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, including our eastern hub at Talladega Superspeedway in Alabama.
The Company currently owns 20 racecars. 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.
Products and Services. The Company offers various 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 Stock Car 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.
Staffing costs are approximately $15,000 per month at the Talladega 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’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.
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 were entitled to a 60% allocation of revenue for all 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 $30 for driving adventures, and $11 for riding adventures for which the recording is purchased by the student. This agreement was not renewed for 2014.
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 also were 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.
During October 2012, and again during January 2014, we entered into a new usage agreement with Talladega Superspeedway, LLC for 2013 and 2014, respectively, with no exclusivity and no minimum racing days.
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 paid $271,000 to Las Vegas Motor Speedway over the course of 2012 for use of the speedway. This agreement was not renewed for 2013.
Marketing. We offer our products and services at various tracks throughout the country. 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.
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 likenesses 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.
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 possesses 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 will continue to 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 two 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.
ITEM 1A.
ITEM 1A. RISK FACTORS
Not applicable to a smaller reporting company.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2.
ITEM 2. PROPERTIES
The registrant’s executive offices, which consist of 2,000 square feet, are located at 116 3rd Street NW, Suite 302, Hickory, North Carolina. We entered into the lease for this building on November 1, 2012. The lease requires a monthly payment of $1,800 and expires October 31, 2014. Future minimum payments under this lease agreement are as follows: $18,000 in 2014. Also during 2012, we entered into a lease for 6,836 square feet of office and warehouse space in Las Vegas, NV. The lease required a monthly payment of $1,510 and expired February 28, 2013.
The registrant’s former executive offices consisted of 1,500 square feet and were located at 1313 10th Avenue Lane, SE, Hickory, North Carolina. In October 2009, the registrant entered into an operating lease for use of this office space. The lease required a monthly payment of $1,830 and expired in November, 2012.
The registrant also leases various office and warehouse space on a month to month basis or under terms that are less than one year. Rent expense under all operating leases amounted to $67,943 and $94,081 for the years ended December 31, 2013 and 2012, respectively.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
We are not aware of any litigation pending or threatened by or against Dale Jarrett Racing Adventure.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’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
3/31/13
0.10
0.05
6/30/13
0.07
0.04
9/30/13
0.14
0.04
12/31/13
0.06
0.02
3/31/12
0.05
0.03
6/30/12
0.05
0.02
9/30/12
0.08
0.02
12/30/12
0.08
0.04
b) Holders. At March 20, 2014, there were approximately 167 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.
Not applicable
Item 5(b) Use of Proceeds. Not applicable.
Item 5(c) Purchases of Equity Securities by the issuer and affiliated purchasers.
During 2013 and 2012 we repurchased no shares of our common stock.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable to a smaller reporting company.
ITEM 7.
ITEM 7. 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.
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 sales of our products and services. 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’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 2014.
Capital and Source of Liquidity. The Company has expanded the racecars we currently run on the racetracks to include exotic racecars as well.
We believe that our cash on hand and cash generated from operations will be sufficient to conduct operations through December 31, 2014.
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, 2013, we spent $24,900 on additions to racecars under construction, and we spent $20,129 on the acquisition of property and equipment. As a result, we spent $45,029 on investing activities for the year ended December 31, 2013.
Comparatively, for the year ended December 31, 2012, we spent $19,912 on additions to racecars under construction, and we spent $42,181 on the acquisition of property and equipment. As a result, we spent $62,093 on investing activities for the year ended December 31, 2012.
For the year ended December 31, 2013, we received proceeds of $100,000 from the sale of common stock and repaid long-term debt of $14,898. As a result, we had net cash provided by financing activities of $85,102 for the year ended December 31, 2013.
Comparatively, for the year ended December 31, 2012, we received proceeds from a shareholder advance of $100,000 and we repaid long-term debt of $30,962. As a result, we had net cash provided by financing activities of $69,038 for the year ended December 31, 2012.
Our long-term liquidity is dependent on the continuation of operations and receipt of revenues.
Results of Operations.
