dale Jarrett Racing Adventure, Inc.
30
Glenn Jarrett. Mr. Jarrett has been a Director of the Company since its inception. Mr. Jarrett works as an auto racing announcer and consultant. Mr. Jarrett has been a senior motorsports announcer for TNN since 1991. He is a motorsports announcer (Pits) at contracted events and is the co-producer and co-host of the "World“World of Racing"Racing” radio program on MRN radio which airs weekdays. Mr. Jarrett has an extensive background in auto racing. He drove in the NASCAR Busch Series from 1982 to 1988 and ran a total of 18 NASCAR Winston Cup Races from 1977 to 1983. Mr. Jarrett is the acting consultant and marketing 30
coordinator for DAJ Racing, Inc. and has been a guest speaker at many auto racing and related functions. Mr. Jarrett graduated from the University of North Carolina in 1972 with a Bachelor of Science degree in Business Administration.
Kenneth J. Scott. Since 1985, Mr. Scott has been President of Kenneth J. Scott, P.A., an accounting firm that provides financial, tax and advisory services to a wide range of businesses and not-for-profit organizations throughout the state of Florida. Mr. Scott has been a certified public accountant in the state of Florida since 1979. He graduated from Rollins College with a Bachelor of Arts degree in Business Administration in 1978.
Committees of the Board of Directors
We do not have standing audit, nominating or compensation committees, or committees performing similar functions. Our board of directors believes that it is not necessary to have standing audit, nominating or compensation committees at this time because the functions of such committees are adequately performed by our board of directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, as
amended, an officer, director, or greater-than-10% shareholder of the
registrant must file a Form 4 reporting the acquisition or disposition of registrant's equity securities with the Securities and Exchange Commission no later than the end of the second business day after the day the transaction occurred unless certain exceptions apply. Transactions not reported on Form 4 must be reported on Form 5 within 45 days after the end of the registrant's fiscal year. Such persons must also file initial reports of ownership on Form 3 upon becoming an officer, director, or greater-than-10% shareholder. To our knowledge, based solely on a review of the copies of these reports furnished to it, the officers, directors, and greater than 10% beneficial owners complied
with all applicable Section 16(a) filing requirements during 2010.
2011.
Code of Ethics Policy
During July 2008, we adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.
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Corporate Governance
There have been no changes in any state law or other procedures by which security holders may recommend nominees to our board of directors. In addition to having no nominating committee for this purpose, we currently have no specific audit committee and no audit committee financial expert. Based on the fact that our current business affairs are simple, any such committees are excessive and beyond the scope of our business and needs.31
Indemnification
The Company shall indemnify to the fullest extent permitted by, and in the manner permissible under the laws of the State of Florida, any person made, or threatened to be made, a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he is or was a director or officer of the Company, or served any other enterprise as director, officer or employee at the request of the Company. The board of directors, in its discretion, shall have the power on behalf of the Company to indemnify any person, other than a director or officer, made a party to any action, suit or proceeding by reason of the fact that he/she is or was an employee of the registrant.
Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrant, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceedings) is asserted by such director, officer, or controlling person in connection with any securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issues.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE REGISTRANT FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS THEREFORE UNENFORCEABLE.
32
ITEM 11. EXECUTIVE COMPENSATION
The following table set forth certain information as to the
compensation paid to our sole executive officer.
Summary Compensation Table
Name and
Principal Cash Stock Option All Other
Position Year Salary Awards Awards Compensation Total
($) ($) ($) ($) ($)
------------------- ---- ------- ------ ------ ------------- -------
Timothy B. Shannon 2010 175,279 - - - -
CEO, CFO 2009 179,815 16,000 28,755 - 224,570
| | | | | | |
Name and Principal Position | CashYear | Salary($) | Stock Awards($) | Option Awards($) | All Other Compensation($) | Total ($) |
Timothy B. Shannon | 2011 | 150,000 | - | - | 20,000 | 170,000 |
CEO, CFO | 2010 | 175,279 | - | - | - | - |
The cash salary amount for 2010 includes a base salary of $150,000 and commissions earned by Mr. Shannon during 2010 of $25,279.32
The cash salary amount for 2009 includes a base salary of $150,000 and
commissions earned by Mr. Shannon during 2009 of $29,815.
