<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
December 31, 1998
------------------------------------------------
Date of Report (date of earliest event reported)
All-American SportPark, Inc.
----------------------------------------------------
Exact name of Registrant as Specified in its Charter
Nevada 0-24970 88-0203976
- --------------------------- --------------- ---------------------------
State or Other Jurisdiction Commission File IRS Employer Identification
of Incorporation Number Number
6730 Las Vegas Boulevard, Las Vegas, Nevada 89119
------------------------------------------------------------------
Address of Principal Executive Offices, Including Zip Code
(702) 798-7777
--------------------------------------------------
Registrant's Telephone Number, Including Area Code
Saint Andrews Golf Corporation
------------------------------------------------------------
Former name or former address, if changed, since last report
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 31, 1998, a wholly owned subsidiary of All-American
SportPark, Inc. (the "Company") acquired substantially all of the assets,
subject to certain liabilities, of All-American Golf LLC (the "LLC"). Until
the time of the sale, the LLC owned, managed and operated the "Callaway Golf
Center", a premier golf facility adjacent to the Company's All-American
SportPark in Las Vegas, Nevada.
From 1997, when the LLC was formed, until May 1998, the Company held an
80% interest in the LLC. On May 5, 1998 the Company sold its interest in the
LLC to Callaway Golf Company. The terms of that transaction are disclosed in
the Company's Report on Form 8-K dated May 5, 1998.
The Company purchased substantially all of the assets of the LLC pursuant
to the terms of an Asset Purchase Agreement between the LLC and a newly
formed, wholly-owned subsidiary of the Company. Under the terms of the
Agreement, the consideration paid by the subsidiary consisted of the delivery
to the LLC of a trade credit in the amount of $4,000,000 from Active Media
Services, Inc. for which the Company paid Active Media Services, Inc.
$1,000,000 in the form of a promissory note. The promissory note is payable
in quarterly installments of $25,000 over a period of ten years, without
interest. The subsidiary also assumed certain liabilities of the LLC.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The following
financial statements of All-American Golf LLC are filed herewith:
Page
----
Report of Independent Public Accountants F-1
Balance Sheet as of December 31, 1997, and
Unaudited Interim Balance Sheet as of September 30, 1998 F-2
Statement of Operations for the Period from
Inception (June 13, 1997) through December 31, 1997, and
Unaudited Interim Statements of Operations for the Nine
Months Ended September 30, 1998 and for the Period from
Inception (June 13, 1997) through September 30, 1997 F-3
Statement of Changes in Members' Equity for the
Period from Inception (June 13, 1997) through December
31, 1997, and Unaudited Interim Statements of Members'
Equity for the Nine Months Ended September 30, 1998
and for the Period from Inception (June 13, 1997) through
September 30, 1997 F-4
Audited Statement of Cash Flows for the Period from
Inception (June 13, 1997) through December 31, 1997, and
Unaudited Interim Statements of Cash Flows for the
Nine Months Ended September 30, 1998 and for the Period
from Inception (June 13, 1997) through September 30, 1997 F-5
Notes to Financial Statements F-6
2
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION. The following pro forma financial
information is filed herewith:
Page
----
Introduction to Unaudited Pro Forma Combined Financial
Statements F-12
Forward Looking Information F-12
Unaudited Pro Forma Combined Balance Sheet as of
September 30, 1998 F-13
Unaudited Pro Forma Combined Statement of Operations for
the Nine Months Ended September 30, 1998 F-15
Notes to Unaudited Pro Forma Combined Financial Statements F-16
An Unaudited Pro Forma Statement of Operations for the period from
inception (June 13, 1997) through September 30, 1997 is not filed herewith as
no pro forma adjustments would be required to the Company's Unaudited
Consolidated Condensed Statement of Operations for the nine months ended
September 30, 1997, included in the Company's Form 10-QSB for the quarterly
period ended September 30, 1997, as filed with the Securities and Exchange
Commission on November 24, 1997. Readers should refer to this Form 10-QSB for
the Company's operating results for the nine months ended September 30, 1997.
