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)
|
Large Accelerated Filer o
|
Accelerated Filer o
|
Non-Accelerated Filer o
|
Smaller Reporting Company x
|
Page No.
|
||
PART
I. FINANCIAL INFORMATION
|
1
|
|
Item 1.
|
Financial
Statements
|
1
|
Condensed
Consolidated Balance Sheets as of September 30, 2008 (Unaudited)
and
December 31, 2007 (Audited)
|
1
|
|
Condensed
Consolidated Statements of Income for the Nine and Three Months Ended
September 30, 2008 and 2007 (Unaudited)
|
3
|
|
Condensed
Consolidated Statements of Cash Flows for the Nine Months Ended September
30, 2008 and 2007 (Unaudited)
|
4
|
|
Notes
to Condensed Consolidated Financial Statements
|
5
|
|
Item 2.
|
Management's
Discussion and Analysis of Financial Conditions and Results of
Operations
|
15
|
Item 3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
23
|
Item 4T.
|
Controls
and Procedures
|
23
|
PART
II. OTHER INFORMATION
|
24
|
|
Item 1.
|
Legal
Proceedings
|
24
|
Item 1A.
|
Risk
Factors
|
24
|
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
24
|
Item 3.
|
Defaults
upon Senior Securities
|
24
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders
|
24
|
Item 5.
|
Other
Information
|
24
|
Item 6.
|
Exhibits
|
24
|
SIGNATURES
|
25
|
September 30, 2008
|
December 31, 2007
|
||||||
Unaudited
|
Audited
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
236,816
|
$
|
919,784
|
|||
Accounts
receivable, net
|
4,380,333
|
3,421,107
|
|||||
Inventories
|
18,095,980
|
25,626,033
|
|||||
Deferred
tax assets
|
6,100
|
22,000
|
|||||
Loan
receivable related party
|
433,680
|
-
|
|||||
Prepaid
expenses
|
41,602
|
28,069
|
|||||
TOTAL
CURRENT ASSETS
|
23,194,511
|
30,016,993
|
|||||
FIXED
ASSETS, NET
|
1,402,961
|
1,666,828
|
|||||
OTHER
ASSETS
|
|||||||
Intangibles,
net
|
1,688,950
|
1,688,950
|
|||||
Deposits
|
45,600
|
45,600
|
|||||
TOTAL
OTHER ASSETS
|
1,734,550
|
1,734,550
|
|||||
TOTAL
ASSETS
|
$
|
26,332,022
|
$
|
33,418,371
|
September 30, 2008
|
December 31, 2007
|
||||||
Unaudited
|
Audited
|
||||||
CURRENT
LIABILITIES
|
|||||||
Current
portion of long-term debt
|
$
|
475,025
|
$
|
796,510
|
|||
Notes
payable, floor plans
|
16,391,370
|
24,748,401
|
|||||
Note
payable, officer
|
257,994
|
119,551
|
|||||
Accounts
payable, trade
|
1,832,647
|
1,055,932
|
|||||
Accrued
expenses
|
627,879
|
583,102
|
|||||
Accrued
tax provision
|
567,200
|
436,200
|
|||||
Customer
deposits
|
1,181,910
|
834,594
|
|||||
TOTAL
CURRENT LIABILITIES
|
21,334,025
|
28,574,290
|
|||||
DEFERRED
TAX LIABILITIES
|
13,500
|
13,500
|
|||||
LONG-TERM
DEBT, NET
|
260,132
|
428,488
|
|||||
TOTAL
LIABILITIES
|
21,607,657
|
29,016,278
|
|||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
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 shares
issued
and outstanding at September 30, 2008 and December 31,
2007.
