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QDM International (QDMI)

Filed: 28 May 15, 8:00pm

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 March 31, 2015


-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  000-27251


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)


 

 

 

116 3rd Street NW, Suite 302, Hickory, NC

 

28601

(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):




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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 as of

May 29, 2015:   Common Stock –37,438,852













































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DALE JARRETT RACING ADVENTURE, INC.

FORM 10-Q

For the quarterly period ended March 31, 2015

INDEX


PART I – 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 Disclosures About Market Risk

 

10

Item 4.  Controls and Procedures

 

10


PART II – OTHER INFORMATION



 

 

 

Item 1.  Legal Proceedings

 

12

Item 1A.  Risk Factors

 

12

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

 

12

Item 3.  Defaults upon Senior Securities

 

12

Item 4.  Mine Safety Disclosures

 

12

Item 5.  Other Information

 

12

Item 6.  Exhibits

 

12

 

 

 

SIGNATURES

 

13





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Table of Contents

Dale Jarrett Racing Adventure, Inc.

Condensed Balance Sheets


 

March 31, 2015

 

December 31, 2014

 

 (Unaudited)

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

  Cash and cash equivalents                 

 $   119,946

 

 $   190,362

  Accounts receivable

 10,529

 

 12,482

  Spare parts and supplies

 141,121

 

 148,548

  Prepaid expenses and other current assets

 57,740

 

 51,226

  Race car held for sale

 -   

 

 112,674

    Total current assets             

 329,336

 

 515,292

Property and equipment, at cost, net

 159,433

 

 172,703

    Total Assets

 $   488,769

 

 $   687,995

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

Current liabilities:

 

 

 

  Current portion of long-term debt

$       5,363

 

$   100,127

  Accounts payable

 42,990

 

 58,709

  Accrued expenses

 179,211

 

 161,548

  Deferred revenue

 938,505

 

 869,621

  Advance from shareholder

 103,480

 

 110,110

    Total current liabilities          

 1,269,549

 

 1,300,115

 

 

 

 

Stockholders' deficit:

 

 

 

 Preferred stock, $.0001 par value,

 

 

 

   5,000,000 shares authorized

 -   

 

 -   

 Common stock, $.0001 par value, 200,000,000 shares

 

 

 

  authorized, 38,110,502 and  28,110,502 shares issued, and 37,438,852 and 27,438,852 shares outstanding at March 31, 2015 and December 31, 2014, respectively

3,811

 

2,811

 Additional paid-in capital

 6,638,431

 

 6,639,431

 Treasury stock, 671,650 shares, at cost

 (39,009)

 

 (39,009)

 Accumulated deficit

 (7,384,013)

 

 (7,215,353)

   Total Stockholders’ Deficit

(780,780)

 

(612,120)

    Total Liabilities and Stockholders’ Deficit

$     488,769

 

   $    687,995

    

See accompanying notes to unaudited condensed financial statements.



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Table of Contents

Dale Jarrett Racing Adventure, Inc.

Condensed Statements of Operations

For the Three Months Ended March 31, 2015 and 2014

(Unaudited)


 

2015

 

2014

 

 

 

 

Sales          

 $  261,344

 

 $  538,266

Cost of sales and services

 153,172

 

 276,209

   Gross profit

 108,172

 

 262,057

 

 

 

 

General and administrative expenses

 267,634

 

 298,408

 

 

 

 

Loss from operations   

 (159,462)

 

 (36,351)

 

 

 

 

Other income and (expense):

 

 

 

Interest income

 26

 

 667

Interest expense

 (3,624)

 

 (4,204)

Loss on disposal of assets

 (5,600)

 

 (842)

   Other expense, net

 (9,198)

 

 (4,379)

 

 

 

 

Net loss

 $  (168,660)

 

 $  (40,730)

 

 

 

 

Per share information:

 

 

 

 

 

 

 

Basic and diluted loss per share

 $        (0.01)

 

 $      (0.00)

 

 

 

 

Weighted average shares outstanding

 37,438,852

 

 26,338,852


See accompanying notes to unaudited condensed financial statements.




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Table of Contents

Dale Jarrett Racing Adventure, Inc.

Condensed Statements of Cash Flows

For the Three Months Ended March 31, 2015 and 2014

(Unaudited)


 

2015

 

2014

 

 

 

 

 Net cash used in operating activities

 $  (72,352)

 

 $  (139,152)

 

 

 

 

Cash provided by investing activities -

 

 

 

   Proceeds from disposal of race car held for sale

 106,700

 

 -   

 

 

 

 

Cash used in  financing activities -

 

 

 

   Repayment of long-term debt

 (104,764)

 

 (7,201)

 

 

 

 

Decrease in cash and cash equivalents

 (70,416)

 

 (146,353)

 

 

 

 

Cash and cash equivalents, beginning of period

 190,362

 

 388,886

 

 

 

   

Cash and cash equivalents, end of period

 $  119,946

 

 $  242,533

 

 

 

 

Supplemental cash flow information:

 

 

 

Cash paid for interest

    $         254

 

 $      3,081

Cash paid for income taxes

           $              -   

 

  $              -   

 

 

 

 


                     See accompanying notes to unaudited condensed financial statements.




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Table of Contents

DALE JARRETT RACING ADVENTURE, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2015

(UNAUDITED)


(1)

Basis of Presentation and Going Concern  


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.   As such, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including normal, recurring adjustments) considered necessary for a fair presentation have been included.


