Thursday, June 13, 2013 11:34:32 PM
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 March 31, 2013
¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 000 - 24970
A LL -A MERICAN S PORTPARK , I NC .
(Exact name of registrant as specified in its charter)
Nevada 88-0203976
(State or other jurisdiction of incorporation
or organization) (I. R. S. Employer
Identification No. )
6730 South Las Vegas Boulevard
Las Vegas, NV 89119
(Address of principal executive offices)
(702) 798-7777
(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 May 6, 2013 was 4,522,123 shares.
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A LL -A MERICAN S PORTPARK , INC .
F ORM 10-Q
I NDEX
Page
Number
P ART I: F INANCIAL I NFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at March 31, 2013
(Unaudited) and December 31, 2012 1
Condensed Consolidated Statements of Operations for the Three
Months Ended March 31, 2013 and 2012 (Unaudited) 2
Condensed Consolidated Statements of Cash Flows For the
Three Months Ended March 31, 2013 and 2012 (Unaudited) 4
Notes to Condensed Consolidated Financial Statements (Unaudited) 5
Item 2. Management’s Discussion and Analysis of Financial Condition
And Results of Operations 12
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures 20
P ART II: O THER I NFORMATION
Item 1. Legal Proceedings 21
Item 1A. Risk Factors 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Mine Safety Disclosures 21
Item 5. Other Information 21
Item 6. Exhibits 21
S IGNATURES 22
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PART 1 – FINANCIAL INFORMATION
I TEM 1 F INANCIAL S TATEMENTS
A LL -A MERICAN S PORT P ARK , I NC .
C ONDENSED C ONSOLIDATED B ALANCE S HEETS
Unaudited
March 31, December 31,
2013 2012
Assets
Current assets:
Cash $ 57,464 $ 5,500
Accounts receivable 168 5,942
Prepaid expenses and other current assets 215,340 5,733
Total current assets 272,972 17,175
Property and equipment, net of accumulated depreciation
of $730,078 and $702,488, as of 2013 and 2012, respectively
659,789 669,441
Total Assets $ 932,761 $ 686,616
Liabilities and Stockholders' Deficit
Current liabilities:
Cash in excess of available funds $ 4,413 $ 5,594
Accounts payable and accrued expenses 337,981 359,907
Current portion of deferred revenue 100,000 -
Current portion of notes payable - related parties 4,329,495 4,329,495
Current portion due to related parties 1,558,297 1,416,843
Current portion of capital lease obligation 31,541 35,120
Accrued interest payable - related party 5,085,318 4,978,335
Total current liabilities 11,447,045 11,125,294
Long-term liabilities:
Long-term portion of capital lease obligation 1,734 6,529
Deferred revenue 100,000 -
Deferred rent liability 680,835 691,780
Total long-term liabilities 782,569 698,309
Commitments and Contingencies
Stockholder’s deficit:
Preferred stock, Series "B", $0.001 par value, 10,000,000
shares authorized, no shares issued and outstanding
as of March 31, 2013 and December 31, 2012, respectively
- -
Common stock, $0.001 par value, 50,000,000 shares
authorized, 4,522,123 and 4,522,123 shares issued and
outstanding as of March 31, 2013 and December 31, 2012,
respectively
4,522 4,522
Additional paid-in capital 14,387,972 14,387,972
Accumulated deficit (26,064,231 ) (25,877,864 )
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Total All-American SportPark, Inc. stockholders'
deficit
(11,671,737 ) (11,485,370 )
Non-controlling interest in net assets of subsidiary 374,884 348,383
Total stockholders' deficit (11,296,853 ) (11,136,987 )
Total Liabilities and Stockholders' Deficit $ 932,761 $ 686,616
The accompanying notes are an integral part of these condensed consolidated financial statements.
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ALL-AMERICAN SPORTPARK, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
For the Three Months Ending
March 31,
2013 2012
Revenue $ 484,501 $ 524,364
Revenue - related party 40,950 39,312
Total revenue 525,451 563,676
Cost of revenue 169,139 199,399
Gross profit 356,312 364,277
Expenses:
General and administrative expenses 353,966 349,407
Depreciation and amortization 27,590 29,443
Total expenses 381,556 378,850
Net operating (loss) (25,244 ) (14,573 )
Other income (expense):
Interest expense (134,622 ) (135,326 )
Gain on property and equipment - 1,673
Total other expense (134,622 ) (133,653 )
Net loss before provision for income tax (159,866 ) (148,226 )
Provision for income tax expense - -
Net loss (159,866 ) (148,226 )
Net income attributable to non-controlling interest 26,501 25,094
Net loss attributable to All-American SportPark, Inc. $ (186,367 ) $ (173,320 )
Net loss per share – basic and fully diluted $ (0.04 ) $ (0.04 )
Weighted average number of common shares outstanding - basic and fully diluted
4,522,123 4,522,123
The accompanying notes are an integral part of these condensed consolidated financial statements
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ALL-AMERICAN SPORTPARK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ending
March 31,
2013 2012
Cash flows from operating activities
Net (loss) $ (159,866 ) $ (148,226 )
Adjustments to reconcile net loss to net cash provided by
(used) in operating activities:
Depreciation and amortization expense 27,590 29,443
Gain on disposal of property and equipment - (1,673 )
Changes in operating assets and liabilities:
Accounts receivable 5,774 2,657
Prepaid expenses and other current assets (209,607 ) 6,655
Cash issued in excess of available funds (1,181 ) (29,184 )
Accounts payable and accrued expenses (21,926 ) (28,180 )
Deferred revenue 200,000 -
Deferred rent liability (10,945 ) 822
Accrued interest payable - related party 106,983 106,525
Net cash used in operating activities (63,178 ) (61,161 )
Cash flows from investing activities
Proceeds from sale on property and equipment - 1,675
Purchase of property and equipment (17,938 ) (36,893 )
Net cash used in investing activities (17,938 ) (35,218 )
Cash flows from financing activities
Proceeds from related parties 141,454 52,579
Payment on capital lease obligation (8,374 ) (7,401 )
Proceeds from notes payable – related parties - 95,001
Net cash provided by financing activities 133,080 140,179
Net increase in cash 51,964 43,800
Cash - beginning 5,500 1,900
Cash - ending $ 57,464 $ 45,700
Supplemental disclosures:
Interest paid $ 1,242 $ 2,217
Income taxes paid $ - $ -
Supplemental disclosure of non-cash investing activities
Cash payment for equipment in prior year $ - $ 90,000
The accompanying notes are an integral part of these condensed consolidated financial statements.
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A LL -A MERICAN S PORTPARK , I NC .
N OTES TO C ONDENSED C ONSOLIDATED F INANCIAL S TATEMENTS
(Unaudited)
Note 1 – Basis of presentation
The condensed 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 March 31, 2013, we had an accumulated deficit of $26,064,231. In addition, the Company’s current liabilities exceed its current assets by $11,174,073 as of March 31, 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 January 2013, the Financial Accounting and Standards Board (FASB) issued Accounting Standards Update (“ASU”) ASU 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of
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Disclosure about Offsetting Assets and Liabilities. The ASU clarifies disclosures required for derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements, and securities borrowing and lending transactions that are either offset in accordance with Section 310-20-45 or Section 815-10-46 or subject to an enforceable master netting arrangement or similar agreement. The ASU is effective for annual and interim periods beginning after January 1, 2013. There will be no changes in our presentation with regards to this new standard as it does not affect our Consolidated Financial Statements.
