Telephone (303) 893-2300 |
Clanahan, Beck & Bean, P.C. Attorneys at Law Suite 1401 1873 S. Bellaire Street Denver, Colorado 80222
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November 19, 2010
Mr. Andrew Mew
Accounting Branch Chief
Division of Corporation Finance
United States Securities and Exchange Commission
100 F Street, N.E.
Mail Stop 7010
Washington, DC 20549
Re: All-American SportPark, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2009
Filed March 31, 2010
File No. 000-24970
Dear Mr. Mew:
Our firm serves as securities counsel to All-American Sportpark, Inc. (AASP or the Company). This letter will serve as a response and/or explanation with respect to the comments contained in the comment letter dated October 22, 2010 from the staff of the Securities and Exchange Commission (the Staff). The Company intends to file an amendment to its annual report on Form 10-K for the fiscal year ended December 31, 2009 (Form 10-K) upon resolution of your comments. The Form 10-K will reflect the Companys responses to the Staffs comments as well as update certain information and make conforming changes. To expedite your review, we have reproduced your comments and then provided our responses to your comments below.
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Please contact the undersigned if you have any questions or need any additional information in connection with this matter.
Very truly yours,
CLANAHAN, BECK & BEAN, P.C.
By:/s/ James P. Beck
James P. Beck
cc: All American SportPark, Inc.
L.L. Bradford & Co.
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APPENDIX
Note 1 ORGANIZATIONAL STRUCTURE AND BASIS OF PRESENTATION
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f. CORRECTION OF AN ERROR - PRIOR PERIOD ADJUSTMENTS
Amounts received from the Callaway Golf Company (Callaway) under its customer agreement entered into in June 2009 were not accounted for properly. The original accounting and anticipated effects of the resulting adjustments are as follows:
$750,000 received from Callaway for operating expenses of the Company in connection with the Customer Agreement referred to in Note 7 of the financial statements, which were originally recorded, as deferred marketing revenue should be immediately recognized and net with the related operating expenses of the Company. These operating expenses were included in General and administrative expenses. The result will be a reduction of such expenses by $750,000.
$554,552 received from Callaway for range and other leasehold improvements, which were originally recorded as deferred marketing revenue and property and equipment will be reversed. This contribution from Callaway equaled the expenditures for the property and equipment. Accordingly, the reversal will result in a value of $0.00 for such leasehold and range improvements.
As a result of the deferred marketing revenue reversal, $33,125 amortized as marketing revenue included in the Revenue line item will be reversed.
As a result of the forgoing changes, the loss attributable to non-controlling interest totaling $201,780 will be changed to reflect an income attributable to non-controlling interest totaling $241,755.
The following table provides additional details regarding the changes to the statement of operations for the year ended December 31, 2009:
As previously
As restated reported Change
Revenue $ 2,050,425 $ 2,083,640 $ (33,215)
Cost of Revenue 891,224 493,825 (397,399)
Gross Profit 1,159,201 1,589,815 (430,614)
Expenses:
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General & administrative 816,848 1,964,247 (1,147,399)
Depreciation and amortization 88,897 88,897 --
Total expenses 905,745 2,053,144 (1,147,399)
Income (loss) from operations 253,456 (463,329) 716,785
Other income (expense) (478,054) (478,054) --
Net income (loss) (224,598) (941,383) 716,785
Net (income) loss attributable to
noncontrolling Interest (241,755) 201,780 (443,535)
Total net income (loss) $ (466,353) $ (739,603) $ 273,250
Net income (loss) per share basic
and fully diluted $ (0.13) $ (0.21) $ 0.08
The following table provides additional details regarding the changes to the balance sheet as of December 31, 2009:
As previously
As restated reported Change
Current assets $ 297,735 $ 297,735 $ --
Leasehold improvements and equipment 1,246,447 691,895 (554,552)
Total Assets $ 989,630 $ 1,544,182 $ (554,552)
Current liabilities $ 9,159,959 $ 9,215,550 $ (55,591)
Long-term liabilities 690,636 1,906,382 (1,215,746)
Total All-American SportPark, Inc. stockholders
(deficit) (9,120,291) (9,393,541) (273,250)
Noncontrolling interest in subsidiary 259,326 (184,209) 443,535
Total stockholders (deficit) (8,860,965) (9,577,750) 716,785
Total liabilities and stockholders
(deficit) $ 989,630 $ 1,544,182 $ (554,552)
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Customer Agreement
On June 19, 2009, the Company entered into a Customer Agreement with Callaway Golf Company (Callaway) and St. Andrews Golf Shop, Ltd. (SAGS) through our majority owned subsidiary AAGC. Pursuant to this agreement, AAGC shall expend an amount equal to or exceeding $250,000 for marketing and promotion of Callaway for a period of approximately three and one half years with an automatic extension to December 31, 2018 unless written notice of termination is received by November 2013. Additionally, AAGC will expend amounts to improve both their range facility as well as the golfing center. These improvements are to include Callaway Golf® branding elements. Callaway has agreed to provide funding and resources in the minimum amount of $2,750,000 to be allocated as follows: 1) $750,000 towards operating expenses of AAGC; 2) $750,000 towards facility improvements for both AAGC and St. Andrews Golf Shop; 3) $500,000 in range landing area improvements of AAGC and 4) three payments each of $250,000 for annual advertising expenses which will be repaid in golf merchandise to SAGS. AAGC will be reimbursed by SAGS for the expenditures in advertising. In substance, due to the related party nature of SAGS, the Company is also considered a customer of Callaway as it relates to this agreement. Therefore, we recognized the contributions from Callaway as follows:
· Contribution of operating expenses totaling $750,000 (received July 2009) was presumed to be a reduction of such operating expenses and therefore reduced our General and administrative expense by that amount.
· Contribution of range and other facility improvements totaling $554,552 were recorded as a reduction of the costs for those improvements. The contributions were exactly equal to the costs and therefore, no value as been recorded for these improvements.
The annual payments for advertising will begin in 2010 and will continue as long as Callaway, AAGC and SAGS agree to maintain the agreement through the term of the Customer Agreement in December 2018. Such contributions from Callaway of up to $250,000 annually will be recorded as a reduction of the Companys costs for the related advertising.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure 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 SECs rules and forms, and that such information is accumulated and communicated to the Companys management, including its Chief Executive Officer and Principal Financial Officer to allow timely decisions regarding required financial disclosure.
As of the end of the period covered by this report, the Companys 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 Companys Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not 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 because a transaction was not properly recorded in order for the Companys financial statements to be prepared in accordance with generally accepted accounting principles, as discussed below.
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Managements Annual Report on Internal Control Over Financial Reporting
The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Management assessed the Companys internal control over financial reporting as of December 31, 2009. Management based their assessment on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Subsequent to the Company receiving comment letters from the Securities and Exchange Commission (SEC) requesting further clarification of an agreement with and amounts received from the Callaway Golf Company ("Callaway") under the customer agreement entered into in June 2009, management has concluded that its internal control over financial reporting was not effective as of the end of the period covered by this report due to managements initial interpretation of generally accepted accounting principles related to this transaction. In October 2010, management concluded the need to restate the financial statements contained in the Companys annual report on Form 10-K for the year ended December 31, 2009 and in the Companys quarterly reports on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010 related The Company determined that amounts received were not properly accounted for.
Management believes the financial statements included in this Amended Report on Form 10-K/A fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented. In addition, management is working to identify and implement corrective actions, where required, to improve internal controls, including specific review of non-recurring transactions as was this case.
This Amended Report on Form 10-K/A does not include an attestation report of the Companys independent registered public accounting firm regarding internal control over financial reporting.
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