Mail Stop 3561
July 11, 2005
Ronald S. Boreta
President and Chief Executive Officer
All-American SportPark, Inc.
6730 South Las Vegas Boulevard
Las Vegas, Nevada 89119
Re: All-American SportPark, Inc.
Form 10-KSB for the Fiscal Year Ended December 31, 2004
Filed March 31, 2005
Form 10-QSB for the Fiscal Quarter Ended March 31, 2005
Filed May 16, 2005
File No. 0-24970
Dear Mr. Boreta:
We have reviewed your filings and have the following
comments. Where indicated, we think you should revise your
documents
in response to these comments. If you disagree, we will consider
your explanation as to why our comment is inapplicable or a
revision
is unnecessary. Please be as detailed as necessary in your
explanation. In some of our comments, we may ask you to provide
us
with information so we may better understand your disclosure.
After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review
process is to assist you in your compliance with the applicable
disclosure requirements and to enhance the overall disclosure in
your
filings. We look forward to working with you in these respects.
We
welcome any questions you may have about our comments or on any
other
aspect of our review. Feel free to call us at the telephone
numbers
listed at the end of this letter.
Form 10-KSB for the Fiscal Year Ended December 31, 2004
Item 1. Description of Business
Marketing, page 6
1. In the last paragraph under this caption, you refer to "a
number
of large existing and potential markets." Please explain. Also
explain the "concepts" you refer to in the second sentence.
Competition, page 6
2. Please describe in further detail your competition. For
example,
discuss whether there are any other facilities similar to yours.
State whether the hotels have their own courses or arrangements
with
country clubs to use their facilities, etc.
Item 2. Description of Property, page 7
3. We note that your property is in good condition both
structurally
and in appearance. This appears to be inconsistent with your
disclosure under Item 3. Legal Proceedings. Please advise or
revise.
Item 5. Market for Common Equity and Related Stockholder Matters,
page 8
4. We note you have provided over-the-counter market quotations.
Also state that the quotations reflect inter-dealer prices,
without
retail mark-up, mark-down or commission and may not represent
actual
transactions. See Item 201(d) of Regulation S-B.
Item 6. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations, page 8
Critical Accounting Policies and Estimates, page 8
5. We note your disclosure that you "do not employ any accounting
policies and estimates that ....or require the exercise of
significant judgment to apply." You disclose in Note 2 several
accounting policies, such as those related to stock-based
compensation and income taxes, that could have a material impact
on
your financial statements. Please revise your disclosures to
include
a discussion of critical accounting policies and estimates.
Overview, page 9
6. Please explain the significance of being named the Number 2
golf
practice facility in the United States. Identify who named you,
state whether they are an independent party and briefly describe
the
criteria used in the ranking.
7. We note that Sportservice pays rent based on a percentage of
gross
sales. Please quantify.
Results of Operations - Year Ended December 31, 2004 Versus Year
Ended December 31, 2003, page 9
8. Please note that Item 303(b)(1) of Regulation S-B requires, as
applicable, a discussion of any known trends, events, or
uncertainties that are reasonably likely to have a material effect
on
your net sales or revenues, income from continuing operations,
profitability, liquidity or capital resources, or that would
otherwise cause reported financial information not necessarily to
be
indicative of future operating results or financial condition.
For
example, are there any trends that you anticipate will impact your
revenues and do you expect your revenues to increase, decrease or
stay the same? Please revise accordingly. For additional
guidance,
please refer to SEC Releases 33-6835, 33-8056, and 33-8350. We
note
your reference to a trend in the third paragraph on page 10 and
have
commented below.
Cost of Revenues, page 9
9. It appears that your cost of doing business is increasing as
your
revenues are decreasing. You disclose that the increase in the
cost
of revenues line item of more than $157,000, or more than 45%, was
due to the salary of two golf pros that was outsourced to Giant
Golf
in 2003. Please explain clearly how outsourcing these costs in
2003
would support your statement that you incurred no costs in 2003.
