Nevada
|
33-1025552
|
(State
or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S.
Employer Identification
No.)
|
13134
State Route 62, Salem,
Ohio
|
44460
|
(Address
of Principal Executive
Offices)
|
(Zip
Code)
|
PART
I. FINANCIAL INFORMATION
|
Page
No.
|
Item 1. Financial Statements | 3 |
Condensed
Consolidated Balance Sheets as of March 31, 2007 (Unaudited) and
December 31, 2006 (Audited)
|
3 |
Condensed
Consolidated Statements of Operations for the Three Months
Ended March 31, 2007 and 2006 (Unaudited)
|
5 |
Condensed
Consolidated Statements of Cash Flows for the Three
Months Ended
March 31, 2007 and 2006 (Unaudited)
|
6 |
Notes
to Condensed Consolidated Financial Statements
|
7 |
Item
2. Management's Discussion and Analysis of
Financial Conditions and Results
of Operations
|
17 |
Item
3. Quantitative and Qualitative Disclosures
about Market Risk
|
26 |
Item 4. Controls and Procedures | 27 |
PART II. OTHER INFORMATION | 28 |
Item 1. Legal Proceedings | 28 |
Item
1A. Risk Factors
|
28 |
Item
2. Unregistered Sales of Equity Securities
and Use of Proceeds
|
28 |
Item
3. Defaults upon Senior Securities
|
28 |
Item 4. Submission of Matters to a Vote of Security Holders | 28 |
Item 5. Other Information | 28 |
Item
6. Exhibits
|
28 |
SIGNATURES | 29 |
GIANT
MOTORSPORTS, INC.
|
|||||
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|||||
ASSETS
|
March
31, 2007
|
December
31, 2006
|
||||||
Unaudited
|
Audited
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
817,595
|
$
|
156,530
|
|||
Accounts
receivable, net
|
3,580,012
|
3,803,718
|
|||||
Accounts
receivable, employees
|
14,882
|
-
|
|||||
Inventories
|
20,656,889
|
21,267,135
|
|||||
Deferred
tax assets
|
361,000
|
113,900
|
|||||
Prepaid
expenses
|
33,831
|
10,131
|
|||||
TOTAL
CURRENT ASSETS
|
25,464,209
|
25,351,414
|
|||||
FIXED
ASSETS, NET
|
1,904,693
|
2,004,274
|
|||||
OTHER
ASSETS
|
|||||||
Intangibles,
net
|
1,688,950
|
1,688,950
|
|||||
Deposits
|
41,000
|
41,000
|
|||||
TOTAL
OTHER ASSETS
|
1,729,950
|
1,729,950
|
|||||
TOTAL
ASSETS
|
$
|
29,098,852
|
$
|
29,085,638
|
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
|
GIANT
MOTORSPORTS, INC.
|
|||||
CONDENSED
CONSOLIDATED BALANCE SHEETS (CONTINUED)
|
|||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||
March
31, 2007
|
December
31, 2006
|
||||||
Unaudited
|
Audited
|
||||||
CURRENT
LIABILITIES
|
|||||||
Current
portion of long-term debt
|
$
|
1,449,949
|
$
|
1,513,665
|
|||
Notes
payable, floor plans
|
19,845,378
|
20,885,887
|
|||||
Note
payable, officer
|
270,223
|
352,500
|
|||||
Accounts
payable, trade
|
3,114,164
|
1,987,152
|
|||||
Accrued
expenses
|
627,285
|
493,939
|
|||||
Customer
deposits
|
615,737
|
196,246
|
|||||
TOTAL
CURRENT LIABILITIES
|
25,922,736
|
25,429,389
|
|||||
DEFERRED
TAX LIABILITIES
|
14,200
|
20,600
|
|||||
TOTAL
LIABILITIES
|
25,936,936
|
25,449,989
|
|||||
COMMITMENTS
|
|||||||
STOCKHOLDERS'
EQUITY
|
|||||||
Preferred
stock, $.001 par value, authorized 5,000,000 shares
|
|||||||
5,000
shares designated Series A Convertible, $1,000 stated
|
|||||||
value
2,450 and 2,450 shares issued and outstanding at
|
|||||||
March
31, 2007 and December 31, 2006, respectively
|
2,450,000
|
2,450,000
|
|||||
Common
stock, $.001 par value, authorized 75,000,000 shares
|
|||||||
12,213,126
and 11,791,747 shares issued and outstanding at
|
|||||||
March
31, 2007 and December 31, 2006, respectively
|
12,213
|
11,792
|
|||||
Additional
paid-in capital
|
1,960,874
|
1,868,592
|
|||||
Additional
paid-in capital - Options
|
93,426
|
93,426
|
|||||
Additional
paid-in capital - Warrants
|
1,724,800
|
1,724,800
|
|||||
Additional
paid-in capital - Beneficial conversions
|
1,303,400
|
1,303,400
|
|||||
Issuance
cost on preferred series A shares convertible
|
(786,762
|
)
|
(786,762
|
)
|
|||
Accumulated
deficit
|
(3,596,035
|
)
|
(3,029,599
|
)
|
|||
TOTAL
STOCKHOLDERS' EQUITY
|
3,161,916
|
3,635,649
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
29,098,852
|
$
|
29,085,638
|
|||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
|
GIANT
MOTORSPORTS, INC.
|
|||||||
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|||||||
For
the three months ended March 31,
|
2007
|
2006
|
||||||
(Unaudited)
|
(Unaudited)
|
||||||
REVENUES
|
|||||||
Sales
|
$
|
20,034,116
|
$
|
17,783,777
|
|||
Finance,
insurance and extended service revenues
|
871,788
|
605,860
|
|||||
TOTAL
REVENUES
|
20,905,904
|
18,389,637
|
|||||
COST
OF SALES
|
18,428,636
|
15,842,217
|
|||||
GROSS
PROFIT
|
2,477,268
|
2,547,420
|
|||||
OPERATING
EXPENSES
|
|||||||
Selling
expenses
|
1,790,171
|
2,045,931
|
|||||
General
and administrative expenses
|
1,002,609
|
1,171,179
|
|||||
2,792,780
|
3,217,110
|
||||||
LOSS
FROM OPERATIONS
|
(315,512
|
)
|
(669,690
|
)
|
|||
OTHER
INCOME AND (EXPENSE)
|
|||||||
Other
income, net
|
4,706
|
4,096
|
|||||
Gain
on sale of asset
|
184
|
-
|
|||||
Interest
expense, net
|
(416,611
|
)
|
(275,558
|
)
|
|||
(411,721
|
)
|
(271,462
|
)
|
||||
LOSS
BEFORE PROVISION (BENEFIT) FOR TAXES
|
(727,233
|
)
|
(941,152
|
)
|
|||
PROVISION
(BENEFIT) FOR INCOME TAXES
|
(253,500
|
)
|
-
|
||||
LOSS
BEFORE PREFERRED DIVIDENDS
|
(473,733
|
)
|
(941,152
|
)
|
|||
PREFERRED
DIVIDENDS
|
92,703
|
126,722
|
|||||
NET
LOSS ATTRIBUTABLE TO
|
|||||||
COMMON
SHAREHOLDERS
|
$
|
(566,436
|
)
|
$
|
(1,067,874
|
)
|
|
BASIC
LOSS PER SHARE
|
$
|
(0.05
|
)
|
$
|
(0.11
|
)
|
|
DILUTED
LOSS PER SHARE
|
$
|
(0.05
|
)
|
$
|
(0.11
|
)
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
|||||||
BASIC
|
11,936,889
|
10,532,973
|
|||||
DILUTED
|
11,936,889
|
10,532,973
|
|||||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
|
GIANT
MOTORSPORTS, INC.
|
|||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||
For
the three months ended March 31, 2007 and
2006
|
2007
|
2006
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||
Net
loss
|
$
|
(473,733
|
)
|
$
|
(941,152
|
)
|
|
Adjustments
to reconcile net loss to net cash
|
|||||||
provided
by operating activities:
|
|||||||
Depreciation
|
109,487
|
108,506
|
|||||
Deferred
federal income tax credit (net)
|
(253,500
|
)
|
-
|
||||
Provision
for doubtful accounts
|
21,831
|
-
|
|||||
(Gain)
on sale of asset
|
(184
|
)
|
-
|
||||
Decrease
in accounts receivable, net
|
201,875
|
1,385,365
|
|||||
(Increase)
in accounts receivable, employees
|
(14,882
|
)
|
(11,013
|
)
|
|||
(Increase)
decrease in inventories
|
610,246
|
(6,207,433
|
)
|
||||
(Increase)
in prepaid expenses
|
(23,700
|
)
|
(101,370
|
)
|
|||
Increase
in customer deposits
|
419,491
|
633,375
|
|||||
Increase
in accounts payable trade
|
1,127,012
|
612,355
|
|||||
Increase
(decrease) in floor plan liability
|
(1,040,509
|
)
|
5,294,542
|
||||
Increase
in accrued expenses
|
133,346
|
38,108
|
|||||
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
816,780
|
811,283
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||
Purchase
of fixed assets
|
(16,722
|
)
|
(454,934
|
)
|
|||
Proceeds
from sale of property and equipment
|
7,000
|
-
|
|||||
Decrease
in accounts receivable affiliates
|
-
|
261,667
|
|||||
NET
CASH (USED IN) INVESTING ACTIVITIES
|
(9,722
|
)
|
(193,267
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
Payments
on long-term debt
|
(63,716
|
)
|
(78,690
|
)
|
|||
Payments
on note payable to officer
|
(82,277
|
)
|
(115,490
|
)
|
|||
NET
CASH (USED IN) FINANCING ACTIVITIES
|
(145,993
|
)
|
(194,180
|
)
|
|||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
661,065
|
423,836
|
|||||
CASH
AND CASH EQUIVALENTS, beginning of Period
|
156,530
|
227,301
|
|||||
CASH
AND CASH EQUIVALENTS, end of Period
|
$
|
817,595
|
$
|
651,137
|
|||
OTHER
SUPPLEMENTARY CASH FLOW INFORMATION
|
|||||||
Income
taxes paid
|
$
|
-
|
$
|
158,550
|
|||
Interest
paid
|
$
|
416,611
|
$
|
277,412
|
|||
Preferred
stock dividends paid in common stock
|
$
|
92,703
|
$
|
126,722
|
|||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
|
Fixtures,
and equipment
|
3-7
years
|
Vehicles
|
5
years
|
Leasehold
Improvements
|
10
years
|
Gross
Carrying Amount
|
||||
Goodwill
|
$
|
1,588,950
|
||
Licensing
Agreement
|
100,000
|
|||
TOTAL
|
$
|
1,688,950
|
Three
Months Ended
|
|||||||
March
31,
2007
|
March
31,
2006
|
||||||
Net
income (loss) attributed to common shares
|
$
|
(566,436
|
)
|
$
|
(1,067,874
|
)
|
|
Weighted-average
common shares outstanding (Basic)
|
11,936,889
|
10,532,973
|
|||||
Weighted-average
common stock equivalents:
Warrants
|
-0-
|
-0-
|
|||||
|
|||||||
Weighted-average
common shares outstanding (Diluted)
|
11,936,889
|
10,532,973
|
March 31, 2007 | ||||
Fixtures
and equipment
|
$
|
2,153,076
|
||
Vehicles
|
420,675
|
|||
Leasehold
improvements
|
587,969
|
|||
|