|
2,450,000
|
2,450,000
|
|||||
Common
stock, $.001 par value, authorized 75,000,000 shares 12,948,316 and
12,452,651 shares issued and outstanding at September 30, 2008 and
December 31, 2007, respectively
|
12,949
|
12,453
|
|||||
Additional
paid-in capital
|
2,141,942
|
2,053,218
|
|||||
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
|
(2,215,390
|
)
|
(2,448,442
|
)
|
|||
TOTAL
STOCKHOLDERS' EQUITY
|
4,724,365
|
4,402,093
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
26,332,022
|
$
|
33,418,371
|
Nine months ended
|
Three Months Ended
|
||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||
REVENUES
|
|||||||||||||
Sales
|
$
|
76,375,145
|
$
|
76,501,606
|
$
|
23,581,522
|
$
|
22,348,068
|
|||||
Finance,
insurance and extended service revenues
|
2,157,250
|
2,810,347
|
504,095
|
750,838
|
|||||||||
TOTAL
REVENUES
|
78,532,395
|
79,311,953
|
24,085,617
|
23,098,906
|
|||||||||
COST
OF SALES
|
67,268,668
|
66,772,340
|
20,679,595
|
19,243,945
|
|||||||||
GROSS
PROFIT
|
11,263,727
|
12,539,613
|
3,406,022
|
3,854,961
|
|||||||||
OPERATING
EXPENSES
|
|||||||||||||
Selling
expenses
|
6,286,961
|
6,396,637
|
1,834,964
|
2,041,189
|
|||||||||
General
and administrative expenses
|
3,692,395
|
3,337,222
|
1,133,893
|
1,119,452
|
|||||||||
9,979,356
|
9,733,859
|
2,968,857
|
3,160,641
|
||||||||||
INCOME
FROM OPERATIONS
|
1,284,371
|
2,805,754
|
437,165
|
694,320
|
|||||||||
OTHER
INCOME AND (EXPENSE)
|
|||||||||||||
Other
income, net
|
74,543
|
77,194
|
4,591
|
47,555
|
|||||||||
Gain
on sale of asset
|
-
|
184
|
-
|
-
|
|||||||||
Interest
expense, net
|
(763,992
|
)
|
(1,004,254
|
)
|
(216,086
|
)
|
(260,698
|
)
|
|||||
(689,449
|
)
|
(926,876
|
)
|
(211,495
|
)
|
(213,143
|
)
|
||||||
INCOME
BEFORE PROVISION (BENEFIT) FOR TAXES
|
594,922
|
1,878,878
|
225,670
|
481,177
|
|||||||||
PROVISION
(BENEFIT) FOR INCOME TAXES
|
186,900
|
414,000
|
34,300
|
(69,500
|
)
|
||||||||
INCOME
BEFORE PREFERRED DIVIDENDS
|
408,022
|
1,464,878
|
191,370
|
550,677
|
|||||||||
PREFERRED
DIVIDENDS
|
174,970
|
185,287
|
85,750
|
92,584
|
|||||||||
NET
INCOME ATTRIBUTABLE TO
|
|||||||||||||
COMMON
SHAREHOLDERS
|
$
|
233,052
|
$
|
1,279,591
|
$
|
105,620
|
$
|
458,093
|
|||||
BASIC
INCOME PER SHARE
|
$
|
0.02
|
$
|
0.11
|
$
|
0.01
|
$
|
0.04
|
|||||
DILUTED
INCOME PER SHARE
|
$
|
0.01
|
$
|
0.04
|
$
|
0.00
|
$
|
0.02
|
|||||
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
|||||||||||||
BASIC
|
12,839,776
|
12,148,380
|
12,948,316
|
12,291,232
|
|||||||||
DILUTED
|
29,519,350
|
28,827,954
|
29,627,890
|
28,549,427
|
2008
|
2007
|
||||||
(Unaudited)
|
(Unaudited)
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||
Net
income
|
$
|
408,022
|
$
|
1,464,878
|
|||
Adjustments
to reconcile net loss to net cash
|
|||||||
provided