In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”. The ASU requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety from accumulated other comprehensive income to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The ASU is effective for annual and interim periods beginning after January 1, 2013. There will be no changes in our presentation with regards to this new standard as it does not affect our 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 March 31, 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 March 31, 2013, St. Andrews Golf Shop, our minority interest partner and a related party held a $374,884 interest in the net asset value of our subsidiary AAGC and a $26,501 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
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parties by the Company approximated $14,206 and $22,892 for the three months ended March 31, 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 $1,558,297 and $1,416,843 as of March 31, 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 first quarter of 2013 are $15,000 and $9,375, respectively.
Notes and Interest Payable to Related Parties:
The Company has various notes and interest payable to the following entities as of March 31, 2013, and December 31, 2012, respectively:
2013 2012
Various notes payable to the Paradise Store
bearing 10% per annum and due on demand
$ 3,200,149 $ 3,200,149
Note payable to BE Holdings 1, LLC, owned
by the chairman of the board, bearing 10%
per annum and due on demand
100,000 100,000
Various notes payable to SAGS, bearing
10% per annum and due on demand
743,846 693,846
Various notes payable to the District Store,
bearing 10% per annum and due on demand
85,000 85,000
Note payable to BE, III bearing 10% per
annum and due on demand
200,500 200,500
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Total $ 4,329,495 $ 4,279,495
========= =========
All maturities of related party notes payable and the related accrued interest payable as of March 31, 2013 are due and payable upon demand. At March 31, 2013, the Company has no loans or other obligations with restrictive debt or similar covenants.
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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 March 31, 2013 and December 31, 2012, accrued interest payable - related parties related to the notes payable – related parties totaled $5,085,318 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 three month ending March 31, 2013 and 2012, the Company recognized rental income totaling $40,950 and $39,312, respectively.
Note 6 – Commitments
Lease agreements
The land underlying the CGC is leased under an operating lease that expires in 2012 and has two five-year renewal options. In March 2006, the Company exercised the first of two options, extending the lease to 2018. Also, the lease has a provision for contingent rent to be paid by AAGC upon reaching certain levels of gross revenues. The Company recognizes the minimum rental expense on a straight-line basis over the term of the lease, which includes the two five year renewal options.
At March 31, 2013, minimum future lease payments under non-cancelable operating leases are as follows:
2013 397,380
2014 529,840
2015 529,840
2016 529,840
Thereafter $ 3,443,965
$ 5,430,865
Total rent expense for this operating lease was $132,460 and $121,244 for the three months ended March 31, 2013 and 2012.
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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.
2013 28,853
2014 6,767
Total payments 35,620
Less interest (2,345 )
Total principal 33,275
Less current portion (31,541 )
Long-term portion $ 1,734
Accumulated depreciation for the capital leases as of March 31, 2013 and December 31, 2012 was $87,785 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.
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On March 9, 2013, AAGC entered into an amendment to its Customer Agreement with Callaway (the “Amendment”). The effective date of the Amendment is January 20, 2013. The Amendment provides that AAGC is 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 is successful in executing a written contract with an alternative retail branding partner, the Customer Agreement will terminate on June 30, 2013. In the event that an agreement with an alternative retailed branding partner is not entered into by June 30, 2013, the Customer Agreement will terminate on that date but AAGC will 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 which will include one nine-camera motion analysis system and one putting lab, and will provide additional services, equipment, supplies and resources for the golf center.
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
We are authorized to issue 10,000,000 shares of $0.001 par value preferred stock and 50,000,000 shares of $0.001 par value common stock.
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Preferred stock
As of March 31, 2013, we had no preferred shares issued and outstanding.
Common stock
As of March 31, 2013, we had 4,522,123 shares of our $0.001 par value common stock issued and outstanding. We had no new issuances during the period ended March 31, 2013.
Note 8 – Subsequent Events
Upon our evaluation of events and transactions that have occurred subsequent to the balance sheet date, William Kilmer, a board member for many years resigned from the board effective April 16, 2013. He has been replaced by Steven Miller, President of Agassi Enterprises, Inc. and Agassi/Graff Holdings.
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I TEM 2. M ANAGEMENT ’ S D ISCUSSION AND A NALYSIS OF F INANCIAL C ONDITION AND R ESULTS OF O PERATIONS .
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.
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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 is January 20, 2013. The Amendment provides that AAGC is 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 is successful in executing a written contract with an alternative retail branding partner, the Customer Agreement will terminate on June 30, 2013. In the event that an agreement with an alternative retailed branding partner is not entered into by June 30, 2013, the Customer Agreement will terminate on that date but AAGC will 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 from TMaG in early April 2013 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 Agreement provides that TMaG will install a performance lab at AAGC’s facility which will include one nine-camera motion analysis system and one putting lab, and will provide additional services, equipment, supplies and resources for the golf center.
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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 lease at the Callaway Golf Center. They have 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.
Results of Operations for the three months ended March 31, 2013 and 2012 compared.
The following tables summarize selected items from the statement of operations for the three months ended March 31, 2013 compared to the three months ended March 31, 2012.
INCOME:
For the three months ended
March 31,
Increase (Decrease)
2013 2012 $ %
Revenue $ 484,501 $ 524,364 $ (39,863 ) (7.60 )%
Revenue – Related Party 40,950 39,312 1,638 4.17 %
Cost of Sales 169,139 199,399 (30,260 ) (15.18 )%
Gross Profit $ 356,312 $ 364,277 $ (7,965 ) (2.19 )%
Gross Profit Percentage of Sales 67.81 % 64.63 %
Revenue
Our revenue for the three months ended March 31, 2013 was $484,501 compared to $524,364 in the three months ended March 31, 2012, a decrease of 39,863, or 7.60%. The decrease in revenues was directly related to the months of January and February 2013 being colder than normal.
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Revenue-Related Party for the three months ended March 31, 2013 was $40,950, compared to $39,312 in 2012, an increase of $1,638 or 4.17%. 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 three months ended March 31, 2013 was $169,139, a decrease of $30,260 or 15.18% from $199,399 for the three month period ending March 31, 2012. The decrease is directly related to management staff changes as well as some administrative contract changes that reduced expenses for the Company.
Gross profit as a percentage of sales increased to 67.81%, for the three months ended March 31, 2013. Gross profit as a percentage of sales was 64.63% for the three months ended March 31, 2012. This increase is due to the factors discussed above.
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EXPENSES:
For the Three Months Ending
March 31, Increase (Decrease)
2013 2012 $ %
Amount Amount
Expenses:
General and administrative expense $ 353,966 $ 349,407 4,559 1.30 %
Depreciation and amortization 27,590 29,443 (1,853 ) (6.29 )%
Total expenses 381,556 378,850 2,706 0.71 %
Net operating (loss) (25,244 ) (14,573 ) 10,671 73.22 %
Other income (expenses)
Interest expense (134,622 ) (135,326 ) (704 ) (0.43 )%
Gain on property and equipment - 1,673 (1,673 ) -
Total other income (expense) (134,622 ) (133,653 ) (969 ) (0.73 )%
Net (loss) before provision for income tax (159,866 ) (148,226 ) (11,640 ) (7.85 )%
Provision for income tax expense - - - -
Net (loss) (159,866 ) (148,226 ) (11,640 ) (7.85 )%
Net (income (loss) attributable to non- controlling interest 26,501 25,094 1,407 5.61 %
Net (loss) attributable to All-American Sportpark, Inc. $ (186,367 ) $ (173,320 ) (13,047 ) (7.53 )%
General and Administrative Expenses
General and administrative expenses for the three months ended March 31, 2013 were $353,966, an increase of $4,559 or 1.30%, from $349,407 for the three months ended March 31, 2012. Expenses were virtually unchanged for the first quarter of 2013and 2012.
Depreciation and amortization expenses for the three months ended March 31, 2013 were $27,590, a decrease of $1,853, or 6.29% from $29,443 for the three months ended March 31, 2012. The decrease is related to the disposal of assets that took place last year, resulting in a decrease in depreciation and amortization expenses for the first quarter of 2013.
