U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2006
Commission File Number: 0-24970
ALL-AMERICAN SPORTPARK, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 88-0203976
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(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
6730 South Las Vegas Boulevard, Las Vegas, Nevada 89119
----------------------------------------------------------
(Address of principal executive offices including zip code)
(702) 798-7777
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 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 [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of June 30, 2006 3,400,000 shares of common stock were outstanding.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
ALL-AMERICAN SPORTPARK, INC.
FORM 10-QSB
INDEX
Page Number
PART I: FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets
June 30, 2006 (unaudited) and December 31, 2005...... 3
Consolidated Statements of Operations
Three Months Ended June 30, 2006 and 2005 (unaudited) 4
Consolidated Statements of Operations
Six Months Ended June 30, 2006 and 2005 (unaudited).. 5
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2006 and 2005 (unaudited).. 6
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis or
Plan of Operation ................................... 9
Item 3. Controls and Procedures ............................ 12
PART II: OTHER INFORMATION
Item 1. Legal Proceedings .................................. 13
Item 2. Changes in Securities .............................. 14
Item 3. Defaults Upon Senior Securities .................... 14
Item 4. Submission of Matters to a Vote of Security
Holders ............................................ 14
Item 5. Other Information .................................. 14
Item 6. Exhibits and Reports on Form 8-K ................... 14
SIGNATURES .................................................. 14
2
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2006 AND DECEMBER 31, 2005
ASSETS
2006 2005
------------ ------------
(Unaudited)
Current assets:
Cash $ 34,682 $ 14,164
Accounts receivable 382 2,664
Prepaid expenses and other 9,829 27,363
------------ ------------
Total current assets 44,893 44,191
Leasehold improvements and equipment, net 934,053 971,010
Other assets 125,000 125,000
------------ ------------
Total assets $ 1,103,946 1,140,201
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY DEFICIENCY
Current liabilities:
Current portion of notes payable to
related entities $ 1,410,156 $ 1,410,156
Current portion of other long-term debt 83,819 79,944
Interest payable to related entities 423,246 206,035
Accounts payable and accrued expenses 288,216 223,335
------------ ------------
Total current liabilities 2,205,437 1,919,470
Notes payable to related entities, net of
current portion 3,766,998 3,776,441
Interest payable to related entities 1,831,914 1,809,790
Due to related entities 850,096 720,206
Long-term debt, net of current portion 116,526 159,437
------------ ------------
Total liabilities 8,770,971 8,385,344
------------ ------------
Minority interest in subsidiary 100,363 160,089
------------ ------------
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 June 30, 2006,
and December 31, 2005, respectively 3,400 3,400
Additional paid-in capital 13,306,875 13,306,875
Accumulated deficit (21,077,663) (20,715,507)
------------ ------------
Total shareholders' equity deficiency (7,767,388) (7,405,232)
------------ ------------
Total liabilities and shareholders'
equity deficiency $ 1,103,946 $ 1,140,201
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
3
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(UNAUDITED)
2006 2005
---------- ----------
Revenues $ 654,450 $ 638,173
Cost of revenues, excluding depreciation 162,850 141,181
---------- ----------
Gross profit 491,600 496,992
---------- ----------
Operating expenses:
Selling, general and administrative 571,295 522,483
Depreciation and amortization 18,379 16,129
---------- ----------
Total operating expenses 589,674 538,612
---------- ----------
Operating loss (98,074) (41,620)
Other income (expense):
Interest income
Interest expense ((124,696) ((122,363)
Other income -- 1,000
---------- ----------
Loss before minority
interest (222,770) (162,983)
Minority interest 31,080 16,764
---------- ----------
Net(loss) $ (191,690) $ (146,219)
========== ==========
NET LOSS PER SHARE:
Basic and diluted net loss
per share $ (0.06) $ (0.04)
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
4
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(UNAUDITED)
2006 2005
----------- -----------
Revenues $ 1,200,855 $ 1,180,672
Cost of revenues, excluding depreciation 307,192 252,092
----------- -----------
Gross profit 893,663 928,580
----------- -----------
Operating expenses:
Selling, general and administrative 1,028,268 960,584
Depreciation and amortization 36,957 32,208
----------- -----------
Total operating expenses 1,065,225 992,792
----------- -----------
Operating loss (171,562) (64,212)
Other income (expense):
Interest income -- 2,256
Interest expense (250,317) (243,757)
Other income -- 8,394
Other expense -- (773)
----------- -----------
Loss before minority
interest (421,878) (298,092)
Minority interest 59,723 17,775
