<PAGE>
<PAGE>
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 March 31, 1999
Commission File Number: 0-24970
ALL-AMERICAN SPORTPARK, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 88-0203976
- ------------------------------- ---------------------------------
(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___
As of May 12, 1999, 3,000,000 shares of common stock were outstanding.
Transitional Small Business Disclosure Format (check one): Yes___ No X
<PAGE>
<PAGE>
ALL-AMERICAN SPORTPARK, INC.
FORM 10-QSB
INDEX
Page Number
PART I: FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets -
March 31, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Operations -
Three Months Ended March 31, 1999 and 1998 5
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1999 and 1998 6
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis or
Plan of Operation 11
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 14
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 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
2
<PAGE>
<PAGE>
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1999 1998
----------- -----------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,539,337 $ 2,494,300
Accounts receivable 563,039 799,200
Inventory 91,862 99,500
Due from Affiliated Store 54,097 14,900
Due from Related Entities 357,453 257,900
Prepaid expenses and other 257,595 50,100
----------- -----------
Total current assets 2,863,383 3,715,900
Leasehold improvements and equipment, net 24,334,852 24,513,600
Note receivable - related party 20,000 20,000
Deposit for land lease 69,391 225,600
Debt issuance costs, net 375,156 393,300
Other assets 28,345 82,900
----------- -----------
Total assets $27,691,127 $28,951,300
=========== ===========
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
<PAGE>
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, December 31,
1999 1998
----------- -----------
(Unaudited)
CURRENT LIABILITIES:
Current portion of long-term debt $ 515,470 $ 559,300
Current portion of obligations under
capital leases 145,446 118,400
Accounts payable and accrued expenses 956,685 1,277,200
Due to Affiliated Store 59,949 26,500
Payable to Shareholder and Related Entities 1,399,813 1,315,000
----------- -----------
Total current liabilities 3,077,363 3,296,400
----------- -----------
Note payable to shareholder 1,480,000 1,705,300
Long-term debt, net of current portion 13,371,578 13,408,100
Obligation under capital leases, net
of current portion 474,776 530,300
Deferred income 891,863 877,100
SHAREHOLDERS' EQUITY:
Series A Convertible Preferred Stock, $.001
par value, 500,000 shares authorized and
outstanding at March 31, 1999 and
December 31, 1998 4,740,000 4,740,000
Series B Convertible Preferred Stock, $.001
par value, 250,000 shares authorized and
outstanding at March 31, 1999 and
December 31, 1998 2,500,000 2,500,000
Options issued in connection with Series A
Convertible Preferred Stock to purchase
250,000 shares of common stock 260,000 260,000
Options issued in connection with financing 174,000 174,000
Common stock, $.001 par value, 10,000,000
shares authorized, 3,000,000 shares issued
and outstanding at March 31, 1999 and
December 31, 1998 3,000 3,000
Additional paid-in-capital 3,520,800 3,333,300
Common stock purchase warrants, Class A,
1,000,000 warrants authorized and
outstanding at December 31, 1998 - 187,500
Accumulated deficit (2,802,253) (2,063,700)
----------- -----------
Total shareholders' equity 8,395,547 9,134,100
----------- -----------
Total Liabilities and Shareholders' Equity $27,691,127 $28,951,300
=========== ===========
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
<PAGE>
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
----------- -----------
REVENUE:
SportPark Las Vegas $ 1,049,487 $ -
Callaway Golf Center[TM] 483,003 501,700
Other 6,250 36,400
----------- -----------
Total revenue 1,538,740 538,100
COST OF REVENUE:
SportPark Las Vegas 219,434 -
Callaway Golf Center[TM] 71,130 75,700
----------- -----------
Total cost of revenue 290,564 75,700
----------- -----------
GROSS PROFIT 1,248,176 462,400
OPERATING EXPENSES:
Selling, general and administrative 1,262,079 993,700
Depreciation and amortization 404,843 116,600
Preopening expense - 22,800
----------- -----------
Total operating expenses 1,666,922 1,133,100
----------- -----------
OPERATING LOSS (418,746) (670,700)
Net interest (expense) income (319,807) (135,100)
----------- -----------
Loss from continuing operations before
income taxes and minority interest (738,553) (805,800)
Provision for income taxes - -
----------- -----------
Loss from continuing operations before
minority interest (738,553) (805,800)
Minority interest - 54,400
----------- -----------
NET LOSS $ (738,553) $ (751,400)