For the year ended December 31, 2013, we had sales of $2,669,868, which represents a 23.3% decrease from the 2012 sales of $3,481,607. Revenues decreased primarily due to the closing of our expansion into Las Vegas in late 2012 and the reduction in days race schools occurred during 2013. The cost of sales decreased 30.2% to $1,291,307 in 2013, compared to the $1,849,377 from 2012, as a result of the decreased expenses due to the closing of our expansion into Las Vegas and fewer days of race schools. As a result, we had a gross profit of $1,378,561 in 2013, a 15.5% decrease from our gross profit of $1,632,230 in 2012.
For the year ended December 31, 2013, we had general and administrative expenses of $1,584,485, a 13.6% decrease from the general and administrative expenses of $1,834,737 for the year ended December 31, 2012. This decrease was due to decreases in advertising, rent, travel and salaries and benefits because of the reduction of employees. We had a loss from operations of $205,924 for 2013, compared to the $202,507 loss from operations for 2012.
For the year ended December 31, 2013, we had interest income of $139 and other income of $6,754. We had a $8,604 loss on disposal of assets, and spent $9,293 on interest expense. As a result, we had a net loss of $216,928 for the year ended December 31, 2013.
Comparatively, for the year ended December 31, 2012, we had interest income of $448 and other income of $22,453. We paid interest expenses of $2,465. As a result, we had a net loss of $182,071 for the year ended December 31, 2012. The 19.1% increase in net loss is due largely to the decrease in other income and increase in interest expense and losses on disposal of assets during 2013 compared to 2012.
Plan of Operation. The Company may experience problems, delays, expenses and difficulties, many of which are beyond the Company’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.
Liquidity
Our accompanying 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 at December 31, 2013. However, a significant 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 2014. In addition, we believe that our 2014 general and administrative expenses will be approximately $200,000 less than such expenses in 2013. We are also implementing a new advertising strategy and have purchased certain video equipment which allows us to retain a higher percentage of the revenues associated with videos. However there can be no assurance that our plans will be successful and/or that we will generate adequate revenues to meet our obligations, in which case we would most likely have to raise additional debt or equity capital to meet our obligations (and there can be no assurance that such capital will be available to us). 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.
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 $1,019,188 and $1,036,816 at December 31, 2013 and 2012, respectively.
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, 2013, 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 do not believe any recently issued accounting standards will have a material impact on our financial statements.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Dale Jarrett Racing Adventure, Inc.
Index to the Financial Statements
Page
Report of Independent Registered Public Accounting Firm
Balance Sheets as of December 31, 2013 and 2012
Statements of Operations for the years ended December 31, 2013 and 2012
Statement of Changes in Stockholders' Deficit for the years ended December 31, 2013 and 2012
Statements of Cash Flows for the years ended December 31, 2013 and 2012
Notes to Financial Statements
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, 2013 and 2012, and the related statements of operations, stockholders' 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 the Company as of December 31, 2013 and 2012, 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 31, 2014
DALE JARRETT RACING ADVENTURE, INC.
BALANCE SHEETS
DECEMBER 31, 2013 and 2012
ASSETS
Current assets:
Cash and cash equivalents
$ 388,886
$ 403,212
Accounts receivable
17,707
22,293
Spare parts and supplies
138,065
146,255
Prepaid expenses and other current assets
78,607
41,585
Total current assets
623,265
613,345
Property and equipment, at cost, net
404,476
332,208
Other assets - Racecars under construction
-
6,667
$ 1,027,741
$ 952,220
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt
$ 29,131
$ 5,831
Accounts payable
214,675
150,620
Accrued and other liabilities
155,065
123,639
Deferred revenue
1,019,188
1,036,816
Advance from shareholder
105,617
101,123
Total current liabilities
1,523,676
1,418,029
Long-term debt
99,179
12,377
Stockholders' deficit:
Preferred stock, $.0001 par value,
5,000,000 shares authorized, none issued
-
-
Common stock, $.0001 par value,
200,000,000 shares authorized, 27,010,502 and
24,510,502 shares issued and 26,338,852 and
23,838,852 shares outstanding
2,701
2,451
Additional paid-in capital
6,284,230
6,184,480
Treasury stock, 671,650 shares at cost
(39,009)
(39,009)
Accumulated deficit
(6,843,036)
(6,626,108)
Total stockholders' deficit
(595,114)
(478,186)
$ 1,027,741
$ 952,220
See accompanying notes to financial statements.
