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 June 30, 2008 (Unaudited) and December
31, 2007 (Audited)
|
1
|
|
|
|
|
Condensed
Consolidated Statements of Operations for the Six and Three Months
Ended June 30, 2008 and 2007 (Unaudited)
|
3
|
|
|
||
Condensed
Consolidated Statements of Cash Flows for the Six Months Ended June
30, 2008 and 2007 (Unaudited)
|
4
|
|
|
||
Notes
to Condensed Consolidated Financial Statements (Unaudited)
|
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
|
June 30, 2008
|
December 31, 2007
|
||||||
Unaudited
|
Audited
|
||||||
CURRENT
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
596,072
|
$
|
919,784
|
|||
Accounts
receivable, net
|
4,678,515
|
3,421,107
|
|||||
Inventories
|
21,058,036
|
25,626,033
|
|||||
Deferred
tax assets
|
11,400
|
22,000
|
|||||
Prepaid
expenses
|
83,692
|
28,069
|
|||||
TOTAL
CURRENT ASSETS
|
26,427,715
|
30,016,993
|
|||||
FIXED
ASSETS, NET
|
1,467,307
|
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
|
$
|
29,629,572
|
$
|
33,418,371
|
June 30, 2008
|
December 31, 2007
|
||||||
Unaudited
|
Audited
|
||||||
CURRENT
LIABILITIES
|
|||||||
Current
portion of long-term debt
|
$
|
592,549
|
$
|
796,510
|
|||
Notes
payable, floor plans
|
19,606,231
|
24,748,401
|
|||||
Note
payable, officer
|
186,527
|
119,551
|
|||||
Accounts
payable, trade
|
1,664,139
|
1,055,932
|
|||||
Accrued
expenses
|
690,235
|
583,102
|
|||||
Accrued
tax provision
|
558,200
|
436,200
|
|||||
Customer
deposits
|
1,385,130
|
834,594
|
|||||
TOTAL
CURRENT LIABILITIES
|
24,683,011
|
28,574,290
|
|||||
DEFERRED
TAX LIABILITIES
|
13,500
|
13,500
|
|||||
LONG-TERM
DEBT, NET
|
314,316
|
428,488
|
|||||
TOTAL
LIABILITIES
|
25,010,827
|
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 June 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 June 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
|
(2,321,010
|
)
|
(2,448,442
|
)
|
|||
TOTAL
STOCKHOLDERS' EQUITY
|
4,618,745
|
4,402,093
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
29,629,572
|
$
|
33,418,371
|
Six months ended
|
Three Months Ended
|
||||||||||||
June 30,
|
June 30,
|
June 30,
|
June 30,
|
||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||
REVENUES
|
|||||||||||||
Sales
|
$
|
52,793,623
|
$
|
54,153,538
|
$
|
33,961,197
|
$
|
34,119,422
|
|||||
Finance,
insurance and extended service revenues
|
1,653,155
|
2,059,509
|
1,198,682
|
1,187,721
|
|||||||||
TOTAL
REVENUES
|
54,446,778
|
56,213,047
|
35,159,879
|
35,307,143
|
|||||||||
COST
OF SALES
|
46,589,073
|
47,528,395
|
29,684,574
|
29,099,759
|
|||||||||
GROSS
PROFIT
|
7,857,705
|
8,684,652
|
5,475,305
|
6,207,384
|
|||||||||
OPERATING
EXPENSES
|
|||||||||||||
Selling
expenses
|
4,451,997
|
4,355,448
|
2,580,654
|
2,565,277
|
|||||||||
General
and administrative expenses
|
2,558,502
|
2,217,770
|
1,480,937
|
1,215,161
|
|||||||||
7,010,499
|
6,573,218
|
4,061,591
|
3,780,438
|
||||||||||
INCOME
FROM OPERATIONS
|
847,206
|
2,111,434
|
1,413,714
|
2,426,946
|
|||||||||
OTHER
INCOME AND (EXPENSE)
|
|||||||||||||
Other
income, net
|
69,952
|
29,639
|
34,359
|
24,933
|
|||||||||
Gain
on sale of asset
|
-
|
184
|
-
|
-
|
|||||||||
Interest
expense, net
|
(547,906
|
)
|
(743,556
|
)
|
(281,040
|
)
|
(326,945
|
)
|
|||||
(477,954
