Dale Jarrett Racing Adventure Form 10-Q

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, 2012

-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 3^rd 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):



Large accelerated filer [ ]		Non-accelerated filer [ ]
Accelerated filer [ ]		Smaller reporting company [x]

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

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

November 14, 2012: Common Stock - 23,838,852

DALE JARRETT RACING ADVENTURE, INC.

FORM 10-Q

For the quarterly period ended September 30, 2012

INDEX

PART 1 – FINANCIAL INFORMATION



		Page
Item 1. Financial Statements (Unaudited)		4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		9
Item 3. Quantitative and Qualitative Disclosure About Market Risk		11
Item 4. Controls and Procedures		11

PART II – OTHER INFORMATION



Item 1. Legal Proceedings		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

DALE JARRETT RACING ADVENTURE, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

(UNAUDITED)

(1)

Basis Of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and Rule 8.03 of Regulation SX. They do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included.

The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. For further information, refer to the financial statements of the Company as of and for the year ended December 31, 2011, including notes included in the Company’s Form 10-K.

(2)

Recent Accounting Pronouncements

There are no new accounting pronouncements for which adoption is expected to have a material effect on our financial statements in future accounting periods.

(3)

Basic and Diluted Income (Loss) Per Share

The Company calculates basic and diluted income (loss) per share as required by the FASB Accounting Standards Codification. Basic income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods when we report a net loss, anti-dilutive common stock equivalents are not considered in the computation. We did not have any dilutive common stock equivalents during each of the three and nine months ended September 30, 2012 and 2011.

(4)

Spare Parts and Supplies

Spare parts and supplies include engine parts, tires, and other supplies used in the racecar operation and are recorded at 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.

(6)

Commitments

During 2009, we entered into an agreement with a vendor, who provides video equipment and video recording services, which enables the Company to sell video recordings to its students. Under the modified agreement for 2012, we will remit $30 per driving adventure and $11 per ride adventure to the vendor. The agreement continues through December 31, 2013 and is renewable annually thereafter.

During July 2011 the Company extended the employment agreement of its Chief Executive Officer through June 2016 at a base salary of $150,000, with cost of living adjustments to be made on the first day of each year.

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 will also be 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.

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 will pay $271,000 to Las Vegas Motor Speedway over the course of 2012 for use of the speedway.

During 2012, we entered into a lease for office and warehouse space in Las Vegas, NV. The lease requires a monthly payment of $1,510 and expires February 28, 2013.

In January 2012 we recorded a note payable of $23,935 for the purchase of a vehicle. This note is payable in monthly installments of $543 through January 2016 and has an annual interest rate of 4.24%.

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

Trends and Uncertainties. Demand for the Corporation's services and products are dependent on, among other things, general economic conditions 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 services and products as well as the private sale of the Corporation’s stock. There are no trends, events or uncertainties that have had or are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations. There are no significant elements of income or loss that do not arise from the Corporation’s continuing operations. There are no known causes for any material changes from period to period in one or more line items of the corporation’s financial statements.

The Corporation currently has classes planned through September 2013.

Capital Resources and Source of Liquidity. The Corporation currently has no material commitments for capital expenditures. The Corporation has no plans for future capital expenditures, such as additional race cars, at this time. However, the Corporation is committed to approximately $109,500 in track usage fees for the remainder of 2012.

The Corporation believes that there will be sufficient capital from revenues to conduct operations for the next twelve months.

Presently, the Corporation’s revenue and cash comprises one hundred percent of the total cash necessary to conduct operations. Future revenues from classes and events will determine the amount of additional financing necessary to continue operations.

The board of directors has no immediate offering plans in place. The board of directors shall determine the amount and type of financing as the Corporation's financial situation dictates.

For the nine months ended September 30, 2012, the Corporation purchased property and equipment of $37,483 resulting in net cash used in investing activities of $37,483.

Comparatively, for the nine months ended September 30, 2011, the Corporation purchased property and equipment of $5,000 resulting in net cash used in investing activities of $5,000.

For the nine months ended September 30, 2012, the Corporation repaid long-term debt of $29,419. As a result, the Corporation had net cash used in financing activities of $29,419 for the nine months ended September 30, 2012.

Comparatively, for the nine months ended September 30, 2011, the Corporation repaid long-term debt of $18,704. As a result, the Corporation had net cash used in financing activities of $18,704 for the nine months ended September 30, 2011.

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, 2012, the registrant had sales of $1,001,125 with cost of sales and services of $542,607 for a gross profit of $458,518.

Comparatively, for the three months ended September 30, 2011, the registrant had sales of $786,895 with cost of sales of $419,489 for a gross profit of $367,406.

The increase in revenue of $214,230, or 27.2%, also had a corresponding increase in the cost of sales and services of $123,118, or 29.3%. The gross profit percentage decreased from 53.3% for the three months ended September 30, 2011 to 45.8% for the three months ended September 30, 2012. The decreased gross profit percentage is due to the addition of Las Vegas as a new venue during 2012 which resulted in both increased revenue and cost of sales. Operations were not active in Las Vegas during the same period of 2011.

For the three months ended September 30, 2012, the registrant had general and administrative expenses of $382,887. Comparatively, for the three months ended September 30, 2011, the registrant had general and administrative expenses of $355,796. The percentage of general and administrative expenses to revenues for the three months ended September 30, 2012 decreased to 38.2% from 45.2% for the three months ended September 30, 2011 due to increased revenue without a corresponding increase in administrative expenses.