(c) EXHIBITS. The following exhibits are filed herewith:
EXHIBIT
NUMBER DESCRIPTION LOCATION
- ------- ----------- --------
10.29 Asset Purchase Agreement between All- Previously filed
American Golf LLC and The All-American
Golf Center, Inc.
10.30 Promissory Note from All-American Golf Previously filed
Center, Inc. to Active Media Services, Inc.
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, hereunto duly authorized.
All-American SportPark, Inc.
Dated: July 26, 1999 By:/s/ Ronald S. Boreta
Ronald S. Boreta, President
3
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Members of All-American Golf LLC:
We have audited the accompanying balance sheet of ALL-AMERICAN GOLF LLC (a
California limited liability company) as of December 31, 1997 and the related
statements of operations, changes in members' equity and cash flows for the
period from inception (June 13, 1997) to December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides 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 GOLF LLC as of
December 31, 1997, and the results of its operations and its cash flows for
the period from inception (June 13, 1997) to December 31, 1997 in conformity
with generally accepted accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
May 21, 1998
F-1
<PAGE>
ALL-AMERICAN GOLF LLC
BALANCE SHEETS
September 30, December 31,
1998 1997
------------- -----------
(unaudited)
Assets
CURRENT ASSETS:
Cash and cash equivalents $ 119,000 $ 45,500
Accounts receivable 35,200 57,800
Due from Affiliated Store 16,000 33,500
Inventories and prepaid expenses 37,600 27,900
Preopening costs 25,700 99,900
----------- -----------
Total current assets 233,500 264,600
Leasehold improvements, furniture and
equipment, net 9,545,600 9,840,700
----------- -----------
Total assets $ 9,779,100 $10,105,300
=========== ===========
Liabilities and Members' Equity
CURRENT LIABILITIES:
Accounts payable $ 437,700 $ 240,800
Accrued expenses 20,700 357,500
Interest payable 565,000 170,800
Current portion of obligations under
capital leases 65,100 65,100
Due to Affiliated Store 5,100 21,000
Due to Related Entities 524,100 564,900
----------- -----------
Total current liabilities 1,617,700 1,420,100
----------- -----------
LONG-TERM LIABILITIES:
Obligations under capital leases, net
of current portion 153,100 185,200
Note payable 5,250,000 5,250,000
----------- -----------
Total long-term liabilities 5,403,100 5,435,200
----------- -----------
COMMITMENTS AND CONTINGENCIES
MEMBERS' EQUITY:
Member contributions 4,347,700 3,750,000
Accumulated deficit (1,589,400) (500,000)
----------- -----------
Total members' equity 2,758,300 3,250,000
----------- -----------
Total liabilities and members' equity $ 9,779,100 $10,105,300
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
ALL-AMERICAN GOLF LLC
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Inception Inception
(June 13, 1997) Nine Months (June 13, 1997)
Through Ended Through
September 30, 1997 September 30, 1998 December 31, 1997
------------------ ------------------ -----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUE:
Golf activities $ - $ 811,400 $ 262,000
Rental income - 303,300 45,100
Other income - 97,400 14,600
-------- ----------- ----------
Total revenue - 1,212,100 321,700
-------- ----------- ----------
OPERATING EXPENSES:
Salaries and wages - 352,900 169,400
Rent - 298,500 108,700
Utilities - 170,700 67,700
Supplies - 112,800 57,900
Selling, general and
administrative - 518,400 127,200
Amortization of preopening
costs - 74,200 39,400
Depreciation and amortization - 368,000 130,000
-------- ----------- ----------
Total operating expenses - 1,895,500 700,300
-------- ----------- ----------
OPERATING LOSS - (683,400) (378,600)
INTEREST EXPENSE - 406,000 (121,400)
-------- ----------- ----------
NET LOSS $ - $(1,089,400) $ (500,000)
======== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
ALL-AMERICAN GOLF LLC
STATEMENTS OF CHANGES IN MEMBERS' EQUITY
Member Accumulated Total