|
)
|
(713,733
|
)
|
(246,681
|
)
|
(302,012
|
)
|
||||||
INCOME
BEFORE PROVISION FOR TAXES
|
369,252
|
1,397,701
|
1,167,033
|
2,124,934
|
|||||||||
PROVISION
FOR INCOME TAXES
|
152,600
|
483,500
|
410,600
|
737,000
|
|||||||||
INCOME
BEFORE PREFERRED DIVIDENDS
|
216,652
|
914,201
|
756,433
|
1,387,934
|
|||||||||
PREFERRED
DIVIDENDS
|
89,220
|
92,703
|
-
|
-
|
|||||||||
NET
INCOME ATTRIBUTABLE TO
|
|||||||||||||
COMMON
SHAREHOLDERS
|
$
|
127,432
|
$
|
821,498
|
$
|
756,433
|
$
|
1,387,934
|
|||||
BASIC
INCOME PER SHARE
|
$
|
0.01
|
$
|
0.07
|
$
|
0.06
|
$
|
0.11
|
|||||
DILUTED
INCOME PER SHARE
|
$
|
0.00
|
$
|
0.03
|
$
|
0.03
|
$
|
0.05
|
|||||
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
|||||||||||||
BASIC
|
12,784,910
|
12,075,770
|
12,948,316
|
12,213,126
|
|||||||||
DILUTED
|
29,414,688
|
28,914,973
|
29,627,890
|
28,471,321
|
2008
|
2007
|
||||||
(Unaudited)
|
(Unaudited)
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||
Net
income
|
$
|
216,652
|
$
|
914,201
|
|||
Adjustments
to reconcile net loss to net cash
|
|||||||
provided
by (used in) operating activities:
|
|||||||
Depreciation
|
216,633
|
220,890
|
|||||
Deferred
federal income tax credit (net)
|
10,600
|
(16,200
|
)
|
||||
Bad
debt expense
|
57,429
|
31,834
|
|||||
(Gain)
on sale of asset
|
-
|
(184
|
)
|
||||
(Increase)
in accounts receivable, net
|
(1,314,837
|
)
|
(827,837
|
)
|
|||
(Increase)
in accounts receivable, employees
|
-
|
(11,277
|
)
|
||||
Decrease
in inventories
|
4,567,997
|
162,913
|
|||||
(Increase)
in prepaid expenses
|
(55,623
|
)
|
(27,469
|
)
|
|||
(Increase)
in deposits - inventory transit
|
-
|
(107,757
|
)
|
||||
Increase
in customer deposits
|
550,536
|
103,841
|
|||||
Increase
in accounts payable trade
|
608,207
|
410,969
|
|||||
(Decrease)
in floor plan liability
|
(5,142,170
|
)
|
(662,572
|
)
|
|||
Increase
(decrease) in accrued income taxes
|
122,000
|
499,700
|
|||||
Increase
in accrued expenses
|
107,133
|
220,811
|
|||||
NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
(55,443
|
)
|
911,863
|
||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||||
Acquisition
of fixed assets
|
(17,112
|
)
|
(29,932
|
)
|
|||
Proceeds
from sale of property and equipment
|
-
|
7,000
|
|||||
(Increase)
in deposits
|
-
|
(3,000
|
)
|
||||
NET
CASH (USED IN) INVESTING ACTIVITIES
|
(17,112
|
)
|
(25,932
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||||
Payments
on long-term debt
|
(318,133
|
)
|
(163,275
|
)
|
|||
Proceeds
from note payable - officer
|
196,976
|
-
|
|||||
Payments
on note payable to officer
|
(130,000
|
)
|
(95,399
|
)
|
|||
NET
CASH (USED IN) FINANCING ACTIVITIES
|
(251,157
|
)
|
(258,674
|
)
|
|||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(323,712
|
)
|
627,257
|
||||
CASH
AND CASH EQUIVALENTS, beginning of Period
|
919,784
|
156,530
|
|||||
CASH
AND CASH EQUIVALENTS, end of Period
|
$
|
596,072
|
$
|
783,787
|
|||
OTHER
SUPPLEMENTARY CASH FLOW INFORMATION
|
|||||||
Debt
incurred for acquistion of vehicles and equipment
|
$
|
-
|
$
|
56,827
|
|||
Income
taxes paid
|
$
|
20,000
|
$
|
-
|
|||
Interest
paid
|
$
|
547,906
|
$
|
743,556
|
|||
Preferred
stock dividends paid in common stock
|
$
|
89,220
|
$
|
92,703
|
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
