UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
AMENDMENT NO. 2
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the Fiscal Year ended: December 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _____ to ____
Commission File No. 0-024970
ALL-AMERICAN SPORTPARK, INC.
----------------------------------------------
(Name of Small Business Issuer in its Charter)
NEVADA 88-0203976
-------------------------------- ------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identi-
Incorporation or Organization) fication No.)
6730 South Las Vegas Boulevard, Las Vegas, NV 89119
------------------------------------------------------------
(Address of Principal Executive Offices, Including Zip Code)
Issuer's Telephone Number: (702) 798-7777
Securities Registered Pursuant to Section 12(b) of the Act: None.
Securities Registered Pursuant to Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE
-----------------------------
(Title of each class)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes [X]
No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure 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-
KSB or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $2,168,802.
As of March 29, 2005, 3,400,000 shares of common stock were outstanding, and the
aggregate market value of the common stock of the Registrant held by non-
affiliates was approximately $1,099,000.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
EXPLANATORY NOTE: This amendment is being filed to include a revised report of
the Company's independent registered public accounting firm and to file the
consent of independent registered public accounting firm relating to that report
as an exhibit.
ITEM 7. FINANCIAL STATEMENTS.
The financial statements are set forth on pages F-1 through F-20 hereto.
ITEM 13. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION LOCATION
------ -------------------------- ----------------------------------
2 Agreement for the Purchase Incorporated by reference to
and Sale of Assets, as Exhibit 10 to the Registrant's
amended Current Report on Form 8-K
dated February 26, 1997
3.1 Restated Articles of Incorporated by reference to
Incorporation Exhibit 3.1 to the Registrant's
Form SB-2 Registration Statement
(No. 33-84024)
3.2 Certificate of Amendment Incorporated by reference to
to Articles of Incorporation Exhibit 3.2 to the Registrant's
Form SB-2 Registration Statement
No. 33-84024)
3.3 Revised Bylaws Incorporated by reference to
Exhibit 3.3 to the Registrant's
Form SB-2 Registration Statement
(No. 33-84024)
3.4 Certificate of Amendment Incorporated by reference to
Articles of Incorporation Exhibit 3.4 to the Registrant's
Series A Convertible Annual report on Form 10-KSB for
Preferred the year ended December 31, 1998
3.5 Certificate of Designation Incorporated by reference to
Series B Convertible Exhibit 3.5 to the Registrant's
Preferred Annual Report on Form 10-KSB for
the year ended December 31, 1998
3.6 Certificate of Amendment to Incorporated by reference to
Articles of Incorporation - Exhibit 3.6 to the Registrant's
Name change Annual Report on Form 10-KSB for
the year ended December 31, 1998
10.1 Employment Agreement Incorporated by reference to
with Ronald S. Boreta Exhibit 10.1 to the Registrant's
Form SB-2 Registration Statement
(No. 33-84024)
2
10.2 Stock Option Plan Incorporated by reference to
Exhibit 10.2 to the Registrant's
Form SB-2 Registration Statement
(No. 33-84024)
10.3 Promissory Note to Vaso Incorporated by reference to
Boreta Exhibit 10.11 to the Registrant's
Form SB-2 Registration Statement
(No. 33-84024)
10.4 Lease Agreement between Incorporated by reference to
Urban Land of Nevada and Exhibit 10.17 to the Registrant's
All-American Golf Center, Form SB-2 Registration Statement
LLC (No. 33-84024)
10.5 Operating Agreement for Incorporated by reference to
All-American Golf, LLC, Exhibit 10.18 to the Registrant's
a limited liability Form SB-2 Registration Statement
Company (No. 33-84024)
10.6 Lease and Concession Incorporated by reference to
Agreement with Exhibit 10.20 to the Registrant's
Sportservice Corporation Form SB-2 Registration Statement
(No. 33-84024)
10.7 Promissory Note of All- Incorporated by reference to
American SportPark, Inc. Exhibit 10.23 to the Registrant's
for $3 million payable to Annual Report on Form 10-KSB for
Callaway Golf Company the year ended December 31, 1998
10.8 Guaranty of Note to Incorporated by reference to
Callaway Golf Company Exhibit 10.24 to the
Registrant's Annual Report on Form
10-KSB for the year ended December 31,
1998
10.9 Forbearance Agreement Incorporated by reference to
dated March 18, 1998 Exhibit 10.25 to the Registrant's
with Callaway Golf Annual Report on Form 10-KSB for
Company the year ended December 31, 1998
10.10 Promissory Note to Saint Previously filed
Andrews Golf, Ltd.
10.11 Promissory Note to BE Previously filed
Holdings I, LLC
21 Subsidiaries of the Incorporated by reference to
Registrant Exhibit 21 to the Registrant's
Form SB-2 Registration Statement
(No. 33-84024)
23 Consent of Piercy Bowler Filed herewith electronically
Taylor & Kern
3
31 Certification of Chief Filed herewith electronically
Executive Officer and
Principal Financial
Officer Pursuant to
Section 302 of the
Sarbanes-Oxley Act of 2002
32 Certification of Chief Filed herewith electronically
Executive Officer and
Principal Financial
Officer Pursuant to
Section 18 U.S.C.
