DALE JARRETT RACING ADVENTURE INC - Recent Material Event

Item 405 of Regulation S-K is not contained hereof, and will not be contained, to will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [  ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  


Large accelerated filer   [  ]

 

Accelerated filer                     [  ]

Non-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]


State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. The market value of the registrant’s voting $.0001 par value common stock held by non-affiliates of the registrant was approximately $837,285.95


Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the registrant's only class of common stock, as of March 29, 2012 was 23,838,852 shares of its $.0001 par value common stock.


No documents are incorporated into the text by reference.


2




Dale Jarrett Racing Adventure, Inc.

Form 10-K

For the Fiscal Year Ended December 31, 2011

Table of Contents


 

 

Page

Part I

 

 

Item 1.  Business

 

4

Item 1A. Risk Factors

 

7

Item 1B.  Unresolved staff comments

 

7

Item 2.  Properties

 

7

Item 3.  Legal Proceedings

 

7

Item 4.  Mine Safety Disclosures

 

7

 

 

 

Part II

 

 

Item 5.  Market for Registrant's Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities

 

8

Item 6.  Selected Financial Data

 

9

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations

 

9

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

 

12

Item 8.  Financial Statements and Supplementary Data

 

13

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

28

Item 9A.  Controls and Procedures

 

28

Item 9B.  Other Information

 

29

 

 

 

Part III

 

 

Item 10.  Directors, Executive Officers and Corporate Governance

 

30

Item 11.  Executive Compensation

 

33

Item 12.  Securities Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

34

Item 13.  Certain Relationships and Related Transactions, and Director Independence

 

36

Item 14.  Principal Accountant Fees and Services

 

36

 

 

 

Part IV

 

 

Item 15.  Exhibits, Financial Statement Schedules

 

38

Signatures

 

39





PART I


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 15 racecars, and has recently purchased 6 additional racecars for our Las Vegas, NV “hub”.  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 five 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.


Due to the expiration of an exclusive contract between the Richard Petty Driving Experience and the Las Vegas Motor Speedway in December 2011, we have expanded our operations to the west coast.  The Company began running schools at the Las Vegas Motor Speedway in January 2012.  We have leased a garage on Speedway Blvd. in Las Vegas, which is being managed by Glenn Jarrett, an officer and director.  This new hub establishes a national presence for the Company.  The Company plans to eventually service California, Arizona, and Colorado through this hub.


4



The Company currently has 15 racecars, with 6 more being ordered and manufactured, which had an original purchase price of approximately $50,000 per car.  Staffing costs are approximately $20,000 per month at each active 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.


On August 19, 2010, we entered into an agreement with Talladega Superspeedway, LLC to allow Dale Jarrett Racing Adventure exclusivity during 2011 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 2011 for $450,000 payable in four payments of $112,500 due at the end of each quarter during 2011.


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.


Marketing.   We offer our products and services at various tracks throughout the country.  We employ a marketing director who is primarily responsible for closing the prospects created through promotion.  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.


5



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 likeliness 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 possess 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 shall 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 three 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.  


6



ITEM 1A.  RISK FACTORS


Not applicable to a smaller reporting company.



ITEM 1B.  UNRESOLVED STAFF COMMENTS


Not applicable.



ITEM 2.  PROPERTIES


The Company’s executive offices which consist of 1,500 square feet are located at 1313 10th Avenue Lane, SE, Hickory, North Carolina.  In October 2009, the Company entered into an operating lease for use of this office space.  The lease requires a monthly payment of $1,830 and expires in November, 2012.  Once this lease is up, we plan to procure new executive offices at an estimated monthly rent payment of $2,000.  Subsequent to December 31, 2011 we entered into a lease for office space in Las Vegas, NV which requires monthly payments of $1,510 and continues through February 28, 2013.  Future minimum payments under these lease agreements are as follows: $35,461 in 2012 and $3,020 in 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, including our garage facility in Talladega, AL.  Our rent expense was $62,559 and $66,287 for the years ended December 31, 2011 and 2010, respectively.