Total Expenses
Our overall operating expenses increased to $381,556 for the three months ended March 31, 2013 as compared to $378,850 for the three months ended March 31, 2012. The increase in total expenses was $2,706 or 0.71 % and was virtually unchanged from 2012.
Net Loss from Operations
We had a net loss from operations of $25,244 for the three months ended March 31, 2013 as compared to a net loss from operations of $14,573 for the three months ended March 31, 2012 an
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increase in loss of $10,671 or 73.22%. The increase in net loss from operations was due the decrease in revenue experienced from cold weather in January and February 2013.
Interest Expense
Our interest expense decreased by 0.43% or $704 from $135,326 for the three months ended March 31, 2012 to $134,622 for the three months ended March 31, 2013. Interest expense was virtually the same in 2013 as in 2012.
Net Loss
The net loss before non-controlling interest for the three months ended March 31, 2013 was $159,866 as compared to $148,226 for the same period in 2012. The increase of $11,640 or 7.85% is attributed to the cold weather in January and February 2013.
The net loss attributable to non-controlling interest for the first quarter of 2012 was $26,501 as compared to $25,094 for the same period in 2012. That resulted in net loss attributable to All-American Sport Park of $186,367 for 2013 as compared to $173,320 for 2012 an increase of $13,047 or 7.53%.
Liquidity and Capital
A critical component of our operating plan impacting our continued existence is the ability to obtain additional capital through additional equity and/or debt financing. We have partnered with TaylorMade/adidas Golf Company ("TMaG") to create an updated facility with a new name and brand. In so doing, TMaG has agreed to provide us with cash influx over the next 5 years of the agreement , $200,000 of which was paid within a few days of signing the agreement . This will help us in generating positive internal operating cash flow.
The following table summarizes our current assets, liabilities, and working capital at March 31, 2013 compared to December 31, 2012.
March 31, December 31, Increase / (Decrease)
2012 2012 $ %
Current Assets $ 272,972 $ 17,175 $ 255,797 1,489.36 %
Current Liabilities 11,447,045 11,125,294 321,751 2.89 %
Working Capital Deficit $ 11,174,073 $ 11,108,119
Internal and External Sources of Liquidity
Cash Flow . Since inception, we have primarily financed our cash flow requirements through related party debt transactions. If that source of funding is eliminated it may have a material, adverse effect on our operations. We are currently operating at a loss but with positive cash flow because of deferring related party payables and interest payments. Though this has allowed us to currently minimize the deferral of our payables, we continue to depend on this source of
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financing. Should we lose our ability to defer those payables, without a return to profitability, our cash resources will be limited.
Satisfaction of our cash obligations for the next 12 months.
As of March 31, 2013, our cash balance was $57,464. Our plan for satisfying our cash requirements for the next twelve months is to use the $200,000 received from TMaG in early April 2013 for working capital. 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.
Given our operating history, predictions of future operating results are difficult to make. Thus, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their various stages of commercial viability. Such risks include, but are not limited to, an evolving business model and the management of growth. To address these risks we, among other things, plan to continue to modify our business plan, implement and execute our marketing strategy, develop and upgrade our facilities in a response to our competitor’s developments.
Going Concern
The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern. Management intends to use borrowings and security sales to mitigate the effects of its cash position, however no assurance can be given that debt or equity financing, if and when required will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies and Estimates
Stock-based Compensation: In accordance with accounting standards concerning Stock-based Compensation, the Company accounts for all compensation related to stock, options or warrants using a fair value based method in which compensation cost is measured at the grant date based on the value of the award and is recognized over the service period. Stock issued for compensation is valued on the date of the related agreement and using the market price of the stock.
Related party transactions: In accordance with accounting standards concerning related party transactions, there now are established requirements for related party disclosures and the policy provides guidance for the disclosures of transactions between related parties.
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Subsequent events: In accordance with accounting standards concerning subsequent events, states that a company is not required to disclose the date through with subsequent events have been evaluated. The adoption of this ASU did not have a material impact on our consolidated financial statements.
Recent Accounting Developments
In January 2013, the Financial Accounting and Standards Board (FASB) issued Accounting Standards Update (“ASU”) ASU 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosure about Offsetting Assets and Liabilities. The ASU clarifies disclosures required for derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements, and securities borrowing and lending transactions that are either offset in accordance with Section 310-20-45 or Section 815-10-46 or subject to an enforceable master netting arrangement or similar agreement. The ASU is effective for annual and interim periods beginning after January 1, 2013. There will be no changes in our presentation with regards to this new standard as it does not affect our Consolidated Financial Statements.
In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”. The ASU requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety from accumulated other comprehensive income to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The ASU is effective for annual and interim periods beginning after January 1, 2013. There will be no changes in our presentation with regards to this new standard as it does not affect our Consolidated Financial Statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Principal Financial Officer to allow timely decisions regarding required financial disclosure.
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As of the end of the period covered by this report, the Company’s management carried out an evaluation, under the supervision of and with the participation of the Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Exchange Act). Based upon that evaluation, the Company’s Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report, to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, completely and accurately, within the time periods specified in SEC rules and forms.
Changes in Internal Control over Financial Reporting
There were no changes in internal control over financial reporting that occurred during the first quarter of the fiscal year covered by this report that have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting.
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PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no legal proceedings in which the Company is involved at this time.
ITEM 1A. RISK FACTORS.
Not required
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
We did not have any unregistered sales of equity securities during the quarter ended March 31, 2013 that have not been reported in a Current Report on Form 8-K.
We did not repurchase any of our equity securities during the quarter ended March 31, 2013.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
Exhibit Filed Period Exhibit Filing
number Exhibit description herewith Form ending No. date
10.1 First Amendment to Customer Agreement with
Callaway Golf Company. 10 -K 12-31- 2013 10.19 4-1-2013
10.2 Golf Center Sponsorship Agreement with
Taylor Made Golf Company, Inc. * X
31.1 Certification of Chief Executive and Principal
Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 X
32.1 Certification of Chief Executive and Principal
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 X
* Confidential treatment has been requested for portions of this agreement.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ALL-AMERICAN SPORTPARK, INC.
(Registrant)
Date: May 15, 2012 By: /s/ Ronald Boreta
Ronald Boreta, President, Chief Executive Officer,
and Treasurer (On behalf of the Registrant and as
Principal Financial Officer)
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Exhibit 10.2
NOTE: PORTIONS OF THIS EXHIBIT ARE THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST BY THE REGISTRANT TO THE
SECURITIES AND EXCHANGE COMMISSION. SUCH PORTIONS HAVE BEEN
REDACTED AND ARE MARKED WITH A “[***]” IN PLACE OF THE REDACTED LANGUAGE.
GOLF CENTER SPONSORSHIP AGREEMENT
This GOLF CENTER SPONSORSHIP AGREEMENT (this “ Agreement ”) is made as of March 27, 2013 (the “ Effective Date ”), between All-American Golf Center, Inc., a Nevada corporation (“ AAGC ”), and TAYLOR MADE GOLF COMPANY, INC., a Delaware corporation doing business as TaylorMade-adidas Golf Company (“ TMaG ”), with respect to the golf center facility owned and operated by AAGC and located at 6730 South Las Vegas Boulevard, Las Vegas, Nevada 89119, as further described in Exhibit A attached hereto (the “ Facility ”).
WHEREAS , AAGC is the lessee of the Facility and has the exclusive rights to the use, occupation, operation, branding, advertising and marketing of the Facility pursuant to the terms and conditions of that certain Lease Agreement (along with any and all addendums, amendments, and other modifications thereto, collectively, the “ Lease ”), dated June, 1997 with Urban Land of Nevada; and
WHEREAS , the parties desire that TMaG become the exclusive sponsor of the Facility and that the Facility be branded and marketed using TMaG’s trademarks.
