SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended September 30, 2006
- -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
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification Number)
120 A North Main Avenue, Newton, NC 28658
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(Address of principal executive offices, Zip Code)
(888) 467-2231
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(Registrant's telephone number, including area code)
Check 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 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,
September 30, 2006: Common Stock - 19,362,376
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [ x ]
2
PART I -- FINANCIAL INFORMATION
Dale Jarrett Racing Adventure, Inc.
Item 1. Financial Statements
Balance Sheet,
September 30, 2006(unaudited)
Statements of Operations for the
Three months and
Nine months ended
September 30, 2006 and 2005
(unaudited)
Statements of Cash Flows for the
Nine months ended September 30, 2006
and 2005 (unaudited)
Notes to financial statements
3
Dale Jarrett Racing Adventure, Inc.
Balance Sheet
September 30, 2006
(Unaudited)
ASSETS
------
Current assets:
Cash $ 186,710
Inventory 3,061
Prepaid expenses and other current assets 165,326
----------
Total current assets 355,097
----------
Property and equipment, at cost, net of
accumulated depreciation 245,280
----------
$ 600,377
==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
---------------------------------------
Current liabilities:
Note payable $ 60,061
Current portion of long-term debt 24,161
Accounts payable 133,695
Accrued expenses 86,207
Accrued salaries - officers 137,285
Deferred revenue 694,020
Shareholder advances 290,234
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Total current liabilities 1,425,663
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Long-term debt 17,785
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Stockholders' (deficit):
Common stock, $.01 par value, 100,000,000 shares
authorized, 19,362,376 shares issue and outstanding 195,679
Additional paid-in capital 4,047,212
Deferred services (60,250)
Accumulated (deficit) (5,025,712)
----------
(843,071)
----------
$ 600,377
==========
See accompanying notes to financial statements.
4
Dale Jarrett Racing Adventure, Inc.
Statements of Operations
For The Three Months and Nine Months Ended September 30, 2006 and 2005
(Unaudited)
Three Months Nine Months
2006 2005 2006 2005
---------- ---------- ---------- ----------
<s> <c> <c> <c> <c>
Sales $ 629,895 $ 470,657 $1,346,817 $1,253,390
Cost of sales and services 277,502 274,656 619,221 722,759
---------- ---------- ---------- ----------
Gross profit 352,393 196,001 727,596 530,631
---------- ---------- ---------- ----------
Expenses
General and administrative ?
non cash stock compensation 64,889 90,400 94,139 102,400
General and administrative 213,134 227,011 753,724 730,161
---------- ---------- ---------- ----------
278,023 317,411 847,863 832,561
---------- ---------- ---------- ----------
Income (loss) from operations 74,370 (121,410) (120,267) (301,930)
---------- ---------- ---------- ----------
Other income and (expense):
Interest income 949 - 2,397 -
Other income 1,195 - 1,645 404
Interest expense (5,591) (8,029) (19,059) (19,199)
---------- ---------- ---------- ----------
(3,447) (8,029) (15,017) (18,795)
---------- ---------- ---------- ----------
Income (Loss) before taxes 70,923 (129,439) (135,284) (320,725)
Income taxes - - - -
---------- ---------- ---------- ----------
Net income (loss) $ 70,923 $ (129,439) $ (135,284) $ (320,725)
========== ========== ========== ==========
Per share information:
Basic and diluted income
(loss) per share $ 0.00 $ (0.01) $ (0.01) $ (0.02)
========== ========== ========== ==========
Weighted average shares outstanding 19,297,561 18,466,543 19,135,215 18,288,765
========== ========== ========== ==========
See accompanying notes to financial statements.
5
Dale Jarrett Racing Adventure, Inc.