The stock awards compensation for 2009 includes the value of stock
awards granted to Mr. Shannon by board of director's resolution on April
9, 2009. To calculate the fair value of the awards, the market price at
the grant date is used in accordance with ASC 718-10-30. The market
price at that date was $.04.
The option awards compensation for 2009 includes the fair value of the
extended options described in Note 4 of the financial statements over
the fair value of those options immediately preceding the extension as
required by ASC 718-20-35-3. These options were valued using a risk-
free rate of 1.9%, strike price of $.15, market price of $.04,
volatility of 73%, and a life of .54 years immediately prior to the
extension and 5.54 upon extension.
The all other compensation amount for 2010 represents salary accrued by
the registrant in prior years, but not paid to Mr. Shannon until 2010
and 2009.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth the outstanding stock options to our sole executive officer:
Option Awards
Outstanding Equity Awards at December 31, 2010
Number of Number of
Securities Securities
Underlying Underlying
Unexercised Unexercised Option Option
Options/ Options/ Exercise Expiration
Name Exercisable Unexercisable Price Date
---- ----------- ------------- -------- ----------
Timothy B.
Shannon 2,000,000/2,000,000 2,000,000 $0.15 Oct. 21, 2014
2011
| | | | |
Name | Number of Securities Underlying Unexercised Options/Exercisable | Number of Securities Underlying Unexercised Options/Unexercisable | Option ExercisePrice | Option ExpirationDate |
Timothy B. Shannon | 2,000,000/ 2,000,000 | 2,000,000 | 0.15 | Oct. 21, 2014 |
33
DIRECTOR COMPENSATION FOR 2010
2011
The following table sets forth the compensation to our directors for
2010:
2011:
Director Compensation Table
Fees Earned
or Paid Stock Option All Other
Name in Cash Awards Awards Compensation Total
($) ($) ($) ($) ($)
------------------- ----- ------- ------ ------ ------
Timothy B. Shannon 20,000 - - - 20,000
Glenn Jarrett 10,000 - - - 10,000
Ken Scott 10,000 - - - 10,000
| | | | | |
Name | Fees Earned or Paid inCash ($) | Stock Awards($) | Option Awards($) | All Other Compensation($) | Total ($) |
Timothy B. Shannon | 20,000 | - | - | - | 20,000 |
Glenn Jarrett | 10,000 | - | - | - | 10,000 |
Ken Scott | 10,000 | - | - | - | 10,000 |
ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS
The following tabulates holdings of shares of the Company by each person who, subject to the above, holds of record or is known by management to own beneficially more than 5.0% of the common shares and, in addition, by all directors and officers of the registrant individually and as a group. Each named beneficial owner has sole voting and investment power with respect to the shares set forth opposite his name.
Shareholdings at March 28, 2010
Percentage of
Number & Class(1) Outstanding
of Shares Common Shares
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class(2)
-------------------- -------------------- --------
Timothy B. Shannon 3,983,333(1) 16.25%
c/o Dale Jarrett Racing
Adventure, Inc.
1313 10TH Avenue Lane, SE
Hickory, NC 28602
Glenn Jarrett 2,000,000(3) 8.16%
c/o Dale Jarrett Racing
Adventure, Inc.