----------- -----------
Net loss (loss) $ (362,156) $ (280,317)
=========== ===========
NET LOSS PER SHARE:
Basic and diluted net loss
per share $ (0.11) $ (0.08)
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
5
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(UNAUDITED)
2006 2005
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (362,156) $ (280,317)
Adjustment to reconcile net (loss)
to net cash provided by
operating activities:
Decrease in minority interest (59,725) (17,776)
Depreciation and amortization 36,957 32,208
Changes in operating assets and
liabilities:
(Increase) decrease in accounts 2,282 (681)
receivable
(Increase) decrease prepaid expenses
and other 17,534 (132,265)
Increase in accounts payable and
accrued expenses 64,880 21,320
Increase in interest payable to
related entities 239,337 227,861
Decrease in deferred expense -- (13,104)
---------- ----------
Net cash used in
operating activities (60,891) (162,754)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of capital assets -- --
Capital asset expenditures -- --
---------- ----------
Net cash used in
investing activities -- --
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable to
related entities -- 55,000
Principal payments on notes payable
to related entities (9,444) (14,506)
Principal payments on other notes payable (39,037) (35,522)
Increase (decrease) in due to
related entities 129,890 225,172
---------- ----------
Net cash provided by financing
activities 81,409 230,144
---------- ----------
NET (DECREASE) INCREASE IN CASH 20,518 67,390
CASH, beginning of period 14,164 6,125
---------- ----------
CASH, end of period $ 34,682 $ 73,515
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 10,963 $ 15,717
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
6
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of All-American SportPark,
Inc. ("AASP" or the "Company"), include the accounts of AASP and its 65% owned
subsidiary, All-American Golf Center, Inc. ("AAGC"), (collectively the
"Company"). All significant intercompany accounts and transactions have been
eliminated. The operations of the Callaway Golf Center ("CGC") are included in
AAGC.
The accompanying interim unaudited consolidated financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission relating to interim financial statements. Accordingly,
certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted. In the opinion of
management, all necessary adjustments have been made to present fairly, in all
material respects, the financial position, results of operations and cash flows
of the Company at June 30, 2006 and for all prior periods presented.
The 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.
These consolidated financial statements should be read in conjunction with the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2005,
from which the December 31, 2005, audited balance sheet information was derived.
2. INCOME (LOSS) PER SHARE AND SHAREHOLDER'S EQUITY DEFICIENCY
Basic and diluted income (loss) per share is computed by dividing the reported
net income or loss by the weighted average number of common shares outstanding
during the period. The weighted-average number of common shares used in the
calculation of basic and diluted loss per share were 3,400,000 for the
three-month and six-month periods ended June 30, 2006 and 2005.
3. 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) three golf retail stores, two are
named Saint Andrews Golf Shop ("SAGS")and one is a Las Vegas Golf and Tennis,
owned by the Company's President and his brother, and 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 $22,404 and $25,000 for the six-months ended June 30, 2006
and 2005, respectively. There were no additional debt issues made to the company
7
from related entities for the period. Related party interest expense was
$119,453 and $239,353 for the three and six months periods ending June 30, 2006
respectively.
4. 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. Historically, with some
exceptions, the Company has incurred net losses. As of June 30, 2006, the
Company had a working capital deficit of $2,160,544 and a shareholders' equity
deficiency of $7,767,388. CGC has generated positive cash flow before corporate
overhead that is in place to support of the CGC and public company operations
and interest expense. However, this positive cash flow has diminished in 2006
and there is no assurance that it will continue.
Management believes that its operations, and existing cash balances as of June
30, 2006 may not be sufficient to fund operating cash needs and debt service
requirements over the next 12 months. Management continues to seek other sources
of funding, 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.
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.
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.
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.
5. RECLASSIFCATIONS
Certain prior period amounts have been reclassified to conform to the current
period presentation.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following information should be read in conjunction with the Company's
consolidated financial statements and related notes included in this report.