ITEM 3.  LEGAL PROCEEDINGS.


There is no litigation pending or threatened by or against Dale Jarrett Racing Adventure.



ITEM 4.  MINE SAFETY DISCLOSURES.


Not applicable


7



PART II


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

3/31/10

 

0.07

 

0.04

6/30/10

 

0.06

 

0.04

9/30/10

 

0.05

 

0.03

12/31/10

 

0.06

 

0.01

 

 

 

 

 

3/31/11

 

0.08

 

0.04

6/30/11

 

0.06

 

0.03

9/30/11

 

0.05

 

0.03

12/30/11

 

0.04

 

0.03


b)  Holders.  At March 29, 2012, there were approximately 312 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.


8



    Item 5(c)  Purchases of Equity Securities by the issuer and affiliated purchasers.  


During 2010, we purchased a total of 397,150 shares of our common stock for cash aggregating $22,132, which is classified as treasury stock in the accompanying balance sheets as of December 31, 2011 and 2010.


ITEM 6.  SELECTED FINANCIAL DATA


Not applicable to a smaller reporting company.



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Trends and Uncertainties.  Demand for the Company's products are 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 the sale of our products and services, as well as the private sale of our 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 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 2012.


Capital and Source of Liquidity.  The Company currently has no material commitments for capital expenditures and has no plans for future capital expenditures, other than as discussed above, at this time.  


We believe that there will be sufficient capital from revenues to conduct operations for the next 12 months.  


In 2011, our revenue provided substantially all of the cash necessary to conduct operations; however, our operations used $91,230 in cash during the year due to activities related to our expansion to Las Vegas.  Future revenues from classes and events will determine the amount of additional financing necessary to continue and expand operations.


9




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, 2011, we acquired property and equipment, including racecars under construction, of $37,434 resulting in net cash used in investing activities of $37,434.  For the year ended December 31, 2010, we acquired property and equipment of $53,919 resulting in net cash used in investing activities of $53,919.  


The following table summarizes the stock option activity during the years ended December 31, 2011 and 2010:


 

 

Stock Options

 

Weighted- average Price per Share

Balance at December 31, 2009

 

3,500,000

 

$0.15

 

 

=======

 

====

Expired

 

              -

 

       -

 

 

 

 

 

Balance at December 31, 2010

 

3,500,000

 

$0.15

 

 

=======

 

====

Expired

 

              -

 

        -

 

 

 

 

 

Balance at December 31, 2011

 

3,500,000

 

$0.15

 

 

=======

 

====


At December 31, 2011, we have the following options outstanding, all of which are exercisable:


Exercise price: $0.15; Outstanding: 3,500,000; Contractual life: 2.8 years


For the year ended December 31, 2011, we repaid long-term debt of $24,962.  As a result, our net cash used in financing activities was $24,962 in 2011.


For the year ended December 31, 2010, we repaid long-term debt of $21,612.  We also purchased treasury stock of an amount equaling $22,132.  As a result, our net cash used in financing activities was $43,744 in 2010.


Our long-term liquidity is dependent on the continuation of operations and receipt of revenues.


10



Results of Operations.


For the year ended December 31, 2011, we had sales of $2,875,602, which represented a 6% decrease over the 2010 sales of $3,075,262.  Revenues decreased due to general economic distress in our market areas.  The cost of sales increased only 3% to $1,355,924 from the 2010 cost of sales of $1,320,718 due to an emphasis placed on controlling at-track expenses.  This resulted in a 13% decrease in gross profit from $1,754,544 in 2010 to $1,519,678 in 2011.


For the year ended December 31, 2011, we had selling, general and administrative expenses of $1,849,847.  This is an increase from the $1,676,550 in general and administrative expenses for the year ended December 31, 2010 of 10%.


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.


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 $1,172,821 and $946,922 at December 31, 2011 and 2010, respectively.