1313 10TH Avenue Lane, SE
Hickory, NC 28602
Ned Jarrett 1,000,000 4.08%
3182 Ninth Tee Drive
Newton, NC 28658
Dale Jarrett 1,500,000 6.12%
3182 Ninth Tee Drive
Newton, NC 28658
29, 2012
| | | |
Name and Address of Beneficial Owner | | Number & Class (1) of Shares, Amount and Nature of BeneficialOwnership | Percentage of Outstanding Common Shares Percent ofClass (2) |
Timothy B. Shannon | | 3,983,333 (1) | 16.71% |
c/o Dale Jarrett Racing Adventure, Inc. | | | |
1313 10th Avenue Lane, SE | | | |
Hickory, NC 28602 | | | |
| | | |
Glenn Jarrett | | 2,000,000 (3) | 8.39% |
c/o Dale Jarrett Racing Adventure, Inc. | | | |
1313 10th Avenue Lane, SE | | | |
Hickory, NC 28602 | | | |
34
Brett Favre 1,500,000 6.12%
132 Westover Drive
Hattiesburg, MS 39402
Kenneth J. Scott 1,109,800(4) 4.53%
c/o Dale Jarrett Racing
Adventure, Inc.
1313 10TH Avenue Lane, SE
Hickory, NC 28602
| | | |
| | | |
Ned Jarrett | | 1,000,000 | 4.19% |
3182 Ninth Tee Drive | | | |
Newton, NC 28658 | | | |
| | | |
Dale Jarrett | | 1,500,000 | 6.29% |
3182 Ninth Tee Drive | | | |
Newton, NC 28658 | | | |
| | | |
Brett Farve | | 1,500,000 | 6.29% |
132 Westover Drive | | | |
Hattiesburg, MS 39402 | | | |
| | | |
Kenneth J. Scott | | 1,109,800 (4) | 4.66% |
c/o Dale Jarrett Racing Adventure, Inc. | | | |
1313 10th Avenue Lane, SE | | | |
Hickory, NC 28602 | | | |
(1) Includes 1,983,333 common shares and immediately exercisable options to purchase 2,000,000 common shares by Mr. Shannon.
(2) The percentages are based upon 24,510,502 issued and outstanding common shares.
(3) Includes 1,000,000 common shares and immediately exercisable options to purchase 1,000,000 common shares by Mr. Glenn Jarrett.
(4) Includes 609,800 common shares and immediately exercisable options to purchase 500,000 common shares by Mr. Scott.
The following information relates to the common shares beneficially owned by each of our directors and executive officers and all of our directors and executive officers as a group:
Name and Address of Amount and Nature of Percent
Beneficial Owner (1) Beneficial Ownership of Class
------------------- -------------------- ---------
Kenneth J. Scott 1,109,800 (2) 4.53 (3)
Glenn Jarrett 2,000,000 (4) 8.16 (5)
Timothy B. Shannon 3,983,333 (6) 16.25 (7)
All directors and executive
officers as a group (3 persons) 7,093,133 (8) 28.94 (9)
| | | | |
Name and Address of Beneficial Owner (1) | | Amount and Nature of BeneficialOwnership | | Percent ofClass |
Kenneth J. Scott | | 1,109,800 (2) | | 4.53 (3) |
Glenn Jarrett | | 2,000,000 (4) | | 8.16 (5) |
Timothy B. Shannon | | 3,983,333 (6) | | 16.25 (7) |
All directors and executive officers as a group (3 persons) | | 7,093,133 (8) | | 28.94 (9) |
(1) The address for each of the persons listed above is c/o Dale
Jarrett Racing Adventure, Inc., 1313 10TH Avenue Lane, SE, Hickory, NC 28602.
35
(2) Includes 609,800 common shares and immediately exercisable options to purchase 500,000 common shares by Mr. Scott.
(3) The percentage is based upon 24,510,502 issued and
outstanding common shares and immediately exercisable options to
purchase 500,000 common shares by Mr. Scott.
(4) Includes 1,000,000 common shares and immediately exercisable options to purchase 1,000,000 common shares by Mr. Jarrett.
(5) The percentage is based upon 24,510,502 issued and outstanding common shares and immediately exercisable options to purchase 1,000,000 common shares by Mr. Glenn Jarrett.