3,161,720
|
|||
Less
accumulated depreciation
|
1,257,027
|
|||
NET
FIXED ASSETS
|
$
|
1,904,693
|
Year
Ending
|
Amount
|
|||
2008
|
$
|
1,028,209
|
||
2009
|
1,051,049
|
|||
2010
|
1,073,940
|
|||
2011
|
1,097,516
|
|||
2012
|
1,121,802
|
|||
$
|
5,372,516
|
March 31, 2007 | December 31,2006 | ||||||
Current
|
$
|
(247,100
|
)
|
$
|
(92,700
|
)
|
|
Deferred
|
(6,400
|
)
|
20,600
|
||||
$
|
(253,500
|
)
|
$
|
(72,100
|
)
|
March
31, 2007
|
December
31, 2006
|
||||||
Deferred
tax assets (liabilities) consisted of the following:
|
|||||||
Deferred
tax assets - current and long term:
|
|||||||
Allowance
for doubtful account and net
|
|||||||
operating
loss carryforward
|
$
|
361,000
|
$
|
113,900
|
|||
Deferred
tax liabilities - long term:
|
|||||||
Depreciation
|
(14,200
|
)
|
(20,600
|
)
|
|||
TOTALS
|
$
|
346,800
|
$
|
93,300
|
|
March
31,
2007
|
March
31,
2006
|
Increase
(Decrease)
|
%
Change
|
|||||||||
Total
Revenues
|
$
|
20,905,904
|
$
|
18,389,637
|
$
|
2,516,267
|
13.7
|
%
|
|||||
Cost
of Sales
|
$
|
18,428,636
|
$
|
15,842,217
|
$
|
2,586,419
|
16.3
|
%
|
|||||
Operating
Expenses
|
$
|
2,792,780
|
$
|
3,217,110
|
$
|
(424,330
|
)
|
13.2
|
%
|
||||
Loss
from Operations
|
$
|
(315,512
|
)
|
$
|
(669,690
|
)
|
$
|
(354,178
|
)
|
52.9
|
%
|
||
Other
Income and (Expenses)
|
$
|
(411,721
|
)
|
$
|
(271,462
|
)
|
$
|
140,259
|
51.7
|
%
|
|||
Loss
before Provision (Benefit) for Taxes
|
$
|
(727,233
|
)
|
$
|
(941,152
|
)
|
$
|
(213,919
|
)
|
22.7
|
%
|
||
Loss
before Preferred Dividends
|
$
|
(473,733
|
)
|
$
|
(941,152
|
) |
$
|
(467,419
|
)
|
49.7
|
%
|
Contractual
Obligations
|
Payments
Due By Period
|
|||||||||||||||
|
Total
|
Less
than 1 year
|
1-3
years
|
3-5
Years
|
More
than 5 Years
|
|||||||||||
Long-Term
Debt Obligations
|
$
|
1,449,949
|
$
|
1,449,949
|
--
|
--
|
--
|
|||||||||
Capital
(Finance) Lease Obligations
|
--
|
--
|
--
|
--
|
--
|
|||||||||||
Operating
Lease Obligations
|
$
|
11,838,764
|
$
|
1,028,209
|
$
|
3,222,505
|
$
|
3,390,174
|
$
|
4,197,876
|
||||||
Purchase
Obligations
|
As
Needed
|
|||||||||||||||
Other
Long-Term Liabilities Reflected on the Company's Balance Sheet under
the
GAAP of the Primary Financial Statements
|
--
|
--
|
--
|
--
|
--
|
|||||||||||
Total
|
$
|
13,288,713
|
$
|
2,478,158
|
$
|
3,222,505
|
$
|
3,390,174
|
$
|
4,197,876
|
31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)). |
31.2 | Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)). |
32.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(b)). |
32.2 | Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(b)). |
GIANT MOTORSPORTS, INC. | ||
|
|
|
Date: May 11, 2007 | By: | /s/ Russell A. Haehn |
|
||
Name:
Russell A. Haehn Title:
Chairman of the Board of Directors,
Chief
Executive Officer and Secretary
(Principal
Executive Officer)
|
|
|
|
Date: May 11, 2007 | By: | /s/ Gregory A. Haehn |
|
||
Name:
Gregory A. Haehn
Title:
President, Chief Operating Officer,
Treasurer
and a Director
(Principal
Financial and Accounting
Officer)
|