Statements of Cash Flows
For the Nine Months Ended September 30, 2006 and 2005
(Unaudited)
2006 2005
---------- ----------
Net cash provided by (used in) operating
activities $ 38,918 $ (185,181)
---------- ----------
Cash flows from investing activities:
Acquisition of plant and equipment (88,735) (8,946)
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Net cash (used in) financing activities (88,735) (8,946)
---------- ----------
Cash flows from financing activities:
Repayment of officer advance - (35,000)
Repayment of notes payable (57,939) (7,000)
Repayment of long-term debt (19,110) (26,070)
---------- ----------
Net cash (used in) financing activities (77,049) (68,070)
(Decrease) in cash (126,866) (262,197)
---------- ----------
Cash and cash equivalents,
beginning of period 313,576 263,200
---------- ----------
Cash and cash equivalents, end of period $ 186,710 $ 1,003
========== ==========
See accompanying notes to financial statements.
6
DALE JARRETT RACING ADVENTURE, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
(1) Basis Of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
(GAAP) for interim financial information and Item 310(b) of Regulation
S-B. 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, 2005, including notes thereto
included in the Company?s Form 10-KSB.
(2) Earnings Per Share
The Company calculates net income (loss) per share as required by
Statement of Financial Accounting Standards (SFAS) 128, "Earnings per
Share." Basic earnings (loss) per share is 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.
During periods when anti-dilutive commons stock equivalents are not
considered in the computation.
(3) Inventory
Inventory is valued at the lower of cost or market on a first-in first-
out basis and consists primarily of finished goods and includes
primarily promotional items that bear the Company?s logo.
(4) Stockholdes? Equity
During the period ended September 30, 2006, the Company issued 568,055
shares of common stock for services. The shares were valued at their
fair market value of $94,139. In addition, the Company issued 200,000
shares of common stock subscribed for at December 31, 2005.
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(5) Basis of Reporting
The Company?s financial statements are presented on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business.
The Company has experienced a significant loss from operations as a
result of its investment necessary to achieve its operating plan, which
is long-range in nature. From inception to September 30, 2006, the
Company incurred net losses of $5,025,712 and for the nine months ended
September 30, 2006, the Company incurred a net loss of $135,284. In
addition, the Company has working capital and stockholder deficits of
$1,070,566 and $843,071 at September 30, 2006.
The Company?s ability to continue as a going concern is contingent upon
its ability to attain profitable operations and secure financing. In
addition, the Company?s ability to continue as a going concern must be
considered in light of the problems, expenses and complications
frequently encountered by entrance into established markets and the
competitive environment in which the Company operates.
The Company is pursuing equity financing for its operations. Failure
to secure such financing or to raise additional capital or attain
materially profitable operations may result in the Company depleting
its available funds and not being able pay its obligations.
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result
from the possible inability of the Company to continue as a going
concern.
8
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Trends and Uncertainties. Demand for the Corporation's products are
dependent on, among other things, general economic conditions that 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 products as well
as the private sale of the Corporation?s 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 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 December 2006.
Capital 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 comprises one hundred(100) percent
of the total cash necessary to conduct operations. Future revenues
from classes and events will determine the amount of offering proceeds,
if any, 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 offering as the Corporation's
financial situation dictates.
The Corporation had cash and cash equivalents at September 30, 2006 of
$186,710 compared to $1,003 at September 30, 2005. The increase in
cash and cash equivalents at September 30, 2006 compared to December
31, 2005 was due principally to the net income for the period and the
repayment of notes and other debt and the acquisition of equipment.
For the nine months ended September 30, 2006, the Corporation acquired
plant and equipment of $88,735 resulting in net cash used in investing
activities of $88,735.
9
For the nine months ended September 30, 2005, the Corporation acquired
plant and equipment of $8,946 resulting in net cash used in investing
activities of $8,946.