OVERVIEW
The Company's operations consist of the management and operation of the Callaway
Golf Center (CGC). The CGC includes a par 3 golf course fully lighted for night
golf, a 110-tee two-tiered driving range, and a 20,000 square foot clubhouse
which includes the Callaway Golf fitting center. Also located within the
clubhouse are two sub-leased spaces. The first is occupied by the Saint Andrews
Golf Shop retail store. The other space was for a restaurant and bar that was
unoccupied until May 31, 2005. A lease was signed with a new tenant on January
25, 2006 and the restaurant re-opened in February 2006. The lease is for one
year and there is an option to extend the lease after one year for an additional
four-year term through 2011.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2006 AS COMPARED TO THE
THREE MONTHS ENDED JUNE 30, 2005.
REVENUES. Revenues of the Callaway Golf Center ("CGC") for the three months
ended June 30, 2006 increased $16,277 or 2.6% to $654,450 from $638,173 reported
for the three months ended June 30, 2005. The increase in revenues is attributed
to increased golf lesson fees, cart rentals and golf league fees. The golf
lesson fees increased by $20,752 to $80,550 in 2006 compared to $59,798 in 2005
because of an upgrade in the golf pros and supervision. Golf cart rental revenue
increased by $9,325 to $60,895 in 2006 from $51,570 in 2005 due to a increase in
rental rates. The CGC marketed to golf leagues in 2006 and was able to attract
several golf leagues. This resulted in an additional $8,981 in golf league
revenues for the three months ended June 30, 2006. There was a decrease of
$20,928 in golf course green fees because of unusually hot weather that occurred
starting in May 2006. Golf course green fees decreased to $192,936 in 2006 from
$213,864 in 2005. This decrease is due to unreasonably hot weather that resulted
in a 25% decrease in green fees during mid-day hours in order to attract
visitors to the golf course.
COST OF REVENUES. Cost of revenues consists mainly of commissions paid to the
golf instructors, the payroll and benefits expenses of ACG staff, and operating
supplies. Cost of revenues increased by $21,669 or 15.4% to $162,850 from
$141,181 for the same period in the prior year. Commissions paid to golf
instructors increased $13,895 to $51,890 from $37,995 due to higher golf lesson
fees above and addition of another instructor. The payroll and payroll taxes at
the activities counter increased by $7,555 to $21,442 in 2006 from $13,887 in
2005 compared to last year due to the addition of assistant manager and addition
of mid-shift cashier in the second quarter of 2006.
SELLING, GENERAL AND ADMINISTRATIVE. These expenses consist principally of
landscaping services and professional fees, ground lease, utilities, insurance
and administrative payroll. These expenses increased $48,812 or 9.3% to $571,295
from $522,483 for the three months ending June 30, 2006 and 2005 respectively.
Audit and tax expense increased by $48,917 to $55,417 from $6,500 in the prior
year. The increased expenses were related to the responding to SEC comment
letters and a change of Company's public accounting firm that occurred in April
2006.
9
Lease expense increased by $9,952 to $109,471 in 2006 from $99,519 in 2005 for
the land on which that the CGC is located. The lease contains provision to
periodically raise the minimum rent by 10% and the rent was increased in
September 2005. The Company is protesting the rent increase and the matter is
currently in litigation. These increases were offset by a decrease in
landscaping services of $11,520 to $92,795 from $104,315 for the same period
last year due to the six months in 2005 reflecting a settlement with the
Company's prior landscaper.
OTHER INCOME AND EXPENSE. Other income and expense consists principally of
interest income and expense and non-operating income. For the three months ended
June 30, 2006 there was little or no change from prior year.
NET LOSS. The net loss before minority interest for the three months ending June
30, 2006 is a net loss of $222,720 compared to a loss of $162,983 in the prior
year. The difference of $59,787 is due to a lower margin and an increase in
selling and general administrative expenses.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2006 AS COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 2005.
REVENUES. Revenues of the Callaway Golf Center ("CGC") for the six months ended
June 30, 2006 increased by $20,183 or 1.8% to $1,200,855 from $1,180,672
reported for the same period in 2005. This increase in revenues is due to golf
cart rentals and golf lesson fees offset by lower green fees. The golf lesson
fees increased by $22,805 to $127,525 in 2006 compared to $104,720 in 2005
because of the upgrade in the golf pros and supervision that occurred in March
of 2006. Golf club rentals revenues increased due to a two-stage rate increase
of 38 percent that raised revenues by $15,413 to $104,305 in 2006 from 88,892 in
2005. Golf club rental revenue also increased by $5,823 to $59,673 from $53,850
for three months ended 2006 and 2005. Golf activities revenue increased by
$6,110 to $10,022 in 2006 from $3,912 in 2005 due to local university conducting
local golf lessons in 2006. Offsetting these increases in revenues was a
decrease in golf course green fees. Golf course green fees decreased to $371,196
in 2006 from $403,739 in 2005. This decrease is due to unreasonably hot weather
that resulted in a 25% decrease in green fees during mid-day hours and lower
rates charged to tourists. Driving range revenue remained consistent at $416,786
for the six months ended 2006 compared to $417,151 for the six months ended
2005.
