GLOBAL ACQUISITIONS Corp - Quarter Report: 2013 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

x           QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013  

 

¨         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 000-24970 

 

(Exact name of registrant as specified in its charter)

 

 

(Address of principal executive offices)

 

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.           Yes x        No ¨ 

             

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x      No ¨ 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ¨                                                                                     Accelerated filer ¨ 

 

Non-accelerated filer ¨   (Do not check if a smaller reporting company)   Smaller reporting company x 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes       No x 

 

      The number of shares of Common Stock, $0.001 par value, outstanding on October 31, 2013 was 4,624,123 shares.

 

All-American Sportpark, inc. 

Form 10-Q

Index

 

PART 1 – FINANCIAL INFORMATION

Item 1 Financial Statements

All-American SportPark, Inc.

Consolidated Balance Sheets

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

ALL-AMERICAN SPORTPARK, INC.

Consolidated Statements of Operations

(Unaudited)

 

 

 

The accompanying notes are an integral part of these consolidated financial statements

 

ALL-AMERICAN SPORTPARK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

All-American Sportpark, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

 

Note 1 – Basis of presentation

 

The consolidated interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by All-American SportPark, Inc. (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

 

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein.  It is suggested that these consolidated interim financial statements be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2012 and notes thereto included in the Company's Form 10-K.  The Company follows the same accounting policies in the preparation of consolidated interim reports.

 

Results of operations for interim periods may not be indicative of annual results.

 

Certain reclassifications have been made in prior periods’ financial statements to conform to classifications used in the current period.

 

Note 2 – Going concern

 

As of September 30, 2013, we had an accumulated deficit of $26,437,308.  In addition, the Company’s current liabilities exceed its current assets by $11,524,122 as of September 30, 2013. These conditions have raised substantial doubt about the Company's ability to continue as a going concern.  Although our recent growth has greatly improved cash flows, we nonetheless need to obtain additional financing to fund payment of obligations and to provide working capital for operations.  Management is seeking additional financing, and is now looking for a merger or acquisition candidate.  It is management’s objective to review the acquisition of interests in various business opportunities, which in their opinion will provide a profit to the Company.  Management believes these efforts will generate sufficient cash flows from future operations to pay the Company's obligations and working capital needs.  There is no assurance any of these transactions will occur. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

 

 

Note 3 – Recent accounting Policies

 

In April 2013, the Financial Accounting and Standards Board (FASB) issued Accounting Standards Update (“ASU”) ASU 2013-07,  Presentation of Financial Statements (Topic 205): Liquidation Basis of Accounting.  The ASU requires entities to prepare its financial statements using he liquidation basis of accounting when liquidation is imminent.  The Company adopted this ASU in the period ended September 30, 2013, without significant impact to financial condition, results of operations, cash flows, or disclosures to its consolidated financial statements. 

 

In July 2013, the FASB issued ASU No. 2013-10, Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rat (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. The ASU permits the Fed Funds Effective Swap Rate or Overnight Index Swap Rate (OIS) to be used as a U. S. benchmark interest rate for hedge accounting purposes in addition to interest rate on U.S. Treasury obligations (UST) and London Interbank Offered Rate (LIBOR).  The ASU is effective prospectively for qualifying hedging relationships entered into on or after July 17, 2013.  Since the Company does not currently engage in these types of relationships, the Company does not anticipate significant impact to financial condition, results of operations, cash flows, or disclosures to its consolidated financial statements.

 

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740):  Presentation of an Unrecognized Tax Benefit When a Net Operating Loss (NOL) Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The ASU’s objective is to eliminate diversity in practice of treating of unrecognized tax benefit when NOL exists as either a reduction to a deferred tax asset or as a liability.  The ASU clarifies that the unrecognized tax benefit or a portion of an unrecognized tax benefit should be presented in the financial statements as a reduction to the deferred tax asset for a NOL carrryforward, a similar tax loss, or a tax credit forward with an exception.  The exception is to the extent a NOL carryforward, a similar tax loss, or a tax credit forward is not available at the reporting date under the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized  tax benefit should instead be presented as a liability.  This ASU is effective for fiscal year, and interim periods, beginning after December 15, 2013.  The Company is currently evaluating the impact if any of adoption of this ASU on financial condition, results of operations, cash flows, and disclosures to its consolidated financial statements.