In addition, such financial statements contemplate the realization of assets and liquidation of liabilities in the normal course of business.  We have suffered recurring losses from operations and have stockholder and working capital deficits, as well as minimal cash at March 31, 2015.     As such, and although a portion of our liabilities (i.e. the shareholder advance, and approximately one half of our deferred revenues) are not expected to result in the outlay of cash in the next year, we will need to generate capital, either through positive results of operations and/or equity or debt infusions, to meet our obligations during such period. We have reduced our general and administrative expenses significantly and plan to continue to closely monitor such expenses. We are also investigating the possibility of investing in an alternative business model and/or seeking to raise capital from existing shareholders. However, there is no assurance that we will be successful in any such endeavors which would most likely result in us having difficulty continuing as a going concern. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern


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, 2014, including notes, filed with 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.




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Table of Contents

(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 either of the three month periods ended March 31, 2015 and 2014.


(4)

Spare Parts and Supplies


Spare parts and supplies include engine parts, tires, and other supplies used in the racecar operations and are recorded at the lower of cost or market, on a first-in, first-out basis.


(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.  Depreciation expense approximated $13,000 and $23,000, during the respective three month periods ended March 31, 2015 and 2014.


(6)

Stockholders’ Deficit


In December 2014, we agreed to grant 10,000,000 shares of our stock to the brother in law of our President and CEO as consideration for his assistance with the development of a new business opportunity.  Because the shares vested immediately, we  recognized $300,000 of stock based compensation in December 2014, which amount represented the fair market value of such shares on the grant date.   The shares were issued in January 2015.   


(7)

Race Car Held for Sale


In January 2015, we sold the race car held for sale as of December 31, 2014, and paid the remaining balance of the long-term debt related to such vehicle.  The sale resulted in a loss of approximately $5,600.  



 




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Table of Contents

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.


Trends and Uncertainties.  Demand for the Company's products is 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.  


With the exception of the decline in sales discussed under Results of Operations below, there are no other known trends, events or uncertainties that have, or are reasonably likely to have, a material impact on our results of operations and/or liquidity.  Sources of liquidity will come from sales of our products and services.  There are no material commitments for capital expenditure at this time.  


We currently have classes planned through December 2015.


Capital Resources and Source of Liquidity.  


We used cash of $72,352 to finance our operating activities during the three months ended March 31, 2015.  This amount was somewhat less than our net loss partially because of the occurrence of certain non-cash expenses and partially because of the increase in our deferred revenues resulting from cash we received during the current period.

 

For the three months ended March 31, 2015, we received proceeds of $106,700 from the disposal of a race car held for sale.   Comparatively, for the three months ended March 31, 2014, we did not pursue any investing activities.


For the three months ended March 31, 2015, we repaid debt related to the race car that we sold, and stockholder advances, of approximately $94,800 and $10,000, respectively.   Comparatively, for the three months ended March 31, 2014, we repaid long-term debt of $7,201.


Because we have suffered recurring losses from operations and have stockholder and working capital deficits, as well as minimal cash at March 31, 2015, we will need to generate capital, either through positive results of operations and/or equity or debt infusions, to meet our obligations during the next twelve months.  We have reduced our general and administrative expenses significantly and plan to continue to closely monitor such expenses. We are also investigating the possibility of investing in an alternative business model and/or seeking to raise capital from existing shareholders. However, there is no assurance that we will be successful in any such endeavors which would most likely result in us having difficulty continuing as a going concern.




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Table of Contents


Results of Operations.


For the three months ended March 31, 2015, we had sales of $261,344.  Our cost of sales and services was $153,172, resulting in a gross profit of $108,172.  We also incurred general and administrative expenses of $267,634.  These general and administrative expenses consisted primarily of advertising expenses and payroll of approximately

$82,300 and $99,000, respectively.  Advertising expenses increased substantially from the quarter ended March 31, 2014 balance of approximately $45,000 because we were focused on efforts to increase sales activity. Conversely payroll expenses were down from approximately $139,000 in the first quarter of 2014 due to a reduction in officer salaries and certain reductions in our staff.  


Comparatively, for the three months ended March 31, 2014, we had sales of $538,266.  Our cost of sales and services was $276,209, resulting in a gross profit of $262,057.  We incurred $298,408 in general and administrative expenses.


The decline in operating results for the three months ended March 31, 2015 compared to the three months ended March 31, 2014 primarily resulted from a significant decrease in sales which decreased primarily from the declining popularity of NASCAR, and because certain new competitors were offering their services at significantly discounted prices through such sites as Groupon and Living Social.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk


Not applicable for smaller reporting companies.


Item 4.  Controls and Procedures


During the quarter ended December 31, 2014 we concluded that our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles as our small size does not allow us to provide for the desired segregation of control functions, and/or allow us to hire  accounting personnel that have a thorough understanding of SEC rules and regulations and such accounting principles.  Furthermore, we do not have an audit committee with an independent financial expert.  Finally we had a material weakness as of December 31, 2014 with regard to limitations in the capacity of our accounting resources to identify and react in a timely manner to certain transactions as well as the adequate understanding of the disclosure requirements related to these transactions.   




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Table of Contents


Evaluation of Disclosure Controls and Procedures


Under the supervision and with the participation of our management, we conducted an evaluation of disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of March 31, 2015.   Based on this evaluation, our chief executive officer and principal financial officers have concluded there  was no  change in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the current quarter that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting


Remediation of Material Weaknesses in Internal Control over Financial Reporting

 

We have not established adequate financial reporting monitoring activities to mitigate the risk of missed financial statement adjustments and disclosures relative to transactions that are other than routine for the reasons mentioned above.  In addition, and unless results of operations improve considerably, we do not currently anticipate that we will have the available cash flow to remediate this weakness.




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Table of Contents

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.   Mine Safety Disclosures

Not Applicable


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.



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Table of Contents

SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


Dated: May 29, 2015


DALE JARRETT RACING ADVENTURE, INC.


By:

/s/Timothy Shannon

Timothy Shannon

Chief Executive Officer

Principal Financial Officer





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