by (used in) operating activities:
|
|||||||
Depreciation
|
322,469
|
331,081
|
|||||
Deferred
federal income tax credit (net)
|
15,900
|
(16,200
|
)
|
||||
Bad
debt expense
|
79,460
|
35,261
|
|||||
(Gain)
on sale of asset
|
-
|
(184
|
)
|
||||
(Increase)
decrease in accounts receivable, net
|
(1,038,686
|
)
|
659,777
|
||||
(Increase)
in accounts receivable, employees
|
-
|
(15,436
|
)
|
||||
Decrease
in inventories
|
7,530,053
|
3,373,795
|
|||||
(Increase)
in prepaid expenses
|
(13,533
|
)
|
(18,817
|
)
|
|||
Increase
in customer deposits
|
347,316
|
428,151
|
|||||
Increase
(decrease) in accounts payable trade
|
776,715
|
(736,439
|
)
|
||||
(Decrease)
in floor plan liability
|
(8,357,031
|
)
|
(5,344,565
|
)
|
|||
Increase
in accrued income taxes
|
131,000
|
430,200
|
|||||
Increase
in accrued expenses
|
44,777
|
119,968
|
|||||
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
246,462
|
711,470
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||
Acquisition
of fixed assets
|
(58,602
|
)
|
(45,863
|
)
|
|||
Proceeds
from sale of property and equipment
|
-
|
7,000
|
|||||
(Increase)
in deposits
|
-
|
(4,600
|
)
|
||||
(Increase)
in accounts receivable, affiliates
|
(433,680
|
)
|
-
|
||||
NET
CASH (USED IN) INVESTING ACTIVITIES
|
(492,282
|
)
|
(43,463
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
Payments
on long-term debt
|
(489,841
|
)
|
(286,424
|
)
|
|||
Proceeds
from note payable - officer
|
298,443
|
(182,547
|
)
|
||||
Payments
on note payable - officer
|
(160,000
|
)
|
-
|
||||
Preferred
stock dividends to shareholders
|
(85,750
|
)
|
-
|
||||
NET
CASH (USED IN) FINANCING ACTIVITIES
|
(437,148
|
)
|
(468,971
|
)
|
|||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(682,968
|
)
|
199,036
|
||||
CASH
AND CASH EQUIVALENTS, beginning of Period
|
919,784
|
156,530
|
|||||
CASH
AND CASH EQUIVALENTS, end of Period
|
$
|
236,816
|
$
|
355,566
|
|||
OTHER
SUPPLEMENTARY CASH FLOW INFORMATION
|
|||||||
Debt
incurred for acquisition of vehicles and equipment
|
-
|
$
|
56,827
|
||||
Income
taxes paid
|
$
|
40,000
|
-
|
||||
Interest
paid
|
$
|
758,506
|
$
|
1,004,254
|
|||
Preferred
stock dividends paid in common stock
|
$
|
89,220
|
$
|
185,287
|
Fixtures
and equipment
|
3-7
|
years
|
Vehicles
|
5
|
years
|
Leasehold
Improvements
|
39
|
years
|
Gross Carrying
|
||||
Amount
|
||||
Goodwill
|
$
|
1,588,950
|
||
Licensing
Agreement
|
100,000
|
|||
TOTAL
|
$
|
1,688,950
|
Nine Months Ended
|
|||||||
September 30,
|
September
30,
|
||||||
2008
|
2007
|
||||||
Net
income attributed to common shares
|
$
|
233,052
|
$
|
1.279,591
|
|||
Weighted-average
common shares outstanding (Basic)
|
12,839,776
|
12,148,380
|
|||||
Weighted-average
common stock equivalents:
|
|||||||
Warrants
|
16,679,574
|
16,679,574