11



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, 2011, 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 have determined that all recently issued accounting standards will not have a material impact on our financial statements, or do not apply to our operations.



ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Not applicable


12



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

 

14

 

 

 

Balance Sheets at December 31, 2011 and 2010

 

15

 

 

 

Statements of Operations for the years ended December 31, 2011 and 2010

 

17

 

 

 

Statements of Changes in Stockholders' Equity (Deficit) for the years ended December 31, 2011 and 2010

 

18

 

 

 

Statements of Cash Flows for the years ended December 31, 2011 and 2010

 

19

 

 

 

Notes to Financial Statements

 

20


13



[dalejarrett10k11v6001.jpg]


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, 2011 and 2010, and the related statements of operations, stockholders' equity (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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes 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 Dale Jarrett Racing Adventure, Inc. as of December 31, 2011 and 2010, 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 29, 2012


14



DALE JARRETT RACING ADVENTURE, INC.

BALANCE SHEETS

DECEMBER 31, 2011 and 2010

 

2011

 

2010

ASSETS

 

 

 

Current assets:

 

 

 

  Cash and cash equivalents

 $   415,966

 

 $    569,592

  Accounts receivable

 68,993

 

 9,372

  Spare parts and supplies

 142,862

 

 185,105

  Prepaid expenses and other current assets

        80,958

 

        38,128

      Total current assets

      708,779

 

      802,197

Property and equipment, at cost, net of

 

 

 

  accumulated depreciation of $1,008,730 and $883,659

      332,601

 

      452,072

Other assets

        45,345

 

        13,510

 

 $1,086,725

 

 $1,267,779

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

Current liabilities:

 

 

 

  Current portion of long-term debt

 $      22,840

 

 $    25,142

  Accounts payable

 83,726

 

 87,845

  Accrued expenses

 101,058

 

 146,697

  Deferred revenue

  1,172,821

 

    946,922

      Total current liabilities

  1,380,445

 

 1,206,606

 

 

 

 

Long-term debt

         2,395

 

     25,055

 

 

 

 


15



DALE JARRETT RACING ADVENTURE, INC.

BALANCE SHEETS

DECEMBER 31, 2011 and 2010

(Continued)


Stockholders' equity (deficit):

 

 

 

 Preferred stock, $.0001 par value,

 

 

 

    5,000,000 shares authorized, none issued

 -   

 

 -   

 Common stock, $.0001 par value,

 

 

 

    200,000,000 shares authorized, 24,510,502 shares

 

 

 

    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)

 (6,444,037)

 

 (6,111,804)

      Total stockholders' equity (deficit)

   (296,115)

 

        36,118

                                      

 $1,086,725

 

 $1,267,779


See accompanying notes to financial statements.


16



DALE JARRETT RACING ADVENTURE, INC.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010


 

2011

2010

 

 

 

Sales          

 $ 2,875,602

 $3,075,262

Cost of sales and services

   1,355,924

 1,320,718

Gross profit

   1,519,678

 1,754,544

Selling, general and administrative expenses

   1,849,847

 1,676,550

 

 

 

Income (loss) from operations   

 (330,169)

 77,994

 

 

 

Other income(expense):

 

 

 Interest income

 942

 1,538

 Interest expense

      (3,006)

 (6,055)

 

 

 

Income (loss) before income taxes

 (332,233)

 73,477

Income taxes

                 -   

                -   

 

 

 

  Net income (loss)        

 $(332,233)

 $73,477

 

   

   

Per share information basic and diluted:

 

 

 

 

 

Income (loss) per share

 $      (0.01)

$          0.00

 

 

 

Weighted average shares outstanding

 23,838,852

 23,924,125






See accompanying notes to financial statements.


