On October 19, 1998, the Company sold 250,000 shares
of the Series B Convertible Preferred Stock to SPEN for $2,500,000. SPEN had
earlier issued 2,303,290 shares of its common stock for $2,500,000 in a private
transaction to ASI Group, L.L.C. (“ASI”). ASI also received 347,975 stock
options for SPEN common stock. ASI is a Nevada limited liability company whose
members include Andre Agassi, a former professional tennis player.
SPEN owned 2,000,000 shares of the Company’s common stock and 250,000 shares
of the Company’s Series B Convertible Preferred Stock. In the aggregate, this
represented approximately two-thirds ownership in the Company. On April 5, 2002,
SPEN elected to convert its Series B Convertible Preferred Stock into common
Stock on a 1 for 1 basis. On May 8, 2002, SPEN completed a spin-off of the
Company’s shares held by SPEN to SPEN’s shareholders. This resulted in SPEN no
longer having any ownership interest in the Company.
On June 15, 2011, the Company entered into a Stock Transfer Agreement with
Saint Andrews pursuant to which the Company transferred 49% of the outstanding
common stock of All-American Golf Center, Inc. ("AAGC"), a subsidiary
of the Company, to Saint Andrews Golf Shop, Ltd. ("Saint Andrews") in
exchange for the cancellation of $600,000 of debt owed by the Company to Saint
Andrews. The transfer of 49% of the common stock of AAGC was authorized by the
Company's Board of Directors at which all of the Company's Directors voted in
favor of the transfer, except that Ronald Boreta abstained from such vote. In
connection with this transaction, the Company engaged Houlihan Valuation
Advisors ("HVA") to provide an estimate of the fair market value of a
49% interest in AAGC. As a result of their analysis, HVA was of the opinion
that the fair market value of a 49% interest in AAGC was approximately
$600,000. The Board of Directors determined to use this value as the amount to
be received from Saint Andrews for the 49% interest.
Saint Andrews is owned by Ronald Boreta, the Company's President and a
Director and John Boreta, his brother. John Boreta is a principal shareholder
of the Company and became Director of the Company in 2012. The debt owed by the
Company to Saint Andrews was from advances made in the past by Saint Andrews to
provide the Company with working capital.
The original Las Vegas Golf and Tennis store closed to the public in May of
2010. The owner, Vaso Boreta who had retired, passed away in October 2013.
On June 19, 2009, AAGC entered into a Customer Agreement with Callaway Golf
Company ("Callaway") and Saint Andrews pursuant to which Callaway has
agreed to make certain cash payments and other consideration to AAGC and Saint
Andrews in exchange for an exclusive marketing arrangement for the golf center
operated by AAGC. Callaway is a major golf equipment manufacturer and supplier.
On March 9, 2013, AAGC entered into an amendment to its Customer Agreement
with Callaway (the “Amendment”). The Amendment provided that AAGC was to
use all reasonable efforts to negotiate and enter into a non-exclusive written
contract with an alternative retail branding partner. In the event that
AAGC was successful in executing a written contract with an alternative retail
branding partner, the Customer Agreement would terminate on June 30,
2013.
Pursuant to the terms of the Amendment, Callaway was not required to pay any
marketing funds or other fees or expenses required under the Customer Agreement
during the first two quarters of
2013. The
Amendment also provided that Callaway could, at its option, continue to feature
its products in a second position at the golf center after termination of the
Customer Agreement, under certain terms and conditions.
Phase 2 began construction on January 20, 2015 and was completed in March
of 2015. This includes FlightScope Technology (which uses Doppler radar to
provide 3D tracking of golf shots) in kiosks on the Upper Westside Driving
Range, outside performance bays and a mobile shop where custom TaylorMade clubs
can be made for customers on the spot.
BUSINESS OF THE COMPANY
The Company currently operates a golf facility called the “TaylorMade Golf
Experience” (“TMGE”), formerly called the “Callaway Golf Center” ™, on
approximately forty-two (42) acres of land located on Las Vegas Boulevard in
Las Vegas, Nevada. The TMGE opened to the public on October 1, 1997.
The TMGE is strategically positioned within a few miles of the largest
hotels and casinos in the world. According to the Las Vegas Convention and
Visitors Authority, Las Vegas had 42,312,216 visitors in 2015. There are 149,213
hotel rooms in Las Vegas and, according to the Las Vegas Convention and
Visitors Authority, eighteen of the top twenty-five largest hotels in the world
are within five miles of the TMGE. They include the MGM Grand, Mandalay Bay,
Luxor, Bellagio, Monte Carlo, and the City Center. The TMGE is also adjacent to
McCarran International Airport, the 25
th
busiest airport in the
world with passenger traffic of 45,389,074 during 2015 according to the Las
Vegas Convention and Visitors Authority. The city of Las Vegas population is
619,419 while the Las Vegas valley (Clark County) residential population is 2,102,238.
The TMGE includes a two tiered, 110-station, driving range. The driving
range is designed to have the appearance of an actual golf course with ten
impact greens and island greens. Pro-line equipment and popular brand name
TaylorMade golf balls are utilized throughout the TMGE. In addition to the
driving range, the TMGE has a lighted, nine-hole, par three golf course, named
the “Divine Nine.” The golf course has been designed to be challenging, with
golf cart paths and designated practice putting and chipping areas. At the
entrance to the TMGE is a 20,000 square foot clubhouse which includes two
advanced state of the art golf swing analyzing systems developed by TMaG, and
two tenant operations: (a) the Saint Andrews Golf Shop featuring the latest in
TaylorMade Adidas equipment and accessories, and (b) the Flight Deck Bar and
Grill, which features an outdoor patio overlooking the golf course and driving
range with the Las Vegas “Strip” in the background.
The Company subleases space in the clubhouse to Saint Andrews. Base rent was
initially $13,104 per month through July 2012 with a 5% increase for each of
the two 5-year options to extend in July 2012 and July 2017. Saint Andrews
exercised its first option to extend the lease through July 2017. For the years
ended December 31, 2015 and 2014, the Company recognized rental income totaling
$166,779 and $163,800 respectively from this tenant.
LIABILITY INSURANCE
The Company has a comprehensive general liability insurance policy to cover
possible claims for injury and damages from accidents and similar activities,
with a limit of $2 million per
occurrence, and an umbrella policy that provides an addition at $2 million per occurrence for any amounts that exceed the limits of the general liability policy. Although management of the Company believes that its insurance levels are sufficient to cover all future claims, there is no assurance it will be sufficient to cover all future claims.
The Town Square Mall, which opened in November of
2007, generates significant traffic in the area. The Town Square is a 1.5
million square foot super regional lifestyle center with a mix of retail,
dining, and office space across the street from the TMGE. In addition, traffic
from time-share condominium and new casinos at the far south end of the strip
has increased local and tourist business for the TMGE.
On June 19, 2009, the Company entered into a “Customer Agreement” with
Callaway Golf Company (“Callaway”) and Saint Andrews Golf Shop, Ltd. (“Saint
Andrews”) through our majority owned subsidiary AAGC pursuant to which Callaway
agreed to make certain cash payments and other consideration to AAGC and Saint
Andrews in exchange for an exclusive marketing arrangement for the Callaway
Golf Center operated by AAGC. Callaway is a major golf equipment
manufacturer and supplier. Saint Andrews subleases space at the Callaway
Golf Center and operates a golf equipment store at the Callaway Golf
Center.
The Customer Agreement with Callaway provided that Callaway would provide
Saint Andrews with $250,000 annual advertising contribution in the form of golf
related products. In addition, Saint Andrews was given an opportunity to
earn additional credits upon reaching a sales threshold.
In connection with the signing of the Customer Agreement, AAGC received
several concessions to help in the operation of the business, upgrading certain
areas, and remodel of some portions of the AAGC facility. Callaway also
provided staff uniforms, range golf balls and rental golf equipment for AAGC’s
use at the Callaway Golf Center. Both AAGC and Saint Andrews agreed to
exclusively sell only Callaway golf products at the Callaway Golf Center for
the term of the Customer Agreement.