DALE JARRETT RACING ADVENTURE, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
Sales
$ 2,669,868
$ 3,481,607
Cost of sales and services
1,291,307
1,849,377
Gross profit
1,378,561
1,632,230
General and administrative expenses
1,584,485
1,834,737
Loss from operations
(205,924)
(202,507)
Other income(expense):
Interest income
Other income
6,754
22,453
Loss on disposal of property and equipment
(8,603)
-
Interest expense
(9,293)
(2,465)
Loss before income taxes
(216,928)
(182,071)
Income taxes
-
-
Net Loss
$ (216,928)
$ (182,071)
Per share information basic and diluted:
Loss per share
$ (0.01)
$ (0.01)
Weighted average shares outstanding
25,318,304
23,838,852
See accompanying notes to financial statements.
DALE JARRETT RACING ADVENTURE, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
Additional
Common
Stock
Paid-in
Treasury
Stock
Accumulated
Shares
Amount
Capital
Shares
Amount
Deficit
Total
Balance December 31, 2011
24,510,502
$2,451
$6,184,480
671,650
$(39,009)
$(6,444,037)
$(296,115)
Net loss
-
-
-
-
-
(182,071)
$(182,071)
Balance December 31, 2012
24,510,502
2,451
6,184,480
671,650
(39,009)
(6,626,108)
(478,186)
Common stock issued for cash
2,500,000
99,750
-
-
-
100,000
Net loss
-
-
-
-
-
(216,928)
(216,928)
Balance December 31, 2013
27,010,502
$2,701
$6,284,230
671,650
$(39,009)
$(6,843,036)
$(595,114)
See accompanying notes to financial statements.
DALE JARRETT RACING ADVENTURE, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
Cash flows from operating activities:
Net loss
$ (216,928)
$ (182,071)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation
95,825
125,099
Interest added to shareholder loan
4,494
1,123
Loss on disposal of property and equipment
8,603
-
Changes in assets and liabilities:
Accounts receivable
4,586
46,700
Spare parts and supplies
8,190
(3,393)
Prepaid expenses and other current assets
(37,022)
39,373
Deferred revenue
(17,628)
(136,005)
Accounts payable and accrued and other liabilities
95,481
89,475
Total adjustments
162,529
162,372
Net cash used in operating activities
(54,399)
(19,699)
Cash flows from investing activities:
Additions to racecars under construction
(24,900)
(19,912)
Acquisition of property and equipment
(20,129)
(42,181)
Net cash used in investing activities
(45,029)
(62,093)
Cash flows from financing activities:
Proceeds from shareholder advance
-
100,000
Proceeds from sale of common stock
100,000
-
Repayments of long-term debt
(14,898)
(30,962)
Net cash provided by financing activities
85,102
69,038
Change in cash and cash equivalents
(14,326)
(12,754)
Cash and cash equivalents, beginning of year
403,212
415,966
Cash and cash equivalents, end of year
$ 388,886
$ 403,212
Supplemental cash flow information:
Cash paid for interest
$ 3,207
$ 2,465
Cash paid for income taxes
$ -
$ -
Non-cash Investing and Financing Activities:
Property and equipment financed with long-term debt
$ 125,000
$ 23,935
Racecars under construction transferred to property and equipment
$ 31,567
$ 58,590
See accompanying notes to financial statements.
Dale Jarrett Racing Adventure, Inc.
Notes to Financial Statements
December 31, 2013 and 2012
Note 1. Organization, Significant Accounting Policies and Liquidity
Dale Jarrett Racing Adventure, Inc. (referred to as “we”, “us”, “our” or the “Company”) was incorporated in Florida on November 24, 1998. The Company offers the “NASCAR” racing school to the public. The Company owns several “NASCAR” type racecars and has secured several racetrack locations at which it offers these services at various dates during the year.