17



DALE JARRETT RACING ADVENTURE, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010


 

 

 

Additional

 

 

 

 

 

    Common    

         Stock          

Paid-in

Accumulated

 Treasury

 Stock          

 

 

 Shares

 Amount

Capital

 (Deficit)

 Shares

 Amount

 Total

 

 

 

 

 

 

 

 

Balance December 31, 2009

 24,510,502

 $2,451

 $6,184,480

 $(6,185,281)

 294,500

 $(17,867)

 $(16,217)

 

 

 

 

 

 

 

 

Shares issued for services

 -   

 

 

 

 (20,000)

 990

 990

Purchase of treasury stock

 -   

 -   

 -   

 -   

 397,150

 (22,132)

 (22,132)

Net income

 -   

 -   

 -   

 73,477

 -   

 -   

 73,477

Balance December 31, 2010

 24,510,502

 2,451

 6,184,480

 (6,111,804)

 671,650

 (39,009)

 36,118

 

 

 

 

 

 

 

 

Net loss

 -   

 -   

 -   

 (332,233)

 -   

 -   

 (332,233)

Balance December 31, 2011

 24,510,502

 $2,451

 $6,184,480

 $(6,444,037)

 671,650

 $(39,009)

 $(296,115)

 

 

 

 

 

 

 

 












See accompanying notes to financial statements.


18



DALE JARRETT RACING ADVENTURE, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

 

2011

2010

 

 

 

Net income (loss)

 $(332,233)

 $  73,477

  Adjustments to reconcile net income (loss) to net

 

 

   cash provided by (used in) operating activities:

 

 

   Depreciation

 125,070

 133,584

   Common stock issued for services

 -   

 990

   Loss on disposal of assets

 -   

 18,252

Changes in assets and liabilities:

 

 

    (Increase) decrease in accounts receivable

 (59,621)

 49,112

    (Increase) decrease in spare parts and supplies

 42,243

 (20,792)

    (Increase) decrease in prepaid expenses and other current assets

 (42,830)

 26,366

    Increase (decrease)in deferred revenue

 225,899

 (206,391)

    Increase (decrease) in accounts payable and

 

 

        accrued expenses

  (49,758)

   48,094

       Total adjustments           

   241,003

   49,215

  Net cash provided by (used in) operating activities

  (91,230)

 122,692

 

 

 

Cash flows from investing activities:

 

 

   Additions to racecars under construction

   Acquisition of property and equipment

(31,834)

    (5,600)

(9,910)

 (44,009)

  Net cash used in investing activities

  (37,434)

 (53,919)

 

 

 

Cash flows from financing activities:

 

 

   Purchase of treasury stock

 -   

 (22,132)

   Repayment of long-term debt

  (24,962)

 (21,612)

  Net cash used in financing activities

  (24,962)

 (43,744)

 

 

 

Increase (decrease) in cash and cash equivalents

 (153,626)

 25,029

Cash and cash equivalents, beginning

   569,592

  544,563

Cash and cash equivalents, ending

 $415,966

$569,592

 

 

 

Supplemental cash flow information:

 

 

   Cash paid for interest

$     3,006

$    6,055

   Cash paid for income taxes

$             -   

$            -   

 

 

 

Non-cash Investing and Financing Activities:

 

 

   Property and equipment transferred to parts and supplies

$             -   

$  14,470


See accompanying notes to financial statements.


19



Dale Jarrett Racing Adventure, Inc.

Notes to Financial Statements

December 31, 2011 and 2010


Note 1. Organization and Significant Accounting Policies

 

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.


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.  Provision for sales returns will be 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 $1,172,821 and $946,922 at December 31, 2011 and 2010, respectively.


Statement of Cash Flows


For purposes of the statement 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, 2011 and 2010.


20



Spare Parts and Supplies


Inventories are valued at the lower of cost or market on a first-in, first-out basis, which at December 31, 2011 and 2010 include approximately $138,245 and $178,630, respectively, of spare parts and tires used in the racecar operation and finished goods, which are primarily promotional items that bear our logo, of approximately $4,617 and $6,475, 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.  At December 31, 2011, we believe the remaining carrying values of these assets are recoverable.