NOW THEREFORE , in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the parties do hereby agree as follows:
1. Facility .
1.1 Rebrand and build - out of Facility . The Facility will be re-branded using TMaG Marks (defined below) and, throughout the duration of this Agreement (and for such longer period of time as the parties may agree upon in accordance with the terms of this Agreement), the Facility shall be identified as the TaylorMade Golf Center (the “ Facility Name ”). The parties hereby agree that TMaG shall reimburse AAGC for the reasonable costs associated with the rebranding efforts, including the costs associated with the build-out of the Facility and the Performance Lab (defined below) (TMaG’s total reimbursement expenditures shall collectively be referred to herein as the “ TMaG Contribution ”); provided, however, that the TMaG Contribution shall not exceed $[***]. AAGC shall work in cooperation with TMaG for the approval of the designs, plans and budget for the build-out and rebranding of the Facility. AAGC shall submit invoices to TMaG for third party costs and expenses incurred by AAGC related to the build-out and rebranding of the Facility; and, TMaG shall reimburse AAGC for such expenses within thirty (30) days upon receipt or within such time as reasonably required by AAGC’s invoice therefor accompanied by receipts and other acceptable documentation of such costs and expenses. In addition, AAGC shall provide weekly status updates to TMaG
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regarding the rebranding and build-out of the Facility in a form mutually agreed by the parties.
1.2 Advertising . AAGC hereby agrees to comply with the following requirements:
1.2.1 AAGC shall place exterior signage with TMaG Marks of the type and in placement mutually agreed between the parties, including, but not limited to a street sign with an electronic readerboard on Las Vegas Boulevard that will bear the Facility Name (the “ LVB Sign ”); provided, however that the readerboard on the LVB Sign may also include advertising of TMaG Competitors (as defined in Section 4.6 below) so long as the prominence of the TMaG Marks remains consistent with the TMaG Merchandise Placement Requirements defined below (i.e., TMaG Competitors may appear on the readerboard, but [***]% of the time on the readerboard shall be devoted to TMaG Marks). Subject to the limitations set forth in Section 1.1 above, TMaG shall reimburse AAGC for the expenses relating to the costs of creating and installing the exterior signage. AAGC shall not promote or advertise any TMaG Competitors on the exterior of the Facility.
1.2.2 Within the Facility, AAGC may advertise TMaG Competitors; provided, however, that the TMaG Merchandise (defined below) shall be displayed in accordance with the TMaG Merchandise Placement Requirements described below. Notwithstanding anything to the contrary herein, AAGC shall not place any marketing materials of any TMaG Competitor anywhere within the Facility which directly disparages TMaG [***].
1.2.3 Upon request therefor by AAGC, TMaG shall provide AAGC with reasonable access to TMaG’s marketing materials. AAGC shall not modify such marketing materials without the prior written approval of TMaG in each and every instance. In addition, should AAGC prepare any of its own marketing materials, AAGC shall provide the marketing materials to TMaG for approval in accordance with Section 7.1 of this Agreement.
1.2.4 AAGC shall be permitted to operate a website for the Facility (the “ Facility Website ”) using the following URL: www.taylormadegolfcenter.com (the “ Facility URL ”); provided, however that the Facility URL shall be considered a TMaG Mark subject to the terms of Section 7.1.2 below. The Facility URL shall be registered and owned by TMaG. The Facility Website shall not promote or sell any products of TMaG Competitors.
1.2.5 AAGC shall operate the Facility in consistent with the minimum standards set forth on Exhibit C .
1.3 TMaG Website . TMaG shall include a link on its website (www.taylormadegolf.com) to the Facility Website.
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1.4 Fixtures and Artwork . TMaG will be responsible for updating the retail merchandising fixtures and artwork at the Facility with fixtures and artwork that will bear TMaG Marks.
1.5 TMaG Performance Lab . TMaG will install, at TMaG’s sole cost and expense, subject to the limitations set forth in Section 1.1, (i) one nine-camera MAT-T System for the indoor Studio within the Facility, and (ii) one putting lab (collectively, the MAT-T System and the putting lab shall be referred to as the “ Performance Lab ”).
TMaG shall provide reasonable maintenance service updates for the Performance Lab throughout the Term of the Agreement; provided, however, that AAGC shall be responsible for operating the Performance Lab at the Facility. Should there be an issue with the Performance Lab, AAGC shall promptly notify TMaG and TMaG shall have a reasonable amount of time to repair the Performance Lab.
1.5.1 Equipment for Performance Lab . TMaG shall furnish a reasonable amount of custom fitting demonstration equipment (including, but not limited to, irons, metal woods, drivers and putters) for AAGC’s use with the Performance Lab at no additional charge to AAGC, subject, however to the limitations set forth in Section 1.1. Throughout the Term of this Agreement, TMaG shall reasonably repair, replace or update demonstration equipment as necessary for AAGC to operate the Performance Lab.
1.6 Floor Space . Subject to the limitations set forth in Section 1.1 above, TMaG shall pay for the cost of any required build-out of the Facility, including the expansion of the retail floor space from its current size of approximately 3,500 square feet to approximately 7,500 square feet, resulting in a corresponding reduction of common area space. The expanded retail space will display merchandise in accordance with Section 4.5 below.
1.7 Facility Uniforms . TMaG will provide a reasonable amount of uniforms for all AAGC staff (including shirt, shoes, pants and a belt), in such amounts as reasonably determined by TMaG from time to time.
1.8 Facility Staff . [***]
1.9 Range Ball Program . [***] TMaG shall have the option, at TMaG’s sole discretion to provide to AAGC up to [***] dozen range balls per year for AAGC’s use at the Facility. In the event that TMaG chooses not to supply range balls to AAGC for use at the Facility, AAGC shall be permitted to purchase range balls from a TMaG Competitor for use in the Facility.
1.10 Completion of Rebranding . Upon the completion of the rebranding of the Facility, the parties shall hold a grand-opening party for the new Facility. The party shall be mutually coordinated between TMaG and AAGC. TMaG shall provide a reasonable amount of funds for the party.
2. TMaG Consideration . Provided that AAGC is continuing to operate the Facility and comply with the terms and conditions of this Agreement as more particularly described
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herein, TMaG will pay to AAGC the payments listed below in accordance with the following schedule:
2.1 Upon execution of this Agreement TMaG shall pay to AAGC $200,000.
2.2 Upon the first anniversary of the Effective Date of this Agreement, TMaG shall pay to AAGC $[***].
2.3 Upon the second anniversary of the Effective Date of this Agreement, TMaG shall pay to AAGC $[***].
3. Ownership .
3.1 Any point of purchase displays, TMaG demonstration products, uniforms, fitting systems, and TMaG Merchandise (as defined in and subject to sales under Section 4) and all other equipment, artwork and fixtures provided by TMaG during the Term, including the Performance Lab (collectively, the “ TMaG Property ”) shall at all times be and remain the property of TMaG. AAGC shall not permit any lien, encumbrance or security interest arising out of or in any way relating to any indebtedness or obligation of AAGC (collectively, “ AAGC Liens ”) to attach to any TMaG Property now or hereafter in AAGC’s possession, and agrees to cause its current and future lenders and lessors to execute and deliver to TMaG such waivers, releases or other agreements as TMaG may from time to time require to establish, protect or maintain TMaG’s rights in all TMaG Property, free and clear of any AAGC Liens. AAGC shall keep the TMaG Property operational, clean and in good condition throughout the duration of this Agreement. AAGC shall, at its sole cost and expense, operate the TMaG Property, including equipment, artwork and fixtures, in a manner consistent with TMaG’s specifications and instructions, maintain them in first-class condition, and, except for the Performance Lab, which shall be repaired by TMaG, make such repairs and replacements thereto as may be necessary or appropriate. AAGC shall take reasonable steps to prevent loss of or damage to any TMaG Property. Upon expiration of this Agreement, [***] the TMaG Property shall promptly be returned to TMaG. TMaG may file or record financing statement(s), naming AAGC as debtor and TMaG as creditor, in the appropriate filing office(s) to, among other things, provide notice of TMaG’s interest in the TMaG Property in AAGC’s possession from time to time (and, in the case of TMaG Merchandise, any proceeds thereof), and may notify any other creditor purporting to have a security interest in any inventory, personal property or fixtures of AAGC of TMaG’s interest therein. TMaG shall have the right to mark any of the TMaG Property as the sole property of TMaG and AAGC shall not remove or obscure, or permit the removal or obscuring of any signs, tags, labels or other identifying information affixed to any of the TMaG Property. Unless otherwise expressly approved by TMaG in writing, no TMaG Property in AAGC’s possession shall be removed from the Facility. TMaG shall be responsible for any use tax or personal property taxes payable with respect to any TMaG Property (other than TMaG Merchandise) furnished by TMaG hereunder.