For the nine months ended September 30, 2012, the registrant had sales of $2,677,824 with cost of sales and services of $1,428,445 for a gross profit of $1,249,379.

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

The increase in revenue of $600,394, or 28.9%, also had a corresponding increase in the cost of sales and services of $428,585, or 42.9%. The gross profit percentage decreased from 51.9% for the nine months ended September 30, 2011 to 46.7% for the nine months ended September 30, 2012. The decreased gross profit percentage is due to the addition of Las Vegas as a new venue during 2012 which resulted in both increased revenue and cost of sales. Operations were not active in Las Vegas during the same period of 2011.

For the nine months ended September 30, 2012, the registrant had general and administrative expenses of $1,307,630. Comparatively, for the nine months ended September 30, 2011, the registrant had general and administrative expenses of $1,206,932. The percentage of general and administrative expenses to revenues for the nine months ended September 30, 2012 decreased to 48.8% from 58.1% for the nine months ended September 30, 2011 due to increased revenue without a corresponding increase in administrative expenses.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable for smaller reporting companies.

Item 4. Controls and Procedures

During the period ended September 30, 2012, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of September 30, 2012. Based on this evaluation, our chief executive officer and principal financial officers have concluded such controls and procedures to be effective as of September 30, 2012 to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 1A. Risk Factors

Not applicable for smaller reporting companies

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

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

None

Item 6. Exhibits

Exhibit 31* - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32* - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS** XBRL Instance Document

101.SCH** XBRL Taxonomy Extension Schema Document

101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF** XBRL Taxonomy Extension Definition 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.

SIGNATURES

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

Dated: November 14, 2012

DALE JARRETT RACING ADVENTURE, INC.

By:

/s/Timothy Shannon

Timothy Shannon

Chief Executive Officer

Principal Financial Officer


Dale Jarrett Racing Adventure, Inc.
Condensed Balance Sheets
	September 30,	December 31,
	2012	2011
	(Unaudited)
ASSETS
Current assets:
Cash	$ 188,625	$ 415,966
Accounts receivable	17,914	68,993
Spare parts and supplies	147,126	142,862
Prepaid expenses and other current assets	101,222	80,958
Total current assets	454,887	708,779

Property and equipment, at cost, net of
accumulated depreciation of $1,101,545 and $1,008,730	330,259	332,601
Other assets	16,290	45,345
	$ 801,436	$1,086,725
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt	$ 5,790	$ 22,840
Accounts payable	201,095	83,726
Accrued expenses	102,495	101,058
Deferred revenue	810,760	1,172,821
Total current liabilities	1,120,140	1,380,445

Long-term debt	13,961	2,395

Stockholders' deficit:
Preferred stock, $.0001 par value
5,000,000 shares authorized,	-	-
Common stock, $.0001 par value,
200,000,000 shares authorized, 24,510,502 issued and
23,838,852 shares outstanding	2,451	2,451
Additional paid-in capital	6,184,480	6,184,480
Treasury stock, 671,650 shares, at cost	(39,009)	(39,009)
Accumulated deficit	(6,480,587)	(6,444,037)
Total stockholders' deficit	(332,665)	(296,115)
	$ 801,436	$1,086,725


Dale Jarrett Racing Adventure, Inc.
Condensed Statements of Operations
For The Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)

	Three Months		Nine Months
	2012	2011	2012	2011
Sales	$1,001,125	$786,895	$2,677,824	$2,077,430
Cost of sales and services	542,607	419,489	1,428,445	999,860
Gross profit	458,518	367,406	1,249,379	1,077,570

General and administrative expenses	382,887	355,796	1,307,630	1,206,932

Income (loss) from operations	75,631	11,610	(58,251)	(129,362)

Other income (expense):
Interest income	47	277	379	654
Insurance proceeds	22,453	-	22,453	-
Interest expense	(226)	(582)	(1,131)	(2,347)
	22,274	(305)	21,701	(1,693)

Net income (loss)	$ 97,905	$ 11,305	$ (36,550)	$ (131,055)

Per share information:

Basic and diluted (loss) per share	$ 0.00	$ 0.00	$ (0.00)	$ (0.01)

Weighted average shares outstanding	23,838,852	23,838,852	23,838,852	23,838,852


Dale Jarrett Racing Adventure, Inc.
Condensed Statements of Cash Flows
For The Nine Months Ended September 30, 2012 and 2011
(Unaudited)

	2012	2011

Net cash used in operating activities	$(160,439)	$(330,273)

Cash flows from investing activities:
Acquisition of property and equipment	(37,483)	(5,000)
Net cash used in investing activities	(37,483)	(5,000)

Cash flows from financing activities:
Repayment of long-term debt	(29,419)	(18,704)
Net cash used in financing activities	(29,419)	(18,704)

Decrease in cash	(227,341)	(353,977)

Cash, beginning of period	415,966	569,592

Cash, end of period	$ 188,625	$ 215,615

Supplemental cash flow information:
Cash paid for interest	$ 1,131	$ 2,045
Cash paid for income taxes	$ -	$ -

Non-cash investing and financing activity:
Race vehicles under construction transferred to property and equipment	$ 45,345	$ -
Purchase of vehicle in exchange for a long-term note	$ 23,935	$ -