COST OF REVENUES. Cost of revenues consists mainly of commissions paid to the
golf instructors, the payroll and benefits expenses of CGC staff, cost of
merchandise sold and operating supplies. Cost of revenues increased by $55,100
or 21.9% to $307,192 from $252,092 for the same period of the prior year.
Commissions paid to golf instructors increased $11,924 to $81,269 from $69,345
due to higher golf lesson fees mentioned above. The payroll and payroll taxes
increased by $13,303 compared to last year due to the addition of assistant
manager at the end of 2005 and addition of mid-shift cashier in the second
quarter of 2006. Payroll and payroll taxes also increased by $14,433 as a result
of the addition of a salaried supervisor in February 2006. Finally, golf
operating supplies increased $20,685 due to the addition of range balls, range
mats, and other operating supplies for the six months ended June 30, 2006.
SELLING, GENERAL AND ADMINISTRATIVE. These expenses consist principally of
landscaping services and professional fees, ground lease, utilities, insurance
and administrative payroll. These expenses increased by $67,684 to $1,020,268
10
from $960,584 for the same period in the prior year. Of this increase the
largest amount related to an increase in audit and tax frees of $55,417 to
$61,917 from $6,500 in the prior year. The increased expenses were related to
responding to SEC comment letters and a change of Company's registered public
accounting firm that occurred in April 2006. Other increases include a $10,043
increase in administrative salaries and payroll taxes because payroll expense
for the first six months of 2005 did not reflect a controller's salary for the
first month and a half of 2005 as the position was not occupied until mid
February 2005. Legal expenses increased by $18,411 from the same period last
year due to the arbitration with Urban Land related to the settlement of Sierra
SportService matter. Lease expense increased by $19,902 to $218,942 in 2006 from
$199,051 in 2005 for the land on which the CGC is located. The lease contains
provision to periodically raise the minimum rent by 10% and the rent was
increased in September 2005. The Company is protesting the rent increase and the
matter is currently in litigation. There was also an increase of $8,937 from
$75,514 in 2006 to $66,577 in 2006 due to higher rates charged by the Las Vegas
Water District. These increases were offset by a decrease in landscaping
services of $17,622 from $185,604 to $203,226 for the same period last year due
the six months in 2005 reflecting a settlement with the Company's prior
landscaper. In addition, there was no bad debt expense in 2006 compared $24,764
in 2005 related to the Sports Entertainment Enterprises, Inc. sale on February
7, 2005. The company received 10,000 shares of Sports Entertainment Enterprises,
Inc. (CKX) stock as compensation for the debt owed. Additional amounts owed to
the Company were written off in the first quarter of 2005.
OTHER INCOME AND EXPENSE. Other income and expense consists principally of
interest income and expense and non-operating income. For the six months ended
June 30, 2005 the Company had other income of $8,394 related primarily to
insurance proceeds. Interest expense increased $6,650 to $250,317 in 2006
compared to $243,757 in 2005 due to net increase in borrowing from related
parties.
NET LOSS. The net loss before minority interest for the six months ending June
30, 2006 is $421,878 compared to a loss of $298,092 in the prior year. The
difference of $123,786 is due to higher cost of revenues and selling and general
administrative expenses, increased interest expense offset by the increase in
revenues.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2006, the Company had a working capital deficit of $2,160,544, as
compared to a working capital deficit of $1,875,279 at December 31, 2005. The
CGC has generated positive cash flow before corporate overhead and interest
expense. There is no assurance that it will continue to provide positive cash
flow.
Management believes that the CGC operations and existing cash balances as of
June 30, 2006, may not be sufficient to fund operating cash needs and debt
service requirements over the next 12 months. In its report on the Company's
annual financial statements for 2005, the Company's auditors expressed
substantial doubt about the Company's ability to continue as a going concern.
Management continues to seek other sources of funding, 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.
11
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. At this time, management does not intend to target any
particular industry but, rather, intends to judge any opportunity on its
individual merits. Any such transaction would likely have a dilutive effect on
the interests of the Company's stockholders that would, in turn, reduce each
shareholders proportionate ownership and voting power in the Company. 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 Company has no commitments to enter into or acquire a specific business
opportunity and, therefore, is able to disclose the risks of a business or
opportunity that it may enter into only in a general manner, and unable to
disclose the risks of any specific business or opportunity that it may enter
into. An investor can expect a potential business opportunity to be quite risky.
Any business opportunity acquired may be currently unprofitable or present other
negative factors.
Working capital needs have been helped by favorable payment terms and conditions
included in our notes payable to an Affiliate. Management believes that
additional notes could be negotiated, if necessary, with similar payment terms
and conditions.
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.
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included in this quarterly report contains statements that
are forward-looking such as statements relating to plans for future expansion
and other business development activities, as well as other capital spending and
financing sources. Such forward-looking information involves important risks and
uncertainties that could significantly affect anticipated results in the future
and, accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of the Company. These risks and
uncertainties include, but are not limited to, those relating to dependence on
existing management, leverage and debt service (including sensitivity to
fluctuations in interest rates), domestic or global economic conditions, changes
in federal or state tax laws or the administration of such laws, and changes in
regulations and application for licenses and approvals under applicable
jurisdictional laws and regulations.
ITEM 3. CONTROLS AND PROCEDURES
As of June 30, 2006, under the supervision and with the participation of the
Company's Chief Executive Officer and Principal Financial Officer, management
has evaluated the effectiveness of the design and operations of the Company's
disclosure controls and procedures. Based on that evaluation, the Chief
Executive Officer and Principal Financial Officer concluded that the Company's
disclosure controls and procedures were effective as of June 30, 2006. There
have been no changes in internal control over financial reporting that occurred
during the second quarter of the fiscal year covered by this report that have
materially affected, or are reasonably likely to affect, the Company's internal
control over financial reporting.
12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is plaintiff in a lawsuit against Western Technologies and was
awarded a judgment of $660,000 in March 2003. Western Technologies has appealed
the judgment, and it is currently pending before the Nevada Supreme "Court". The
Court is expected to hear arguments in the case in summer of 2006. Western
Technologies was required to and did file a bond in the amount of the judgment
to date, which is approximately $1,180,000 including the judgment, interest, and
attorney's fees.
On May 31, 2005, Sierra SportService, Inc. the Company's tenant, who operated
the restaurant in CGC, ceased operations. Sierra SportService filed a notice of
default pertaining to the restaurant concession agreement and against all
guarantors of that agreement. A settlement was reached on November 18, 2005 for
a total amount of $800,000, of which the AASP paid $700,000 and the remaining
$100,000 was paid by AAGC, which is 65% owned by the Company.
In December 2005, the Company commenced an arbitration proceeding before the
American Arbitration Association against Urban Land of Nevada ("Urban Land")
seeking reimbursement of the $800,000 paid in settlement of the Sierra
SportService matter plus fees and costs pursuant to the terms of the Company's
agreements with Urban Land which owns the property on which the CGC is located.
Urban Land filed a counterclaim against the Company and claims against other
parties in the arbitration proceeding. The other parties include, among others,
Ronald S. Boreta, the President of the Company; Vaso Boreta, Chairman of the
Board of the Company; and Boreta Enterprise, Ltd., a principal shareholder of
the Company. The counterclaims and other party claims allege that the Company
and others defrauded otherwise injured Urban Land in connection with Urban Land
entering into certain agreements in which the Company is a party. Urban Land is
seeking damages and other relief under various claims.
On February 10, 2006, Urban Land filed a notice of default on the CGC ground
lease claiming that certain repairs to the property had not been performed or
documented. It is expected that the issues in the notice of default will be
included in the above arbitration proceeding. The company is also disputing the
rent increase under the ground lease. Legal counsel has been hired and has
advised the company to pay all amounts due pending litigation.
The Company is involved in certain other 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
and the forgoing matters will have a material adverse effect, if any, upon the
Company. Accordingly, no provision has been made for any estimated losses in
connection with such matters.
13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None.
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits
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
SIGNATURES
Pursuant to the requirements 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.
ALL-AMERICAN SPORTPARK, INC.
Date: August 11, 2006
By: /s/ Ronald Boreta
Ronald Boreta, President and
Chief Executive Officer(Principal
Executive Officer) and Treasurer
(Principal Financial Officer)
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