Generally, when a business outsources a task or function, certain
costs would still be incurred. Explain to us what you mean by
outsourcing these payroll costs. Tell us if you received any
benefit
during 2003 from the services of these two golf pros whose costs
were
outsourced to Giant Golf. Explain to us your relationship with
Giant
Golf and who owns these operations. See Item 303(b)(1)(iv) of
Regulation S-B. Please show us in your response what your revised
disclosures will look like.
Liquidity and Capital Resources, page 10
10. Please tell us how you accounted for the $187,553 received
from
the Southern Nevada Water Authority and the amounts received in
each
period presented. Please also tell us and revise your disclosures
to
clarify why the costs you incurred in construction are less than
the
amount received from the water authority. See Item 303(b)(1)(ii)
of
Regulation S-B.
11. In the third paragraph, please quantify the payments of
interest
and notes payable balances due to an affiliate that were deferred
and
identify the affiliate.
12. You do not appear to have discussed cash flows from
operations,
investment, and financing activities. Please revise.
13. Please disclose the amount of interest expense that has been
deferred for all periods presented, and when you expect these
amounts
to become due and payable. See Item 303(b)(1)(i) of Regulation S-
B.
14. In the fourth paragraph, please describe the new marketing
strategies you began implementing in 2004. Also, describe in
further
detail the "trend" you are referring to.
15. You disclose in your consolidated statement of operations
gains
on the extinguishment of debt of $669,887 in 2004 and $316,991 in
2003 as well as an amount in 2002. Please tell us your basis in
GAAP
for recognizing these gains. Given the nature of the transaction,
it
appears that debt forgiveness should have been characterized as a
capital transaction. See APB 26 note 1 to paragraph 20. You
should
provide disclosures related to the transactions in the
Management`s
Discussion and Analysis and discuss the impact on your liquidity
of
these transactions for all periods presented. See Item
303(b)(1)(v)
of Regulation S-B.
Item 7. Financial Statements
General
16. With respect to the related party golf businesses that are
separate and independently owned by your Chairman, your President
and
his brother, you may have a controlling financial interest as
defined
in FIN 46 and FIN 46R in one or more of these related entities
which
appear to provide you with the ability to control and share a
broad
group of costs and expenses among these other operations which
also
have common ownership and common control. Please provide us with
the
following:
* The names of each of the other businesses and a brief
description
of their operation;
* A summary by entity or business of the formal and informal
contracts and agreements that you have with each listing the
nature
and type of service being provided;
* The results of your review and evaluation of your contracts and
agreements with these related entities in connection with your
adoption of and compliance with the requirements of FIN 46 and FIN
46R to determine who is the primary beneficiary, as defined in FIN
46R;
* The total ownership percent shared between your Chairman, your
President and his brother who is the other son of your Chairman;
and
* The ownership interest, if any, that you have in each of these
related businesses.
We may have further comment upon the review of your response.
Refer
to FIN 46 and FIN 46R.
Consolidated Statements of Operations, page F-4
17. Please tell us and revise your presentation of $1,978,385 of
selling, general and administrative expenses to separately
disclose
the amounts of each cost and expense category that exceeds 20% of
gross revenues. You should discuss in your Management`s
Discussion
and Analysis the reasons for changes between periods for each
major
cost category. Refer to Item 310 and Item 303(b)(1)(vi) of
Regulation S-B.
18. Please present interest expense and interest income in
separate
line items or disclose for each period presented the amounts of
each
in a footnote that reconciles to the interest expense, net line
item.
Similarly, please also revise your presentation of other income,
net.
19. Your presentation indicates that you recognized gains of
$669,887
in 2004 and $316,991 in 2003 on the extinguishment of debt.
Please
explain to us the nature of the debt and the fact and
circumstances
relating to each year that gave rise to the extinguishment and the
gains recognized in your financial statements. Please explain to
us
your basis in GAAP for your accounting treatment that supports
recognition of each gain. If the amounts extinguished were due
from
related parties like shareholders, please also explain why you did
not record a capital contribution for the amount of the debt.