Section 1350
4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
All-American SportPark, Inc.
Las Vegas, Nevada
We have audited the accompanying consolidated balance sheets of All-American
SportPark, Inc. and subsidiary (the Company) as of December 31, 2004 and 2003,
and the related consolidated statements of operations, shareholders' equity
deficiency 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). Those standards require that we plan
and perform the audit 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 2004 and 2003, and the results of their operations and their cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1d to
the consolidated financial statements, the Company has had recurring losses from
continuing operations, and has a working capital deficit and substantial
shareholders' equity deficiency at December 31, 2004; these factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1d. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
As discussed, in Note 1e to the consolidated financial statements, the Company's
consolidated balance sheets as of December 31, 2004 and 2003, and the related
consolidated statements of operations, shareholders' equity deficiency and cash
flows for the years then ended have been restated.
PIERCY BOWLER TAYLOR & KERN
/s/ Piercy Bowler Taylor & Kern
Certified Public Accountants & Business Advisors
A Professional Corporation
Las Vegas, Nevada
March 25, 2005, except for Note 1e as to which the date is April 5, 2006
F-1
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
2004 2003
(restated) (restated)
----------- -----------
ASSETS
Current assets:
Cash $ 6,125 $ 17,521
Accounts receivable 902 23,696
Prepaid expenses and other 11,626 16,278
----------- -----------
18,653 57,495
Leasehold improvements and
equipment, net of accumulated
depreciation 1,034,033 808,112
Other assets 1,367 3,872
----------- -----------
$ 1,054,053 $ 869,479
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
(CONTINUED)
2004 2003
(restated) (restated)
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY DEFICIENCY
Current liabilities:
Current portion of notes payable to
related parties $ 385,896 $ 500,000
Current portion of other long-term debt 72,760 66,210
Interest payable to related parties 232,690 230,983
Accounts payable and accrued expenses 199,287 311,720
----------- -----------
890,633 1,108,913
Notes payable to related parties,
net of current portion 3,999,299 3,713,473
Other long-term debt, net of current portion 239,381 312,141
Interest payable to related parties 1,525,044 1,384,720
Due to related parties 344,425 359,917
Deferred income 13,104 1,500
----------- -----------
7,011,886 6,880,664
----------- -----------
Minority interest in subsidiary 411,508 435,527
----------- -----------
Shareholders' equity deficiency:
Series B Convertible Preferred Stock,
$.001 par value, no shares issued
and outstanding - -
Common Stock, $.001 par value, 10,000,000
shares authorized, 3,400,000 shares
issued and outstanding at December 31,
2004 and 2003, respectively 3,400 3,400
Additional paid-in capital 12,689,185 12,019,298
Accumulated deficit (19,061,926) (18,469,410)
----------- -----------
(6,369,341) (6,446,712)
----------- -----------
$ 1,054,053 $ 869,479
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(CONTINUED)
2004 2003
(restated) (restated)
----------- -----------
Revenues $ 2,168,802 $ 2,214,675
Cost of revenues 505,555 342,050
----------- -----------
1,663,247 1,872,625
----------- -----------
Operating expenses:
Selling, general and administrative:
Land lease expense 398,085 397,901
Landscape maintenance 361,172 364,230
Payroll, taxes and benefits 346,553 416,592
Utilities and telephone 304,931 255,693
Other 567,644 612,503
----------- -----------
1,978,385 2,046,919
Depreciation and amortization 71,154 67,905
----------- -----------
2,049,539 2,114,824
----------- -----------
Operating loss (386,292) (242,199)
Interest income 16,157 7,148
Interest expense (499,949) (478,040)
Other income 254,703 883,941
Other expense (1,154) -
----------- -----------
Income (loss) before minority
interest (616,535) 170,850
Minority interest (income) loss of
subsidiary 24,019 (150,417)
----------- -----------
Net income (loss) $ (592,516) $ 20,433
=========== ===========
NET INCOME (LOSS) PER SHARE:
Basic and diluted net income
(loss) per share $ (0.17) $ 0.01
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
------------ ------------ ------------ ------------
Balances,
January 1, 2003
As previously
reported $ 3,400 $ 11,462,882 $(18,250,418) $ (6,784,136)
Adjustment 239,425 (239,425)
------------ ------------ ------------ ------------
As restated $ 3,400 $ 11,702,307 $(18,489,843) $ (6,784,136)
Capital contributions
in the form of
debt extinguishment - 316,991 - 316,991
Net income - - 20,433 20,433
------------ ------------ ------------ ------------
Balances,
December 31,
2003 (restated) 3,400 12,019,298 (18,469,410) (6,446,712)
Capital contributions
in the form of
debt extinguishment - 669,887 - 669,887
Net loss - - (592,516) (592,516)
------------ ------------ ------------ ------------
Balances,
December 31,
2004 (restated) $ 3,400 $ 12,689,185 $(19,061,926) $ (6,369,341)
============ ============ ============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
2004 2003
(restated) (restated)
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (592,516) $ 20,433