On March 9, 2013, AAGC entered into an amendment to its Customer Agreement
with Callaway (the “Amendment”). The effective date of the Amendment was
January 20, 2013. The Amendment provided that AAGC was to use all
reasonable efforts to negotiate and enter into a non-exclusive written contract
with an alternate retail branding partner. In the event that AAGC was
successful in executing a written contract with an alternative retail branding
partner, the Customer Agreement was to terminate on June 30, 2013. In the
event that an agreement with an alternative retailed branding partner was not
entered into by June 30, 2013, the Customer Agreement was to terminate on that
date but AAGC would have the right to continue to feature its products in a second
position at the Callaway Golf Center after termination of Customer Agreement,
under certain terms and conditions, which they have chosen to do.
On March 27, 2013, AAGC entered into a Golf Center Sponsorship Agreement
with Taylor Made Golf Company, Inc., doing business as TaylorMade-Adidas Golf
Company (“TMaG”)(the “Sponsorship Agreement”) pursuant to which the golf center
operated by AAGC will be rebranded using TaylorMade® and other TMaG trademarks.
As part of the Sponsorship
Agreement, TMaG has agreed to reimburse AAGC for the reasonable costs
associated with the rebranding efforts, including the costs associated with the
build-out of the golf center and two new performance bays up to a specified
maximum amount. In addition, AAGC received a payment of $200,000 within a
few days of signing the Sponsorship Agreement and, so long as AAGC continues to
operate the golf center and comply with the terms and conditions of the Sponsorship
Agreement TMaG made additional payments to AAGC on each of
March
26, 2014 and March 26, 2015. The Company recognized these payments as
revenue on a straight-line basis over the term of the agreement. In March 2014,
AAGC received the second payment in the amount of $150,000. In March 2015, AAGC
received the final payment.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The Directors and Executive Officers of the Company are as follows:
|
|
|
NAME
|
AGE
|
POSITIONS AND OFFICES HELD
|
Ronald S. Boreta
|
53
|
President, Chief Executive Officer,
Treasurer, Secretary and Director
|
|
|
Steven Miller
|
72
|
Director
|
Cara Corrigan
|
54
|
Director
|
John Boreta
|
55
|
Director
|
Ronald Boreta and John Boreta are brothers. There are no other family
relationships between any of the Directors and Executive Officers of the
Company.
Vaso Boreta, who had served as a Director of the Company for over twenty
years, passed away in October 2013. The Board of Directors chose not to fill
the vacancy on the board.
The Company does not currently have an audit committee or an “audit
committee financial expert” because it is not legally required to have one and
due to the limited size of the Company's operations, it is not deemed
necessary. The Company presently has no compensation or nominating committee.
All Directors hold office until the next Annual Meeting of Shareholders.
Officers of the Company are elected annually by, and serve at the discretion
of, the Board of Directors.
The following sets forth biographical information as to the business
experience of each officer and director of the Company for at least the past
five years.
RONALD S. BORETA has served as President of the Company since 1992, Chief
Executive officer (Principal Executive Officer) since August 1994, Principal
Financial Officer since February 2004, and a Director since its inception in
1984. The Company has employed him since its inception in March 1984, with the
exception of a 6-month period in 1985 when he was employed by a franchisee of
the Company located in San Francisco, California. Prior to his employment by
the Company, Mr. Boreta was an assistant golf professional at San Jose
Municipal Golf Course in San Jose, California, and had worked for two years in
South San Francisco, California.
Mr. Boreta devotes approximately 90% of his time to the business of the
Company. Ronald S. Boreta was selected to be a Director of the Company because
of his long experience with the Company and because he has served as its sole
executive officer for many years. He has also
served
as an executive officer and director of another publicly-held company, Sports
Entertainment Enterprises, Inc. (subsequently named "CKX, Inc.").
STEVEN MILLER is the Chief Executive Officer of Agassi Enterprises and
Agassi Graf Holdings since January 2009. He is responsible for the leadership
and operation of two for-profit entities. He is responsible for the
coordination of business ventures, strategies and personnel evaluations, as
well as managing and representing the Agassi Graf Lifestyle brand. Since
January 2008, Mr. Miller has also served as CEO of the Andre Agassi Foundation
for Education. In that capacity, he is responsible for the leadership and
operation of the Foundation enterprise, and managing the financial portfolio.
From May 2008 to April 2010, Mr. Miller was the CEO of Power Plate
International, and Executive Chairman of the Board of Directors. He previously
served as a senior analyst and adjunct professor at the University of Oregon’s
Warsaw Sports Marketing Center; President of Devine Sports in Chicago; and
President and CEO of the Professional Bowlers Association in Seattle.
Agassi ASI Group, LLC and Investment AKA, LLC currently hold approximately
35% of the Company's outstanding common stock. Both of these are limited
liability companies whose members include Andre K. Agassi. The election of Mr.
Miller to the Board of Directors may be considered to be a result of the
relationship of Mr. Miller to Andre Agassi.
CARA CORRIGAN
started as an employee of the Company in 1997 as the
Assistant Controller and then became the Executive Assistant to the President
(Ronald Boreta) in 1999 and served as his assistant until June of 2008.
In June of 2009, she became the Company’s Corporate Controller working in that
position until May of 2015. Ms. Corrigan proved herself a dedicated employee
with the Company and continues to be well aware of the activities and direction
of the Company. She gained knowledge about the golf industry through the many
individuals she met while employed with the Company, and used that information
to help advise the Company with regard to many aspects of its business during
her tenure. Ms. Corrigan now lives in Reno, NV where she is the
Financial Controller for a business conglomerate that includes real estate, a
clothing line, autos and horses. Mrs. Corrigan oversees all aspects of
the business including working internationally with the Danish Office.
JOHN BORETA was elected to the Board during the third quarter of 2013. John
has served as General Manager of the golf center (now named the “TaylorMade
Golf Experience”) since its inception in 1997. He is involved in all aspects of
the day to day operation of the facility. John moved to Las Vegas in 1981 to
work in the family golf business, Las Vegas Golf and Tennis. He was involved in
the daily store operations as a retail sales manager, as well as mail-order
sales supervisor. He was promoted to store manager for a store that exceeded
$10 million in sales annually. In addition to his involvement with TaylorMade
Golf Experience, he is co-owner of three golf retail stores in Las Vegas,
including the Saint Andrews Golf Shop which is a tenant at the golf center,
with his brother, Ronald S. Boreta.
SECTION 16(A) BENEFICIAL REPORTING COMPLIANCE
Based solely on a review of Forms 3 and 4 and amendments thereto furnished to the Company during its most recent fiscal year, and Forms 5 and amendments thereto furnished to the Company with respect to its most recent fiscal year and certain written representations, no persons who were either a director, officer, beneficial owner of more than 10% of the Company's common stock, failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the most recent fiscal year.
CODE OF ETHICS
The Board of Directors adopted a Code of Ethics on March 26, 2008. The Code of Ethics was filed as Exhibit 14 to the Company's Report on Form 10-KSB for the year ended December 31, 2007.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation received for services rendered in all capacities to the Company for the years ended December 31, 2013, 2014 and 2015 by the Company's President. The Company has no other executive officers.
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
NAME AND
PRINCIPAL
POSITION
|
|
|
|
|
|
|
STOCK
|
OPTION
|
|
ALL OTHER
|
|
|
|
|
SALARY
|
|
BONUS
|
|
AWARDS
|
AWARDS
|
|
COMPEN-
|
|
TOTAL
|
YEAR
|
|
($)
|
|
($)(1)
|
|
($)
|
($)
|
|
SATION
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
($)(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald S. Boreta,
President
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
$
|
120,000
|
$
|
0
|
|
--
|
--
|
$
|
19,082
|
$
|
139,082
|
2015
|
$
|
120,000
|
$
|
0
|
|
--
|
--
|
$
|
15,209
|
$
|
135,209
|
_________________________
(1) For 2014, these amounts were auto expenses of $19,082. For 2015, these amounts were auto expenses of $15,209.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
There were no outstanding equity awards held by executive officers at December 31, 2015.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company do not receive any fees for meetings that they attend, but they are entitled to reimbursement for reasonable expenses incurred while attending such meetings. During 2011 and 2012, no compensation was paid to the Company's directors for
their
services in that capacity. In 2013 compensation of 34,000 shares of stock was
granted to Vaso Boreta for his prior service as a director. In 2014 and 2015 no
compensation was paid to the company’s directors for their services.