Notes to Consolidated Financial Statements
Note 1. Organizational Structure and Basis of Presentation, page
F-7
General
20. We note that you do not present any disclosures relating to
segment reporting Please explain to us and disclose your
compliance
with the provisions of SFAS 131 and the identity of your operating
and reportable segments. Please tell us the separate revenues
from
the two lease tenant operations and the operating results,
including
gross margins, of your retail golf operations such as the revenues
from the use of the driving range and golf course for all periods
presented. Explain to us why you believe the operations relating
to
these business activities do not represent separate operating and
reportable segments as defined by paragraphs ten through 17 of
SFAS
131. Please also note the enterprise-wide disclosures of SFAS 131
and tell us how you complied with these requirements.
a. Principles of Consolidation, page F-7
21. Please tell us who owns Urban Land of Nevada, Inc., which owns
the remaining 35% of All-American Golf Center, Inc., and their
relationship with your company. Explain to us the types and
amounts
of transactions you have with them.
Note 2. Summary of Significant Accounting Policies, page F-8
22. Please tell us, separately identify and disclose the source of
your revenues, including each different type of transaction that
you
enter into such as sponsorship revenues and golf club course green
fees and membership dues, as well as any revenues from leasing
operations. Include for each different type a description of what
it
is, if not obvious to investors, and your revenue recognition
accounting policy for each along with how it complies with the
requirements of SAB Topic 13:A. Please show us in your response
what
your revised disclosures will look like.
23. Please disclose in a footnote the types of amounts included in
the cost of revenues and the general and administrative expense
line
items.
24. Please tell us and disclose your accounting policy for
recognizing and measuring the existence of impairments of a long-
lived asset. Refer to SFAS 144.
25. We note that you have two tenants that operate retail
businesses.
Please tell us and clarify in your disclosures if you operate any
type of retail operations at your Callaway Golf Center. If so,
please tell us if you receive credits and allowances from vendors
in
connection with the purchase and/or promotion of the vendor
products.
If so, please tell us and disclose the specific nature and timing
of
the allowances and credits received from vendors and other
entities.
Please disclose your accounting policy for consideration received
from a vendor such as slotting fees, payments under buydown
agreements, co-operative advertising fees, and other
consideration.
Disclose the statement of operations line item in which each of
these
types of amounts is included. For any amounts netted against each
expense line items other than cost of revenues, also disclose the
amounts netted for each period presented. Refer to EITF 02-16.
b. Leasehold Improvements and Equipment, page F-9
26. Please explain to us and expand your policy disclosures to
clarify whether you amortize additions made to leasehold
improvements
over the remaining term of the original lease or if you also
include
the subsequent five year renewal periods.
Note 4. Related Party Transactions, page F-9
27. Your disclosures state that you share and allocate based on
relative benefits received most all costs and expenses with four
other retail golf stores in Las Vegas that are separate and
independently owned by your Chairman and his two sons, one of
which
is also your President. Please tell us and revise your
disclosures
to clarify how you determined the basis used to allocate these
costs
and expenses to each entity. Please provide us your basis of
allocation by type of cost and expense and tell us the relative
size
of each of the other four operations in relation to your
operations.
Please provide us for all periods presented the total costs and
expenses shared, by fiscal year and type of cost and expense, and
the
amount of each type that was allocated between you and each of the
other four entities. Please show us in your response what your
revised disclosures will look like.
28. Please tell us and revise your disclosures to clarify the
number
of separate outstanding notes payable to an entity owned by your
Chairman as of December 31, 2004. Please disclose each note
payable
separately from the accrued interest due, the principal amount of
each note and the terms including interest rate. Explain to us
why
you disclose payments of $3,037,446 in 2008. Please summarize the
notes disclosing the total short-term and long-term portions that
reconcile to the amounts presented in your consolidated balance
sheet. Please show us in your response what your revised
disclosures
will look like.