Liquidity
Our accompanying 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 at December 31, 2013. However, a significant 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 2014. In addition, we believe that our 2014 general and administrative expenses will be approximately $200,000 less than such expenses in 2013. We are also implementing a new advertising strategy and have purchased certain video equipment which allows us to retain a higher percentage of the revenues associated with videos. However there can be no assurance that our plans will be successful and/or that we will generate adequate revenues to meet our obligations, in which case we would most likely have to raise additional debt or equity capital to meet our obligations (and there can be no assurance that such capital will be available to us). 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.
Revenue Recognition
In general, we record revenue when persuasive evidence of an arrangement exists, services have been rendered, the sales price to the student is fixed or determinable, and collectability of the sales price is reasonably assured. The following policies reflect specific criteria for our various revenue streams:
•
Revenue is recognized at the time the product is delivered or the service is performed. Provision for sales returns are estimated based on the Company’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 $1,019,187 and $1,036,816 at December 31, 2013 and 2012, respectively.
Statements of Cash Flows
For purposes of the statements of cash flows, we consider all highly liquid instruments 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, 2013 and 2012.
Spare Parts and Supplies
Spare parts and supplies are valued at the lower of cost or market on a first in, first out basis. At December 31, 2013 and 2012 spare parts and supplies include $135,480 and $139,377, respectively, of spare parts and tires used in the racecar operations, and finished goods (which are primarily promotional items that bear our logo), of $2,585 and $6,878, 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.
Long Lived Assets
We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. 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, 2013 and 2012.
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. The reported amounts of revenues and expenses may be affected by the estimates management is required to make. 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 $372,419 and $462,325 for the years ended December 31, 2013 and 2012, respectively.
Fair Value of Financial Instruments
At December 31, 2013, our short-term financial instruments consist primarily of accounts receivable, accounts payable, accrued and other liabilities and the advance from shareholder. The carrying amounts of these financial instruments approximate fair value because of their short-term maturities. We also believe the carrying values of our note payable obligations approximate their fair values because the terms on such obligations approximate the terms at which similar obligations could currently be negotiated.
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. As of December 31, 2013 and 2012, and periodically throughout such years, balances in various operating accounts exceeded federally insured limits. We monitor our positions with, and the credit quality of, the financial institutions in which we maintain cash balances and 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, 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 if we expand our operations.
Income Taxes
We compute income taxes in accordance with FASB ASC Topic 740, Income Taxes. Under ASC-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. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be 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 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. 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.
We do not believe we have taken any uncertain tax positions on any of our open income tax returns filed through the year ended December 31, 2013. Our methods of tax 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 carryforwards of net operating losses, all of our federal and state income tax returns remain subject to audit.
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 Loss Per Common Share
We calculate net loss per share in accordance with ASC Topic 260, Earnings per Share. Basic loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted loss per share is calculated by dividing net loss by the weighted average number of common shares and dilutive common stock equivalents outstanding.
During periods in which we incur losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. As of December 31, 2013 and 2012, we have no dilutive shares as we experienced net losses in both years.
Recent Accounting Pronouncements
We do not believe any recently issued accounting standards will have a material impact on our financial statements.
Note 2. Property and Equipment
Property and equipment consist of the following at December 31, 2013 and 2012:
Race vehicles
$
644,806
$
654,490
Vehicles - other
382,220
415,738
Shop and track equipment
173,739
290,548
Office furniture and equipment
54,809
54,593
Software
26,398
26,398
DJ Graphics Equipment
24,271
24,271
1,306,243
1,466,038
Less accumulated depreciation
(901,767)
(1,133,830)
$
404,476
$
332,208
Depreciation charged to operations was $95,825 and $125,099 for the years ended December 31, 2013 and 2013, respectively, of which $93,569 and $122,722 is included in cost of sales and services for those years.
Note 3. Long-term Debt
During the year ended December 31, 2012, we entered into a new debt obligation under a vehicle purchase contract having an initial outstanding principal balance of $23,935. The vehicle purchase loan is payable in monthly installments of $543, including interest at 4.24%, through January 2016, and is collateralized by a support vehicle acquired through the financing.