Long Lived Assets


We annually, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, review our long-lived assets for impairment.  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, 2011 and 2010.


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 and the reported amount of revenues and expenses during the reporting period.   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 $489,015 and $510,191 for the years ended December 31, 2011 and 2010, respectively.


21



Fair Value of Financial Instruments


The Company’s short-term financial instruments consist of cash and cash equivalents, accounts and notes receivable, accounts payable and accrued expenses and notes payable. The carrying amounts of these financial instruments approximate fair value because of their short-term maturities.  Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.  We continually monitor our positions with, and the credit quality of, the financial institutions in which we invest.  As of December 31, 2011 and 2010, and periodically throughout such years, balances in various operating accounts exceeded federally insured limits.  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 as 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.


22



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.


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 Income (Loss) Per Common Share


We calculate net income (loss) per share in accordance with ASC Topic 260, Earnings per Share.  Basic earnings (loss) per share are 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.  Outstanding options were not dilutive in the period of income.


During periods in which we incur losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive or have no effect on earnings per share.


Recent Accounting Pronouncements


We have determined that all recently issued accounting standards will not have a material impact on our financial statements, or do not apply to our operations.


23



Note 2.  Property and Equipment  


Property and equipment consist of the following at December 31, 2011 and 2010:


   2011

     2010

Office furniture and equipment                                   $    54,593           $  54,593

Software

                26,398               26,398

Shop and track equipment                                               278,267             272,667

Race vehicles                          

 571,000

  571,000

DJ Graphics Equipment

    24,271

    24,271

Vehicles – other                     

  386,802         _ 386,802

                                     

            1,341,331         1,335,731

Less accumulated depreciation       

           (1,008,730)         (883,659)

                                    

            $  332,601       $  452,072


Depreciation charged to operations was $125,071 and $133,584 for the years ended December 31, 2011 and 2010, respectively, of which $119,176 and $122,038 is included in cost of sales and services for those years.


Note 3. Long-term Debt


At December 31, 2011 and 2010, long-term debt consists of obligations under vehicle purchase contracts having outstanding principal balances of $25,235 and $50,197, respectively.   The loans are payable in monthly installments of $2,306, including interest at rates ranging from 5.0% to 7.5% through March 2013, and are collateralized by three support vehicles.


Principal repayments are due as follows:  $22,840 in 2012 and $2,395 in 2013.


Note 4. Stockholders’ Equity (Deficit)


During 2011 and 2010, we purchased a total of zero and 397,150 shares of our common stock for cash aggregating $0 and $22,132, respectively, which is classified as treasury stock in the accompanying balance sheets as of December 31, 2011 and 2010. Further in April 2010, we reissued 20,000 shares of treasury stock with a fair value of $990 to an employee for services.


24



The following table summarizes the stock option activity during the years ended December 31, 2011 and 2010:


                                   

  

   Stock         

  Weighted-average

                                 

  

  Options    

     Price per Share


Balance at December 31, 2009        

   3,500,000         

 $0.15

Expired

                  -

      -

Balance at December 31, 2010

 

    3,500,000

 $0.15

Expired

                  -   

      -

Balance at December 31, 2011

   

   3,500,000

 $0.15


At December 31, 2011, we have the following options outstanding, all of which are exercisable:


Exercise price: $0.15; Outstanding:3,500,000; Weighted average remaining contractual life: 2.8 years.


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.