4. TMaG Merchandise .
4.1 AAGC shall offer for sale to the public at the Facility the full range of standard TMaG products including golf equipment, accessories, golf balls, apparel (Taylor
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Made, adidas Golf, and Ashworth) and footwear (the “ TMaG Merchandise ”), subject to the obligations of TMaG to third parties with respect thereto (such as exclusive distribution rights or area restrictions), which are set forth on Exhibit D attached hereto. The range of TMaG Merchandise, and the quantities of items within the range, maintained at the Facility shall be reasonably determined by TMaG in cooperation with AAGC from time to time. TMaG reserves the right to establish policies regarding the periodic return of unsold TMaG Merchandise. The TMaG Merchandise shall remain the property of TMaG until sale thereof to the consumer is complete, except that, for purposes of this Agreement, loss or shrinkage of TMaG Merchandise shall be treated as if such TMaG Merchandise were sold by AAGC to a consumer in the month during which such loss or shrinkage occurred. On or before the 3 rd working day of every calendar month, AAGC shall report the type (by TMaG sku) and quantity of TMaG Merchandise sold by AAGC during the preceding calendar month (including loss and shrinkage), and the type and quantity of TMaG Merchandise remaining at the Facility on the last day of such calendar month. AAGC shall provide such other periodic reporting regarding transactions in or relating to TMaG Merchandise as TMaG may from time to time reasonably require. AAGC shall pay TMaG the full wholesale price for any TMaG Merchandise, as quoted by TMaG from time to time, net 21 days end of month, for all TMaG Merchandise sold in the preceding month, provided that AAGC will receive a [***] percent ([***]%) discount for payment made within 20 days from end of month. Moreover, a monthly late payment charge of [***]% will be assessed on any unpaid balance after its due date, which, for the avoidance of doubt, is 21 days from the end of the month in which the relevant TMaG Merchandise was sold. AAGC shall pay collection costs, collection agency commission, expenses and reasonable attorney fees (including, without limitation, at trial and on appeal) that TMaG may incur in any manner of collection of any sums past due.
4.2 AAGC shall maintain its sales records (including its sales tax records) pertaining to TMaG Merchandise sold under this Agreement for a period of not less than seven calendar years after sale. AAGC shall maintain such records on a consistent basis from month to month and year to year, and such records shall specify in reasonable detail the type and quantity of TMaG Merchandise sold by AAGC. Upon reasonable notice [***] TMaG shall have the right to audit such sales records at any reasonable time, to conduct its own inventory of TMaG Merchandise, and otherwise to verify AAGC’s compliance with its obligations hereunder, and the parties may, in addition to any other remedies, make appropriate adjustments based upon the results of such audit or inventory. In addition, TMaG will have the right to conduct regular inventory counts and cycle counts.
4.3 AAGC shall be solely responsible for the collection of all sales, use, value added or other taxes imposed on sales of TMaG Merchandise from the Facility, and shall timely remit same to the appropriate taxing authorities.
4.4 Except as provided in this Agreement, AAGC shall not have the right to sell TMaG Merchandise provided under this Agreement at any location other than the Facility without the prior written consent of TMaG, which consent may be withheld in TMaG’s sole discretion. The purchase and sale of such Products shall be subject to TMaG’s standard Business Policy and General Terms and Conditions, as may updated from time to time by TMaG. [***] AAGC shall not sell any TMaG Merchandise, directly or indirectly, via any unauthorized internet website or via direct mail, telephone or e-mail solicitation. Notwithstanding the
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foregoing, AAGC may sell TMaG Merchandise via direct mail, telephone, or email solicitation solely to existing customers of the Facility existing as of the Effective Date.
4.5 Merchandise Placement Requirements . AAGC covenants that [***] percent ([***]%), or a greater percentage to be mutually agreed upon between the parties, of the expanded retail floor space (by usable square footage) shall be devoted to the TMaG Merchandise, with the location and layout to be mutually agreed by the parties (the “ TMaG Merchandise Placement Requirements ”). Additionally, TMaG Merchandise shall have clear priority positioning with respect to each distinct product category. As a nonlimiting example, TMaG putters shall clearly be the most visible and have the best positioning when compared to any TMaG Competitor’s putters. Should TMaG reasonably believe that the TMaG Merchandise does not have clear priority positioning, TMaG and AAGC shall work to re-position the TMaG Merchandise in a mutually agreeable manner.
4.6 Competing Merchandise . AAGC may devote no more than [***] percent ([***]%) of Facility retail floor space to TMaG Competitors (defined below), comprised of at least three independent TMaG Competitors. The Term “ TMaG Competitor ” means any person or entity other than TMaG that manufactures, produces, licenses, sells, markets or distributes, directly or indirectly, anywhere in the world, any golf equipment, accessories, balls, apparel or footwear.
4.7 Close out product . TMaG shall use good faith efforts to make close out products available at the Facility, and Las Vegas Golf and Tennis’ DM Location (defined below) and BP Location (defined below) from time to time. Close out product will be subject to TMaG’s close out terms and AAGC shall pay for any close out product on such terms regardless of the date of actual retail sale of such items.
5. Marketing Fund . During the Term of this Agreement, TMaG will pay to AAGC’s retail tenant a quarterly rebate in the amount of [***] percent ([***]%) of the wholesale price of the TMaG Merchandise purchased at the Facility. In addition, provided that AAGC’s associated facility, Las Vegas Golf and Tennis, maintains TMaG as its premier vendor at its Dean Martin location (the “ DM Location ”) and its Boca Park location (the “ BP Location ”), TMaG will pay to each retail operating entity of the DM Location and the BP Location, a quarterly rebate in the amount of [***] percent ([***]%) of the wholesale price of the TMaG Merchandise purchased at the DM Location or the BP Location, respectively. If, at any time during the Term of this Agreement either the DM Location or the BP Location ceases to maintain TMAG as its premier vendor, TMaG will immediately cease paying the marketing rebate to such location upon thirty (30) days advance written notice. TMaG will remit any earned marketing rebate to AAGC, the DM Location or the BP Location within forty-five (45) days after the end of each calendar quarter throughout the Term of this Agreement, accompanied by a report describing the basis for the marketing rebate earned. Any marketing rebate owed will be credited against any open invoice payable to TMaG or paid in cash if there is no outstanding invoice. Any marketing rebate owed to either of the DM Location or the BP Location will be credited against any open invoice payable to TMaG by either the DM Location or the BP Location, respectively, or paid in cash to either the DM Location or the BP Location if there is no outstanding invoice.