 

The Company believes there are no additional new accounting pronouncements adopted but not yet effective that is relevant to the readers of our financial statements.

 

Note 4 – Non controlling interest

 

Non-controlling interest represents the minority stockholders’ proportionate share of the equity of All-American Golf Center ("AAGC') which is a 51% owned subsidiary of the Company. At September 30, 2013, we owned 51% of AAGC’s capital stock, representing voting control and a majority interest. Our controlling ownership interest requires that AAGC’s operations be included in the Condensed Consolidated Financial Statements contained herein. The 49% equity interest that is not owned by us is shown as “Non-controlling interest in consolidated subsidiary”

 

 

in the Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets.  As of September 30, 2013, St. Andrews Golf Shop, our minority interest partner and a related party held a $414,303 interest in the net asset value of our subsidiary AAGC and a $65,920 interest in the net income from operations of AAGC.

 

Note 5 – 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 other two Las Vegas Golf and Tennis ("Boca Store") and Las Vegas Golf and Tennis Superstore (“Westside”), owned by the Company's President and his brother. The SAGS store is the retail tenant in the CGC.

 

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 $26,058 and $63,459 for the nine months ended September 30, 2013 and 2012, 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 Chairman. These funds helped pay for office supplies, phone charges, postages, and salaries. The net amount due to these stores totaled $1,551,241 and $1,416,843 as of September 30, 2013 and December 31, 2012, 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 the Company’s President and his brother have continued to defer half of their monthly salaries until the Company is in a more positive financial state.  The amounts deferred for the first nine months of 2013 and 2012 were $260,000 and $162,500, respectively.

 

Notes and Interest Payable to Related Parties:

The Company has various notes and interest payable to the following entities as of September 30, 2013, and December 31, 2012, respectively:

                                                                                                         

All maturities of related party notes payable and the related accrued interest payable as of September 30, 2013 are due and payable upon demand. At September 30, 2013, the Company has no loans or other obligations with restrictive debt or similar covenants.

 

On June 15, 2009, the Company entered into a “Stock Transfer Agreement” with St. Andrews Golf, 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 the Company’s outstanding loan due to St. Andrews Golf Shop, Ltd. In March 2009, the Company 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.

As of September 30, 2013 and December 31, 2012, accrued interest payable - related parties related to the notes payable – related parties totaled $5,295,041 and $4,978,335 respectively. 

 

Lease to SAGS

The Company subleases space in the clubhouse to SAGS. Base rent includes $13,104 per month through July 2012 with a 5% increase for each of two 5-year options to extend in July 2012 and July 2017. For the nine months ending September 30, 2013 and 2012, the Company recognized rental income totaling $122,850 and $119,070, respectively.

Note 6 – Commitments

 

Lease agreements

 

The land underlying the CGC is leased under an operating lease that was to initially expire in 2012 and had 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.

 

At September 30, 2013, minimum future lease payments under non-cancelable operating leases are as follows:

 

 

 

Total rent expense for this operating lease was $397,380 and $363,722 for the nine months ended September 30, 2013 and 2012.

 

Capital Lease

 

The Company entered into a capital lease for new Club Car gas powered golf carts.  The lease is 47 months in length and started on March 1, 2010.  The Company pays $2,612 a month in principal and interest expense related to the lease.

 

The Company entered into a capital lease for a new telephone system during the third quarter of 2011.  The lease is 36 months in length and started in July of 2011.  The Company pays $642 a month in principal and interest expense related to the lease. 

 

 

The following is a schedule by year of future minimum payments required under these lease agreements.

 

Accumulated depreciation for the capital leases as of September 30, 2013 and December 31, 2012 was $103,238 and $56,880, respectively.

Customer Agreement

On June 19, 2009, AAGC entered into a Customer Agreement with Callaway Golf Company (“Callaway”) and Saint Andrews 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.

 

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”) pursuant to which the golf center operated by AAGC will be rebranded using TaylorMade® and other TMaG trademarks.