Contributions Deficit Equity
------------- ----------- -----------
BALANCE, June 13, 1997 $ - $ - $ -
Member contributions 3,750,000 - 3,750,000
---------- ----------- -----------
BALANCE, September 30, 1997 3,750,000 - 3,750,000
Net loss - (500,000) (500,000)
---------- ----------- -----------
BALANCE, December 31, 1997 3,750,000 (500,000) 3,250,000
Member contributions
(unaudited) 597,700 - 597,700
Net Loss (unaudited) - (1,089,400) (1,089,400)
---------- ----------- -----------
BALANCE, September 30, 1998
(unaudited) $4,347,700 $(1,589,400) $ 2,758,300
========== =========== ===========
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
ALL-AMERICAN GOLF LLC
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Inception Inception
(June 13, 1997) Nine Months (June 13, 1997)
Through Ended Through
September 30, 1997 September 30, 1998 December 31, 1997
------------------ ------------------ -----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ - $(1,089,400) $ (500,000)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization - 368,000 130,000
Amortization of preopening costs - 74,200 39,400
Changes in assets and liabilities:
Decrease (increase) in accounts
receivable (100) 22,600 (57,800)
Increase in inventories and
prepaid expenses (71,400) (9,700) (27,900)
Increase in accounts payable 412,300 196,900 240,800
(Decrease) increase in accrued
expenses 22,500 (336,800) 357,500
Increase in interest payable 54,300 394,200 170,800
----------- ----------- ------------
Net cash provided by (used in)
operating activities 417,600 (380,000) 352,800
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures on leasehold improvements,
furniture and equipment (8,010,000) (72,900) (9,701,600)
Preopening costs (139,300) - (139,300)
----------- ----------- ------------
Net cash used in investing
activities (8,149,300) (72,900) (9,840,900)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable 3,937,500 - 5,250,000
Net increase (decrease) in
receivable/payable with Affiliated
Store and related entities 927,900 (39,200) 552,400
Principal payments under capital lease
obligations - (32,100) (18,800)
Member contributions 3,750,000 597,700 3,750,000
----------- ----------- ------------
Net cash provided by financing
activities 8,615,400 526,400 9,533,600
----------- ----------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 883,700 73,500 45,500
CASH AND CASH EQUIVALENTS - Beginning of
period - 45,500 -
----------- ----------- ------------
CASH AND CASH EQUIVALENTS - End of
period $ 883,700 $ 119,000 $ 45,500
=========== =========== ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ - $ - $ 3,700
=========== =========== ============
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Equipment financed through capital leases $ - $ - $ 269,100
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
ALL-AMERICAN GOLF LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. Background and Basis of Presentation
a. Background
The accompanying financial statements include the accounts of
All-American Golf LLC, a California limited liability company ("the Company").
The Company was formed on June 13, 1997 to construct, manage and operate the
"Callaway Golf Center" in Las Vegas, Nevada. Through May 7, 1998, the Company
was owned jointly by Saint Andrews Golf Corporation ("SAGC") (who contributed
$3.0 million for 80 member units) and Callaway Golf Company ("Callaway") (who
contributed $750,000 for 20 member units) (collectively the "Members"), and
its business was conducted in accordance with the terms of the Operating
Agreement for All-American Golf LLC (the "Operating Agreement").
The facility, which commenced operations on October 1, 1997, is comprised
of an executive golf course, driving range, putting course, clubhouse, and
golf performance center, as well as a number of food and beverage concessions.
The facility is located within the All-American SportPark ("SportPark"), which
is a wholly owned subsidiary of SAGC.