Adjustment to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Minority interest (24,019) 150,417
Depreciation and amortization 71,154 67,903
Other income 26,950 -
Bad debts 109,871 -
Increase in operating (assets) and
liabilities:
Accounts receivable 3,919 13,272
Prepaid expenses and other assets 7,157 37,769
Accounts payable and
accrued expenses (112,433) (415,261)
Interest payable to related parties 411,918 434,545
Decrease in deferred income 11,604 (80,908)
----------- -----------
Net cash provided by (used in)
operating activities (86,395) 228,170
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of capital assets (324,025) (74,502)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in due to related parties (36,526) (159,337)
Proceeds of loan from related parties 688,334 100,000
Principal payments on notes payable
related parties (186,574) -
Principal payments on other
notes payable (66,210) (106,918)
----------- -----------
Net cash provided by (used
in) financing activities 399,024 (166,255)
----------- -----------
NET DECREASE IN CASH (11,396) (12,587)
CASH, beginning of year 17,521 30,108
----------- -----------
CASH, end of year $ 6,125 $ 17,521
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 88,030 $ 69,145
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATIONAL STRUCTURE AND BASIS OF PRESENTATION
a. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of All-American SportPark, Inc. ("AASP"),
include the accounts of AASP and its 65%-owned subsidiary, All-American Golf
Center, Inc. ("AAGC"), collectively the "Company". Urban Land of Nevada, Inc.
("ULN") owns the remaining 35% of AAGC. All significant intercompany accounts
and transactions have been eliminated. The company's business operations of the
Callaway Golf Center ("CGC") are included in AAGC.
b. COMPANY BACKGROUND AND CONTINUING BUSINESS ACTIVITIES
Prior to April 5, 2002, the Company had issued and outstanding 3,150,000 shares
of common stock and 250,000 shares of Series B convertible preferred stock.
Sports Entertainment Enterprises, Inc. (a publicly traded company, "SPEA") owned
2,000,000 of the Company's common shares outstanding and all of the Series B
preferred shares that combined represented an approximate 66% ownership in the
Company. On April 5, 2002, SPEA elected to convert its Series B convertible
preferred stock into common stock on a 1 for 1 basis. As such, commencing April
5, 2002, the Company had issued and outstanding 3,400,000 shares of common stock
and no Series B preferred stock.
On May 8, 2002, SPEA completed a spin-off of its AASP common stock holdings to
SPEA shareholders that resulted in SPEA having no ownership interest in the
Company.
The Callaway Golf Center includes the Divine Nine par 3 golf course fully
lighted for night golf, a 110-tee two-tiered driving range which has been ranked
the Number 2 golf practice facility in the United States since it opened in
October 1997, a 20,000 square foot clubhouse which includes the Callaway Golf
fitting center and two tenants: the St. Andrews Golf Shop retail store, and the
Bistro 10 restaurant and bar.
Because our business activities are not structured on the basis of different
services provided, the above activities are reviewed, evaluated and reported as
single reportable segment. Therefore, revenues, from external customers, are not
presented for each service provided. The Company is based in and operates solely
in Las Vegas, Nevada, and does not receive revenues from other geographic areas.
No one customer of the Company comprises more than 10% of the Company's
revenues.
c. CONCENTRATIONS OF RISK
The Company operates the Callaway Golf Center in Las Vegas, Nevada. The probable
level of sustained customer demand for this type of recreational facility is
undetermined. The Company has implemented various strategies to market the
Callaway Golf Center to both tourists and local residents. Should attendance
levels at the Golf Center not meet expectations in the short-term, management
believes existing cash balances would not be sufficient to fund operating
expenses and debt service requirements for at least the next twelve months. The
inability to build attendance to profitable levels beyond a twelve-month period
may require the Company to seek additional debt or equity financing to meet its
obligations as they come due. There is no assurance that the Company would be
successful in securing such debt or equity financing in amounts or with terms
acceptable to the Company.
F-7
d. GOING CONCERN MATTERS
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As shown in the accompanying
consolidated financial statements, for 2004 and 2003, although the Company had
net income (loss) of $(592,516) and $20,433, respectively, as of December 31,
2004, the Company had a working capital deficit of $871,980 and a shareholders'
equity deficiency of $6,369,341.
AASP management believes that its continuing operations may not be sufficient to
fund operating cash needs and debt service requirements over at least the next
12 months. As such, management plans on seeking other sources of funding as
needed, which may include Company officers or directors or other related
parties. In addition, management continues to analyze all operational and
administrative costs of the Company and has made and will continue to make the
necessary cost reductions as appropriate.