(6) Includes 1,983,333 common shares and immediately exercisable options to purchase 2,000,000 common shares by Mr. Shannon.
(7) The percentage is based upon 24,501,502 issued and outstanding common shares and immediately exercisable options to purchase 2,000,000 common shares by Mr. Shannon.
(8) Includes 3,593,133 common shares and immediately exercisable option to purchase 3,500,000 common shares by the three named directors and officers.35
(9) The percentage is based upon 24,510,502 issued and outstanding common shares and immediately exercisable options to purchase 3,500,000 common shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
During the years ended December 31, 20102011 and 2009,2010, Timothy Shannon, an officer of the Company paid approximately $167,000$95,000 and $114,000,$167,000, respectively, of internet advertising expenses for the Company and has been reimbursed for those payments.
Director Independence. The Company'sCompany’s board of directors consists of Timothy Shannon, Glenn Jarrett and Kenneth Scott. Neither Timothy Shannon nor Glenn Jarrett is independent as such term is defined by a national securities exchange or an inter-dealer quotation system. During the year ended December 31, 2010,2011, there were no transactions with related persons other than as described in the section above entitled "Item“Item 11. Executive Compensation"Compensation”.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Audit Fees. We paid aggregate fees and expenses of approximately $27,800$28,300 and $29,000,$27,800, respectively, to Kingery & Crouse, P.A. during 2011 and Stark
Winter Schenkein and Co., LLP during 2010, and 2009, respectively, for work completed for our annual audits and for the review of our financial statements included in our Form 10-Q.
36
Tax Fees. We did not incur any aggregate tax fees and expenses from Kingery & Crouse, P.A. and Stark Winter Schenkein and Co., LLP for the years ended December 31, 20102011 and 2009,2010, respectively, for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees. We did not incur any other fees from Kingery & Crouse, P.A. during 2011 and Stark Winter Schenkein and Co., LLP during 2010 and 2009.
2010.
The board of directors, acting as the Audit Committee considered whether, and determined that, the auditor's provision of non-audit services was compatible with maintaining the auditor's independence. All of the services described above for the years ended December 31, 20102011 and 20092010 were approved by the board of directors pursuant to its policies and procedures.36
37
Part IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) List of Financial statements included in Part II hereof
Balance Sheets, December 31, 20102011 and 2009
2010
Statements of Operations for the years ended December 31, 20102011 and 2009
2010
Statements of Stockholders'Stockholders’ Equity (Deficit) for the years ended December 31, 20102011 and 2009
2010
Statements of Cash Flows for the years ended December 31, 20102011 and 2009
2010
Notes to the Financial Statements
(a)(2) List of Financial Statement schedules included in Part IV hereof: None.
(a)(3) Exhibits
The following of exhibitsdocuments are filed withas a part of this report:
(31)
Exhibit 31* - Certifications pursuant to Section 302 certification
(32)of the Sarbanes-Oxley Act of
2002
Exhibit 32* - Certifications pursuant to Section 906 certification
37
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.
38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Companyregistrant has duly caused this Reportreport to be signed on its behalf by the undersigned, thereunto duly authorized
person.
Date: March 28, 2011
authorized.
Dale Jarrett Racing Adventure, Inc.
/s/
/s/ Timothy Shannon
------------------------------
By: Timothy Shannon
President
Date: March 29, 2012
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of the Companyregistrant and in the capacities and on the dates indicated.
/s/Timothy B. Shannon CEO/CFO March 28, 2011
------------------- Controller/Director
/s/Kenneth J. Scott Director March 28, 2011
-------------------
/s/Glenn Jarrett Director March 28, 2011
------------------- Vice President
| | | | |
/s/Timothy B. Shannon | | CEO/CFO | | March 29, 2012 |
| | Controller/ Director | | |
| | | | |
/s/Kenneth J. Scott | | Director | | March 29, 2012 |
| | | | |
| | | | |
/s/Glenn Jarrett | | Director | | March 29, 2012 |
| | Vice President | | |
39