As part of the 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 a new performance lab (described below), up to a specified maximum amount.  In addition, AAGC received a payment of $200,000 within a few days of signing the Agreement and, so long as AAGC continues to operate the golf center and comply with the terms and conditions of the Agreement TMaG will make additional payments to AAGC on each of March 26, 2014 and March 26, 2015.  The Company will recognize these payments as revenue on a straight-line basis over the term of the agreement.

The Agreement provides that TMaG will install a performance lab at AAGC’s facility, as well as many other upgrades.  Currently the golf center, now called TaylorMade Golf Experience is under construction for a comprehensive remodel including the entire golf shop, activities area/golf check-in and restaurant area. 

The 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 its 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 Agreement is for five years.  AAGC and TMaG may mutually agree in writing to extend the 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 – Stockholders' deficit

 

Preferred stock

 

As of September 30, 2013, we had no preferred shares issued and outstanding.

 

Common stock

 

As of September 30, 2013, we had 4,624,123 shares of our $0.001 par value common stock issued and outstanding.

 

Equity-based compensation

 

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 $13,128 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 8 – Subsequent Events

Upon our evaluation of events and transactions that have occurred subsequent to the balance sheet date, there are no subsequent events that have taken place.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Forward-Looking Statements

 

This document contains “forward-looking statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

 

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures we make in future filings of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

 

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors affecting these risks and uncertainties include, but are not limited to:

 

·        increased competitive pressures from existing competitors and new entrants;

·        deterioration in general or regional economic conditions;

·        adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

·        loss of customers or sales weakness;

·        inability to achieve future sales levels or other operating results;

·        the inability of management to effectively implement our strategies and business plans; and

·        the other risks and uncertainties detailed in this report.

 

 

Overview of Current Operations

On June 19, 2009, AAGC entered into a Customer Agreement with Callaway Golf Company (“Callaway”) and Saint Andrews 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.

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”) pursuant to which the golf center operated by AAGC will be rebranded using TaylorMade® and other TMaG trademarks.

As part of the 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 a new performance lab (described below), up to a specified maximum amount.  In addition, AAGC received a payment of $200,000 within a few days of signing the Agreement and, so long as AAGC continues to operate the golf center and comply with the terms and conditions of the Agreement TMaG will make additional payments to AAGC on each of March 26, 2014 and March 26, 2015.  The Company will recognize these payments as revenue on a straight-line basis over the term of the agreement.

 

The Agreement provides that TMaG will install a performance lab at AAGC’s facility, as well as many other upgrades.  Currently the golf center, now called TaylorMade Golf Experience is under construction for a comprehensive remodel including the entire golf shop, activities area/golf check-in and restaurant area. 

The 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 its 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 Agreement is for five years.  AAGC and TMaG may mutually agree in writing to extend the 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.

On January 25, 2011, The 305 Group leased the restaurant at the Callaway Golf Center.  They renamed the restaurant The Upper Deck Grill and Sports Lounge.  The tenant remodeled the entire restaurant space and opened to the public on April 28, 2011. They now offer fresh made foods for the restaurant and bar.   The tenant is paying $4,000 a month in rent increasing by 4% each month and potential percentage rent could be paid if the tenant's sales reach certain levels.

Because of the remodeling construction that commenced on July 22, 2013 on the facility and an adjustment of space that will belong to the restaurant, the restaurant lease was amended to provide a rebate of $2,000 a month towards their rent to help with any loss of business due to construction.  Once construction is complete, the restaurant will receive a $1,000 rebate per month towards their rent to compensate for a loss of space to their business.

 

Results of Operations for the three months ended September 30, 2013 and 2012 compared.

The following tables summarize selected items from the statement of operations for the three months ended September 30, 2013 compared to the three months ended September 30, 2012.

 

INCOME:

 

Revenue

 

Our revenue for the three months ended September 30, 2013 was $454,412 compared to $435,968 in the three months ended September 30, 2012, an increase of $18,444, or 4.23%.  The increase in revenues was related to the new special events program we started in March 2013 which offers group events to take place at our facility with special group pricing.

 

Revenue-Related Party for the three months ended September 30, 2013 was $40,951, compared to $40,446 in 2012, an increase of $505 or 1.25%. Revenue – Related Party increased slightly as rent increased in July of 2012.