The Corporation was able to repay some its outstanding debt. For the
nine months ended September 30, 2006, the Corporation did not make any
officer advance repayment compared to a $35,000 repayment for the nine
months ended September 30, 2005. Additionally, the Corporation repaid
notes payable of $57,939 and repaid long-term debt of $19,110 compared
to $7,000 and $26,070, respectively for the nine months ended September
30, 2005. As a result, the Corporation had net cash used in financing
activities of $77,049 for the nine months ended September 30, 2006
compared to $68,070 for the nine months ended September 30, 2005.
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, 2006, the Corporation had
sales of $629,895 with cost of sales of $277,502 for a gross profit of
$352,393. Comparatively, for the three months ended September 30,
2005, the Corporation had sales of $470,657 with cost of sales of
$274,656 for a gross profit of $196,001.
For the three months ended September 30, 2006, the Corporation had
general and administrative expenses of $213,134 and non cash stock
compensation of $64,889 compared to $227,011 and $90,400, respectively
for the same period in 2005. The amount of general and administrative
expenses decreased slightly for the three months ended September 30,
2006 compared to the same period in 2005 due mainly to a decrease in
non-cash stock compensation.
For the nine months ended September 30, 2006, the Corporation had sales
of $1,346,817 with cost of sales of $619,221 for a gross profit of
$727,596. Comparatively, for the nine months ended September 30, 2005,
the Corporation had sales of $1,253,390 with cost of sales of $722,759
for a gross profit of $530,631.
For the nine months ended September 30, 2006, the Corporation had
general and administrative expenses of $753,724 and non cash stock
compensation of $94,139 compared to $730,161 and $102,400, respectively
for the same period in 2005. The amount of general and administrative
expenses decreased slightly for the nine months ended September 30,
2006 compared to the same period in 2005 due mainly to a decrease in
non-cash stock compensation.
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.
10
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
current revenues and cash made available from the private sale of its
securities, if any.
The Corporation's management is of the opinion that its revenues and
the proceeds of the sales of its securities, if any, will be sufficient
to pay its expenses for the next twelve months.
Our auditors have expressed reservations concerning our ability to
continue as a going concern. The Corporation has incurred significant
losses from operations and has working capital and stockholder
deficiencies. These factors raise substantial doubt about our ability to
continue as a going concern.
Our ability to continue as a going concern is contingent upon our ability
to secure additional financing, increase ownership equity and attain
profitable operations. In addition, the Corporation's ability to
continue as a going concern must be considered in light of the problems,
expenses and complications frequently encountered by entrance into
established markets and the competitive environment in which the
Corporation operates.
The Corporation is pursuing financing for its operations and seeking
additional private investments. In addition, the Corporation is seeking
to expand its revenue base. Failure to secure such financing or to raise
additional equity capital and to expand its revenue base may result in
the Corporation depleting its available funds and not being able pay its
obligations.
Item 3. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our
chief executive officer, conducted an evaluation of our "disclosure
controls and procedures" (as defined in Securities Exchange Act of 1934
(the "Exchange Act") Rules 13a-14(c)). Based on his evaluation, our
chief executive officer and chief financial officer have concluded that
as of the Evaluation Date, our disclosure controls and procedures are
effective to ensure that all material information required to be filed
in this quarterly report on Form 10QSB has been made known to him in a
timely fashion.
Changes in Internal Controls
There have been no significant changes (including corrective actions
with regard to significant deficiencies or material weaknesses) in our
internal controls or in other factors that could significantly affect
these controls subsequent to the Evaluation Date set forth above.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings. Not applicable.
Item 2. Changes in Securities and Use of Proceeds.
The Corporation issued 162,500 shares of common stock for
services. The shares were valued at their fair market value of
$29,250. In addition, the Corporation issued 200,000 shares of
common stock subscribed for at December 31, 2005.
Item 3. Defaults Upon Senior Securities.
not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
not applicable.
Item 5. Other Information. Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Reports on Form 8-K. none
(b) Exhibits. none
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 13, 2006
Dale Jarrett Racing Adventure, Inc.
By /s/ Timothy B. Shannon
------------------------
Timothy B. Shannon
President and Director