=========== ===========
NET LOSS PER SHARE:
Basic and Diluted:
Net loss per share $ (.25) $ (.25)
=========== ===========
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
<PAGE>
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (738,553) $ (751,400)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Minority interest - (54,400)
Depreciation and amortization 561,052 154,500
Preopening expense amortization - 22,800
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 236,161 (223,900)
Decrease in inventory 7,638 -
(Increase) decrease in prepaid expenses
and other (166,556) 16,300
Increase (decrease) in accounts payable
and accrued expenses (320,515) 2,129,500
Increase in deferred income 14,763 53,800
----------- -----------
Net cash provided by (used in) operating
activities (406,010) 1,347,200
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Project development costs - (5,617,600)
Leasehold improvements expenditures (154,488) -
Leasehold improvements and equipment
disposals, net - 19,900
----------- -----------
Net cash used in investing activities (154,488) (5,597,700)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of line of credit - (668,400)
Proceeds from notes payable and note
payable to shareholder - 4,650,800
Increase (decrease) in payable to Affiliate
Store and Related Entities, net (20,488) 258,400
Payments on notes payable and notes payable
to shareholder (345,499) -
Principal payments on capital lease
obligations (28,478) (20,200)
----------- -----------
Net cash provided by (used in)
financing activities (394,465) 4,220,600
----------- -----------
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
<PAGE>
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Continued)
1999 1998
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS $ (954,963) $ (29,900)
CASH AND CASH EQUIVALENTS,
Beginning of period 2,494,300 176,000
----------- -----------
CASH AND CASH EQUIVALENTS,
End of period $ 1,539,337 $ 146,100
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest, net of amounts capitalized $ 341,145 $ 140,533
=========== ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Equipment acquired through issuance of
note payable $ 39,847 $ -
=========== ===========
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
<PAGE>
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements
include the accounts of All-American Sportpark, Inc. ("AASP"), a Nevada
corporation, and its subsidiaries, All-American Golf Center, Inc., and
Sportpark Las Vegas, Inc., (collectively the "Company"). All significant
inter-company accounts and transactions have been eliminated.
The accompanying 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 generally accepted accounting
principles 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 March 31, 1999 and for all periods presented.
Certain reclassifications have been made to previously reported amounts to
conform them to the current presentation.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
These condensed consolidated financial statements should be read in
conjunction with the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1998.
The Company's current operations consist of the management and operation of
a family and sport-oriented theme park under the name "All-American
SportPark" located in Las Vegas, Nevada. The Company's first SportPark
commenced operations on October 9, 1998. Included in this 65 acre SportPark
located on the south end of the Las Vegas "Strip" are major attractions which
include: The Callaway Golf Center[TM] including a 110 tee driving range,
Divine Nine[R] golf course and 20,000 square foot club house; All-American
SportPark Pavilion, Major League Baseball Slugger Stadium, NASCAR SpeedPark
and AllSport Arena.
Las Vegas Discount Golf & Tennis, Inc. ("LVDG"), a publicly traded company,
owns approximately two-thirds of the Company's common stock and one-third of
the Company's convertible preferred stock.
2. CALLAWAY GOLF CENTER[TM]
In the first three months of 1998, the Company operated the Callaway Golf
Center as the managing member of All-American Golf, LLC. The Company owned
80% of the membership units and Callaway Golf Company ("Callaway Golf") owned
the remaining 20% of the membership units. The Callaway Golf Center occupies
approximately forty-two of the sixty-five acre All-American SportPark. The
Callaway Golf Center[TM] opened to the public on October 1, 1997.
8
<PAGE>
<PAGE>
All-American Golf, LLC (the "LLC") was formed by Callaway Golf Company
contributing $750,000 of equity capital and loaning the LLC $5,250,000. The
Company contributed the value of expenses it incurred relating to the design
and construction of the golf center and cash in the combined amount of
$3,000,000.