Note 5. Income Taxes


We have not provided for income taxes during any period presented as a result of operating losses.  We have a net operating loss carryforward at December 31, 2011 of approximately $4,300,000 that will expire through 2031.  The principal difference between the income (loss) for book purposes and as reported on the income tax return results primarily from stock-based compensation.  We have fully reserved the deferred tax asset that would arise from the loss carryforward since we believe that it is more likely than not that future income from operations will not be available to utilize the deferred tax asset.  The approximate deferred tax asset and the related reserve are as follows:


Deferred tax asset

 

2011

 

2010

    Tax benefit of net operating losses

$

1,573,000

$

1,460,000

    Less valuation allowance

 

(1,573,000)

 

(1,460,000)

Net deferred tax asset

$

-

$

-


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, 2011 and 2010.  The sources and tax effects of the differences are as follows:


25




 

 

2011

 

2010

Income tax provision at the federal statutory rate

 

34 %

 

34 %

Effect of operating losses

 

(34)%

 

(34)%

 

 

0 %

 

0 %


We have not taken any uncertain tax positions on any of our open income tax returns filed through the period ended December 31, 2011.  Our methods of 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 carryforward of net operating losses, our federal and state income tax returns are subject to audit for various periods beginning in 1998.



Note 6. Commitments and Contingencies


Operating Leases


In October 2009, we entered an operating lease for use of a building in Hickory, North Carolina.  The lease requires a monthly payment of $1,830 and expires in November, 2012.  Subsequent to December 31, 2011 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.  Future minimum payments under these lease agreements are as follows:  $35,461 in 2012 and $3,020 in 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 amounted to $62,559 and $66,287 for the years ended December 31, 2011 and 2010, 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


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 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.


26



On August 19, 2010, we entered into an agreement with Talladega Superspeedway, LLC to allow Dale Jarrett Racing Adventure exclusivity during 2011 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 2011 for $450,000 payable in four payments of $112,500 due at the end of each quarter during 2011.  


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.


Litigation


On June 28, 2010, we paid $20,000 to settle litigation related to an alleged breach of contract in the circuit court of Talladega County, Alabama.  The Company had previously accrued $17,500 related to this proceeding and expensed an additional $2,500 during 2010.



Note 7.  Related Party Transactions


During the years ended December 31, 2011 and 2010, an officer of the Company paid approximately $95,000 and $167,000, respectively, of advertising expenses for the Company and has been reimbursed for those payments.


27




ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


None


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, 2011.


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.


28



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, 2011, 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 2011.  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.  OTHER INFORMATION


None


29




PART III


ITEM 10.  DIRECTORS AND 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 49

 

President, Director

 

Inception to Present

 

 

Chief Executive Officer

 

 

 

 

Chief Financial Officer

 

June 1, 2005 to present

 

 

 

 

 

Glenn Jarrett, Age 59

 

Vice President

 

Inception to Present

 

 

Director

 

 

 

 

 

 

 

Kenneth J. Scott, age 56

 

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.


30



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 for TNN 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 2011.


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.


31



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.


32



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

Cash Year

Salary ($)

Stock Awards ($)

Option Awards ($)

All Other Compensation ($)

Total ($)

Timothy B. Shannon

2011

150,000

-

-

20,000

170,000

CEO, CFO

2010

175,279

-

-

-

-


The cash salary amount for 2010 includes a base salary of $150,000 and commissions earned by Mr. Shannon during 2010 of $25,279.



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, 2011


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


33



DIRECTOR COMPENSATION FOR 2011


The following table sets forth the compensation to our directors for

2011:


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

10,000

-

-

-

10,000

Ken Scott

10,000

-

-

-

10,000



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 29, 2012


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)

16.71%

c/o Dale Jarrett Racing Adventure, Inc.

 

 

 

1313 10th Avenue Lane, SE

 

 

 

Hickory, NC 28602

 

 

 

 

 

 

 

Glenn Jarrett

 

2,000,000 (3)

8.39%

c/o Dale Jarrett Racing Adventure, Inc.

 

 

 

1313 10th Avenue Lane, SE

 

 

 

Hickory, NC 28602

 

 

 


34




 

 

 

 

Ned Jarrett

 

1,000,000

4.19%

3182 Ninth Tee Drive

 

 

 

Newton, NC 28658

 

 

 

 

 

 

 

Dale Jarrett

 

1,500,000

6.29%

3182 Ninth Tee Drive

 

 

 

Newton, NC 28658

 

 

 

 

 

 

 

Brett Farve

 

1,500,000

6.29%

132 Westover Drive

 

 

 

Hattiesburg, MS 39402

 

 

 

 

 

 

 

Kenneth J. Scott

 

1,109,800 (4)

4.66%

c/o Dale Jarrett Racing Adventure, Inc.