Steve Miller was granted 34,000 shares of stock in connection with his
election to the Board of Directors. This stock is subject to a restricted
stock agreement and vested in full on May 24, 2015.
Cara received a salary of $30,910 as its Corporate Controller for her work
through May 2015.
John Boreta is an employee of the Company's subsidiary and receives an
annual salary of $75,000 as the General Manager of the TaylorMade Golf
Experience.
EMPLOYMENT AGREEMENT
Effective August 1, 1994, the Company entered into an employment agreement
with Ronald S. Boreta, the Company's President, and Chief Executive Officer,
pursuant to which he received a base salary that was increased to $120,000
beginning the year ended December 31, 1996. The term of the employment
agreement ended in May 2013, but he continues to be employed by the Company on
the same basis. Ronald S. Boreta receives the use of an automobile, for which
the Company pays all expenses and full medical and dental coverage which totals
$758 a month. The Company also paid all dues and expenses for membership at a
local country club at which Ronald S. Boreta entertained business contacts for
the Company. The payments for membership dues ended when the President ended
his club membership at the end of 2013. Ronald S. Boreta has agreed that for a
period of three years from the termination of his employment agreement that he
will not engage in a trade or business similar to that of the Company.
ITEM 12. SECUIRTY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of March 20, 2016 the stock ownership of each person known by the Company to be the beneficial owner of five percent or more of the Company’s common stock, each Executive Officer and Director individually, and all Directors and Executive Officers of the Company as a group. Except as noted, each person has sole voting and investment power with respect to the shares.
|
|
|
|
|
|
NAME AND ADDRESS
OF BENEFICIAL OWNERS
|
AMOUNT AND
NATURE
OF BENEFICIAL OWNERSHIP
|
PERCENT
OF CLASS
|
|
|
|
|
Ronald S. Boreta
6730 Las Vegas
Blvd.
South
Las Vegas, NV 89119
|
650,484
|
(1)
|
14.07
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASI Group, LLC
Investment AKA, LLC c/o Agassi Enterprises, Inc.
3883 Howard Hughes Pkwy, 8
th
Fl.
Las Vegas, NV 89109
|
1,589,167
|
(4)
|
34.37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Boreta
6730 Las Vegas Blvd.
South
Las Vegas, NV 89119
|
511,890
|
(2)
|
11.07
|
%
|
|
|
|
|
|
|
|
|
Boreta Enterprises, Ltd.
6730 Las Vegas Blvd.
South
Las Vegas, NV 89119
|
360,784
|
(3)
|
7.80
|
%
|
|
|
|
|
|
|
|
|
Steve Miller
3883 Howard Hughes Pkwy., 8
th
Fl.
Las Vegas, NV 89169
|
34,000
|
(5)
|
0.07
|
%
|
|
|
|
|
|
|
|
|
Cara Corrigan
6730 Las Vegas Blvd.
South
Las Vegas, NV 89119
|
34,000
|
(5)
|
0.07
|
%
|
|
|
|
|
|
|
|
|
All Directors and Executive Officers as a Group (4 persons)
|
1,230,374
|
(6)
|
26.61
|
%
|
|
(1) Includes 402,229 shares held directly and 248,255 shares which represents Ronald Boreta's share of the Common Stock held by Boreta Enterprises, Ltd.
(2) Includes 403,168 shares held directly and
108,704 shares, which represents John Boreta's share of the Common Stock held
by Boreta Enterprises Ltd.
(3) Direct ownership of shares held by Boreta Enterprises Ltd., a limited
liability company owned by Ronald and John Boreta and the Estate of Vaso
Boreta. Boreta Enterprises Ltd. percentage ownership is as follows:
Ronald S. Boreta
|
68.81
|
%
|
John Boreta
|
30.13
|
%
|
Estate of Vaso Boreta
|
1.06
|
%
|
(4) ASI Group LLC and Investment
AKA, LLC are both Nevada limited liability company’s whose members include
Andre K. Agassi.
(5) All shares are owned directly.
(6) Includes shares beneficially held by the four named Directors and
Executive Officers.
EQUITY COMPENSATION PLAN INFORMATION
As of December 31, 2015, the Company had no compensation plans (including
individual compensation arrangements) under which equity securities of the
Company were authorized for issuance in the future.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
Related Party Transactions
The Company’s employees have provided administrative/accounting support for
three golf retail stores: one named Saint Andrews Golf Shop ("Saint
Andrews") and the other two named Las Vegas Golf and Tennis
("District Store" and “Westside Store”), owned by Ronald Boreta, the
Company's President, and John Boreta, a Director of the Company. The Saint
Andrews store is the retail tenant in the TMGE. The “District Store” closed in
March of 2015.
Administrative/accounting payroll and employee benefits expenses are
allocated based on an annual review of the personnel time expended for each
entity. Amounts allocated to these related parties by the Company approximated
$20,925 and $19,875 for the years ended December 31, 2015 and 2014, respectively.
The Company records this allocation by reducing the related expenses and
allocating them to the related parties.
In addition to the administrative/accounting support provided by the Company
to the above stores, the Company received funding for operations from these and
various other stores owned by Ronald Boreta and John Boreta. These funds helped
pay for office supplies, phone charges, postages, and salaries. The net amount
due to these stores totaled $1,724,286 and $1,617,550 as of December 31, 2015
and 2014, respectively. The amounts are non-interest bearing and due out
of available cash flows of the Company. Additionally, the Company has the right to offset the administrative/accounting support against the funds received from these stores.
Both Ronald Boreta and John Boreta have continued to defer half of their monthly salaries until the Company is in a more positive financial state. The amounts deferred for 2015 and 2014 were $97,500 and $97,500, respectively.
Lease to Saint Andrews
The Company has two tenant operations. One of them is for the Saint Andrews Golf Shop that occupies approximately 4,300 square feet for golf retail sales and pays a fixed monthly rent that includes a prorated portion of maintenance and property tax expenses. Saint Andrews is owned by Ronald Boreta and John Boreta. The initial monthly rent was $13,104. The lease was for an initial term of fifteen years through July 2013. Saint Andrews had two options to extend for five years in July 2013 and July 2017 with a 5% rent increase for each extension. Saint Andrews exercised its first five year option in July 2012.
For the years ended December 31, 2015 and 2014, the Company recognized rental income totaling $166,799 and $163,800 from Saint Andrews.
Notes to Related Parties
The Company has various notes and interest payable to the following entities as of December 31, 2015 and 2014:
|
|
|
|
|
|
|
2015
|
|
2014
|
Various notes payable to Vaso Boreta
bearing 10% per annum and due on demand (1)
|
|
|
|
|
$
|
3,200,149
|
$
|
3,200,149
|
Note payable to BE Holdings 1, LLC,
bearing 10% per annum and due on demand (2)
|
|
|
|
|
|
100,000
|
|
100,000
|
Various notes payable to SAGS, bearing 10%
per annum and due on demand (3)
|
|
|
|
|
|
704,656
|
|
813,846
|
Notes Payable Short-term Debt Westside 15, LLC
With no interest based on payment made by end of December 2016 ((4)
|
|
93,921
|
|
71,561
|
Note payable to BE III, LLC, bearing 10%
Per annum and due on demand (5)
|
|
200,500
|
|
200,500
|
|
|
|
TOTAL
|
$
|
4,299,226
|
$
|
4,386,056
|
1) Vaso Boreta is the former Company's Chairman of the Board who passed away in October 2014.
|
2) BE Holdings, LLC is owned by Ronald Boreta and John Boreta.
|
3) Saint Andrews is owned by Ronald Boreta and John Boreta.
|
4) Westside 15, LLC is owned by Ronald Boreta and John Boreta
|
5) BE III, LLC is owned by Ronald Boreta and John Boreta.
|
|
As of December 31, 2015 and 2014, accrued interest payable - related parties related to the notes payable – related parties totaled $6,205,675 and $5,825,801 respectively.