The Company sold its interest in All-American Golf, LLC to Callaway Golf on
May 5, 1998 but retained the right to repurchase its 80% interest in the LLC
for a period of two years on essentially the same financial terms under which
it had sold its interest. This sale netted the Company approximately $1.5
million in cash and relieved the Company of approximately $3 million in debt.
On December 31, 1998, the Company acquired substantially all of the assets
subject to certain liabilities of All-American Golf, LLC that had been
managing and operating the Callaway Golf Center. Under terms of this asset
purchase agreement, the Company paid Active Media Services, an entity related
to Callaway Golf Company, $1,000,000 in the form of a promissory note payable
in quarterly installments of $25,000 over a 10-year period without interest.
In the accompanying condensed consolidated balance sheets, this promissory
note payable has been discounted to its net present value.
3. SPORTPARK LAS VEGAS LOAN AGREEMENT
On September 15, 1998 the Company entered into a $13,500,000 loan agreement
with Nevada State Bank. The loan is for 15 years with interest measured at
a fixed rate of 4% above the lender's five-year LIBOR rate measured September
1, 1998, 2003 and 2008. The initial interest rate through 2003 is 9.38%.
The loan is secured by substantially all the assets of the Company that
existed at the time the financing was completed. To facilitate this
financing transaction, the owner of the leasehold interest in the land
underlying the SportPark executed a trust deed granting a security interest
in the leased property to Nevada State Bank to secure repayment of the loan.
As consideration for the Landlord's willingness to provide collateral for the
loan, the Company's President, CEO and its Chairman and a related entity
pledged their stock in the Company's parent as additional collateral.
4. EARNINGS PER SHARE AND SHAREHOLDER'S EQUITY
Basic earnings per share is computed by dividing reported earnings by the
weighted average number of common shares outstanding during the period.
Diluted earnings per share reflects the additional dilution for all
potentially dilutive securities such as stock options. However, when an
entity has a loss from continuing operations, no potential common shares are
included in the computation of any diluted per share amounts. As such,
potential dilution has not been considered in the calculations for the
periods presented.
The weighted-average number of common and common equivalent shares used in
the calculation of basic and diluted earnings per share were 3,000,000 for
the three-month periods ended March 31, 1999 and 1998.
On February 16, 1999, the Board of Directors of the Company approved the
award to the President of the Company, Stock Appreciation Rights ("SAR's") as
to 125,000 shares independent of any stock options under the Company's 1998
Stock Incentive Plan. The base value of the SAR's shall be equal to $6 per
share, however no SAR may be exercised unless and until the market price of
the Company's Common Stock equals or exceeds $10 per share. Amounts to be
paid under this agreement are solely in cash and are not to exceed $500,000.
9
<PAGE>
<PAGE>
The SAR's expire on October 26, 2008. The award of these SAR's had no impact
on results of operations for the periods presented in this report.
No other stock options or similar instruments were granted or issued during
the three months ended March 31, 1999.
On December 13, 1994, the Company completed a public offering of 1,000,000
Units, each Unit consisting of one share of Common Stock and one Class A
Common Stock Purchase Warrant. Two of these warrants entitled the holder to
purchase one share of the Company's Common Stock for $6.50, $2 above the
initial public offering price. These warrants expired unexercised on March
15, 1999.
5. RELATED PARTY TRANSACTIONS
The Company has unsecured, ten percent notes payable to shareholder of
$1,480,000 and $1,705,300 at March 31, 1999 and December 31, 1998,
respectively. The Company paid $225,300 on these notes payable in late March
1999.
The Company normally has extensive transactions and relationships with LVDG
and subsidiaries ("Related Entities"), the chairman and principal shareholder
of LVDG, and the retail store owned by the Chairman of LVDG (the "Affiliated
Store"). During the first quarter of 1999, no significant transactions
occurred with the Related Entities.
6. LEASEHOLD IMPROVEMENTS AND EQUIPMENT
Leasehold improvements and equipment include the following as of March 31,
1999 and December 31, 1998:
1999 1998
----------- -----------
Building $17,631,803 $17,592,200
Land Improvements 3,137,400 3,127,150
Furniture and equipment 1,710,218 1,639,900
Leased equipment 1,079,840 1,041,300
Signs 604,215 600,900
Go-Karts 462,780 479,500
Other 385,095 323,350
----------- -----------
25,011,351 24,804,300
----------- -----------
Accumulated depreciation and
amortization (676,499) (290,700)
----------- -----------
$24,334,852 $24,513,600
=========== ===========
7. LEASES
The Company and LVDG share facilities leased from the Chairman of the Board
under a non-cancelable operating lease agreement, which expires January 31,
2005. Rent is allocated 50% to the Company and 50% to LVDG. Monthly rent
from January to November 1998 was $4,230. Effective December 1998, monthly
rent is $1,830.
The land underlying the All-American SportPark is leased to the Company at a
base amount of $52,083 per month allocated $33,173 to the Callaway Golf
10
<PAGE>
<PAGE>
Center and $18,910 to the SportPark Las Vegas ("SPLV"). Also, the lease has
provisions for contingent rent to be paid by the Company upon reaching
certain levels of gross revenues at the All-American SportPark. The lease
commenced October 1, 1997 for the Callaway Golf Center and February 1, 1998
for SPLV. The terms of both leases are 15 years with two five-year renewal
options.
The Company is also obligated under various other capital and non-cancelable
operating leases for equipment that expire at various dates over the next
five years.
8. COMMITMENTS AND CONTINGENCIES
The Company has employment agreements with its President, as well as other
key employees which will require the payment of fixed and incentive based
compensation.
The Company has purchased a comprehensive general liability insurance policy
to cover possible claims for injury and damages from accidents and similar
activities. There is no assurance that it will be sufficient to cover or be
available for future claims.
The Company is involved in certain litigation as both plaintiff and defendant
related to its business activities. Management, based upon consultation with
legal counsel, does not believe that the resolution of these matters will
have a materially adverse effect on the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following information should be read in conjunction with the Company's
condensed consolidated financial statements and related footnotes included in
this report.
OVERVIEW
The Company's continuing operations consist of the management and operation
of a family and sport-oriented theme park under the name "All-American
SportPark". Results of operations for the quarter ended March 31, 1999
include the results of the All-American SportPark in Las Vegas, Nevada which
includes the SportPark Las Vegas and the Callaway Golf Center. The SportPark
Las Vegas commenced operations on October 9, 1998. The Callaway Golf Center
commenced operations in October 1997, the Company sold its 80% interest in
the Callaway Golf Center on May 5, 1998 and then repurchased 100% of the
Callaway Golf Center on December 31, 1998.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1999 AS COMPARED TO
THREE MONTHS ENDED MARCH 31, 1998
REVENUE. Revenue increased to $1,538,740 in 1999 compared to $538,100
in 1998 due primarily to the opening of the SportPark Las Vegas on October 9,
1998. The SportPark Las Vegas contributed $1,049,487 to 1999 revenues. Other
income declined to $6,250 in 1999 from $36,400 in 1998 due primarily to
management fees of $25,200 earned by the Company in 1998 to manage the
Callaway Golf Center; no management fees were earned in 1999 since the
Company now owns 100% of the Callaway Golf Center.
11
<PAGE>
<PAGE>
COST OF REVENUE. Cost of revenue increased to $290,564 in 1999 compared
to $75,700 in 1998 due to the opening of the SportPark Las Vegas on October
9, 1998.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A"). These expenses consist
principally of administrative payroll, rent, professional fees and other
corporate costs. These expenses increased to $1,262,079 in 1999 from $993,700
in 1998. The increase is due mainly to the operations of the SportPark Las
Vegas, which has necessitated increased staffing and increased sales and
marketing costs.
DEPRECIATION AND AMORTIZATION. These costs increased to $404,843 in
1999 compared to $116,600 in 1998 reflecting the higher overall depreciable
base of fixed assets due to the commencement of operations at the SportPark
Las Vegas in October 1998.
NET INTEREST (EXPENSE) INCOME. Net interest expense increased to
$319,807 in 1999 from $135,100 in 1998 due primarily to interest costs on
debt secured by the SportPark Las Vegas which commenced operation in October
1998. In addition, some interest costs were capitalized in 1998 because the
SportPark Las Vegas was under development; however, total borrowings were
less in 1998 compared to 1999.
INCOME TAXES. Due to operating losses, the Company has recorded no tax
provision nor has it recorded any tax benefits.
MINORITY INTEREST. The $54,400 recorded in 1998 reflects Callaway Golf
Company's 20% interest in the Callaway Golf Center[TM] in 1998. In 1999, The
Callaway Golf Center is 100% owned by the Company.
NET LOSS. Net loss for 1999 was $738,553 compared to a net loss of
$751,400 in 1998. The losses are principally attributed to the start-up and
fixed costs of the Callaway Golf Center[TM] in 1998 and similar reasons in
1999 due to the reacquisition of the Callaway Golf Center on December 31,
1998 and the opening of the SportPark Las Vegas in October 1998.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company had negative working capital of $213,980 as
compared to positive working capital of $419,500 at December 31, 1998, a
decrease of $633,480. Excluding amounts due to/from related parties, the
Company had positive working capital of $834,232 at March 31, 1999 compared
to $1,488,200 at December 31, 1998 for a decrease of $653,968. This decrease
in working capital resulted mainly from heavy start up type costs incurred in
the first quarter of 1999 to operate, promote and market the SportPark Las
Vegas. In addition, working capital was used to reduce outstanding payables
by approximately $320,000.
There are no planned major capital expenditures in 1999.
The Company in the normal course of its business receives sponsorship fees
and various advance payments of different kinds, which are recorded as
deferred income until earned. Such amounts are typically earned over the
term of the contract with the applicable sponsor. Deferred income was
$891,863 at March 31, 1999 compared to $877,100 at December 31, 1998. A
sponsorship fee of $250,000 was received in the first quarter of 1999. It is
anticipated, but cannot be guaranteed, that sponsorship fees and advances
will be a source of cash flow in 1999.
12
<PAGE>
<PAGE>
On September 15, 1998 the Company entered into a $13,500,000 loan agreement
with Nevada State Bank. The loan is for 15 years with interest measured at
a fixed rate of 4% above the lender's five-year LIBOR rate measured September
1, 1998, 2003 and 2008. For 1998 through August 31, 2003 the loan bears
interest of 9.38%. The loan is secured by substantially all the assets of
the Company that existed at the time the financing was completed. Debt
service for this loan approximates $140,000 per month.
On December 31, 1998 the Company purchased substantially all the assets and
assumed certain liabilities of the Callaway Golf Center[TM] for $1,000,000
payable in quarterly installments of $25,000 for a 10 year period with no
interest. The Callaway Golf Center generated positive cash flow in the first
quarter of 1999. If required to fund corporate operations, management
believes that additional borrowings against the Callaway Golf Center could
probably be arranged although there can be no assurance that the Company
would be successful in securing such financing.
The Company's Chairman has historically loaned funds to the Company as
needed. Such lendings were $1,705,300 at December 31, 1998 and have decreased
to $1,480,000 at March 31, 1999. This decrease is due to the Company
repaying $225,300 of these loans in late March 1999. The remaining loans are
due in the year 2001 and bear interest at ten percent per annum. Interest
payments of $186,000 through March 31, 1999 have been deferred, a practice
which could continue throughout 1999 if necessary.
Operating Activities. Net cash used in operating activities was $406,010 for
the three months ended March 31, 1999 compared to net cash provided by
operating activities of $1,347,200 for the three months ended March 31, 1998.
The primary reason for the difference relates to changes in accounts payable
and accrued expenses. In 1998, payables increased approximately $2.1 million
whereas in 1999 payables decreased approximately $320,000 due to the Company
making a concerted effort to decrease its payables balance. Other factors
contributing to the change in cash flow from operations are (1) increased
prepaid expenses in 1999 compared to 1998 and (2) increased SG&A costs in
1999 compared to 1998 relating to corporate administration and marketing and
promotion.
Investing Activities. Net cash used in investing activities was $154,488 and
$5,597,700 for the three months ended March 31, 1999 and 1998, respectively.
Uses in 1998 relate to development costs to build the SportPark Las Vegas
whereas 1999 relates to normal leasehold improvement expenditures.