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6. Sales targets . AAGC will [***] meet the annual retail sales targets for the TMaG
Merchandise sold at the Facility (the “Retail Sales Targets”). The Retail Sales Target for the 2013 calendar year shall be $[***] in gross retail sales prorated for the time the Facility is actually open during the 2013 calendar year. The Retail Sales Target for the 2014 calendar year shall be $[***] in gross retail sales. Thereafter, the Retail Sales Target for each successive year shall increase by [ ** *] percent ([***]%). The parties hereby acknowledge that the Retail Sales Targets shall be used [***]; provided, however, that if AAGC is not on track to hit a Retail Sales Target in any given calendar year throughout the Term of this Agreement, AAGC will [***] implement reasonable measures that are suggested by TMaG and mutually agreed by AAGC in order to improve sales of the TMaG Merchandise at the Facility at AAGC’s sole cost and expense.
7. Intellectual Property .
7.1 Trademarks . Subject to the terms and conditions of this Agreement, during the Term, TMaG shall provide a license to AAGC with respect to the Facility Name, Facility URL and the TMaG Marks (collectively, the “ Marks ”) as set forth below.
7.1.1 License to use Facility Name . TMaG hereby grants AAGC an exclusive, non-transferable, non-sublicensable license during the Term to use the Facility Name and TMaG URL, solely in connection with the marketing and promotion of the Facility in accordance with this Agreement. AAGC shall not acquire any right, title or interest in and to the Facility Name or any other trademark or intellectual property of TMaG except for the limited license to use the trademark(s) as specifically set forth herein. The license granted to AAGC by TMaG hereunder shall terminate automatically and irrevocably upon the expiration or termination of this Agreement [***].
7.1.2 License to use TMaG Marks . TMaG hereby grants AAGC a non-exclusive, non-transferable, non-sublicensable license to use the TMaG trademarks, servicemarks, logos, and other identifying marks listed on Exhibit B attached hereto (the “ TMaG Marks ”), solely in connection with the marketing and promotion of the TMaG Merchandise at the Facility in accordance with this Agreement. AAGC shall not acquire any right, title or interest in and to the TMaG Marks listed on Exhibit B or any other trademark or intellectual property of TMaG except for the limited license to use the trademark(s) as specifically set forth herein. The licenses granted to AAGC by TMaG under this Agreement shall terminate automatically and irrevocably upon the expiration or termination of this Agreement [***].
7.1.3 TMaG’s Rights in the Marks . AAGC acknowledges the validity of and TMaG’s title to the Marks and of the goodwill associated therewith and shall not do or suffer to be done any act or thing which would adversely affect or otherwise impair the rights of TMaG in and to the Marks. AAGC shall not during or after the Term of this Agreement make any use of the Marks (except as expressly set forth herein) or any trademarks, service marks, trade names, or logos confusingly similar thereto, or file any application to register any thereof in any jurisdiction, shall make no claim of trademark rights adverse to those of TMaG, and shall not challenge or contest
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the validity of the Marks, or assist others in doing so. AAGC further acknowledges that its use of the Marks and all goodwill developed therefrom shall inure to the benefit of TMaG.
7.2 Quality Standards and Control .
7.2.1 Quality Standards . The Facility, its operation, and the services provided at the Facility (collectively, the “ Facility Operations ”) and any proprietary information, along with any marketing materials prepared by or on behalf of AAGC relating to the Facility (the “ Marketing Materials ”) shall be of the high standards in both nature and quality of TMaG.
(a) AAGC agrees that all of its use of the Marks shall be effected under the authority of TMaG, and in accordance with all directions and quality control standards of TMaG as listed herein or communicated by TMaG to AAGC from time to time. AAGC shall submit to TMaG copies of all materials using (or mock-ups of proposed electronic representations of) the Marks at least twenty-one (21) days before the first use thereof. AAGC shall promptly provide all other materials reasonably requested by TMaG to assess the quality of services or materials offered by AAGC pursuant to this Agreement. Should TMaG disapprove of the quality of any such services or materials, AAGC will immediately comply with any requested changes.
7.2.2 Control .
(a) Except as otherwise provided in this Agreement, AAGC shall not incorporate any company or change the name of any company to a name which is or includes a name which is the same or similar to any of the Marks licensed hereunder.
(b) AAGC shall co-operate with TMaG to ensure at all times that the Facility, the Facility Operations and the Marketing Materials meet the high standards of nature and quality set out in Section 7.2.1 and shall co-operate with TMaG to enable TMaG at all times to ascertain whether the Facility, the Facility Operations and the Marketing Materials meet such high standards, and, in that regard, AAGC shall allow TMaG or any of its respective directors, officers, employees, agents or representatives the right to inspect the premises at all reasonable times in order to ascertain whether the Facility, the Facility Operations and the Marketing Materials meet such high standards.
7.2.3 Deficiency . Upon receipt of written notice from TMaG that the Facility, the Facility Operations or the Marketing Materials do not meet the high standards of nature and quality set out in Section 7.2.1, AAGC shall co-operate with TMaG to correct such deficiency with reasonable promptness.
7.3 Intellectual Property Rights in the MAT - T System .
7.3.1 TMaG hereby grants AAGC a non-exclusive, non-transferable, non-sublicensable license to use the MAT-T System, solely in connection with the operation of the Facility in accordance with this Agreement. AAGC shall not acquire any right, title or interest in and to the MAT-T System. The license granted to
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AAGC by TMaG hereunder shall terminate automatically and irrevocably upon the expiration or termination of this Agreement [***]. AAGC acknowledges the validity of and TMaG’s right, title and interest in and to the intellectual property rights embodied now or in the future in the MAT-T System and of the goodwill associated therewith and shall not do or suffer to be done any act or thing which would adversely affect or otherwise impair the rights of TMaG in and to the MAT-T System.
7.3.2 AAGC hereby assigns to TMaG any of AAGC’s right, title and interest in and to any intellectual property rights AAGC may acquire relating to the MAT-T System or any subsequent developments, improvements, or derivative works thereto created by AAGC. TMaG shall have the sole right to file for, obtain, maintain, register and extend copyright, patent or trademark protection for any and all MAT-T System and any such subsequent development or improvement. AAGC agrees to use reasonable efforts to cooperate and assist TMaG in the protection of TMaG's intellectual property rights in and to the MAT-T System by providing evidence, documents or testimony concerning TMaG’s use of the MAT-T System.
7.3.3 AAGC shall not copy the software relating to the MAT-T System in whole or in part.
7.3.4 AAGC shall not, and shall not permit any third party to, modify the MAT-T System or decompile, reverse engineer, disassemble, or otherwise determine or attempt to determine the code of the MAT-T System, or any ideas, algorithms, structure or organization contained therein. AAGC shall not attempt to produce or aid in the production of any other club fitting or instructional system which captures and quantifies a golfer's unique body motion and manipulation of golf equipment.
7.3.5 TMaG shall own all right, title and interest in and to the golf data collected by the MAT-T System at the Facility. Notwithstanding the foregoing, AAGC acknowledges that golf data constitutes confidential information of TMaG, and should be treated in accordance with Section 8 herein.