During the year ended December 31, 2013, we entered into a new debt obligation under a vehicle purchase contract having an initial outstanding principal balance of $141,793. The vehicle purchase loan is payable in monthly installments of $2,363, including interest at 4.99%, through July 2018, and is collateralized by a vehicle acquired through the financing.
Future maturities of debt total $29,131, $30,570, $26,002, $26,761 and $15,846, respectively, during 2014, 2015, 2016, 2017 and 2018.
Note 4. Stockholders’ Deficit
The following table summarizes the stock option activity during the years ended December 31, 2013 and 2012:
Stock Options
Weighted-average Exercise Price
Weighted-average Remaining Term (years)
Balance at December 31, 2011
3,500,000
$0.15
2.8
Expired
-
-
Balance at December 31, 2012
3,500,000
$0.15
1.8
Expired
-
-
-
Balance at December 31, 2013
3,500,000
$0.15
0.8
During April 2009, we 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.
Common stock issued upon the exercise of stock options would come from our authorized common shares.
All options outstanding were fully vested as of 2009 and no compensation cost was recognized during 2013 or 2012. We had no exercisable options outstanding, nor did any options have intrinsic value as of December 31, 2013 or 2012, as all options carry an exercise price greater than our current stock price as of each date. In valuing our options at grant date we used a Black-Scholes model and the average expected life was calculated using the simplified method as we believe we do not have sufficient history to adequately estimate the expected term.
On May 14, 2013 we sold 2,500,000 shares of common stock to an accredited investor who owned 5% of our common shares prior to the sale. The sale occurred at $0.04 per share for total proceeds of $100,000.
Note 5. Income Taxes
We have not provided for income taxes in 2013 or 2012 as a result of operating and tax losses. We have net operating loss carryforwards at December 31, 2013 of approximately $4,800,000 that expire in various years through 2033. We have fully reserved the deferred tax assets that would arise from the loss carryforwards since we are uncertain as to whether future income from operations will be available to utilize the deferred tax asset. The approximate deferred tax asset and the related allowance are as follows:
Deferred tax asset:
Tax benefit of net operating loss
$ 1,700,000
$ 1,627,000
Less valuation allowance
(1,700,000)
(1,627,000)
Net deferred tax asset
$ -
$ -
The valuation reserve increased by $73,000 in 2013 and by $54,000 in 2012.
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, 2013 and 2012. The sources and tax effects of the differences are as follows:
Income tax provision at the federal statutory rate
34%
34%
Effect of operating losses
(34)%
(34)%
Tax provision
0%
0%
Note 6. Commitments
Operating Leases
In 2011 and through November 2012, we were obligated under an operating lease for use of a building in Hickory, North Carolina. On November 1, 2012 we entered a new operating lease in such locale, which requires monthly payments of $1,800 and expires October 31, 2014. Also during 2012, we entered into a lease for office and warehouse space in Las Vegas, NV. The lease required monthly payments of $1,510 and expired February 28, 2013.
The Company also leases various office and warehouse space on a month to month basis or under terms that are less than one year. Rent expense under all operating leases amounted to $67,943 and $94,081 for the years ended December 31, 2013 and 2012, respectively.
Employment Agreements
During July 2011, we extended the employment 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
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 paid $271,000 to Las Vegas Motor Speedway over the course of 2012 for use of the speedway. This agreement was not renewed for 2013.
During October 2011, we entered into an agreement with Talladega Superspeedway, LLC to allow us 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 also were 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.
In October 2012, and again in January 2014, we entered new usage agreements with Talladega Superspeedway, LLC for 2013 and 2014, respectively, with no exclusivity and no minimum racing days.
Note 7. Other Related Party Transaction
During 2012 we received a $100,000 advance from a shareholder accruing interest at 5% per year with no payment terms specified. As of December 31, 2013 none of the principal had been paid and the note balance included accrued interest of $5,617.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
ITEM 9A.
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) 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’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, 2013.
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.
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, 2013, 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’s report was not subject to attestation by the registrant’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the registrant to provide only management’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 2013. 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.