Effective May 8, 1998, SAGC sold its 80% interest in the Company to
Callaway. Effective December 31, 1998, SAGC, under its new name All-American
SportPark, Inc. ("AASP"), repurchased 100% of the Company's operating assets
from Callaway. See Note 11 for further discussion regarding these
transactions.
b. Estimates in the Preparation of Financial Statements
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.
2. Summary of Significant Accounting Policies
a. Cash and Cash Equivalents
Cash equivalents include all highly liquid debt investments with an
original maturity of three months or less.
b. Accounts Receivable
Accounts receivable consists of amounts due from tenants and amounts due
for the sale of merchandise and/or services.
c. Preopening Costs
Preopening costs primarily represent direct personnel and other operating
costs incurred before the opening date of the Callaway Golf Center. These
costs were capitalized as incurred and are being amortized to expense on a
straight-line basis over a period of 12 months. Total preopening costs
capitalized were approximately $139,300 of which approximately $39,400 has
been amortized as of December 31, 1997.
F-6
<PAGE>
d. Leasehold Improvements, Furniture and Equipment
Leasehold improvements, furniture and equipment are stated at cost,
including interest on funds borrowed to finance the acquisition or
construction of major capital additions. Depreciation and amortization is
provided for on a straight-line basis. Leasehold improvements are amortized
over the lease term (15 years) and furniture and equipment is depreciated over
its estimated useful lives (ranging from 5-10 years). Normal repairs and
maintenance are charged to expense when incurred. Expenditures that
materially extend the useful life of assets are capitalized.
e. Income Taxes
The Company, as a limited liability company, is not separately subject to
taxation. Rather, the income (loss) of the Company is allocated to the
Members in an amount proportionate to their membership percentages (or as
otherwise stipulated in the Operating Agreement) and included in the tax
return of each member. Accordingly, the accompanying financial statements do
not reflect an income tax provision or benefit. See Note 4 for a discussion
of the allocation of income and losses incurred by the Company.
f. Recoverability of Long-Lived Assets
Pursuant to Statement of Financial Accounting Standards No. 121,
"Accounting for Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," the Company reviews its long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset or
group of assets may not be recoverable. The Company deems an asset to be
impaired if a forecast of undiscounted future operating cash flows directly
related to the asset, including disposal value, if any, is less than its
carrying amount. If an asset is determined to be impaired, the loss is
measured as the amount by which the carrying amount of the asset exceeds fair
value. The Company generally measures fair value by discounting estimated
future cash flows. Considerable management judgment is necessary to estimate
discounted cash flows. Accordingly, actual results could vary significantly
from such estimates. Based upon the short duration of operations at the
Callaway Golf Center, the Company does not believe that a triggering event has
occurred with respect to the negative operating income that has been achieved.
3. Related Party Transactions
The Company has extensive transactions and relationships with SAGC, SportPark
and Las Vegas Discount Golf & Tennis, Inc. ("LVDG"), the majority shareholder
of SAGC, (collectively the "Related Entities"). A retail store operated by
Boreta Enterprises (of which the President of SAGC is a majority owner) is
located at the golf center (the "Affiliated Store"). Amounts due to Related
Entities consist primarily of short-term funding provided by SAGC to the
Company and management fees payable to SAGC in accordance with the Operating
Agreement. Under the terms of the Operating Agreement, SAGC manages the
driving range, golf course, and tenant facilities in the clubhouse for a fee
of 5% of gross revenues. Amounts due from the Affiliated Store represent rent
and common area maintenance charges in connection with the lease agreement for
the retail store located at the golf center. Amounts due to the Affiliated
Store relate to purchases in the normal course of business of golf-related
supplies.
F-7
<PAGE>
In addition, the Related Entities also provide certain corporate services and
pay certain corporate expenses on behalf of the Company. These items include
an allocation for corporate payroll and related expenses, rent and utilities
at the corporate office, certain insurance payments, and other general office
support provided at the corporate office. The Company believes that these
costs would not have a material effect on the financial statements. The costs
associated with these items have not been reflected in the accompanying
financial statements.
4. Allocations of Net Income (Loss) and Distributions
Net income or loss is allocated among the Members in accordance with the
provisions of the Operating Agreement, which is generally in proportion to
each Members' ownership interest. Distributions are to be made in accordance
with the Operating Agreement. No distributions have been made to date.
5. Leasehold Improvements, Furniture and Equipment
Leasehold improvements, furniture and equipment included the following as of
December 31, 1997:
Furniture and equipment $ 510,600
Leasehold improvements 9,259,200
Other 200,900
-----------
9,970,700
Less - Accumulated depreciation and
amortization (130,000)
-----------
$ 9,840,700
===========
Furniture and equipment includes approximately $269,100 relating to equipment
purchased under capital lease agreements. Additionally, leasehold
improvements include approximately $54,300 of interest cost capitalized during
the construction process.
6. Notes Payable
Callaway provided $5,250,000 in debt financing (the "Note") for construction
of the Callaway Golf Center. Interest is payable at the rate of 10 percent
per annum with interest only payments to commence 60 days after the opening of
the golf center. The principal is due in 60 equal monthly payments commencing
October 1, 2002. As part of the financing agreement, SAGC has granted to
Callaway a security interest in its 80% ownership percentage of the Company as
additional security for the prompt and full repayment of all secured debts
owed by the Company to Callaway. In addition, the Note is secured by
substantially all the assets of the Company.
The Company was unable to make its interest payment due in December 1997 and
at December 31, 1997 was in default on the Note. Subsequently, the Company
was unable to make its scheduled interest payments in January, February, and
March 1998. On March 18, 1998, the Company entered into a forbearance
agreement with Callaway that cured the default and established terms to repay
the amounts in arrears. The first payment required under the forbearance
agreement is due on May 21, 1998 in the amount of $80,600.
F-8
<PAGE>
Aggregate maturities of notes payable for the five years subsequent to
December 31, 1997, are as follows:
Year Ending:
1998 $ -
1999 -
2000 -
2001 -
2002 262,500
Thereafter 4,987,500
----------
$5,250,000
==========
7. Leases
Effective June 20, 1997, the Company entered into a lease agreement for
approximately 42 acres of land in Las Vegas, Nevada. The lease term is for a
period of fifteen years, with two consecutive five-year renewal periods. The
lease commenced on October 1, 1997. The annual base amount of the lease is
$398,000 payable in monthly installments of approximately $33,000.
Additionally, the lease contains contingent rent based upon a percentage of
gross revenues ranging from three to ten percent of such revenues. Such
contingent rent is payable if such percentage of revenues exceeds the annual
base amount. The minimum rent shall be increased at the end of the fifth year
of the lease term and every five years thereafter by an amount equal to ten
percent of the minimum monthly installment immediately proceeding the
adjustment date. This lease is being accounted for as an operating lease.
The Company also leases certain furniture and equipment under various leases.
All leases with an initial term greater than one year are accounted for under
Statement of Financial Accounting Standards No. 13, "Accounting for Leases."
These leases are classified as either capital leases or operating leases as
appropriate. Rent expense under all of the Company's operating leases were
approximately $108,700 during the period ended December 31, 1997.
At December 31, 1997, minimum future rental commitments under all of the
Company's non-cancelable operating leases and required future principal and
interest payments under capital leases were as follows:
Operating Capital
Leases Leases
---------- ---------
Year Ending:
1998 $ 427,000 $ 79,700
1999 427,000 79,500
2000 425,500 75,400
2001 439,100 58,700
2002 398,100 14,000
Thereafter 3,998,000 -
---------- --------
$6,114,700 $307,300
Less amounts representing
interest (57,000)
--------
$250,300
========
F-9
<PAGE>
8. Rental Income
The Company leases certain space within the Callaway Golf Center to third
party retailers. Current lessees include food and beverage concessions, a
golf shop and a golf academy. Rents received are based on a percentage of
revenues generated and generally range from three to fifteen percent of the
applicable revenue source. The lease agreements do not guarantee a minimum
base rate to the Company. Lease terms generally range from 5 to 10 years and
may contain renewal clauses. In addition, the Company will receive annual
rents not to exceed $50,000 relating to the performance and training center
leased by Callaway (and will pay to Callaway an annual amount not to exceed
$50,000 as a licensing fee on the Callaway trademarks). The agreement with
Callaway will remain in effect until terminated in accordance with the
provisions of the Operating Agreement.
9. Commitments and Contingencies
In September 1997, SAGC entered into a lease and concession agreement with
Sportservice Corporation ("Sportservice") which provides Sportservice with the
exclusive right to prepare and sell all food, beverages (alcoholic and
non-alcoholic), candy and other refreshments throughout the All-American
SportPark, including the Callaway Golf Center, during the ten year term of the
agreement. Sportservice has agreed to pay rent based on a percentage of gross
sales depending upon the level of sales, whether the receipts are from
concession sales, the Arena restaurant, the Clubhouse, vending machines,
mobile stands, or catering sales. Rents from the Callaway Golf Center will be
paid to the Company and all other rents will be paid to SAGC.
In the normal course of business, the Company has entered into contracts and
agreements with various vendors. These contracts and agreements commit the
Company to various specific and contingent obligations. All such obligations
have been properly reflected in the accompanying financial statements.
10. Interim Reporting
The accompanying interim financial statements are unaudited; however, these
financial statements contain all adjustments which are, in the opinion
of management, necessary for a fair presentation of the financial position
of the Company as of September 30, 1998, and the results of its operations
and its cash flows for the nine months ended September 30, 1998, and for the
period from inception (June 13, 1997) through September 30, 1997.
The accounting policies followed by the Company are set forth in Note 2 to the
financial statements. The results of operations for the nine months ended
September 30, 1998, and for the period from inception (June 13, 1997) through
September 30, 1997, are not necessarily indicative of the results to be
expected for the full year.
11. Sale of Membership Interest
On May 5, 1998, pursuant to the terms of a Purchase and Sale Agreement between
the Company, SAGC and Callaway, SAGC sold its 80% membership interest in the
Company to Callaway for $4,526,178. The purchase price included $1,500,000 in
cash and the forgiveness of indebtedness of the SportPark totaling $3,026,000.
In connection with the sale of the membership interest, SAGC resigned as the
manager of the Company, and agreed not to compete with the Callaway Golf
F-10
<PAGE>
Center in Clark County, Nevada for a period of two years. As a result of the
sale of its interest in the Company, SAGC had no ownership of the Callaway
Golf Center, and the Callaway Golf Center is operated separately from the
SportPark.
12. Subsequent Event (Unaudited)
On December 31, 1998, SAGC, under its new name All-American SportPark, Inc.,
repurchased substantially all of the Company's assets and certain liabilities,
excluding the $5.25 million promissory note and related interest, from
Callaway through a newly-formed subsidiary, All-American Golf Center, Inc. The
purchase price of $1,000,000 is payable in forty quarterly non-interest
bearing installments through September 2008, to an unrelated third party which
has, in turn, assigned a $4,000,000 trade credit to Callaway in exchange for
rights to receive the quarterly payments. In connection with the repurchase,
Callaway agreed to not compete with the Callaway Golf Center in Clark County,
Nevada for a period of five years.
F-11
<PAGE>
ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
INTRODUCTION
The following unaudited pro forma combined financial information of
All-American SportPark, Inc. (the Company) gives effect to the aforementioned
purchase (the "Acquisition"). The purpose of the pro forma combined balance
sheet as of September 30, 1998, the date of the last balance sheet of the
Company filed with the Securities and Exchange Commission prior to the
Acquisition, is to reflect the financial condition of the Company as if the
Acquisition occurred on that date. The purpose of the pro forma combined
statement of operations for the nine months ended September 30, 1998, is to
reflect what the results of operations might have been if the Acquisition had
taken place on June 13, 1997, the inception date of the LLC. No pro forma
combined statement of operations is presented for the nine months ended
September 30, 1997, as no pro forma adjustments would be required to the
Company's Unaudited Consolidated Condensed Statement of Operations for the
nine months ended September 30, 1997, included in the Company's Form 10-QSB
for the quarterly period ended September 30, 1997, as filed with the
Securities and Exchange Commission on November 24, 1997. Readers should refer
to this Form 10-QSB for the Company's operating results for the nine months
ended September 30, 1997.
The pro forma financial statements should be read in conjunction with the
historical financial statements of the Company filed on Form 10-KSB for the
year ended December 31, 1997 and filed on Form 10-QSB for the nine months
ended September 30, 1998, as well as the historical financial statements of
All-American Golf LLC included in this amendment to the related Report on
Form 8-K. The unaudited pro forma combined financial information presented
herein does not purport to represent what the Company's actual results of
operations would have been had the Acquisition occurred on June 13, 1997,
or to project the Company's results of operations for any future period.
FORWARD-LOOKING INFORMATION
This report contains certain forward-looking information which is based upon
current expectations that involve a number of risks and uncertainties. The
forward-looking information is based upon a number of assumptions, including,
without limitation, those enumerated in Management's Discussion and Analysis
included in the Company's 1997 annual report on Form 10-KSB, which is
hereby incorporated by reference. Assumptions related to the foregoing
involve judgments with respect to, among other things, future economic,
competitive and market conditions, and future business decisions, all of which
are beyond the control of the Company. Although the Company believes that the
assumptions underlying the forward-looking information are reasonable, any of
the assumptions could prove inaccurate and, therefore, there can be no
assurance that the results contemplated in forward-looking information
will be realized. In addition, the business and operations of the Company are
subject to substantial risks which increase the uncertainty inherent in such
forward-looking information. In light of the significant uncertainties
inherent in such forward-looking information included herein, the inclusion of
such information should not be regarded as a representation by the Company, or
any other person, that the objectives or plans for the Company will be
achieved.
F-12
<PAGE>
ALL-AMERICAN SPORTPARK, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Historical Pro Forma
September 30, 1998 Adjustments September 30, 1998
------------------ ----------- ------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 43,700 $ - $ 43,700
Accounts receivable 2,466,000 - 2,466,000
Inventories 111,700 - 111,700
Due from affiliated store 14,500 - 14,500
Prepaid expenses and other 106,900 - 106,900
----------- -------- -----------
Total current assets 2,742,800 - 2,742,800
LEASEHOLD IMPROVEMENTS AND
EQUIPMENT, net 135,000 859,300 (A) 994,300
NOTE RECEIVABLE - related party 20,000 - 20,000
DEPOSIT FOR LAND LEASE 282,400 - 282,400
PROJECT DEVELOPMENT COSTS 22,886,800 - 22,886,800
OTHER ASSETS 60,700 - 60,700
----------- -------- -----------
$26,127,700 $859,300 $26,987,000
=========== ======== ===========
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
F-13