|
Six Months Ended
|
|||||||
June 30,
|
June 30,
|
||||||
2008
|
2007
|
||||||
Net
income attributed to common shares
|
$
|
127,432
|
$
|
821,498
|
|||
Weighted-average
common shares outstanding (Basic)
|
12,784,910
|
12,075,770
|
|||||
Weighted-average
common stock equivalents:
|
|||||||
Warrants
|
16,629,778
|
16,839,203
|
|||||
Options
|
-
|
-
|
|||||
Weighted-average
common shares outstanding
|
29,414,688
|
28,914,973
|
June 30,
|
||||
2008
|
||||
Fixtures
and equipment
|
$
|
2,149,616
|
||
Vehicles
|
422,917
|
|||
Leasehold
improvements
|
617,065
|
|||
|
3,189,598
|
|||
Less
accumulated depreciation
|
1,722,291
|
|||
NET
FIXED ASSETS
|
$
|
1,467,307
|
Year Ending
|
Amount
|
|||
2009
|
$
|
1,044,120
|
||
2010
|
1,066,803
|
|||
2011
|
1,090,167
|
|||
2012
|
1,114,229
|
|||
2013
|
1,139,018
|
|||
$
|
5,454,337
|
June 30,
|
December 31,
|
||||||
2008
|
2007
|
||||||
Current
|
$
|
(258,000
|
)
|
$
|
492,750
|
||
Deferred
|
0
|
38,250
|
|||||
$
|
(258,000
|
)
|
$
|
531,000
|
June 30,
|
December 31,
|
||||||
2008
|
2007
|
||||||
Deferred
tax assets - current and long term:
|
|||||||
Allowance
for doubtful account and net operating loss carryforward
|
$
|
280,000
|
$
|
22,000
|
|||
Deferred
tax liabilities - long term
|
(13,500
|
)
|
(38,250
|
)
|
|||
TOTALS
|
$
|
(266,500
|
)
|
$
|
(16,250
|
)
|
|
June
30,
2008
|
|
June
30,
2007
|
|
Increase
(Decrease)
|
|
%
Change
|
||||||
Total
Revenues
|
$
|
35,159,897
|
$
|
35,307,143
|
$
|
(147,264
|
)
|
(0.42
|
)%
|
||||
Cost
of Sales
|
$
|
29,684,574
|
$
|
29,099,759
|
$
|
584,815
|
1.99
|
%
|
|||||
Operating
Expenses
|
$
|
4,061,591
|
$
|
3,780,438
|
$
|
281,153
|
7.44
|
%
|
|||||
Income
from Operations
|
$
|
1,413,714
|
$
|
2,426,946
|
$
|
(1,013,232
|
)
|
(41.75
|
)%
|
||||
Other
Income and (Expense)
|
$
|
(246,681
|
)
|
$
|
(302,012
|
)
|
$
|
(55,331
|
)
|
(18.32
|
)%
|
||
Income
before Provision for Income
Taxes
|
$
|
1,167,033
|
$
|
2,124,934
|
$
|
(957,901
|
)
|
(45.08
|
)%
|
||||
Net
Income before Preferred Dividends
|
$
|
756,433
|
$
|
1,387,934
|
$
|
(631,501
|
)
|
(45.45
|
)%
|
|
June
30,
2008
|
|
June
30,
2007
|
|
Increase
(Decrease)
|
|
%
Change
|
||||||
Total
Revenues
|
$
|
54,446,778
|
$
|
56,213,047
|
$
|
(1,766,269
|
)
|
(3.14
|
)%
|
||||
Cost
of Sales
|
$
|
46,589,073
|
$
|
47,528,395
|
$
|
(939,322
|
)
|
(1.98
|
)%
|
||||
Operating
Expenses
|
$
|
7,010,499
|
$
|
6,573,218
|
$
|
437,281
|
6.65
|
%
|
|||||
Income
from Operations
|
$
|
847,206
|
$
|
2,111,434
|
$
|
(1,264,228
|
)
|
(59.86
|
)%
|
||||
Other
Income and (Expense)
|
$
|
(477,954
|
)
|
$
|
(713,733
|
)
|
$
|
(235,779
|
)
|
(33.03
|
)%
|
||
Income
before Provision for Income
Taxes
|
$
|
369,252
|
$
|
1,397,701
|
$
|
(1,028,449
|
)
|
(73.58
|
)%
|
||||
Net
Income before Preferred Dividends
|
$
|
216,652
|
$
|
914,201
|
$
|
(697,549
|
)
|
(76.30
|
)%
|
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)).
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GIANT
MOTORSPORTS, INC.
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Date: August 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)
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Date: August 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)
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