Management continues to seek out financing to help fund working capital needs of
the Company. In this regard, management believes that additional borrowings
against the CGC could be arranged although there can be no assurance that the
Company would be successful in securing such financing or with terms acceptable
to the Company.
Among its alternative courses of action, management of the Company may seek out
and pursue a business combination transaction with an existing private business
enterprise that might have a desire to take advantage of the Company's status as
a public corporation. There is no assurance that the Company will acquire a
favorable business opportunity through a business combination. In addition, even
if the Company becomes involved in such a business opportunity, there is no
assurance that it would generate revenues or profits, or that the market price
of the Company's common stock would be increased thereby.
The consolidated financial statements do not include any adjustments relating to
the recoverability of assets and the classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.
e. CORRECTION OF AN ERROR - PRIOR PERIOD ADJUSTMENTS
On April 5, 2006, the President and Principal Financial and Accounting Officer
of the Company concluded that the previously issued consolidated financial
statements contained in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2004, required restatement as a result of accounting errors
contained therein. In particular, it was determined that reported gains from the
extinguishment of debt from related parties of $669,887, $316,991 and $239,425,
should have been treated as capital contributions during the years ended
December 31, 2004, 2003 and 2002, respectively.
The previously reported accumulated deficit at January 1, 2003, and previously
reported net income (loss) for 2003 and 2004, have been retroactively restated
and with offsetting credits to additional paid-in capital for the effects of a
series of related party capital contributions in
F-8
the form of debt forgiveness transactions previously credited to income and now
determined to be in error. Other reclassifications with no effect on net income
(loss) were also made to selling, general and administrative expenses, interest
income and expense, other income and expense, due to related entities, and the
current portion of notes payable. These changes were made to present additional
detailed information and do not have an effect on net income (loss).
The following table provides additional details regarding the changes to the
income statement for 2004:
As previously As restated Change
reported
------------ ------------ ------------
Revenues $ 2,168,802 $ 2,168,802 $ -
Cost of revenues 505,555 505,555 -
------------ ------------ ------------
1,663,247 1,663,247 -
------------ ------------ ------------
Operating expenses:
Selling, general & administrative:
Land lease expense - 398,085 398,085
Landscape maintenance - 361,172 361,172
Payroll, taxes and benefits - 346,553 346,553
Utilities and telephone - 304,931 304,931
Other 1,978,385 567,644 (1,410,741)
------------ ------------ ------------
1,978,385 1,978,385 -
Depreciation and amortization 71,154 71,154 -
------------ ------------ ------------
2,049,539 2,049,539 -
------------ ------------ ------------
Operating loss (386,292) (386,292) -
Interest income - 16,157 16,157
Interest expense (483,792) (499,949) (16,157)
Gain on extinguishment of debt 669,887 - (669,887)
Other income 253,549 254,703 1,154
Other expense - 1,154 (1,154)
------------ ------------ ------------
Income (loss) before
Minority interest 53,352 (616,535) (669,887)
Minority interest (income) loss
of subsidiary 24,019 24,019 -
------------ ------------ ------------
Net income (loss) $ 77,371 $ (592,516) $ (669,887)
============ ============ ============
NET INCOME (LOSS) PER SHARE:
Basic and diluted net income
(loss) per share $ 0.02 $ (0.17) $ (0.19)
============ ============ ============
F-9
The following table provides details regarding the changes to the balance sheet
for 2004:
As previously As restated Change
reported
------------ ------------ ------------
ASSETS
Current assets:
Cash $ 6,125 $ 6,125 $ -
Accounts receivable 902 902 -
Prepaid expenses and other 11,626 11,626 -
------------ ------------ ------------
18,653 18,653 -
Leasehold improvements and
equipment, net of accumulated
depreciation 1,034,033 1,034,033 -
Due from related partities 296,131 - (296,131)
Other assets 1,367 1,367 -
------------ ------------ ------------
$ 1,350,184 $ 1,054,053 $ (296,131)
============ ============ ============
LIABILITY AND SHAREHOLDERS' EQUITY DEFICIENCY
Current liabilities
Current portion of notes
payable to related parties $ 350,000 $ 385,896 $ 35,896
Current portion of other
long-term debt 108,656 72,760 (35,896)
Interest payable to related
parties 232,690 232,690 -
Accounts payable and
accrued expenses 199,287 199,287 -
------------ ------------ ------------
890,633 890,633 -
Notes payable to related parties,
net of current portion 3,999,299 3,999,299 -