ITEM 9B. OTHER INFORMATION
None
PART III
ITEM 10.
ITEM 10. DIRECTORS, 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 51
President, Director
Inception to Present
Chief Executive Officer
Chief Financial Officer
June 1, 2005 to present
Ronda Robertson, Age __
Chief Operating Officer
Inception to Present
Glenn Jarrett, Age 61
Vice President
Inception to Present
Director
Kenneth J. Scott, age 58
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’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.
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 on radio since 1991. He is a motorsports announcer (Pits) at contracted events and is the co-producer and co-host of the “World of 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 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 2013.
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.
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.
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.
ITEM 11.
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 Position
Year
Salary ($)
Stock Awards ($)
Option Awards ($)
All Other Compensation ($)
Total ($)
Timothy B. Shannon
161,150
-
-
20,000
181,150
CEO, CFO
150,000
-
-
17,873
167,873
Ronda Robertson
103,772
-
-
-
103,772
COO
103,597
-
-
-
103,597
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, 2013
Name
Number of Securities Underlying Unexercised Options/ Exercisable
Number of Securities Underlying Unexercised Options/ Unexercisable
Option Exercise Price
Option Expiration Date
Timothy B. Shannon
2,000,000/ 2,000,000
2,000,000
0.15
Oct. 21, 2014
DIRECTOR COMPENSATION FOR 2013
The following table sets forth the compensation to our directors for 2013:
Director Compensation Table
Name
Fees Earned or Paid in Cash ($)
Stock Awards ($)
Option Awards ($)
All Other Compensation ($)
Total ($)
Timothy B. Shannon
20,000
-
-
-
20,000
Glenn Jarrett
-
-
-
-
-
Ken Scott
-
-
-
-
-
ITEM 12.
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 31, 2014
Name and Address of Beneficial Owner
Number & Class (1) of Shares, Amount and Nature of Beneficial Ownership
Percentage of Outstanding Common Shares Percent of Class (2)
Timothy B. Shannon
3,983,333 (1)
15.12%
c/o Dale Jarrett Racing Adventure, Inc.
116 3rd Street NW, Suite 302
Hickory, NC 28601
Glenn Jarrett
1,900,000 (3)
7.21%
c/o Dale Jarrett Racing Adventure, Inc.
116 3rd Street NW, Suite 302
Hickory, NC 28601
Ronda Robertson
400,000
1.52%
c/o Dale Jarrett Racing Adventure, Inc.
116 3rd Street NW, Suite 302
Hickory, NC 28601
Ned Jarrett
1,000,000
3.80%
3182 Ninth Tee Drive
Newton, NC 28658
Dale Jarrett
1,500,000
5.70%
3182 Ninth Tee Drive
Newton, NC 28658
Brett Favre
1,500,000
5.70%
132 Westover Drive
Hattiesburg, MS 39402
Kenneth J. Scott
925,571 (4)
3.51%
c/o Dale Jarrett Racing Adventure, Inc.
116 3rd Street NW, Suite 302
Hickory, NC 28601
Robert Brooks
2,500,000
9.49%
9 Prospect Avenue
Port Washington, NY 11050
(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 26,338,852 outstanding common shares.
(3) Includes 900,000 common shares and immediately exercisable options to purchase 1,000,000 common shares by Mr. Glenn Jarrett.
(4) Includes 425,571 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 Beneficial Owner (1)
Amount and Nature of Beneficial Ownership
Percent of Class
Kenneth J. Scott
925,571 (2)
3.51% (3)
Ronda Robertson
400,000
1.52%
Glenn Jarrett
1,900,000 (4)
7.21% (5)
Timothy B. Shannon
3,983,333 (6)
15.12% (7)
All directors and executive officers as a group (4 persons)
7,208,084 (8)
27.37% (9)
(1) The address for each of the persons listed above is c/o Dale Jarrett Racing Adventure, Inc., 116 3rd Street NW, Suite 302, Hickory, NC 28601.
(2) Includes 425,571 common shares and immediately exercisable options to purchase 500,000 common shares by Mr. Scott.