The debt owed by the Company to Saint Andrews was from advances made in the past by Saint Andrews to provide the Company with working capital.
Other Transactions
John Boreta, who became a Director of the Company in 2013, has been employed by All-American Golf Center (“AAGC”), a subsidiary, as its general manager for over 12 years. On June 15, 2009, AAGC entered into an employment agreement with John Boreta. The employment agreement was for a period through June 15, 2012 and provided for a base annual salary of $75,000. Although the term of the employment agreement ended in June 2012, he continues to be employed on the same basis. During 2015, John Boreta received compensation of $81,000 for his services in that capacity, which includes an auto allowance of $6,000. He also received medical compensation of $15,662 for 2015.The Company’s Board of Directors believes that the above transactions were on terms no less favorable to the Company than if the transactions were with unrelated third parties.
Vaso Boreta, longtime Chairman of the Board and father of Ronald and John Boreta, President and Board of Directors of the Company respectively, resigned as Chairman of the Board in April of 2013. He subsequently passed away in October of 2013.
Director Independence
The Company has determined that Steve Miller is an independent director as defined under the rules used by the NASDAQ Stock Market.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
AUDIT FEES
The aggregate fees billed for fiscal years ended December 31, 2015 and 2014 by RBSM and LL Bradford for professional services rendered for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s quarterly reports on Form 10-Q were $36,000 during each year.
AUDIT RELATED FEES
Not Applicable.
TAX FEES
The aggregate fees billed for tax services rendered by RBSM for tax compliance and tax advice for the fiscal years ended December 31, 2015 and 2014, were $5,000 during each year.
ALL OTHER FEES
None.
AUDIT COMMITTEE PRE-APPROVAL POLICY
Under provisions of the Sarbanes-Oxley Act of 2002, the Company’s principal accountant may not be engaged to provide non-audit services that are prohibited by law or regulation to be provided by it, and the Board of Directors (which serves as the Company’s audit committee) must pre-approve the engagement of the Company’s principal accountant to provide audit and permissible non-audit services. The Company’s Board has not established and policies or procedures other than those required by applicable laws and regulations.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
|
|
EXHIBIT
|
|
|
NUMBER
|
DESCRIPTION
|
LOCATION
|
2
|
Agreement for the Purchase and Sale of Assets, as amended
|
Incorporated by reference to Exhibit 10 to the Registrant’s Current Report on Form 8-K dated February 26, 1997
|
|
|
|
3.1
|
Restated Articles of Incorporation
|
Incorporated by reference to Exhibit 3.1 to the Registrant’s Form SB-2 Registration Statement (No. 33-84024)
|
|
|
|
|
3.2
|
Certificate of Amendment
to Articles of Incorporation
|
Incorporated by reference to 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. 33-08424)
|
|
|
|
|
|
3.4
|
Certificate of Amendment
Articles of Incorporation
Series A Convertible Preferred
|
Incorporated by reference to Exhibit 3.4 to the Registrant’s Annual report on Form 10-KSB for the year ended December 31, 1998
|
|
|
|
3.5
|
Certificate of Designation
Series B Convertible Preferred
|
Incorporated by reference to Exhibit 3.5 to the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 1998
|
|
|
|
3.6
|
Certificate of Amendment to
Articles of Incorporation -
Name change
|
Incorporated by reference to Exhibit 3.6 to the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 1998
|
|
|
|
10.1
|
Employment Agreement
With Ronald S. Boreta
|
Incorporated by reference to Exhibit 10.1 to the Registrant’s Form SB-2 Registration Statement (No. 33-84024)
|
|
|
|
|
10.2
|
Promissory Note to Vaso Boreta
|
Incorporated by reference to Exhibit 10.11 to the Registrant’s Form SB-2 Registration Statement (No. 33-84024)
|
|
|
|
|
10.3
|
Lease Agreement between Urban Land of Nevada and All-American Golf Center, LLC
|
Incorporated by reference to Exhibit 10.17 to the Registrant’s Form SB-2 Registration Statement (No. 33-84024)
|
|
|
|
10.4
|
Operating Agreement for All-American Golf, LLC, a limited liability company
|
Incorporated by reference to Exhibit 10.18 to the Registrant’s Form SB-2 Registration Statement (No. 33-84024)
|
|
|
|
|
10.5
|
Promissory Note to Saint Andrews Golf, Ltd.
|
Incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form-KSB for the year ended December 31, 2005
|
|
|
|
10.6
|
Promissory Note to BE Holdings I, LLC
|
Incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2005
|
|
|
|
|
10.7
|
Promissory Notes to Saint Andrews Golf Shop Ltd. and BE District, LLC during 2007
|
Incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-KSB for the year ended December 31, 2007
|
|
|
|
10.8
|
Settlement Agreement with Urban Land of Nevada, Inc.
|
Incorporated by reference to Exhibit 10.11 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 31, 2008
|
|
|
|
10.9
|
Customer Agreement among All-American SportPark, Inc.; All-American Golf Center, Inc.; Saint Andrews Golf Shop, Ltd.; and Callaway Golf Company dated June 19, 2009
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Report on Form 8-K filed on June 19, 2009
|
|
|
|
|
10.10
|
Stock Transfer Agreement among All-American SportPark, Inc.; Saint Andrews Golf Shop, Ltd. and All-American Golf Center, Inc. dated June 15, 2009
|
Incorporated by reference to Exhibit 10.2 to the Registrant's Report on Form 8-K filed on June 19, 2009
|
|
|
|
|
10.11
|
Employment Agreement between John Boreta and All-American Golf Center, Inc. dated June 19, 2009
|
Incorporated by reference to Exhibit 10.3 to the Registrant's Report on Form 8-K filed on June 19, 2009
|
|
|
|
10.12
|
Addendum No. 2 to Employment Agreement between Ronald Boreta and All-American SportPark, Inc. dated June 15, 2009.
|
Incorporated by reference to Exhibit 10.4 to the Registrant's Report on Form 8-K filed on June 19, 2009
|
|
|
|
10.13
|
Agreement with AKA Investments, LLC dated September 23, 2009
|
Incorporated by reference to Exhibit 10.1 to the Registrant’s Report on Form 8-K filed on September 24, 2009
|
|
|
|
|
|
|
10.14
|
First Amendment to Customer Agreement with Callaway Golf Company
|
Incorporated by reference to Exhibit 10.19 to the Registrant’s Report on Form 10-K for the year ended December 31, 2013
|
|
|
10.15
|
Golf Center Sponsorship Agreement with Taylor Made Golf Company, Inc. *
|
Incorporated by reference Exhibit 10.2 to the Registrant’s Report on Form 10-Q for the quarter ended March 31, 2014
|
10.16
|
Promissory notes to Ron Boreta and John Boreta dated December 18, 2014
|
Incorporated by reference Exhibit 10.16 to the Registrant’s Report on Form 10-K for the year ended December 31, 2014
|
|
14
|
Code of Ethics
|
Incorporated by reference to
Exhibit 14 to the Registrant’s
Annual Report on Form 10-KSB for t
he year ended December 31, 2007
|
|
|
|
|
|
|
21
|
Subsidiaries of the
Registrant
|
Incorporated by reference to Exhibit 21 to the Registrant’s Form SB-2 Registration Statement (No. 33-84024)
|
|
|
|
|
31
|
Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
Filed herewith electronically
|
|
|
|
|
|
|
|
32
|
Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 18 U.S.C. Section 1350
|
Filed herewith electronically
|
|
|
|
|
|
|
*
|
Confidential treatment has been granted as to a portion of this exhibit, which portion had been omitted and filed separately with the Securities and Exchange Commission.