8. Confidentiality . Both parties shall have a continuing obligation not to use or disclose the confidential information of the other, except to their respective existing or prospective shareholders and lenders, and their respective advisors, attorney and accountants and employees; provided in each such case, such disclosure shall be on a need-to-know basis, and the disclosing party shall be responsible for causing the person to whom such disclosure was made not to use or disclose the confidential information to any other person. In no event shall AAGC disclose the confidential information of TMaG to or for the benefit of any TMaG Competitor. For the purposes of this Agreement, the terms of this Agreement shall be deemed confidential information of both parties. Notwithstanding the foregoing, the parties may disclose the terms of this Agreement to any court or government agency, to the extent required by applicable law, regulation or order provided that they notify the other party and limit the disclosure to only the information legally required. Notwithstanding the foregoing, either party may make such a disclosure to the minimum extent required by law or by the requirements of any nationally recognized securities exchange, quotation system or over-the-counter market on which such
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party has its securities listed or traded, including to the SEC as an exhibit to its public filing to the extent required to comply with applicable securities laws, provided that such party seeks confidential treatment thereof. In the event that such disclosure is required as aforesaid, the disclosing party shall provide the other party with notice beforehand and coordinate with the other party with respect to the wording, content, scope and timing of any such disclosure. For the purposes of this Agreement, confidential information does not include information that the receiving party can show through documentary evidence: (a) is or becomes publicly known through no fault of receiving party; (b) is known by or in the possession of receiving party prior to its receipt from the disclosing party; or (c) is lawfully obtained from a third party who rightfully possesses the information (without confidentiality or proprietary restriction).
9. Representations . AAGC hereby represents and warrants to TMaG that, as of the date hereof:
9.1 This Agreement constitutes the legal, valid and binding obligation of AAGC, enforceable against AAGC in accordance with its terms.
9.2 The execution, delivery and performance by AAGC of this Agreement does not and will not violate or conflict with any provision of AAGC's organizational documents or of any agreement to which AAGC is a party or by which AAGC is bound and does not and will not violate or conflict with any law, rule, regulation, judgment, order or decree to which AAGC is subject.
9.3 There is no pending or threatened action, suit or proceeding that, if determined against AAGC, would adversely affect AAGC's ability to enter into this Agreement or to perform its obligations hereunder.
9.4 There are no conflicting agreements, arrangements or understandings to which AAGC is a party or by which AAGC is bound, relating to the Facility. Specifically, AAGC has received a full release from Callaway Golf Company permitting AAGC to enter into this Agreement with TMaG.
9.5 No consent of any third party is necessary for the execution of this Agreement or the performance of AAGC’s obligations herein.
10. Representations . TMaG hereby represents and warrants to AAGC that, as of the date hereof:
10.1 This Agreement constitutes the legal, valid and binding obligation of TMaG, enforceable against TMaG in accordance with its terms.
10.2 The execution, delivery and performance by TMaG of this Agreement does not and will not violate or conflict with any provision of TMaG's organizational documents or of any agreement to which TMaG is a party or by which TMaG is bound and does not and will not violate or conflict with any law, rule, regulation, judgment, order or decree to which TMaG is subject.
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10.3 There is no pending or threatened action, suit or proceeding that, if determined against TMaG, would adversely affect TMaG's ability to enter into this Agreement or to perform its obligations hereunder or thereunder.
10.4 EXCEPT AS SET FORTH IN THIS AGREEMENT, TMAG MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTIES RELATING TO ANY PRODUCTS, SERVICES, MATERIALS OR EQUIPMENT PROVIDED BY TMAG.
11. Term and Termination .
11.1 Term . Subject to any earlier termination of this Agreement pursuant to this Section 11 below, the term of this Agreement shall commence on the Effective Date and continue thereafter for a period of five (5) years (the “ Initial Term ”). The parties may mutually agree in writing to extend this Agreement for an additional four (4) year period (the “ Renewal Term ”); provided, however that the option to enter into the Renewal Term 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 Lease. The Initial Term and the Renewal Term shall collectively be referred to herein as the “ Term ”.
11.2 [***]
11.3 Termination for Breach . Either party may terminate this Agreement if (A) the other party fails in any material respect to timely perform any covenant by it made in this Agreement (including any failure to pay any amount when due hereunder), which failure has not been cured to the first party’s reasonable satisfaction within thirty (30) days of written notice of the default (except as provided below); unless such default cannot be cured within such thirty-day period using diligent best efforts, in which case the defaulting party must promptly commence and diligently cure such default to the first party’s reasonable satisfaction within ninety (90) days of written notice of the default; or (B) if any representation or warranty made by the other party in this Agreement is or proves to be untrue as of the date made.
11.4 TMaG Termination Rights . In addition to the rights contained in Section 11.3 above, TMaG shall have the option to terminate this Agreement immediately and without prior notice or any opportunity for AAGC to cure, if:
11.4.1 a petition to have AAGC adjudicated as bankrupt or a petition for reorganization or arrangement under any of the laws of the United States relating to bankruptcy or for the appointment of a trustee or receiver of AAGC or for relief under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, is filed by or against AAGC and not dismissed within sixty (60) days from the date of such filing;
11.4.2 the assets of AAGC or the business conducted by AAGC at the Facility is assumed by any trustee or any other person pursuant to any judicial proceedings;
11.4.3 AAGC makes an assignment for the benefit of creditors;
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11.4.4 None of John Boreta or Ron Boreta is overseeing the day-to-day operations of the Facility;
11.4.5 AAGC fails to make timely payment to TMaG within 21 calendar days from the end of the month, as more particularly described in Section 4.1, more than twice during any calendar year of the Term;
11.4.6 AAGC fails to deliver to TMaG, or maintain in full force and effect, the insurance referred to in Section 15 of this Agreement;
11.4.7 AAGC fails to promote and sell the TMaG Merchandise in accordance with the terms of Sections 1.2 and 4.5 herein;
11.4.8 AAGC attacks the title of TMaG in and to the TMaG Marks; or
11.4.9 AAGC fails, after receipt of written notice from TMaG, to immediately discontinue the use of the TMaG Marks in violation of this Agreement.
If TMaG has grounds to terminate this Agreement under Section 11.4.1 or 11.4.2, regardless of whether TMaG in fact terminates this Agreement, TMaG may remove all TMaG Property from Facility or any other location at which any TMaG Merchandise is being stored.
11.5 Effect of Termination . Expiration or other termination of this Agreement shall be without prejudice to amounts accruing prior to such expiration or other termination. Upon the expiration or termination of this Agreement all licenses granted to AAGC hereunder shall immediately cease and AAGC shall remove all Marks from the Facility and return any TMaG Property to TMaG [***]. The provisions of Sections 7.1.3, 8, 9, 11.5, and 12 through 23 shall survive any expiration or termination hereof and remain in full force and effect in accordance with their respective terms. In the event that TMaG terminates this Agreement prior to the expiration of the Initial Term in accordance with sections 11.3 or 11.4, AAGC shall be required to repay to TMaG a prorated portion of the TMaG Contribution calculated based on the period of time remaining until the end of the Term.
12. Assignment . Neither party may assign this Agreement in whole or in part without obtaining the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that (a) TMaG may assign this Agreement without AAGC’s consent to any party controlling, controlled by or under common control with TMaG, and (b) AAGC may assign this Agreement without TMaG’s consent to any party controlled or under common control by Ron Boreta and/or John Boreta. Any purported assignment in violation of this Section 12 shall be null and void and a material breach hereof.
13. Indemnity . AAGC hereby agrees to defend, indemnify and hold TMaG harmless from and against any and all damages, losses, claims, demands, causes of action and judgments, including reasonable attorney’s fees and expenses, arising out of or related to AAGC’s performance under this Agreement or the operation of the Facility business.
14. Insurance . AAGC shall purchase and maintain at its own cost, the following insurance with limits not less than those as indicated, with insurance companies approved by
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TMaG. AAGC’s insurance may be arranged under a single policy for the full limits required, or by a combination of underlying policies and Excess or Umbrella Liability Policies.