|
|||||
Options
|
-
|
-
|
|||||
Weighted-average
common shares outstanding
|
29,519,350
|
28,827,954
|
September 30,
|
||||
2008
|
||||
Fixtures
and equipment
|
$
|
2,165,584
|
||
Vehicles
|
448,439
|
|||
Leasehold
improvements
|
617,065
|
|||
3,231,088
|
||||
Less
accumulated depreciation
|
1,828,127
|
|||
NET
FIXED ASSETS
|
$
|
1,402,961
|
Year Ending
|
Amount
|
|||
2009
|
$
|
1,049,780
|
||
2010
|
1,072,633
|
|||
2011
|
1,096,171
|
|||
2012
|
1,120,415
|
|||
2013
|
1,145,392
|
|||
$
|
5,484,391
|
September 30,
|
December 31,
|
||||||
2008
|
2007
|
||||||
Current
|
$
|
171,000
|
$
|
492,750
|
|||
Deferred
|
15,900
|
38,250
|
|||||
$
|
186,900
|
$
|
531,000
|
September
30,
|
December
31,
|
||||||
2008
|
2007
|
||||||
Deferred
tax assets - current and long term:
|
|||||||
Allowance
for doubtful account and net operating loss carryforward
|
$
|
6,100
|
$
|
22,000
|
|||
Deferred
tax liabilities - long term
|
(13,500
|
)
|
(38,250
|
)
|
|||
TOTALS
|
$
|
(7,400
|
)
|
$
|
(16,250
|
)
|
|
September 30,
2008
|
September 30,
2007
|
Increase
(Decrease)
|
% Change
|
|||||||||
Total
Revenues
|
$
|
24,085,617
|
$
|
23,098,906
|
$
|
986,711
|
4.2
|
%
|
|||||
Cost
of Sales
|
$
|
20,679,595
|
$
|
19,243,945
|
$
|
1,435,650
|
7.5
|
%
|
|||||
Operating
Expenses
|
$
|
2,968,857
|
$
|
3,160,641
|
$
|
(191,784
|
)
|
(6.1
|
)%
|
||||
Income
from Operations
|
$
|
437,165
|
$
|
694,320
|
$
|
(257,155
|
)
|
(37
|
)%
|
||||
Other
Income and (Expense)
|
$
|
(211,495
|
)
|
$
|
(213,143
|
)
|
$
|
(1,648
|
)
|
(0.8
|
)%
|
||
Income
before Provision for Income Taxes
|
$
|
225,670
|
$
|
481,177
|
$
|
(255,507
|
)
|
(53.1
|
)%
|
||||
Net
Income before Preferred Dividends
|
$
|
191,370
|
$
|
550,677
|
$
|
(359,307
|
)
|
(65.3
|
)%
|
September 30,
2008
|
September 30,
2007
|
Increase
(Decrease)
|
% Change
|
||||||||||
Total
Revenues
|
$
|
78,532,395
|
79,311,953
|
(779,558
|
)
|
(0.9
|
)%
|
||||||
Cost
of Sales
|
$
|
67,268,668
|
66,772,340
|
496,328
|
0.7
|
%
|
|||||||
Operating
Expenses
|
$
|
9,979,356
|
9,733,859
|
245,497
|
2.5
|
%
|
|||||||
Income
from Operations
|
$
|
1,284,371
|
2,805,754
|
(1,521,383
|
)
|
(54.2
|
)%
|
||||||
Other
Income and (Expense)
|
$
|
(689,449
|
)
|
(926,876
|
)
|
237,427
|
(25.6
|
)%
|
|||||
Income
before Provision for Income Taxes
|
$
|
594,922
|
1,878,878
|
(1,283,956
|
)
|
(68.3
|
)%
|
||||||
Net
Income before Preferred Dividends
|
$
|
408,022
|
1,464,878
|
(1,056,856
|
)
|
(72.2
|
)%
|
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:
November 14, 2008
|
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:
November 14, 2008
|
By:
|
/s/
Gregory A. Haehn
|
Name:
Gregory A. Haehn
|
||
Title:
President, Chief Operating Officer,
|
||
Treasurer
and a Director
|
||
(Principal
Financial and Accounting
Officer)
|