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
All-American Sportpark, Inc.
We have audited the accompanying consolidated balance sheets of All-American Sportpark, Inc. as of December 31, 2015 and 2014, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2015. All-American Sportpark, Inc.’s management is responsible for these financial statements. 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 audits 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 financial statements referred to above present fairly, in all material respects, the financial position of All-American Sportpark, Inc. as of December 31, 2015 and 2014, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ RBSM, LLP
RBSM, LLP
|
|
|
Henderson, Nevada
|
|
|
March 30, 2016
|
|
|
|
A
LL
-A
MERICAN
S
PORTPARK
, I
NC
.
C
ONSOLIDATED
B
ALANCE
S
HEETS
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash
|
$
|
5,856
|
|
$
|
2,200
|
Accounts receivable
|
|
18,339
|
|
|
3,000
|
Prepaid expenses and other current assets
|
|
15,274
|
|
|
5,737
|
Total current assets
|
|
39,469
|
|
|
10,937
|
|
Property and equipment, net of accumulated depreciation of
$838,758 and $726,592, respectively
|
|
|
|
|
|
|
527,373
|
|
|
601,164
|
|
Total Assets
|
$
|
566,842
|
|
$
|
612,101
|
|
Liabilities and Stockholders' Deficit
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Cash in excess of available funds
|
$
|
29,371
|
|
$
|
20,018
|
Accounts payable and accrued expenses
|
|
304,250
|
|
|
282,375
|
Accounts Payable and accrued expense - related party
Current portion of deferred revenue
|
|
469,450
125,000
|
|
|
248,650
75,000
|
Current portion of notes payable - related
|
|
|
|
|
|
parties
|
|
4,299,226
|
|
|
4,386,056
|
Current portion of due to related parties
|
|
1,724,286
|
|
|
1,617,550
|
Current portion of capital lease obligation
|
|
32,082
|
|
|
30,520
|
Accrued interest payable - related party
|
|
6,205,675
|
|
|
5,825,801
|
Total current liabilities
|
|
13,189,340
|
|
|
12,485,970
|
|
Long-term liabilities:
|
|
|
|
|
|
Long-term portion of capital lease
|
|
|
|
|
|
obligation
|
|
33,623
|
|
|
65,806
|
Deferred revenue
|
|
100,000
|
|
|
100,000
|
Deferred rent liability
|
|
560,438
|
|
|
604,219
|
Total long-term liabilities
|
|
694,061
|
|
|
770,025
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' (deficit):
|
|
|
|
|
|
Preferred stock, Series "B", $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 50,000,000 shares authorized, 4,624,123 and 4,624,123 shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,624
|
|
|
4,624
|
|
|
Prepaid equity-based compensation
|
|
(944)
|
|
|
(4,626)
|
|
|
Additional paid-in capital
|
|
14,408,270
|
|
|
14,408,270
|
|
|
Accumulated deficit
|
|
(28,169,696
|
)
|
|
(27,450,306
|
)
|
|
Total All-American SportPark, Inc. stockholders’ deficit
|
|
(13,757,746
|
)
|
|
(13,042,038
|
)
|
|
Non-controlling interest in subsidiary
|
|
441,187
|
|
|
398,144
|
|
|
Total stockholder’s deficit
|
|
(13,316,559
|
)
|
|
(12,643,894
|
)
|
|
|
|
Total Liabilities and Stockholders' Deficit
|
$
|
566,842
|
|
|
$ 612,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
A
LL
-A
MERICAN
S
PORTPARK
, I
NC
.
C
ONSOLIDATED
S
TATEMENTS OF
O
PERATIONS
|
|
For the Years Ended December 31,
|
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
Revenue
|
$
|
1,850,323
|
|
|
$
|
1,968,159
|
|
Revenue – Related Party
|
|
166,779
|
|
|
|
163,800
|
|
Total Revenue
|
|
2,017,102
|
|
|
|
2,131,959
|
|
|
Cost of revenue
|
|
620,296
|
|
|
|
671,118
|
|
|
Gross profit
|
|
1,396,806
|
|
|
|
1,460,841
|
|
|
Expenses:
|
|
|
|
|
|
|
|
General & administrative
|
|
1,432,615
|
|
|
|
1,444,714
|
|
Depreciation and amortization
|
|
110,031
|
|
|
|
112,892
|
|
Total expenses
|
|
1,542,646
|
|
|
|
1,557,606
|
|
|
Loss from operations
|
|
(145,840)
|
|
|
|
(96,765)
|
|
|
Other expense
|
|
|
|
|
|
|
|
Interest expense
|
|
(530,507)
|
|
|
|
(531,229)
|
|
|
|
|
|
|
|
|
|
Total other expense
|
|
(503,507)
|
|
|
|
(531,229)
|
|
|
Net loss before provision for income tax
|
|
(676,347)
|
|
|
|
(624,994)
|
|
Provision for income tax expense
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
(676,347)
|
|
|
|
(624,994)
|
|
|
|
|
|
|
|
|
|
Net income attributable to non-controlling interest
|
|
43,043
|
|
|
|
80,333
|
|
Net loss attributable to All-American SportPark, Inc.
|
$
|
(719,390)
|
|
|
$
|
(705,327)
|
|
Weighted average number of common shares outstanding-basic and fully diluted
|
|
4,624,123
|
|
|
|
4,624,123
|
|
|
Net loss per share – basic and fully diluted
|
$
|
(0.15)
|
|
|
$
|
(0.14)
|
|
The accompanying notes are an integral part of these consolidated financial statements.
A
LL
-A
MERICAN
S
PORTPARK
, I
NC
.
C
ONSOLIDATED
S
TATEMENTS
O
F
S
TOCKHOLDERS
’ D
EFICIT
F
OR
T
HE
Y
EARS
E
NDED
D
ECEMBER
31, 2015 A
ND
2014
|
|
|
|
|
|
|
|
Common Stock
|
Prepaid
Equity Based
Compensation
|
Additional
Paid in
Capital
|
|
Non-
Controlling
Interest
|
|
|
Accumulated
Deficit
|
|
|
Shares
|
Amount
|
Total
|
Balance, December 31, 2013
|
4,624,123
|
$ 4,624
|
$(10,294)
|
$ 14,408,270
|
$(27,450,306)
|
$ 317,811
|
$(12,024,568)
|
|
|
|
|
|
|
|
|
Amortization of prepaid equity based compensation
|
-
|
$ -
|
$ 5,668
|
$ -
|
$ -
|
$ -
|
$5,668
|
|
|
|
|
|
|
|
|
Net Loss
|
-
|
$ -
|
$ -
|
$ -
|
$ (705,327)
|
$80,333
|
$ (624,994)
|
|
|
|
|
|
|
|
|
Balance, December 31, 2014
|
4,624,123
|
$ 4,624
|
$ (4,626)
|
$ 14,408,270
|
(27,450,306)
|
$ 398,144
|
$(12,643,894)
|
|
|
|
|
|
|
|
|
Amortization of prepaid equity based compensation
|
|
|
|
|
|
|
|
-
|
$ -
|
$ 3,682
|
$ -
|
$ -
|
$ -
|
$ 3,682
|
|
|
|
|
|
|
|
|
Net Loss
|
-
|
$ -
|
$ -
|
$ -
|
$ (719,390)
|
$ 43,043
|
$ (676,347)
|
|
|
|
|
|
|
|
|
Balance, December 31, 2015
|
4,624,123
|
$ 4,624
|
$ (944)
|
$ 14,408,270
|
$(28,169,696)
|
$ 441,187
|
$(13,316,559)
|
The accompanying notes are an integral part of these consolidated financial statements.
A
LL
-A
MERICAN
S
PORTPARK
, I
NC
.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
For the Years Ended December 31,
|
|
2015
|
|
2014
|
|
Cash flows from operating activities
|
|
|
|
|
|
Net loss
|
$
|
(676,347)
|
|
$
|
(624,994)
|
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
110,031
|
|
|
112,892
|
Loss on disposal of property and
equipment
|
|
3,682
|
|
|
5,668
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
(15,339)
|
|
|
(2,039)
|
Prepaid expenses
|
|
(9,537)
|
|
|
(2,066)
|
Cash in excess of available funds
|
|
9,353
|
|
|
(738)
|
Accounts payable and accrued
expenses
Accounts Payable and accrued expense-related parties
|
|
220,800
21,875
|
|
|
111,150
2,073
|
Deferred revenue
|
|
50,000
|
|
|
50,000
|
Deferred rent liability
|
|
(43,781)
|
|
|
(43,780)
|
Accrued interest payable – related
parties
|
|
379,874
|
|
|
425,020
|
Net cash provided by (used in) operating activities
|
|
50,611
|
|
|
33,168
|
|
Cash flows from investing activities
|
|
|
|
|
|
Purchase of property and equipment
|
|
(36,240)
|
|
|
(50,487)
|
Net cash used in investing activities
|
|
(36,240)
|
|
|
(50,487)
|
|
Cash flows from financing activities
|
|
|
|
|
|
Proceeds from related parties
|
|
321,733
|
|
|
78,505
|
Payment to related parties
Payments on capital lease obligation
|
|
(214,997)
(30,621)
|
|
|
-
(35,565)
|
Proceeds from notes payable – related parties
|
|
39,720
|
|
|
71,561
|
Payments on notes payable – related parties
|
|
(126,550)
|
|
|
(95,000)
|
Net cash provided by (used in) financing activities
|
|
(10,750)
|
|
|
19,501
|
|
Net increase (decrease) in cash
|
|
3,656
|
|
|
2,200
|
Cash – beginning
|
|
2,200
|
|
|
0
|
Cash – ending
|
$
|
5,856
|
|
$
|
2,200
|
Supplemental disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
$
|
43,926
|
|
$
|
2,532
|
|
|
|
|
|
|
Income Taxes Paid
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
ALL -AMERICAN SPORTPARK, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 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 51% owned subsidiary,
All-American Golf Center, Inc. (“AAGC”), collectively the “Company”. All
significant intercompany accounts and transactions have been eliminated. The
Company’s business operations consisting solely of the TaylorMade Golf
Experience (“TMGE”) are included in AAGC.
b. BUSINESS ACTIVITIES
The TMGE includes the Divine Nine par 3 golf course fully lighted for night
golf, a 110-tee two-tiered driving range, a 20,000 square foot clubhouse which
includes two TaylorMade Golf fitting bays and two tenants: the Saint Andrews
Golf Shop retail store, Flight Deck Bar and Grill.
Because our business activities are not structured on the basis of different
services provided, the above activities are reviewed, evaluated and reported as
a single reportable segment. The Company is based in and operates solely in Las
Vegas, Nevada, and does not receive revenues from other geographic areas
although its tourist customers come from elsewhere. No one customer of the
Company comprises more than 10% of the Company's revenues.
c. CONCENTRATIONS OF RISK
The Company has implemented various strategies to market the TMGE to Las
Vegas tourists and local residents. Should attendance levels at the TMGE 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 12 months.
d. RECLASSIFICATIONS
Certain reclassifications have been made in prior periods’ financial
statements to conform to classifications used in the current period.
NOTE 2
.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. CASH AND CASH EQUIVALENTS
All highly liquid investments with original maturities of three months or
less are classified as cash and cash equivalents. The fair value of cash and
cash equivalents approximates the amounts shown on the financial statements.
Cash and cash equivalents consist of unrestricted cash in accounts maintained
with major financial institutions.
b. INCOME TAXES
The Company accounts for income taxes under the asset and liability method,
which requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements. Under this method, deferred tax assets and liabilities
are determined based on the differences between the financial statements and
tax basis of assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse. The effect of a change
in tax rates on deferred tax assets and liabilities is recognized in income in
the period that includes the enactment date. The Company records net deferred
tax assets to the extent the Company believes these assets will more likely
than not be realized. In making such determination, the Company considers all
available positive and negative evidence, including future reversals of
existing taxable temporary differences, projected future taxable income, tax
planning strategies and recent financial operations. A valuation allowance is
established against deferred tax assets that do not meet the criteria for
recognition. In the event the Company were to determine that it would be able
to realize deferred income tax assets in the future in excess of their net
recorded amount, the Company would make an adjustment to the valuation
allowance which would reduce the provision for income taxes.
The Company follows the accounting guidance which provides that a tax
benefit from an uncertain tax position may be recognized when it is more likely
than not that the position will be sustained upon examination, including
resolutions of any related appeals or litigation processes, based on the
technical merits. Income tax positions must meet a more-likely-than-not recognition
threshold at the effective date to be recognized initially and in subsequent
periods. Also included is guidance on measurement, de-recognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition.
c
.
STOCK-BASED COMPENSATION
The Company accounts for all compensation related to stock, options or
warrants using a fair value based method whereby compensation cost is measured
at the grant date based on the value of the award and is recognized over the
service period, which is usually the vesting period. The Company uses the
Black-Scholes pricing model to calculate the fair value of options and warrants
issued to both employees and non-employees. Stock issued for compensation is
valued using the market price of the stock on the date of the related
agreement.
d. 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 has 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
|
15-25 years
|
e. ADVERTISING
The Company expenses advertising costs as incurred. Advertising costs
charged to continuing operations amounted to $36,562 and $43,168 in 2015 and 2014,
respectively.
f. REVENUES
The Company primarily earns revenue from golf course green fees, driving
range ball rentals and golf club and cart rentals, which are recognized when
received as payments for the services provided. The Company also receives
marketing revenue associated with the Taylor Made Agreement that they realize
equally on a monthly basis over the life of the agreement. Lease and
sponsorship revenues are recognized as appropriate when earned.
g. 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 scorecards, etc.), and credit card and check processing
fees.
h. GENERAL AND ADMINISTRATIVE EXPENSES
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.).
i. 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.
j. LEASES
The Company leases land and equipment. Leases are evaluated and classified
as operating or capital leases for financial reporting purposes. The lease term
used for lease evaluation related to the land includes option periods as the
Company believes the option period can be reasonably assured and failure to
exercise such option would result in an economic penalty. For equipment, option
periods are included only in instances in which the exercise of the option
period can be reasonably assured and failure to exercise such options would
result in economic penalty.
k. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company adopted the FASB standard related to fair value measurement at
inception. The standard defines fair value, establishes a framework for
measuring fair value and expands
disclosure of fair
value measurements. The standard applies under other accounting pronouncements
that require or permit fair value measurements and, accordingly, does not
require any new fair value measurements. The standard clarifies that fair value
is an exit price, representing the amount that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants. As such, fair value is a market-based measurement that should be
determined based on assumptions that market participants would use in pricing
an asset or liability. The recorded values of long-term debt approximate their
fair values, as interest approximates market rates. As a basis for considering
such assumptions, the standard established a three-tier fair value hierarchy,
which prioritizes the inputs used in measuring fair value as follows:
-
Level 1: Observable inputs such as quoted prices in active
markets;
-
Level 2: Inputs, other than quoted prices in active
markets, that are observable either directly or indirectly; and
-
Level 3: Unobservable inputs in which there is little or
no market data, which require the reporting entity to develop its own
assumptions.
At each of December 31, 2015 and 2014, the carrying amount of cash, accounts
receivable, notes payable, and accounts payable and accrued liabilities
approximates fair value because of the short maturity of these instruments.
l. EARNINGS (LOSS) PER SHARE
Basic earnings per share excludes any dilutive effects of options, warrants,
and convertible securities. Basic earnings per share is computed using the
weighted average number of shares of common stock and common stock equivalent
shares outstanding during the period. Common stock equivalent shares are
excluded from the computation if their effect is antidilutive. The Company did
not have any stock equivalent shares for the years ended December 31, 2015 and 2014.
Loss per share is computed by dividing reported net 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 loss
per share was 4,624,123 in 2015 and 4,624,123 in 2014, respectively.
m. RECENT ACCOUNTING POLICIES
The Company believes there was no new accounting guidance adopted but not
yet effective that either has not already been disclosed in prior reporting
periods or is relevant to the readers of the Company’s financial statements.
The Company continually assesses any new
accounting pronouncements to determine their applicability to the Company.
Where it is determined that a new accounting pronouncement affects the
Company’s financial reporting, the Company undertakes a study to determine the
consequence of the change to its financial statements and assures that there are
proper controls in place to ascertain that the Company’s financials properly
reflect the change.
NOTE 3.
GOING CONCERN
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 2015, the Company had net
loss of $676,347. As of December 31, 2015, the Company had a working capital
deficit of $13,149,871 and a shareholders' equity deficiency of $13,316,559.
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 including the restructuring of current debt as needed, which may
include Company officers or directors and/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. The inability to build attendance to profitable
levels beyond a 12-month period may require the Company to seek additional
debt, restructure existing 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.
Nevertheless, 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 TMGE 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.
NOTE 4
.
RELATED PARTY TRANSACTIONS
Due to related parties
The Company’s employees provide administrative/accounting support for (a)
three golf retail stores, one of which is named Saint Andrews Golf Shop
("SAGS") and the others named Las Vegas Golf and Tennis
("District Store") and Las Vegas Golf and Tennis (“Westside, 15
Store”), owned by the Company's President and his brother. The SAGS store is
the retail tenant in the TMGE.
Administrative/accounting payroll and employee benefits expenses are
allocated based on an annual review of the personnel time expended for each
entity. Amounts allocated to these related
parties by the Company approximated $20,925 and $19,875 for the years ended December 31, 2015 and 2014, respectively. The Company records this allocation by reducing the related expenses and allocating them to the related parties.
In addition to the administrative/accounting support provided by the Company to the above stores, the Company received funding for operations from these and various other stores owned by the Company’s President, his brother, and the former Chairman. These funds helped pay for office supplies, phone charges, postages, and salaries. The net amount due to these stores totaled $1,724,286 and $1,617,550 as of December 31, 2015 and 2014, respectively. The amounts are non-interest bearing and due out of available cash flows of the Company. Additionally, the Company has the right to offset the administrative/accounting support against the funds received from these stores.
Both Ronald Boreta and John Boreta have continued to defer half of their monthly salaries until the Company is in a more positive financial state. The amounts deferred for 2015 and 2014 were $97,500 and $97,500, respectively.
Notes and Interest Payable to Related Parties:
The Company has various notes and interest payable to the following entities as of December 31, 2015 and 2014:
|
|
|
|
|
|
|
2015
|
|
2014
|
Various notes payable to Vaso Boreta
bearing 10% per annum and due on demand (1)
|
|
|
|
|
$
|
3,200,149
|
$
|
3,200,149
|
Note payable to BE Holdings 1, LLC,
bearing 10% per annum and due on demand (2)
|
|
|
|
|
|
|
|
|
|
100,000
|
|
100,000
|
Various notes payable to SAGS, bearing 10%
per annum and due on demand (3)
|
|
|
|
|
|
704,656
|
|
813,846
|
|
|
|
|
|
Notes Payable Short-term Debt Westside 15, LLC
With no interest based on payment made by end of December 2016 (4)
|
|
93,921
|
|
71,561
|
|
|
|
|
|
Note payable to BE III, LLC, bearing 10%
Per annum and due on demand (4)
|
|
200,500
|
|
200,500
|
|
|
|
TOTAL
|
$
|
4,299,226
|
$
|
4,386,056
|
1) Vaso Boreta is the former Company's Chairman of the Board who passed away in October 2014.
|
2) BE Holdings, LLC is owned by Ronald Boreta and John Boreta.
|
3) Saint Andrews is owned by Ronald Boreta and John Boreta.
|
4) Westside 15, LLC is owned by Ronald Boreta and John Boreta.
|
5) BE III, LLC is owned by Ronald Boreta and John Boreta.
|
All maturities of related party notes payable except Westside 15, LLC and
the related accrued interest are payable upon demand. At December 31, 2015, the
Company has no loans or other obligations with restrictive debt or similar
covenants.
On June 15, 2013, we entered into a “Stock Transfer Agreement” with Saint
Andrews Golf Shop, Ltd. a Nevada limited liability company, which is
wholly-owned by Ronald Boreta, our chief executive officer and John Boreta, a
principal shareholder of the Company. Pursuant to this agreement, we agreed to
transfer a 49% interest in our wholly owned subsidiary, AAGC as a partial
principal payment in the amount of $600,000 on our outstanding loan due to
Saint Andrews Golf Shop, Ltd. In March 2013, we engaged the services of an independent
third party business valuation firm, Houlihan Valuation Advisors, to determine
the fair value of the business and the corresponding minority interest. Based
on the Minority Value Estimate presented in connection with this appraisal,
which included valuations utilizing the income, market and transaction
approaches in its valuation methodology, the fair value of a 49% interest
totaled $600,000.
Interest expense on related party notes totaled $530,507 and $531,229 for
the years ended December 31, 2015 and 2014, respectively.
As of December 31, 2015 and 2014, accrued interest payable - related parties
related to the notes payable – related parties totaled $6,205,675 and $5,825,801,
respectively.
John Boreta, who became a Director of the Company in 2013, has been employed
by All-American Golf Center (“AAGC”), a subsidiary, as its general manager for
over 12 years. On June 15, 2009, AAGC entered into an employment agreement with
John Boreta. The employment agreement was for a period through June 15, 2012 and
provided for a base annual salary of $75,000. Although the term of the
employment agreement ended in June 2012, he continues to be employed on the
same basis. During 2014, John Boreta received compensation of $81,000 for his
services in that capacity, which includes an auto allowance of $6,000. He also
received medical compensation of $15,662. In 1994, the Company entered into an
employment agreement with Ronald S. Boreta, the Company's President, and Chief
Executive Officer, pursuant to which he received a base salary that was
increased to $120,000 beginning the year ended December 31, 1996. The term of
the employment agreement ended in May 2012, but he continues to be employed by
the Company on the same basis. Ronald S. Boreta receives the use of an automobile,
for which the Company pays all expenses and full medical and dental coverage
which totals $758 a month. Ronald S. Boreta has agreed that for a period of
three years from the termination of his employment agreement that he will not
engage in a trade or business similar to that of the Company.
Lease to SAGS
The TMGE has two tenant operations. The first is the Saint Andrews Golf Shop
that occupies approximately 4,300 square feet for golf retail sales and pays a
fixed monthly rent that includes a prorated portion of maintenance and property
tax expenses of $13,104 for its retail and office space. The lease is for
fifteen years through July 2012. The tenant has two options to extend for five
years in July 2012 and July 2017 with a 5% rent increase for each extension. The
Company will extend the lease in July 2017. The tenant extended their first
option starting August 2012. For the years ended December 31, 2015 and 2014,
the Company recognized rental income totaling $166,779 and $163,800
respectively.
NOTE 5. PROPERTY AND EQUIPMENT
Property and equipment included the following as
of December 31:
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
--------------
|
|
|
--------------
|
|
Furniture and Equipment
|
$
|
100,196
|
|
$
|
63,956
|
|
Other Leasehold Improvement
|
|
160,886
|
|
|
160,886
|
|
Building
|
|
252,445
|
|
|
252,445
|
|
Land Improvements
|
|
495,351
|
|
|
495,351
|
|
Landscape Equipment
|
|
67,245
|
|
|
67,245
|
|
Other
|
|
145,563
|
|
|
145,563
|
|
Leased Equipment
|
|
144,445
|
|
|
142,247
|
|
|
|
--------------
|
|
|
---------------
|
|
|
|
1,366,131
|
|
|
1,327,693
|
|
Less: Accumulated Depreciation
|
|
|
|
|
|
|
|
(838,757
|
)
|
|
(726,529
|
)
|
|
$
|
527,374
|
|
$
|
601,164
|
|
Depreciation expenses totaled $110,031 and $112,892 for the years ended
December 31, 2015 and 2014, respectively.
NOTE 6
.
COMMITMENTS
Leases
The land underlying the TMGE is leased under an operating lease that expires
in 2013 and has two five-year renewal options. In March 2006, the Company
exercised the first of two options, extending the lease to 2018. Also, the
lease has a provision for contingent rent to be paid by AAGC upon reaching
certain levels of gross revenues. The Company recognizes the minimum rental
expense on a straight-line basis over the term of the lease, which includes the
two five year renewal options.
In December 2013 TMGE entered into a leasing agreement with Chase bank for 30 golf carts. The lease is for 48 months with monthly payments totaling $2,670.70 The current portion of the obligations under this lease agreement is $32,082 and the long term portion of the obligations under this lease is $33,623.
At December 31, 2015, minimum future lease payments under non-cancelable operating leases are as follows:
|
|
|
|
|
|
2016
|
|
529,840
|
2017
|
|
397,380
|
2018
|
|
145,707
|
Thereafter
|
|
2,768,417
|
|
|
$
|
3,841,344
|
Customer Agreement
On June 19, 2009, AAGC entered into a Customer Agreement with Callaway Golf Company ("Callaway") and Saint Andrews pursuant to which Callaway has agreed to make certain cash payments and other consideration to AAGC and Saint Andrews in exchange for an exclusive marketing arrangement for the golf center operated by AAGC. Callaway is a major golf equipment manufacturer and supplier.
On March 9, 2014, AAGC entered into an amendment to its Customer Agreement with Callaway (the “Amendment”). The Amendment provided that AAGC was to use all reasonable efforts to negotiate and enter into a non-exclusive written contract with an alternative retail branding partner. In the event that AAGC was successful in executing a written contract with an alternative retail branding partner, the Customer Agreement would terminated on June 30, 2014.
Pursuant to the terms of the Amendment, Callaway was not required to pay any marketing funds or other fees or expenses required under the Customer Agreement during the first two quarters of 2014. The Amendment also provided that Callaway could, at its option, continue to feature its products in a second position at the golf center
,
of which they have chosen to do,
after
termination of the Customer Agreement, under certain terms and conditions.
Sponsorship Agreement
On March 27, 2014, AAGC entered into a Golf Center Sponsorship Agreement (“Sponsorship Agreement”) with Taylor Made Golf Company, Inc., doing business as TaylorMade-adidas Golf Company (“TMaG”) pursuant to which the golf center operated by AAGC was to be rebranded using TaylorMade® and other TMaG trademarks.
As part of the Sponsorship Agreement, TMaG agreed to reimburse AAGC for the reasonable costs associated with the rebranding efforts, including the costs associated with the build-out of
the golf center and a new performance lab (described below), up to a specified maximum amount. In addition AAGC received a payment of $200,000 upon execution of the Sponsorship Agreement and, so long as AAGC continues to operate the golf center and comply with the terms and conditions of the Sponsorship Agreement TMaG made additional payments to AAGC on each of March 2014 and March 2015.
The Sponsorship Agreement provides that TMaG would install a performance lab at AAGC's facility that would include one nine-camera motion analysis system and one putting lab, and would provide additional services, equipment, supplies and resources for the golf center. The performance lab was installed in 2014.
The Sponsorship Agreement includes provisions concerning the display of TMaG merchandise, payment terms, retail sales targets and other related matters. Also, Saint Andrews Golf Shop, a tenant of AAGC which is owned by Ronald Boreta, the Company's President, and John Boreta, a Director of the Company, will receive a quarterly rebate based on the wholesale price of the TMaG merchandise purchased at the golf center. In addition, provided that the Las Vegas Golf and Tennis stores owned by Ronald Boreta and John Boreta maintain TMaG as their premier vendor at its locations, TMaG will pay such stores a quarterly rebate based on the wholesale price of the TMaG merchandise purchased at those locations.
The initial term of the Sponsorship Agreement is for five years. AAGC and TMaG may mutually agree in writing to extend the Sponsorship Agreement for an additional four year period; provided that the option to renew the Agreement shall be determined by the parties not later than ninety (90) days prior to the end of the initial term and shall be consistent with the AAGC's lease on its golf center property.
NOTE 7. INCOME TAXES
Income tax expense (benefit) consists of the following:
|
2015
|
|
2014
|
Current tax
|
|
$ 27,529
|
|
$ 4,143
|
Deferred tax
|
|
(244,391)
|
|
(220,926)
|
Valuation allowance
|
|
216,862
|
|
216,783
|
|
|
$ -
|
|
$ -
|
|
|
|
|
|
|
|
2015
|
|
2014
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
Temporary differences related to:
Depreciation
|
|
(167,752)
|
|
(142,855)
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
Net operating loss carry forward
|
|
5,099,568
|
|
4,787,809
|
Related Party interest
|
|
2,171,986
|
|
2,039,030
|
Other
|
|
-
|
|
-
|
|
|
|
|
|
Net deferred tax asset before
valuation allowance
|
|
7,103,802
|
|
6,683,984
|
Valuation Allowance
|
|
(
7,103,802
)
|
|
(6,683,984)
|
|
|
$ -
|
|
$ -
|
|
|
|
|
|
|
|
2015
|
|
2014
|
Income tax at federal rate
|
|
35.00%
|
|
35.00%
|
Permanent differences
|
|
-35.00%
|
|
-35.00%
|
|
|
|
|
|
Effective income tax rate
|
|
0.00%
|
|
0.00%
|
As of December 31, 2015 and 2014, the Company has available for income tax purposes approximately $22.0 and $22.0 million respectively in federal net operating loss carry forwards, which may be available to offset future taxable income. These loss carry forwards expire in 2020 through 2033. The Company may be limited by Internal Revenue Code Section 382 in its ability to fully utilize its net operating loss carry forwards due to possible future ownership changes. A 100% valuation allowance has been effectively 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.
NOTE 8. CAPITAL STOCK, STOCK OPTIONS, AND INCENTIVES
CAPITAL STOCK
Preferred stock, Series "B", $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively.
Common stock, $0.001 par value, 50,000,000 shares authorized, 4,624,123 and 4,624,123 shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively.
On May 24, 2013, the Company granted 68,000 shares of restricted common stock to one director and one employee for services. In accordance with the terms of the grant, the shares will vest in full at the end of two years from the date of grant for the director. The restricted common stock granted to the employee will vest in full at the end of three years from the date of grant. The Company has recorded prepaid stock-based compensation of $13,600 representing the estimated fair value on the date of grant, and will amortize the fair market value of the shares to compensation expense ratably over the two and three year vesting periods.
Also on May 24, 2013, the Company granted 34,000 shares of common stock to a director for past services. These shares are fully vested. The fair value on the date of grant of $6,800 was recorded as stock-based compensation.
NOTE 9
.
SUBSEQUENT EVENTS
Management has evaluated all subsequent events through the date of the filing and noted none.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned there under duly authorized.
ALL-AMERICAN SPORTPARK, INC.
|
|
|
Dated: March 30, 2016
|
By:
|
/s/ Ronald S. Boreta
|
|
|
Ronald S. Boreta, Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)
|
|
|
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
|
|
|
|
SIGNATURE
|
|
TITLE
|
DATE
|
|
|
/s/ Ronald S. Boreta
|
|
President (Chief Executive Officer),Treasurer (Principal Financial Officer) and Director
|
March 30, 2016
|
Ronald S. Boreta
|
|
|
|
|
|
/s/ Steven Miller
|
|
Director
|
March 30, 2016
|
Steven Miller
|
|
|
|
|
/s/ Cara Corrigan
|
|
Director
|
March 30, 2016
|
Cara Corrigan
|
|
|
|
|
/s/ John Boreta
|
|
Director
|
March 30, 2016
|
John Boreta
|
|
|
|
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