<PAGE>
ALL-AMERICAN SPORTPARK, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Historical Pro Forma
September 30, 1998 Adjustments September 30, 1998
------------------ ----------- ------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes
payable $ 420,000 $ 66,000 (A) $ 486,000
Current portion of obligations
under capital leases 7,100 65,300 (A) 72,400
Accounts payable and accrued
expenses 1,960,400 - 1,960,400
Due to affiliated store 15,200 - 15,200
Payable to related entities 994,900 - 994,900
----------- -------- -----------
Total current liabilities 3,397,600 131,300 3,528,900
Note payable to shareholder 1,968,700 - 1,968,700
Long-term portion of notes
payable 13,080,000 588,700 (B) 13,668,700
Obligation under capital leases,
net of current portion 20,800 139,300 (A) 160,100
Deferred income 519,200 - 519,200
----------- -------- -----------
Total liabilities 18,986,300 859,300 19,845,600
----------- -------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par
value, 5,000,000 shares
authorized, no shares issued
and outstanding - - -
Series A convertible preferred
stock, $1 par value, 500,000
shares authorized, issued and
outstanding 4,740,000 - 4,740,000
Options issued in connection
with Series A convertible
preferred stock to purchase
250,000 shares of common stock 260,000 - 260,000
Common stock, $.001 par value,
10,000,000 shares authorized,
3,000,000 shares issued and
outstanding 3,000 - 3,000
Additional paid-in-capital 3,333,300 - 3,333,300
Common stock purchase warrants,
Class A, 1,000,000 warrants
authorized, issued and
outstanding 187,500 - 187,500
Accumulated deficit (1,382,400) - (1,382,400)
----------- -------- -----------
Total shareholders' equity 7,141,400 - 7,141,400
----------- -------- -----------
$26,127,700 $859,300 $26,987,000
=========== ======== ===========
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
F-14
<PAGE>
ALL-AMERICAN SPORTPARK, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Historical Pro Forma
September 30, 1998 Adjustments September 30, 1998
------------------ ----------- ------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUES $ 37,000 $ 733,400 (C) $ 1,249,100
478,700 (D)
----------- ----------- -----------
37,000 1,212,100 1,249,100
OPERATING EXPENSES:
Cost of sales - 339,400 (C) 626,300
286,900 (D)
Selling, general and
administrative 2,157,600 418,300 (C) 3,058,900
483,000 (D)
Depreciation and amortization 169,300 (C) 368,000
- 198,700 (D)
----------- ----------- -----------
Total operating expenses 2,157,600 1,895,600 4,053,200
Operating loss (2,120,600) (683,500) (2,804,100)
Interest expense, net 19,000 187,900 (C) 425,000
218,100 (D)
----------- ----------- -----------
Loss before income taxes,
discontinued operations and
minority interest (2,139,600) (1,089,500) (3,229,100)
Provision for income taxes - - -
----------- ----------- -----------
Net loss from continuing
operations (2,139,600) (1,089,500) (3,229,100)
Discontinued operations:
Loss from operating, net of
minority interest share of
$76,300 (305,200) 305,200 (C) -
Gain on disposal 1,638,900 (1,638,900)(E) -
----------- ----------- -----------
Net income from dis-
continued operations 1,333,700 (1,333,700) -
----------- ----------- -----------
NET LOSS $ (805,900) $(2,423,200) $(3,229,100)
=========== =========== ===========
NET INCOME (LOSS) PER COMMON SHARE:
Continuing operations $ (0.71) $ (0.36) $ (1.08)
Discontinued operations 0.44 (0.44) -
----------- ----------- -----------
$ (0.27) $ (0.81) $ (1.08)
=========== =========== ===========
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
F-15
<PAGE>
ALL-AMERICAN SPORTPARK, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
[A] To reflect the addition of the fair value of All-American Golf LLC
assets and liabilities as of September 30, 1998.
[B] To reflect the net present value of the $1,000,000 note to purchase
substantially all the assets of All-American Golf LLC.
[C] To reclassify the operations of All-American Golf LLC from January 1,
1998 through May 5, 1998, from discontinued operations to continuing
operations.
[D] To reflect the operations of All-American Golf LLC from May 5, 1998
through September 30, 1998.
[E] To reflect removal of the gain on sale of the Company's eighty percent
interest in All-American Golf LLC, originally sold on May 5, 1998.
F-16