Other long-term debt, net of
current portion 239,381 239,381 -
Interest payable to related parties 1,525,044 1,525,044 -
Due to related parties 640,556 344,425 296,131
Deferred income 13,104 13,104 -
------------ ------------ ------------
7,308,017 7,011,866 296,131
------------ ------------ ------------
Minority interest in subsidiary 411,508 411,508 -
------------ ------------ ------------
F-10
Shareholders' equity deficiency:
Series B Convertible Preferred Stock,
$.001 par value, no shares issued
and outstanding - - -
Common Stock, $.001 par value
10,000,000 shares authorized,
3,400,000 shares issued and
outstanding at December 31, 2004 3,400 3,400 -
Additional paid-in capital 11,462,882 12,689,185 1,226,303
Accumulated deficit (17,835,623) (19,061,926) (1,226,303)
------------ ------------ ------------
(6,369,341) (6,369,341) -
------------ ------------ ------------
$ 1,350,184 $ 1,054,053 $ 296,131
============ ============ ============
The following table provides additional details regarding the changes to the
income statement for 2003:
As previously As restated Change
reported
------------ ------------ ------------
Revenues $ 2,218,617 $ 2,214,675 $ (3,942)
Cost of revenues 347,301 342,050 (5,251)
------------ ------------ ------------
1,871,316 1,872,625 1,309
------------ ------------ ------------
Operating expenses:
Selling, general & administrative:
Land lease expense - 397,901 397,901
Landscape maintenance - 364,230 364,230
Payroll, taxes and benefits - 416,592 416,592
Utilities and telephone - 255,693 255,693
Other 2,041,668 612,503 (1,429,165)
------------ ------------ ------------
2,041,668 2,046,919 5,251
Depreciation and amortization 67,903 67,905 2
------------ ------------ ------------
2,109,571 2,114,824 5,253
------------ ------------ ------------
Operating loss (238,255) (242,199) (3,944)
Interest income - 7,148 7,148
Interest expense (470,895) (478,040) (7,145)
Gain on extinguishment of debt 316,991 - (316,991)
Other income 880,000 883,941 3,941
------------ ------------ ------------
Income (loss) before
Minority interest 487,841 170,850 (316,991)
Minority interest (income) loss
of subsidiary (150,417) (150,417) -
------------ ------------ ------------
Net income (loss) $ 337,424 $ 20,433 $ (316,991)
============ ============ ============
NET INCOME (LOSS) PER SHARE:
Basic and diluted net income
(loss) per share $ 0.10 $ 0.01 $ (0.09)
============ ============ ============
F-11
The following table provides details regarding the changes to the balance sheet
for 2003:
As previously As restated Change
reported
------------ ------------ ------------
ASSETS
Current assets:
Cash $ 17,521 $ 17,521 $ -
Accounts receivable 23,696 23,696 -
Prepaid expenses and other 16,278 16,278 -
------------ ------------ ------------
57,495 57,495 -
Leasehold improvements and
equipment, net of accumulated
depreciation 808,112 808,112 -
Due from related parties 242,596 - (242,596)
Other assets 3,872 3,872 -
------------ ------------ ------------
$ 1,112,075 $ 869,479 $ (242,596)
============ ============ ============
LIABILITY AND SHAREHOLDERS' EQUITY DEFICIENCY
Current liabilities
Current portion of notes
payable to related parties $ 500,000 $ 500,000 $ -
Current portion of other
long-term debt 66,210 66,210 -
Interest payable to related
parties 230,983 230,983 -
Accounts payable and
accrued expenses 311,720 311,720 -
------------ ------------ ------------
1,108,913 1,108,913 -
Notes payable to related parties,
net of current portion 3,713,473 3,713,473 -
Other long-term debt, net of
current portion 312,141 312,141 -
Interest payable to related parties 1,384,720 1,384,720 -
Due to related parties 602,513 359,917 242,596
Deferred income 1,500 1,500 -
------------ ------------ ------------
7,123,260 6,880,664 242,596
------------ ------------ ------------
Minority interest in subsidiary 435,527 435,527 -
------------ ------------ ------------
Shareholders' equity deficiency:
Series B Convertible Preferred Stock,
$.001 par value, no shares issued
and outstanding - - -
Common Stock, $.001 par value
10,000,000 shares authorized,
3,400,000 shares issued and
outstanding at December 31, 2004 3,400 3,400 -
Additional paid-in capital 11,462,882 12,019,298 556,416
Accumulated deficit (17,912,994) (18,469,410) (556,416)
------------ ------------ ------------
(6,446,712) (6,369,341) -
------------ ------------ ------------
$ 1,112,075 $ 869,479 $ 242,596
============ ============ ============
F-12
f. ESTIMATES USED IN THE PREPARATION OF FINANCIAL STATEMENTS
Preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that may require revision in future periods.
g. RECLASSIFICATIONS
Certain minor reclassifications have been made to prior year amounts to conform
to the current year presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. STOCK BASED COMPENSATION
The Company has elected to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB25) and related Interpretations in
accounting for its employee stock options. Under APB 25, because the exercise
price of the Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.
