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QDM International (QDMI)

Filed: 13 Nov 11, 7:00pm

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 September 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 of incorporation or organization)

 

(I.R.S. Employer 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 [x]   No [ ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerate filer, or a small reporting company as defined by Rule 12b-2 of the Exchange Act):




Large accelerated filer        [  ]

 

Non-accelerated filer             [  ]

Accelerated filer                 [  ]

 

Smaller reporting company   [x]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  [ ]      No [x]


The number of outstanding shares of the registrant's common stock,

November 14, 2011:

Common Stock  -  24,510,502


2



DALE JARRETT RACING ADVENTURE, INC.

FORM 10-Q

For the quarterly period ended September 30, 2011

INDEX


PART 1 – FINANCIAL INFORMATION

 

 

Page

Item 1.  Financial Statements (Unaudited)

 

4

Item 2.  Management's Discussion and Analysis of

  Financial Condition and Results of Operations

 

9

Item 3.  Quantitative and Qualitative Disclosure

  About Market Risk

 

11

Item 4.  Controls and Procedures

 

11


PART II – OTHER INFORMATION



Item 1.  Legal Proceedings

 

13

Item 1A.  Risk Factors

 

13

Item 2.  Unregistered Sales of Equity Securities and

  Use of Proceeds

 

13

Item 3.  Defaults upon Senior Securities

 

13

Item 4.  (Removed and Reserved)

 

13

Item 5.  Other Information

 

13

Item 6.  Exhibits

 

13

 

 

 

SIGNATURES

 

14



3



Dale Jarrett Racing Adventure, Inc.

Condensed Balance Sheets

September 30, 2011 and December 31, 2010


 

September 30,

 

December 31,

 

 

2011

 

2010

 

 

 (Unaudited)

 

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

  Cash                 

 $    215,615

 

$   569,592

 

  Accounts receivable

 52,133

 

 9,372

 

  Spare parts and supplies

 185,172

 

 185,105

 

  Prepaid expenses and other current assets

        77,725

 

       38,128

 

      Total current assets

      530,645

 

     802,197

 

 

 

 

 

 

Property and equipment, at cost, net of

 

 

 

 

  accumulated depreciation of $977,013 and $883,659

      358,718

 

     452,072

 

Other assets

        18,510

 

       13,510

 

 

$    907,873

 

$1,267,779

 

 

========

 

========

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

Current liabilities:

 

 

 

 

  Current portion of long-term debt

$       25,269

 

$     25,142

 

  Accounts payable

 57,659

 

 87,845

 

  Accrued expenses

 39,534

 

 146,697

 

  Deferred revenue

       874,124

 

     946,922

 

      Total current liabilities          

       996,586

 

  1,206,606

 

 

 

 

 

 

Long-term debt

           6,224

 

       25,055

 

 

 

 

 

 

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)

 (6,242,859)

 

 (6,111,804)

 

       Total stockholders' equity (deficit)

      (94,937)

 

         36,118

 

 

$     907,873

=========

 

$  1,267,779

=========

 

See accompanying notes to unaudited condensed financial statements.

4



Dale Jarrett Racing Adventure, Inc.

Condensed Statements of Operations

For the Three Months and Nine Months Ended September 30, 2011 and 2010

(Unaudited)


 

 

 

 

 

 

Three Months

Nine Months

 

2011

2010

2011

2010

 

 

 

 

 

Sales          

 $786,895

 $ 955,380

 $2,077,430

 $2,241,599

Cost of sales and services

  419,489

   434,179

    999,860

 1,009,028

Gross profit

  367,406

   521,201

 1,077,570

 1,232,571

 

 

 

 

 

General and administrative expenses

  355,796

   359,794

 1,206,932

 1,168,744

 

 

 

 

 

Income (Loss) from operations   

 11,610

 161,407

 (129,362)

 63,827

 

 

 

 

 

Other income and (expense):

 

 

 

 

 Interest income

 277

 323

 654

 1,324

 Loss on disposal of assets

 -   

 -   

 -   

 (18,252)

 Interest expense

       (582)

    (1,037)

      (2,347)

     (5,126)

 

       (305)

       (714)

      (1,693)

   (22,054)

 

 

 

 

 

  Net income (loss)

$   11,305

 $160,693

 $(131,055)

$    41,773

 

=======

=======

========

========

 

 

 

 

 

Per share information:

 

 

 

 

 

 

 

 

 

Basic and diluted (loss) per share

$        0.00

$        0.01

$      (0.01)

$         0.00

 

========

========

========

========

Weighted average shares outstanding

23,838,852

 23,842,927

 23,838,852

 23,952,862

 

========

=========

========

========


See accompanying notes to unaudited condensed financial statements


5



Dale Jarrett Racing Adventure, Inc.