COMMERCIAL GENERAL LIABILITY insurance including but not limited to Products, Premises, Operations, Completed Operations and Contractual Liability coverage for claims for damages from bodily injury, personal injury, death or property damage arising out of AAGC’s fulfillment of obligations set forth under this agreement. AAGC’s Commercial General Liability policy shall include contractual liability coverage, and it shall name TMaG as an Additional Insured for AAGC’s fulfillment of obligations set forth under this agreement. Policy shall be written on an “occurrence” form, and provide the following limits of coverage:
Each Occurrence $[***]
Personal & Advertising Injury $[***]
Products / Completed Operations $[***]
WORKER’S COMPENSATION insurance providing coverage for claims under Worker's Compensation in accordance with state law; and Disability Benefits and other similar employee benefit acts which are applicable to AAGC’s fulfillment of obligations set forth under this agreement, including Employers Liability coverage, for claims for damages from bodily injury, occupational sickness or disease or death of contractor's employees shall be provided with limits of at least $[***].
PROPERTY insurance that includes full coverage for all TMaG products invoiced to AAGC, or in the possession of AAGC, at the TMaG invoice selling price, and any insurer proceeds of stated products shall be applied in TMaG’s satisfaction to the invoice price payable by AAGC.
DEDUCTIBLES for all required insurance shall be the full and sole responsibility of AAGC, and shall in no way diminish loss amounts AAGC is to reimburse TMaG in the event of loss.
WAIVER OF SUBROGATION for all required insurance shall be in favor of TMaG by AAGC and its insurance companies in which both agree to waive all rights of subrogation against TMaG, its parent companies or affiliated companies for damages or injuries covered by the AAGC’s insurance policies.
CERTIFICATES OF INSURANCE for all required insurance shall be provided to TMaG by AAGC evidencing limits of liability and names of insurance companies. Certificate must state that AAGC will provide at least thirty (30) days prior written notice to TMaG if any policy is to be cancelled, non-renewed, or aggregate limits are exhausted.
15. LIMITATION OF LIABILITY . EXCEPT AS OTHERWISE EXPRESSLY SET FORTH ELSEWHERE IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE
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LIABLE FOR INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES (INCLUDING BUT NOT LIMITED TO LOSS OF BUSINESS OPPORTUNITY OR LOSS OF PROFIT) ARISING OUT OF ACTIVITIES RELATING TO THIS AGREEMENT, EXCEPT FOR BREACH OF CONFIDENTIALITY OBLIGATIONS IN SECTION 8 AND BREACH OF INTELLECTUAL PROPERTY OBLIGATIONS IN SECTION 7, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
16. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to principles of conflicts of laws. Any disputes that arise under or relate to this Agreement (whether tort, contract or both) shall be resolved in a state or federal court of competent jurisdiction in San Diego County, California. AAGC hereby consents to the personal jurisdiction of, and to the laying of venue in, any such court.
17. Notices . Any notice required or permitted to be given hereunder shall be in writing and shall be served by personal delivery or by Federal Express or another reputable overnight courier service, addressed to the party to be notified, and if to TMaG, with copy to its General Counsel. For the purposes of the foregoing, the initial addresses of the parties shall be as set forth below their signatures on the signature page hereof.
18. Entire Agreement . This Agreement, and the instruments and agreements referred to herein, constitute the entire agreement between AAGC and TMaG with respect to the subject matter hereof, and supersede all prior agreements respecting same. In entering into this Agreement, neither party is relying on any representation, warranty or covenant of the other party (or allegedly made by or on behalf of the other party) that is not expressly set forth herein.
19. Counterparts . This Agreement may be executed in counterparts each of which, when taken together, shall constitute a single agreement.
20. Amendments, Etc . This Agreement may be amended, modified or terminated only by a writing signed by the party against whom it is to be enforced. No act or course of dealing shall be deemed to constitute an amendment, modification or termination hereof.
21. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties hereto.
22. No Third Party Beneficiaries . Nothing express or implied in this Agreement is intended to confer any rights or benefits on any person other than AAGC and TMaG, and their permitted successors and assigns.
23. Relationship of the Parties . This Agreement is limited to the rights and obligations set forth herein. The relationship of the parties is that of independent contractors, and no agency, partnership, joint venture, fiduciary or other relationship is created hereby, and neither party has any authority of any kind to bind the other party in any respect whatsoever, nor any obligation of any kind to the other party except as expressly provided herein. Except as expressly provided in this Agreement, each party shall be responsible for their own expenses incurred in performing their respective obligations under this Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
All-American Golf Center, Inc.
a Nevada corporation
By:/s/ Ron Boreta
Name: Ron Boreta
Its: __________________________
6730 S. Las Vegas Blvd.
Las Vegas, Nevada 89119
Attention: Ron Boreta
TAYLOR MADE GOLF COMPANY, INC.,
a Delaware corporation doing business as
TaylorMade-adidas Golf Company
By:_ /s/ Mark King ____________________
Name: Mark King
Its: CEO and President
By:_ /s/ David Abeles ___________________
Name: David Abeles
Its: Executive Vice President
and General Manager
5545 Fermi Court
Carlsbad, California 92008
Attention: Doug Holt
with a copy to:
5545 Fermi Court
Carlsbad, California 92008
Attention: William Reimus, Senior Vice President
and General Counsel
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EXHIBIT A
The Facility currently consists of a 42-acre, nine (9) hole, public golf course and training facility, driving range with 113 range stations, and a club house consisting of both a retail space and a restaurant.
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EXHIBIT B
TMaG Marks
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EXHIBIT C
Minimum Standards
1. AAGC shall remain current on payments to TMaG.
2. The Facility shall not be modified in any material way except as set forth in the Agreement (i. e. , further modifications, remodels, etc. to the retail space, driving range, golf course must be approved by TMaG, which approval will not unreasonably be withheld) . Notwithstanding the foregoing, TMaG recognizes that the golf course of the Facility may be modified consistent with a practice, training and fitting centric facility, provided that any such modification to the golf course does not impact the clubhouse, retail space, driving range and quality of the entire Facility.
3. AAGC shall not dispose of any part of the Facility (except for possible changes to the land relating to the golf course, as more particularly described above in section 2) .
4. AAGC shall keep the TMaG Property operational, clean and in good condition.
5. AAGC shall update custom and stock store graphics on at least an annual basis in accordance to product launches and core focuses for TMaG brands. Fixture graphics and displays should be updated and merchandised appropriately in accordance to product launches and core focuses for TMaG's brands.
6. All parts of the Facility (retail space, driving range, golf course) must be maintained in a first class manner in a quality at least as good as it is today (except for possible changes to the land relating to the golf course, as more particularly described above) . AAGC shall ensure that the Facility remains a premier Las Vegas golf destination as it is as of the Effective Date.
7. AAGC shall staff the Facility with a sufficient number of trained, knowledgeable staff. Staffing levels shall not materially decrease from the number of staff employed as of the Effective Date.
8. Use of Marks must be approved by TMaG’s marketing department. As a non-limiting example, all email blasts need to be pre-approved.
9 . AAGC shall ensure that the TMaG product mix is current – all newly launched or hot products shall be on-hand at all times, and AAGC shall manage and cycle out older product.
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EXHIBIT D
TMaG Merchandise Supply Obligations
None.
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19
EXHIBIT 31
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ronald Boreta, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of All-American SportPark, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: May 15, 2013
/s/ Ronald Boreta___________
Ronald Boreta
Chief Executive Officer
(Principal Executive Officer) and
Principal Financial Officer
EXHIBIT 32
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
ALL-AMERICAN SPORTPARK, INC.
PURSUANT TO 18 U.S.C. SECTION 1350
I hereby certify that, to the best of my knowledge, the Quarterly Report on Form 10-Q of All-American SportPark, Inc. for the quarter ended March 31, 2013:
(1) complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material aspects, the financial condition and results of operations of All-American SportPark, Inc.
Dated: May 15, 2013
/s/ Ronald S. Boreta
Ronald S. Boreta
Chief Executive Officer
(Principal Executive Officer) and
Principal Financial Officer
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to All-American SportPark, Inc. and will be retained by All-American SportPark, Inc. and furnished to the Securities and Exchange Commission upon request.
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