In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS
123 (Revised 2004), Share-Based Payment (SFAS 123R). SFAS 123R requires that
compensation cost related to share-based employee compensation transactions be
recognized in the financial statements. Share-based employee compensation
transactions within the scope of SFAS 123R include stock options, restricted
stock plans, performance-based awards, stock appreciation rights and employee
share purchase plans. The provisions of SFAS 123R are effective as of the first
interim period that begins after June 15, 2005. Accordingly, we will implement
the revised standard in the third quarter of fiscal year 2005.
b. LEASEHOLD IMPROVEMENTS AND EQUIPMENT
Leasehold improvements and equipment (Note 5) are stated at cost. Depreciation
and amortization is provided for on a straight-line basis over the lesser of the
lease term (including renewal periods, when the Company as both the intent and
ability to extend the lease) or the following estimated useful lives of the
assets:
Furniture and equipment 3-10 years
Leasehold improvements 15 years
c. ADVERTISING
The Company expenses advertising costs as incurred. Advertising costs charged to
continuing operations amounted to $ 92,885 and $64,337 in 2004 and 2003,
respectively.
d. REVENUES
Lease and sponsorship revenues are recognized as appropriate when earned.
Substantially all other revenues including golf course green fees, driving range
ball rentals and golf cart rentals, are recognized when received as they are
payments for services provided on the same day.
F-13
e. COST OF REVENUES
Cost of revenues is primarily comprised of golf course and driving range
employee payroll and benefits, operating supplies (e.g., driving range golf
balls and golf course score-cards, etc.), and credit card/check processing fees.
f. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses consist principally of management,
accounting and other administrative employee payroll and benefits, land lease
expense, utilities, landscape maintenance costs, and other expenses (e.g.,
office supplies, marketing/advertising, and professional fees, etc.).
g. IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets, including property and equipment, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
the long-lived asset may not be recoverable. If the long-lived asset or group of
assets is considered to be impaired, an impairment charge is recognized for the
amount by which the carrying amount of the asset or group of assets exceeds its
fair value. Long-lived assets to be disposed of are reported at the lower of the
carrying amount or fair value less cost to sell. Long-lived assets were
evaluated for possible impairment and determined not to be impaired as of
December 31, 2004.
h. LEGAL DEFENSE COSTS
The Company does not accrue for estimated future legal and related defense
costs, if any, to be incurred in connection with outstanding or threatened
litigation and other disputed matters but rather, records such as period costs
when the services are rendered.
3. INCOME PER SHARE
Basic and diluted income per share is computed by dividing reported net income
by the weighted-average number of common and common equivalent shares
outstanding during the period. The weighted-average number of common and common
equivalent shares used in the calculation of basic and diluted income per share
was 3,400,000 in both 2004 and 2003.
4. RELATED PARTY TRANSACTIONS
The Company provides administrative/accounting support for (a) the Company
Chairman's two wholly-owned golf retail stores in Las Vegas, Nevada, (the
"Paradise Store" and "Rainbow Store"), (b) two golf retail stores, both named
Saint Andrews Golf Shop ("SAGS"), owned by the Company's President and his
brother, and (c) Sports Entertainment Enterprises, Inc. until February 2005.
Administrative/accounting payroll and employee benefits are allocated based on
an annual review the personnel time expended for each entity. Amounts allocated
to these related parties by the Company approximated $92,500 and $116,000 in
2004 and 2003, respectively.
F-14
The Company has various notes payable to the Paradise Store. These notes are due
in varying amounts on December 1 each year through year 2008. The notes bear
interest at 10% per annum and are secured by the assets of the Company. The note
payable and accrued interest payable balances at December 31, 2004, were
$3,713,473 and $1,756,068, respectively. The note payable and accrued interest
payable balances at December 31, 2003, were $4,113,473 and $1,614,607,
respectively. In December 2004 and 2003, Vaso Boreta, the Company's Chairman and
owner of the Paradise Store, caused the portion of the notes related interest
then currently due totaling $669,887 and $316,991, respectively, to be forgiven
and also agreed to cause execution of a waiver of the rights to accelerate the
maturities of the remaining notes due to these defaults.
In 2003, SAGS secured financing on behalf of AAGC to construct a pylon sign at
the entrance of the golf center facility. The total financing for the sign was
approximately $170,000. SAGS pays the debt service on the financing and bills
AAGC for the amount paid. The financing is for five years with monthly payments
of approximately $3,600.
In 2003, SAGS loaned the Company a total of $100,000 to help fund operations.
The loans were due in 2004, with interest accruing at ten percent. In 2004, an
additional note was issued to SAGS for approximately $553,000, which includes
the refinancing of the notes issued in 2003, and interest accrues at 10% and is
payable only out of available cash flows, if any.
In 2004, a company owned by the Chairman of the Board, advanced the Company
$100,000 to fund operations. This note accrues interest at 10% and is also
payable only out of available cash flows, if any.