 

Cost of Sales/Gross Profit Percentage of Sales

             

Cost of sales currently consists mainly of payroll and benefits expenses of the AAGC staff, and operating supplies.  Our cost of sales for the three months ended September 30, 2013 was $169,581, a decrease of $25,081 or 12.88% from $194,662 for the three month period ended September 30, 2012.  The decrease is associated to a lower overall payroll due to the remodeling taking place in our facility.  This remodeling has us operating our store and activities counter for the golf center out of a tent.  Because of the “close quarters” inside the tent, we have been able to decrease our staffing.

             

Gross profit as a percentage of sales decreased to 65.77%, for the three months ended September 30, 2013.  Gross profit as a percentage of sales was 59.14% for the three months ended September 30, 2012.  This increase is due to the factors discussed above.

 

 

EXPENSES:

 

            

General and Administrative Expenses

 

General and administrative expenses for the three months ended September 30, 2013 were $388,406, a decrease of $19,925 or 4.88%, from $408,331 for the three months ended September 30, 2012.  Expenses were down during this period because we have upgraded several of our landscape maintenance items and the upkeep and repairs are costing the Company less as a result.

 

Depreciation and amortization expenses for the three months ended September 30, 2013 were $28,508 an increase of $2,896, or 11.31% from $25,612 for the three months ended September 30, 2012.  As we have purchased equipment and other fixed assets, our depreciation expense increases.

 

Total Expenses

 

Our overall operating expenses decreased to $416,914 for the three months ended September 30, 2013 as compared to $433,943 for the three months ended September 30, 2012.  The decrease in total expenses was $17,029 or 3.92 %.  This is due to an upgrade to several of our landscape maintenance items and the upkeep and repairs are costing the Company less as a result.

 

 

Net Loss from Operations

 

We had net loss from operations of $91,132 for the three months ended September 30, 2013 as compared to net loss from operations of $152,191 for the three months ended September 30, 2012 a decrease of $61,059 or 40.12%.  The decrease in net loss from operations was due to a slight increase in revenue, as well as a slight decrease in expenses due to landscape equipment upgrade.

 

Interest Expense

 

Our interest expense decreased by 2.73% or $3,688 from $135,000 for the three months ended September 30, 2012 to $131,312 for the three months ended September 30, 2013.  Interest expense decreased due to the payment of related party note payable last quarter.

 

Net Loss

 

The net loss before non-controlling interest for the three months ended September 30, 2013 was $222,444 as compared to $292,109 for the same period in 2012. The decrease of $69,665 or 23.85% is due to a decrease in expenses, increase in revenue and decrease in other expenses.

 

The net loss attributable to non-controlling interest for the second quarter of 2013 was $65,920 as compared to $44,365 for the same period in 2012.  That resulted in net loss attributable to All-American Sport Park of $288,364 for 2013 as compared to $247,744 for 2012 an increase of $40,620 or 16.40%.

Results of Operations for the nine months ended September 30, 2013 and 2012 compared.

The following tables summarize selected items from the statement of operations for the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012.

INCOME:

 

 

Revenue

 

Our revenue for the nine months ended September 30, 2013 was $1,531,550 compared to $1,571,626 in the nine months ended June 30, 2012, a decrease of $40,076, or 2.55%.  The decrease in revenues was directly related to weather issues that Las Vegas has been experiencing the first half of this year, including a much colder than normal January and February, as well as an extremely hot end of May and first part of June.  Both of these issues kept golfers away from courses.

 

Revenue-Related Party for the nine months ended September 30, 2013 was $122,850, compared to $119,070 in 2012, an increase of $3,780 or 3.17%. Revenue – Related Party increased because of an increase in rent in July 2012.

 

Cost of Sales/Gross Profit Percentage of Sales

 

Cost of sales currently consists mainly of payroll and benefits expenses of the AAGC staff, and operating supplies.  Our cost of sales for the nine months ended September 30, 2013 was $539,477, a decrease of $33,873 or 5.91% from $573,350 for the nine month period ended September 30, 2012.  The decrease is related to the fact that no large expenditures were made in the first nine months of 2013 as compared to 2012.

 

Gross profit as a percentage of sales increased to 67.39%, for the nine months ended September 30, 2013.  Gross profit as a percentage of sales was 66.09% for the nine months ended September 30, 2012.  This decrease is due to the factors discussed above.

 

EXPENSES: