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QDM International (QDMI)

Filed: 19 Nov 15, 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, 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

November 20, 2015:   Common Stock –37,438,852













































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DALE JARRETT RACING ADVENTURE, INC.

FORM 10-Q

For the quarterly period ended September 30, 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

 

11


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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Dale Jarrett Racing Adventure, Inc.

Condensed Balance Sheets


 

September 30, 2015

 

December 31, 2014

 

 (Unaudited)

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

  Cash and cash equivalents                 

   $      13,986

 

 $   190,362

  Accounts receivable

6,115

 

 12,482

  Spare parts and supplies

108,019

 

 148,548

  Prepaid expenses and other current assets

61,016

 

 51,226

  Race car held for sale

-

 

 112,674

    Total current assets             

189,136

 

 515,292

Property and equipment, at cost, net

132,893

 

 172,703

    Total Assets

$    322,029

 

 $   687,995

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

Current liabilities:

 

 

 

  Current portion of long-term debt

$                -

 

$   100,127

  Accounts payable

184,791

 

 58,709

  Accrued expenses

166,871

 

 161,548

  Deferred revenue

720,738

 

 869,621

  Advance from shareholder

110,220

 

 110,110

    Total current liabilities          

1,182,620

 

 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 September

   30, 2015 and 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

(7,463,824)

 

 (7,215,353)

   Total Stockholders’ Deficit

(860,591)

 

(612,120)

    Total Liabilities and Stockholders’ Deficit

$    322,029    

 

   $    687,995

    

See accompanying notes to unaudited condensed financial statements.



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Dale Jarrett Racing Adventure, Inc.

Condensed Statements of Operations

For the Three and Nine Months Ended September 30, 2015 and 2014

(Unaudited)


 

Three Months

Nine Months

 

2015

2014

2015

2014

 

 

 

 

 

Sales

$  390,591

$  622,655

$  1,150,192

$  1,897,044

Cost of sales and services

246,125

297,831

585,874

908,996

Gross profit

144,466

324,824

564,318

988,048

 

 

 

 

 

General and admin expenses

267,103

313,693

796,822

938,571

 

 

 

 

 

Income (loss) from operations   

(122,637)

11,131

(232,504)

49,477

 

 

 

 

 

Other income (expense):

 

 

 

 

 Interest income

1

13

35

702

 Other income

-

411

-

411

 Interest expense

(3,370)

(3,047)

(10,401)

(12,631)

 Loss on disposal of property

-

-

(5,600)

-

Total other expense, net


(3,369)


(2,623)


(15,966)


(11,518)

 

 

 

 

 

Net income (loss)        

$   (126,006)

$   8,508

$  (248,470)

 $    37,959

 

 

 

 

 

Per share information:

 

 

 

 

 

 

 

 

 

Basic and diluted income (loss) per share

$        0.00

$       0.00

$          0.01     

 $       0.00

 

 

 

 

 

Weighted average shares outstanding


37,438,852


26,338,852


37,438,852


26,338,852

 

 

 

 

 

See accompanying notes to unaudited condensed financial statements.





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Dale Jarrett Racing Adventure, Inc.

Condensed Statements of Cash Flows

For the Nine Months Ended September 30, 2015 and 2014

(Unaudited)


 

2015

 

2014

 

 

 

 

 Net cash used in operating activities

$     (172,949)

 

$       (295,808)

 

 

 

 

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

(110,127)

 

(20,761)

 

 

 

 

Decrease in cash and cash equivalents

(176,376)

 

(316,569)

 

 

 

 

Cash and cash equivalents, beginning of period

190,362

 

388,886

 

 

 

 

Cash and cash equivalents, end of period

$       13,986

 

$        72,317

 

 

 

 

Supplemental cash flow information:

 

 

 

Cash paid for interest

$            292

 

$            9,261

Cash paid for income taxes

$                 -

 

  $                    -                      

 

 

 

 

See accompanying notes to unaudited condensed financial statements.



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DALE JARRETT RACING ADVENTURE, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER  30, 2015

(UNAUDITED)


(1)

Basis of Presentation and Going Concern (including Subsequent Events)  


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 declining revenues and recurring losses from operations, and have stockholder and working capital deficits, as well as minimal cash, at September 30, 2015.     Because of this, and because we do not anticipate being able to reverse the downward trend with respect to revenues, we filed a proxy statement with the SEC to put forward shareholder votes to (i) allow our President and CEO to acquire substantially all of our assets, and assume substantially all of our liabilities in exchange for a note receivable of $200,000 and (ii) to change the name of our company to 24/7 Kid Doc, Inc.    In connection therewith, on November 9, 2015, our shareholders voted to approve both of these proposals, and we anticipate that such transaction will be consummated prior to December 31, 2015.   Notwithstanding such transaction, and assuming we meet the criteria for extinguishment of our liabilities in accordance with GAAP (for which there can be no assurance), we could remain contingently liable for any liabilities existing as of the date of the transaction that are not satisfied by the acquirer.  


Pursuant to a consulting agreement we entered with Dr. Norberto Benitez in January 2015, he will be providing his expertise in establishing our new business plan. The new business plan is to create a franchise that will deliver pediatric services to children 24 hours a day, 7 days a week.  In addition, we will be looking to provide these same services via the Internet to people throughout the world, especially in places where it is difficult to have available pediatric doctors.  Subsequent to the consummation of the sale, we will no longer draw any revenues from the racing operations nor will we provide any capital to support its operations.  While we do not anticipate having significant cash outlays until we implement our business plan, there can be no assurance that such model will result in profitable operations, and/or that we will be able to obtain the debt or equity financing necessary to pay our expenses.  Either of these factors could 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 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.




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(2)

Recent Accounting Pronouncements


With the exception of the potential for accounting treatment accorded to discontinued operations, 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 any of the three or nine month periods ended September 30, 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 $40,000 and $68,000 during the respective nine month periods ended September 30, 2015 and 2014, and $13,500 and $23,000 during the respective three month periods ended September 30, 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 (see Basis of Presentation and Going Concern above). The shares were issued in January 2015.   

 

(7)

Sale of Race Car


In January 2015 we sold a race car for approximately $106,700 and used substantially all of the proceeds to satisfy approximately $100,000 of indebtedness related to such race car.



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


Trends and Uncertainties.  We have suffered declining revenues and recurring losses from operations, and have stockholder and working capital deficits, as well as minimal cash, at September 30, 2015.     Because of this, and because we do not anticipate being able to reverse the downward trend with respect to revenues, we filed a proxy statement with the SEC to put forward shareholder votes to (i) allow our President and CEO to acquire substantially all of our assets, and assume substantially all of our liabilities in exchange for a note receivable of $200,000 and (ii) to change the name of our company to 24/7 Kid Doc, Inc.    In connection therewith, on November 9, 2015, our shareholders voted to approve both of these proposals, and we anticipate that such transaction will be consummated prior to December 31, 2015.   Notwithstanding such transaction, and assuming we meet the criteria for extinguishment of our liabilities in accordance with GAAP (for which there can be no assurance), we could remain contingently liable for any liabilities existing as of the date of the transaction that are not satisfied by the acquirer.  


Pursuant to a consulting agreement we entered with Dr. Norberto Benitez in January 2015, he will be providing his expertise in establishing our new business plan. The new business plan is to create a franchise that will deliver pediatric  services to children 24 hours a day, 7 days a week.  In addition, we will be looking to provide these same services via the Internet to people throughout the world, especially in places where it is difficult to have available pediatric doctors.  Subsequent to the consummation of  the sale, we will no longer draw any revenues from the racing operations nor will we provide any capital to support its operations.  While we do not anticipate having significant cash outlays until we implement our business plan, there can be no assurance that such model will result in profitable operations, and/or that we will be able to obtain the debt or equity financing necessary to pay our expenses.  Either of these factors could 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 should we be unable to continue as a going concern.  


Capital Resources and Source of Liquidity.  


We used cash in operating activities of $172,949 for the nine months ended September 30, 2015.  


We used cash in operating activities of $295,808 for the nine months ended September 30, 2014.


For the nine months ended September 30, 2015, we received proceeds of $106,700 from the disposal of a race car held for sale.   We did not pursue any investing activities during the nine months ended September 30, 2014.


For the nine months ended September 30, 2015, we repaid debt primarily related to the race car that we sold, and stockholder advances, of approximately $100,000 and $10,000, respectively.   Comparatively, for the nine months ended September 30, 2014, we repaid long-term debt of $20,761.


Because we have minimal cash and a significant working capital deficit at September 30, 2015, we anticipate that we will need to generate additional capital (either through positive results of operations or debt or equity infusions) to meet our obligations for the next year.



9




Results of Operations – Three Months Ended September 30, 2015 and 2014


For the three months ended September 30, 2015 we had sales of $390,591.  Our cost of sales and services was $246,125, resulting in a gross profit of $144,466.  We incurred general and administrative expenses of $267,103.  We recognized interest income of $1 and incurred interest expenses of $3,370.  As a result, we had a net loss of $126,006 for the three months ended September 30, 2015.


Comparatively, for the three months ended September 30, 2014, we had sales of $622,655.  Our cost of sales and services was $297,831, resulting in a gross profit of $324,824.  We incurred $313,693 in general and administrative expenses.  We recognized interest income of $13, other income of $411 and incurred interest expenses of $3,047.  As a result, we had net income of $8,508 for the three months ended September 30, 2014.


The decline in operating results for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 primarily resulted from a significant decrease in sales which decreased primarily from the declining popularity of NASCAR, and also because of the loss of the Dale Jarrett name which occurred in early 2015. In addition, certain new competitors were offering their services at significantly discounted prices through such sites as Groupon and Living Social.


Results of Operations – Nine Months Ended September 30, 2015 and 2014


For the nine months ended September 30, 2015, we had sales of $1,150,192.  Our cost of sales and services was $585,874, resulting in a gross profit of $564,318.  We incurred general and administrative expenses of $796,822.  We recognized interest income of $35, other income of $411 and incurred interest expense of $10,401 and incurred a loss on the disposal of property of $5,600.  As a result, we had net loss of $248,470 for the nine months ended September 30, 2015.


Comparatively, for the nine months ended September 30, 2014, we had sales of $1,897,044.  Our cost of sales was $908,966, resulting in a gross profit of $988,048.  We incurred general and administrative expenses of $938,571.  We recognized interest income of $702 and incurred interest expenses of $12,631.  As a result, we had net income of $37,959 for the nine months ended September 30, 2014.


The decline in operating results for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 primarily resulted from a significant decrease in sales which decreased primarily from the declining popularity of NASCAR, because of the loss of the Dale Jarrett name as mentioned above, 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.




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Item 4.  Controls and Procedures


During the periods  ended September 30, 2015 and 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 during such quarters 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.   


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 June 30, 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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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

Ronda Robertson resigned as Chief Operating Officer and Glenn Jarrett resigned form the Board of Directors and as Corporate Treasurer effective August 6, 2015.

 

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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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 20, 2015


DALE JARRETT RACING ADVENTURE, INC.


By:

/s/Timothy Shannon

Timothy Shannon

Chief Executive Officer

Principal Financial Officer






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