Condensed Statements of Cash Flows

For the Nine Months Ended September 30, 2011 and 2010

(Unaudited)


2011

2010

 

 

 

 Net cash (used in) operating activities

$(330,273)

$(208,389)

 

 

 

Cash flows from investing activities:

 

 

   Acquisition of property and equipment

      (5,000)

    (53,917)

  Net cash (used in) investing activities

      (5,000)

    (53,917)

 

 

 

Cash flows from financing activities:

 

 

   Repayment of long-term debt

 (18,704)

 (15,624)

   Purchase of treasury stock

                -

   (22,132)

  Net cash (used in) financing activities

    (18,704)

   (37,756)

 

 

 

(Decrease) in cash    

   (353,977)

 (300,062)

 

 

 

Cash and cash equivalents,

 

 

 beginning of period     

     569,592

   544,563

Cash and cash equivalents,

   

   

 end of period

$   215,615

$  244,501

 

========

========

Supplemental cash flow information:

 

 

Cash paid for interest

$       2,045

========

$      3,204

========

Cash paid for income taxes

$               -

$              -

 

========

========


See accompanying notes to unaudited condensed financial statements.


6



DALE JARRETT RACING ADVENTURE, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 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 nine months ended September 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.


7



(5)

Property and Equipment


Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the respective assets, ranging from 3 to 10 years.  Major additions are capitalized, while minor additions and maintenance and repairs, which do not extend the useful life of an asset, are expensed as incurred.


(6)

Stockholders’ Equity (Deficit)


During the nine months ended September 30, 2011 and 2010, the Company purchased a total of zero and 47,900 shares, respectively, of its own common stock for cash aggregating $0 and $2,298, 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.


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.


(8)

Subsequent Events


On October 18, 2011 the Company signed an agreement with Las Vegas Motor Speedway to allow the Company to provide 34 event dates at the speedway during 2012.  The Company will pay $271,000 to Las Vegas Motor Speedway over the course of 2012 for use of the speedway.


8



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 nine months ended September 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 nine months ended September 30, 2010, the Corporation acquired plant and equipment of $53,917 resulting in net cash used in investing activities of $53,917.


9



For the nine months ended September 30, 2011, the Corporation reduced its outstanding debt by repaying notes payable of $18,704.  As a result, the Corporation had net cash used in financing activities of $18,704 for the nine months ended September 30, 2011.


Comparatively, for the nine months ended September 30, 2010, the Corporation reduced its outstanding debt by repaying notes payable of $15,624 and purchased treasury stock of $22,132.  As a result, the Corporation had net cash used in financing activities of $37,756 for the nine months ended September 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 September 30, 2011, the registrant had sales of $786,895 with cost of sales and services of $419,489 for a gross profit of $367,406.


Comparatively, for the three months ended September 30, 2010, the registrant had sales of $955,380 with cost of sales of $434,179 for a gross profit of $521,201.  


The decrease in revenue of $168,485, or 17.6%, only resulted in a decrease in cost of sales of $14,690, or 3.38%, due to a slightly reduced number of customers purchasing shorter rides.  The gross profit percentage decreased from 54.55% to 46.69% because of decreased sales and relatively fixed track and race equipment costs.


For the three months ended September 30, 2011, the registrant had general and administrative expenses of $355,796.  Comparatively, for the three months ended September 30, 2010, the registrant had general and administrative expenses of $359,794.  The percentage of general and administrative expenses to revenues for the three months ended September 30, 2011 increased to 45.2% from 37.7% for the three months ended September 30, 2010 due to decreased revenue without a corresponding decrease in administrative expenses.


For the nine months ended September 30, 2011, the registrant had sales of $2,077,430 with cost of sales and services of $999,860 for a gross profit of $1,077,570.


Comparatively, for the nine months ended September 30, 2010, the registrant had sales of $2,241,599 with cost of sales of $1,009,028 for a gross profit of $1,232,571.  The decrease in revenue of $164,169 or 7.3%, resulted in a decrease in cost of sales of $9,268 or 0.9%, due to a slight decrease in customers.  The gross profit percentage decreased from 54.99% to 51.87% because of decreased sales and relatively fixed track and race equipment costs.


10



For the nine months ended September 30, 2011, the registrant had general and administrative expenses of $1,206,932.  Comparatively, for the nine months ended September 30, 2010, the registrant had general and administrative expenses of $1,168,744.  The percentage of general and administrative expenses to revenues for the nine months ended September 30, 2011 increased to 58.1% from 52.1% for the nine months ended September 30, 2010 due to decreased revenues.


Plan of Operation.  The Corporation may experience problems; delays, expenses and difficulties sometimes encountered by an enterprise in the Corporation’s stage, many of which are beyond the Corporation’s control.  These include, but are not limited to, unanticipated problems relating to additional costs and expenses that may exceed current estimates and competition.


The Corporation is not delinquent in any of its obligations even though the Corporation has generated limited operating revenues.  The Corporation intends to market its products and services utilizing cash made available from operations.  The Corporation's management is of the opinion that future revenues will be sufficient to pay its expenses for the next twelve months.


The Corporation is not currently pursuing financing for its operations.  The Corporation is seeking to expand its revenue base 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 September 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.


11



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 September 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 September 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.


12



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.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.


13



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: November 14, 2011


DALE JARRETT RACING ADVENTURE, INC.


By:

/s/Timothy Shannon

Timothy Shannon

Chief Executive Officer

Principal Financial Officer


14