Aggregate maturities of related party notes payable for the five years
subsequent to December 31, 2004 are as follows:
2005 $ 385,896
2006 258,528
2007 151,353
2008 3,037,446
2009 -
Thereafter 551,972
------------
$ 4,385,195
============
At December 31, 2004, the Company has no loans or other obligations with
restrictive debt or similar covenants.
5. LEASEHOLD IMPROVEMENTS AND EQUIPMENT
Leasehold improvements and equipment included the following as of December 31:
F-15
2004 2003
----------------- -----------------
Building $ 252,866 $ 252,866
Land Improvements 450,390 338,637
Furniture and equipment 243,108 287,994
Signs 208,688 52,691
Leasehold improvements 326,400 324,414
Other 13,789 13,789
----------------- -----------------
1,495,241 1,270,391
Less accumulated
depreciation and
amortization (461,208) (462,279)
----------------- -----------------
$ 1,034,033 $ 808,112
================= =================
6. OTHER LONG-TERM DEBT
The Company has outstanding a promissory note payable to an unrelated party, due
in quarterly installments of $25,000 through September 2008 without interest.
This note has been discounted to reflect its present value.
Aggregate maturities of this obligation for the five years subsequent to
December 31, 2003, are as follows:
2005 72,760
2006 79,957
2007 87,801
2008 71,623
-----------
Balance, net of
unamortized discount
of $53,839 $ 312,141
===========
7. LEASES
The land underlying the Callaway Golf Center is leased under an operating lease
that expires in 2012 and has two five-year renewal options. Also, the lease has
a provision for contingent rent to be paid by AAGC upon reaching certain levels
of gross revenues.
The Company is obligated under various other non-cancelable operating leases for
equipment that expire over the next two years.
At December 31, 2004, minimum future lease payments under non-cancelable
operating leases are as follows:
2005 $ 462,602
2006 412,503
2007 399,892
2008 398,077
2009 398,077
Thereafter 696,635
-----------
Total $ 2,767,786
===========
F-16
Total rent expense for operating leases was $440,448 for 2004 and $432,613 for
2003.
8. INCOME TAXES
Income tax expense (benefit) consist of the following:
2004 2003
----------- -----------
Current $ 29,253 $ 73,013
Deferred (29,253) (73,013)
----------- -----------
$ - $ -
=========== ===========
The components of the deferred tax asset (liability) consisted of the following
at December 31:
2004 2003
----------- -----------
Deferred tax liabilities:
Temporary differences related to:
Depreciation $ (239,316) $ (209,088)
Minority interest (139,913) (87,209)
Deferred tax assets:
Net operating loss carryforward 5,788,234 5,733,181
Related party interest 597,063 548,966
Deferred income 4,455 510
Other 2,107 3,016
----------- -----------
Net deferred tax asset before
valuation allowance 6,012,630 5,989,376
Valuation allowance (6,012,630) (5,989,376)
----------- -----------
Net deferred tax asset $ - $ -
=========== ===========
As of December 31, 2004, the Company has available for income tax purposes
approximately $17 million in federal net operating loss carryforwards, which may
be available to offset future taxable income. These loss carryforwards expire in
2018 through 2024. A one hundred percent valuation allowance has been
established against the net deferred tax asset since it appears more likely than
not that it will not be realized.
The provision (benefit) for income taxes attributable to income (loss) from
continuing operations does not differ materially from the amount computed at the
federal income tax statutory rate.
9. CAPITAL STOCK, STOCK OPTIONS, AND INCENTIVES
a. STOCK OPTION PLANS
The Company's Board of Directors adopted an incentive stock option plan (the
"1994 Plan") on August 8, 1994; total shares of the Company's common stock
eligible for grant are 700,000.
F-17
In April 1996, 325,000 options were granted to the Company's President at an
exercise price of $3.06, the fair market value on the grant date. These options
expired unexercised in April 2001. Because of this expiration, 325,000 new
options were granted to the Company's President at an exercise price of $0.055,
the market value on the date of grant; these options expire April 30, 2006.
In October 1999, 50,000 options were granted at an exercise price of $0.65625
per share, the closing market price on the date of grant. These options expire
October 28, 2004. In April 2000, 50,000 options were granted at an exercise
price of $0.8125 per share, the closing market price on the date of grant. These
options expire April 24, 2005.
1998 Plan. In 1998, the Board of Directors and shareholders approved the 1998
stock incentive plan (the "1998 Plan"). The purpose of the Plan is to advance
the interests of the Company and its subsidiaries by enhancing their ability to
attract and retain employees and other persons or entities who are in a position
to make significant contributions to the success of the Company and its
subsidiaries, through ownership of shares of stock in the Company and cash
incentives. The Plan is intended to accomplish these goals by enabling the
Company to grant awards in the form of options, stock appreciation rights,
restricted stock or unrestricted stock awards, deferred stock awards, or
performance awards (in cash or stock), other stock-based awards, or combinations
thereof, all as more fully described below.