(3) The percentage is based upon 26,338,852 issued and outstanding common shares and immediately exercisable options to purchase 500,000 common shares by Mr. Scott.
(4) Includes 900,000 common shares and immediately exercisable options to purchase 1,000,000 common shares by Mr. Jarrett.
(5) The percentage is based upon 26,338,852 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 26,338,852 issued and outstanding common shares and immediately exercisable options to purchase 2,000,000 common shares by Mr. Shannon.
(8) Includes 3,208,904 common shares and immediately exercisable option to purchase 3,500,000 common shares by the four named directors and officers.
(9) The percentage is based upon 26,338,852 issued and outstanding common shares and immediately exercisable options to purchase 3,500,000 common shares.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
During 2012 we received a $100,000 advance from a shareholder accruing interest at 5% per year with no payment terms specified. As of December 31, 2013 none of the principal had been paid and the note balance included accrued interest of $5,617.
Director Independence. The Company’s board of directors consists of Timothy Shannon, Glenn Jarrett and Kenneth Scott. None of our directors are independent as such term is defined by a national securities exchange or an inter-dealer quotation system. During the year ended December 31, 2013, there were no transactions with related persons other than as described in the section above entitled “Item 11. Executive Compensation”.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Audit Fees. We paid aggregate fees and expenses of approximately $28,100 and $28,000, respectively, to Kingery & Crouse, P.A. during 2013 and 2012, respectively, for work completed for our annual audits and quarterly reviews of our financial statements.
Tax Fees. We did not incur any aggregate tax fees and expenses from Kingery & Crouse, P.A. for the years ended December 31, 2013 and 2012, 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 2013 and 2012.
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, 2013 and 2012 were approved by the board of directors pursuant to its policies and procedures.
Part IV
ITEM 15.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) List of Financial statements included in Part II hereof
Balance Sheets, December 31, 2013 and 2012
Statements of Operations for the years ended December 31, 2013 and 2012
Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2013 and 2012
Statements of Cash Flows for the years ended December 31, 2013 and 2012
Notes to the Financial Statements
(a)(2) List of Financial Statement schedules included in Part IV hereof: None.
(a)(3) Exhibits
The following exhibits are included herewith:
Exhibit No.
Description
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer and Chief Financial Officer 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.DEF*
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document
*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.
Following are a list of exhibits which we previously filed in other reports which we filed with the SEC, including the Exhibit No., description of the exhibit and the identity of the Report where the exhibit was filed.
NO.
DESCRIPTION
FILED WITH
DATE FILED
2.1
Articles of Incorporation
Form 10SB12G
September 7, 1999
2.2
Bylaws
Form 10SB12G
September 7, 1999
3.1
Common Stock Certificate
Form 10SB12G
September 7, 1999
3.2
Amended and Restated Articles of Incorporation
Pre 14A
September 8, 2008
3.3
Amended and Restated Bylaws
Pre 14A
September 8, 2008
2001 Non-Statutory Stock Option Plan
Pre 14A
January 4, 2001
6.2
Promotion and Licensing Agreement between Company and Ned Jarrett
Form 10SB12G
September 7, 1999
6.3
Promotion and Licensing Agreement between Company and Glenn Jarrett
Form 10SB12G
September 7, 1999
6.4
Promotion and Licensing Agreement between Company and Jason Jarrett
Form 10SB12G
September 7, 1999
6.5
Promotion and Licensing Agreement between Company and Brett Favre
Form 10SB12G
September 7, 1999
Financial Data Schedule
Form 10KSB
October 13, 2000
99.1
Sarbanes-Oxley
Form 10KSB
October 15, 2003
99.2
Code of Ethics
Form 8-K
August 12, 2008
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dale Jarrett Racing Adventure, Inc.
/s/ Timothy Shannon
By: Timothy Shannon
President
Date: March 31, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/Timothy B. Shannon
CEO/CFO
March 31, 2014
Controller/ Director
/s/Ronda Robertson
COO
March 31, 2014
/s/Kenneth J. Scott
Director
March 31, 2014
/s/Glenn Jarrett
Director
March 31, 2014
Vice President