 

 

 

1313 10th Avenue Lane, SE

 

 

 

Hickory, NC 28602

 

 

 


(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 24,510,502 issued and outstanding common shares.

 (3)  Includes 1,000,000 common shares and immediately exercisable options to purchase 1,000,000 common shares by Mr. Glenn Jarrett.

(4)  Includes 609,800 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

 

1,109,800 (2)

 

4.53 (3)

Glenn Jarrett

 

2,000,000 (4)

 

8.16 (5)

Timothy B. Shannon

 

3,983,333 (6)

 

16.25 (7)

All directors and executive officers as a group (3 persons)

 

7,093,133 (8)

 

28.94 (9)


(1)  The address for each of the persons listed above is c/o Dale

Jarrett Racing Adventure, Inc., 1313 10TH Avenue Lane, SE, Hickory, NC 28602.


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(2)  Includes 609,800 common shares and immediately exercisable options to purchase 500,000 common shares by Mr. Scott.

(3)  The percentage is based upon 24,510,502 issued and

outstanding common shares and immediately exercisable options to

purchase 500,000 common shares by Mr. Scott.

(4)  Includes 1,000,000 common shares and immediately exercisable options to purchase 1,000,000 common shares by Mr. Jarrett.

(5)  The percentage is based upon 24,510,502 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 24,501,502 issued and outstanding common shares and immediately exercisable options to purchase 2,000,000 common shares by Mr. Shannon.

(8)  Includes 3,593,133 common shares and immediately exercisable option to purchase 3,500,000 common shares by the three named directors and officers.

(9)  The percentage is based upon 24,510,502 issued and outstanding common shares and immediately exercisable options to purchase 3,500,000 common shares.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.


During the years ended December 31, 2011 and 2010, Timothy Shannon, an officer of the Company paid approximately $95,000 and $167,000, respectively, of internet advertising expenses for the Company and has been reimbursed for those payments.


Director Independence.  The Company’s board of directors consists of Timothy Shannon, Glenn Jarrett and Kenneth Scott.  Neither Timothy Shannon nor Glenn Jarrett is independent as such term is defined by a national securities exchange or an inter-dealer quotation system.  During the year ended December 31, 2011, there were no transactions with related persons other than as described in the section above entitled “Item 11.  Executive Compensation”.



ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.


Audit Fees.  We paid aggregate fees and expenses of approximately $28,300 and $27,800, respectively, to Kingery & Crouse, P.A. during 2011 and 2010, respectively, for work completed for our annual audits and for the review of our financial statements included in our Form 10-Q.  


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Tax Fees. We did not incur any aggregate tax fees and expenses from Kingery & Crouse, P.A. for the years ended December 31, 2011 and 2010, 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 2011 and 2010.  


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, 2011 and 2010 were approved by the board of directors pursuant to its policies and procedures.


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Part IV


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES


(a)(1)  List of Financial statements included in Part II hereof


Balance Sheets, December 31, 2011 and 2010

Statements of Operations for the years ended December 31, 2011 and 2010

Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2011 and 2010

Statements of Cash Flows for the years ended December 31, 2011 and 2010

Notes to the Financial Statements


(a)(2) List of Financial Statement schedules included in Part IV hereof:  None.

(a)(3) Exhibits


The following documents are filed as a part of this report:


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.


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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 29, 2012


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 29, 2012

 

 

Controller/ Director

 

 

 

 

 

 

 

/s/Kenneth J. Scott

 

Director

 

March 29, 2012

 

 

 

 

 

 

 

 

 

 

/s/Glenn Jarrett

 

Director

 

March 29, 2012

 

 

Vice President

 

 


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