Pursuant to the 1998 Plan, on February 16, 1999, the Board of Directors of the
Company approved an award to the President of the Company, stock appreciation
rights ("SARs") as to 125,000 shares independent of any stock option under the
Company's 1998 Plan. The base value of the SARs is $6 per share, however no SAR
may be exercised unless and until the market price of the Company's Common Stock
equals or exceeds $10 per share. Amounts to be paid under this agreement are
solely in cash and are not to exceed $500,000. The SARs expire on October 26,
2008.
In 1998, the landlord of the property underlying the CGC was granted 75,000
stock options. These options are exercisable at $4.00 per share through the year
2008. These options vested as to 10,000 shares upon grant, and vest as to 10,000
shares per year until fully vested.
Urban Land has a 35% ownership interest in the Company's subsidiary, AAGC, which
owns and operates the CGC. In connection with the issuance of the 35% interest
in AAGC to Urban Land, the Company and Urban Land entered into a Stockholders
Agreement that provides certain restrictions and rights on the AAGC shares
issued to Urban Land. Urban Land is permitted to designate a non-voting observer
of meetings of AAGC's board of directors. In the event of an uncured default of
the CGC land lease, so long as Urban Land holds at least a 25% interest in AAGC,
Urban Land will have the right to select one director of AAGC. As to matters
other than the election of Directors, Urban Land has agreed to vote its shares
of AAGC as designated by the Company.
There are no unusual rights or privileges related to the ownership of the
Company's common stock.
F-18
Pro forma information regarding net income (loss) and earnings (loss) per share
has been determined as if the Company had accounted for its employee stock
options under the fair value method of Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation. The fair value for
these options was estimated at the date of grant using a Black-Scholes option
pricing model with the following assumptions for 2003: risk-free interest rate
of 4.20; dividend yield of 0.0%; volatility factor of the expected market price
of the Company's common stock of 3.95; and a weighted-average expected life of
2.43 years. The assumptions for 2002 were the same except: volatility factor of
the expected market price of the Company's common stock of 2.26, and a weighted
average expected life of 3.43 years.
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows:
YEARS ENDED DECEMBER 31,
2004 2003
------------ ------------
Net income (loss)
As reported $ (592,516) $ 20,433
Pro forma (592,516) 20,433
Basic and diluted net income (loss)
per share
As reported (0.17) 0.01
Pro forma (0.17) 0.01
A summary of changes in the status of the Company's outstanding stock options
for the years ended December 31, 2004 and 2003 is presented below:
2004 2003
----------------------- ----------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
----------------------- ----------------------
Beginning of year 500,000 $ 0.80 500,000 $ 0.78
Granted - - - -
Exercised - - - -
Forfeited - - - -
Expired (50,000) - - -
----------------------- ----------------------
End of year 450,000 $ 0.80 500,000 $ 0.78
======================= ======================
Exercisable at
end of year 495,000 $ 0.76 485,000 $ 0.78
======================= ======================
Weighted average fair
value of options
granted $ 0.05 $ 0.05
======================= ======================
F-19
The following table summarizes information about stock options outstanding at
December 31, 2004:
Options Outstanding Options Exercisable
------------------------------------- ----------------------
Weighted Weighted
Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Price Outstanding Life (Years) Price Exercisable Price
-------- ----------- ------------ -------- ----------- --------
$0.055 325,000 1.33 325,000
$0.8125 50,000 0.25 50,000
$4.00 75,000 4.00 70,000
----------- -----------
450,000 $ 0.80 445,000 $ 0.76
=========== ===========
10. COMMITMENTS AND CONTINGENCIES
The Company has employment agreements with its President, as well as other key
employees who require the payment of fixed and incentive based compensation.
The Company has a lease and concession agreement with Sportservice Corporation
("Sportservice"), an unrelated party, that provides SportService with the
exclusive right to prepare and sell all food, beverages (alcoholic and
non-alcoholic), candy and other refreshments, during the term of the agreement
ending in 2006. Sportservice pays rent based on a percentage of gross sales.
In March 2003, the Company reached a settlement with the general contractor and
other entities responsible for building the CGC wherein the Company received
$880,000. In connection with the settlement described above, a subcontractor
involved in that matter elected not to settle and subsequently, the Company
prevailed in a judgment against said subcontractor in the amount of $660,000.
The subcontractor has appealed and has since been required to post a bond in
excess of $1 million.
The Company is involved in certain litigation as both plaintiff and defendant
related to its business activities. Management, based upon consultation with
legal counsel, does not believe that the resolution of these matters will have a
materially adverse effect upon the Company.
F-20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed
on its behalf by the undersigned thereunder duly authorized.
ALL-AMERICAN SPORTPARK, INC.
Dated: June 15, 2006 By: /s/ Ronald S. Boreta
Ronald S. Boreta, Chief Executive
Officer (Principal Executive Officer)
and Principal Financial and
Accounting Officer
5