29. Please tell us if your note agreements require you to maintain
certain debt covenants. If so, please tell us what they are and
disclose the most significant covenants along with the
repercussions
for not maintaining them. Please also disclose the existence of
any
cross-default provisions. Tell us and disclose whether you were
in
compliance with all of your debt covenants during all periods
presented. In this regard, you disclose in the filing that you
are
delinquent on certain interest payments related to your
outstanding
debt. Please tell us and disclose the amount of debt which has
had
delinquent interest at any time and the dates and types of waivers
received from your Chairman and the terms and conditions of each
waiver. Disclose how the debt and delinquent interest is now
classified in your consolidated balance sheet for all periods
presented and your basis in GAAP for your financial statement
classification. Explain to us if the interest delinquencies are
related to the debt that gave rise to the gain on early
extinquishment of debt recognized in fiscal 2004. Please show us
in
your response what your revised disclosures will look like.
Note 9. Capital Stock, Stock Options, and Incentives, page F-12
General
30. Please disclose any unusual rights and privileges of your
common
stock or shareholders such as the rights provided under the
Stockholders Agreement between you and Urban Land of Nevada, Inc.,
and any other unusual rights and privileges relating to your
common
stock. Refer to paragraphs 17 through 18 of SFAS 129.
a. Stock Option Plans, page F-12
31. You disclose an exercise price range where the highest price
exceeds the lowest by more than 150%. Please revise your
disclosures
to segregate the exercise prices into ranges that are meaningful,
the
number and timing of additional shares that may be issued and the
cash that may be received as a result of option exercises. Refer
to
the requirements of paragraph 48 of SFAS 123.
Note 10. Commitments and Contingencies, page F-13
32. You disclose in the second paragraph that you reached a
favorable
settlement of $880,000 in a lawsuit in March 2003 with Bentar
Development, Inc., the general contractor, and other entities in
connection with the construction of the Callaway Golf Center.
However, we are unable to locate where these funds are classified
in
your consolidated statement of cash flows for year ended December
31,
2003, or any discussion of this amount in your liquidity section
of
Management`s Discussion and Analysis. Please tell us when you
received the $880,000 and in what line item in your consolidated
statement of cash flows on page F-6 the settlement amount is
reflected for 2003.
Signatures
33. Your document must also be signed by your controller or
principal
accounting officer. Any person who occupies more than one of the
positions specified in the Form 10-KSB must indicate each capacity
in
which he signs.
Form 10-Q, for the quarter ended March 31, 2005
Item 2. Management`s Discussion and Analysis or Plan of
Operations,
page 7
Results of Operations - Three Months Ended March 31, 2005 as
Compared
to the Three Months Ended March 31, 2004
Selling, General and Administrative, page 7
34. You disclose a charge for bad debts of $24,764 for amounts due
from SPEN, or Sports Entertainment Enterprises, Inc., a related
party
whose sole shareholder, Chairman, President and CEO at the time of
the merger with CKX, Inc. in February 2005 was your Chairman, Vaso
Boreta. Please tell us if your Chairman or either of his sons has
any ownership interest in CKX, Inc., the company that merged with
SPEN in February 2005. Explain to us the value of the 10,000
shares
of common stock of SPEN and the method used to determine the fair
value of these shares.
* * *
As appropriate, please amend your filings and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested information. Detailed cover letters
greatly
facilitate our review. Please understand that we may have
additional
comments after reviewing your amendment and responses to our
comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings to be certain that the
filings include all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Milwood Hobbs, Staff Accountant, at (202)
551-
3241 or Michael Moran, Accounting Branch Chief, at (202) 551-3841
if
you have questions regarding comments on the financial statements
and
related matters. Please contact Anita Karu, Attorney-Advisor, at
(202) 551-3240, David Mittelman, Legal Branch Chief, at (202) 551-
3214, or me at (202) 551-3725 with any other questions.
Sincerely,
H. Christopher Owings
Assistant Director
Ronald S. Boreta
All-American SportPark, Inc.
July 11, 2005
Page 10