Financing Activities. Net cash used in financing activities was $394,465 for
the three months ended March 31, 1999 compared to net cash provided by
financing activities of $4,220,600 for the three months ended March 31, 1998.
The primary difference between the two periods is in 1998 when the Company
received approximately $4.6 million in financing from third parties and a
principal shareholder.
The Company's current and expected sources of working capital are its cash
balances, which were $1,539,337 at March 31, 1999, and cash flow from
operations including sponsorship fees and advance deposits of various kinds.
The Company has raised considerable capital in the past 2 years for
development projects. The SportPark Las Vegas is now operational. The
Company believes that any working capital deficiency that may occur could be
funded from a combination of existing cash balances and, if necessary,
additional borrowings from lenders or other sources. Expansion programs in
other locations are not yet planned although expansion is a strategic
13
<PAGE>
<PAGE>
objective of the Company. If and when expansion does occur, such expansion
is expected to be funded primarily by third parties.
Year 2000
The Company's accounting system was updated during the first quarter of 1998
and is year 2000 compliant. The Company's All-American SportPark has a
number of computerized systems including a point of sale system. The vendors
of the various systems have advised management that they are all year 2000
compliant. During the first quarter of 1998, the Company hired a consultant
to upgrade all of the Company's other computers and workstations so that they
were all year 2000 compliant. The Company will likely incur additional costs
in 1999 which are not expected to be material.
The Company may be vulnerable to the failure of other companies to be year
2000 compliant. During the fourth quarter of 1998, the Company commenced its
assessment of whether third parties with which the Company has material
relationships are year 2000 compliant. The Company is continuing to evaluate
its vendors and suppliers to determine if there would be a material effect on
the Company's business if they do not timely become year 2000 compliant. The
Company does not have any significant year 2000 issues related to its
customers. The Company intends to initiate formal communications with all of
its significant vendors and suppliers with respect to their year 2000
compliance programs and status during the second quarter of 1999.
Although the Company expects its internal systems to be year 2000 compliant,
the failure of any of its significant vendors or suppliers to correct a
material year 2000 problem could result in an interruption in certain normal
business activities and operations.
A reasonably likely worst case scenario would be for a segment of the
Company's SportPark to shut down, and depending on which segment(s) was shut
down and for how long, the Company's results of operations could be adversely
affected. Daytime operations of the Callaway Golf Center[TM] should not be
affected at all.
The Company has not yet initiated formal contingency planning processes to
mitigate the risk to the Company if any vendors or suppliers are not prepared
for the year 2000, but the Company intends to complete this process by June
30, 1999.
Special Cautionary Notice Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for 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
development and construction activities, 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, changes in regulations and
application for licenses and approvals under applicable jurisdictional laws
and regulations.
14
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. 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 and Reports on Form 8-K. None.
15
<PAGE>
<PAGE>
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.
May 14, 1999 By: /s/ Ronald Boreta
Ronald Boreta, President and
Chief Executive Officer
May 14, 1999 By: /s/ Kirk Hartle
Kirk Hartle, Chief Financial Officer
16
<PAGE>
<PAGE>
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
- ------- ----------------
27. FINANCIAL DATA SCHEDULE Filed herewith electronically
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited condensed balance sheets and unaudited condensed statements of
income found on pages 3 and 4 of the Company's Form 10-QSB for the year to
date, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,539,337
<SECURITIES> 0
<RECEIVABLES> 563,039
<ALLOWANCES> 0
<INVENTORY> 91,862
<CURRENT-ASSETS> 2,863,383
<PP&E> 24,334,852
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,691,127
<CURRENT-LIABILITIES> 3,077,363
<BONDS> 0
<COMMON> 3,000
0
7,240,000
<OTHER-SE> 1,152,547
<TOTAL-LIABILITY-AND-EQUITY> 27,691,127
<SALES> 1,538,740
<TOTAL-REVENUES> 1,538,740
<CGS> 290,564
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,666,922
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (319,807)
<INCOME-PRETAX> (738,553)
<INCOME-TAX> 0
<INCOME-CONTINUING> (738,553)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (738,533)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)
</TABLE>
