10QSB 1 aasp.txt AASP 10-QSB DTD 3-31-02 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2002 Commission File Number: 0-24970 ALL-AMERICAN SPORTPARK, INC. ----------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Nevada 88-0203976 ------------------------------- --------------------------------- (State of other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 6730 South Las Vegas Boulevard, Las Vegas, Nevada 89119 -------------------------------------------------------------------- (Address of principal executive offices including zip code) (702) 798-7777 --------------------------- (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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___ As of May 10, 2002, 3,400,000 shares of common stock were outstanding. Transitional Small Business Disclosure Format (check one): Yes___ No X ALL-AMERICAN SPORTPARK, INC. FORM 10-QSB INDEX Page Number PART I: FINANCIAL INFORMATION Item 1. Consolidated Financial Statements: Consolidated Balance Sheets March 31, 2002 and December 31, 2001 .................... 3 Consolidated Statements of Operations Three Months Ended March 31, 2002 and 2001 .............. 5 Consolidated Statements of Cash Flows Three Months Ended March 31, 2002 and 2001 .............. 6 Notes to Consolidated Financial Statements .............. 7 Item 2. Management's Discussion and Analysis or Plan of Operation ....................................... 11 PART II: OTHER INFORMATION Item 1. Legal Proceedings ....................................... 15 Item 2. Changes in Securities ................................... 15 Item 3. Defaults Upon Senior Securities ......................... 15 Item 4. Submission of Matters to a Vote of Security Holders ................................................. 15 Item 5. Other Information ....................................... 15 Item 6. Exhibits and Reports on Form 8-K ........................ 15 SIGNATURES ....................................................... 16 2 ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS MARCH 31, DECEMBER 31, 2002 2001 ----------- ----------- (UNAUDITED) Current assets: Cash and cash equivalents $ 63,758 $ 27,322 Accounts receivable 94,493 90,267 Inventory 3,907 3,907 Prepaid expenses and other 55,689 79,756 ----------- ----------- Total current assets 217,847 201,252 Leasehold improvements and equipment, net 859,575 881,785 Due from related entities - 30,026 Due from affiliated stores 164,362 170,574 Note receivable - related party 20,000 20,000 Other assets 12,661 12,661 ----------- ----------- Total assets $ 1,274,445 $ 1,316,298 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. 3 ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) MARCH 31, DECEMBER 31, 2002 2001 ----------- ----------- (UNAUDITED) Current liabilities: Current portion of long-term debt $ 68,262 $ 54,827 Current portion of obligations under capital leases 10,678 16,358 Accounts payable and accrued expenses 747,705 811,464 ----------- ----------- Total current liabilities 826,645 882,649 Note payable to shareholder 5,159,948 5,129,879 Due to affiliated stores 436,511 425,699 Due to related entities 555,871 463,890 Long-term debt, net of current portion 436,940 438,600 Deferred income 153,929 178,929 ----------- ----------- Total liabilities 7,569,844 7,519,646 ----------- ----------- Minority interest 368,781 373,724 Shareholders' equity deficiency: Series B Convertible Preferred Stock, $.001 par value, 250,000 shares authorized and outstanding 2,500,000 2,500,000 Options issued in connection with financing 174,000 174,000 Common stock, $.001 par value, 10,000,000 shares authorized, 3,150,000 shares issued and outstanding 3,150 3,150 Additional paid-in-capital 8,789,132 8,789,132 Accumulated deficit (18,130,462) (18,043,354) ----------- ----------- Total shareholders' equity deficiency (6,664,180) (6,577,072) ----------- ----------- Total liabilities and shareholders' equity deficiency $ 1,274,445 $ 1,316,298 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. 4 ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2002 AND 2001 (UNAUDITED) 2002 2001 ----------- ----------- Revenues: Callaway Golf Center[TM] $ 587,942 $ 620,464 Other 880 - ----------- ----------- Total revenues 588,822 620,464 ----------- ----------- Cost of Revenues: Callaway Golf Center[TM] 70,653 78,694 ----------- ----------- Gross profit 518,169 541,770 ----------- ----------- Operating expenses: Selling, general and administrative 460,565 502,981 Depreciation and amortization 22,210 22,575 ----------- ----------- Total operating expenses 482,775 525,556 ----------- ----------- Operating income 35,394 16,214 Other income (expense): Gain on sale of securities 1,061 - Interest expense, net (128,506) (129,394) ----------- ----------- (127,445) (129,394) ----------- ----------- Loss from continuing operations before minority interest (92,051) (113,180) Minority interest in loss of subsidiary 4,943 - ----------- ----------- Loss from continuing operations (87,108) (113,180) DISCONTINUED OPERATIONS: Gain from disposal of discontinued segment - 56,239 ----------- ----------- Net Loss $ (87,108) $ (56,941) =========== =========== NET LOSS PER SHARE: Basic and diluted: Loss from continuing operations $ (0.03) $ (0.04) Income from discontinued operations - 0.02 ----------- ----------- $ (0.03) $ (0.02) =========== =========== The accompanying notes are an integral part of these consolidated financial statements. 5 ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2002 AND 2001 (UNAUDITED) 2002 2001 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (87,108) $ (56,941) Adjustments to reconcile net loss to net cash provided by (used in) operating activities of continuing operations: Income from discontinued operations - (56,239) Depreciation and amortization 22,210 22,575 Minority interest (4,943) - Gain on sale of securities (1,061) - Changes in operating assets and liabilities: Increase in accounts receivable (4,226) (7,140) Decrease in prepaid expenses and other 24,067 19,622 Increase (decrease) in accounts payable and accrued expenses (51,984) 98,631 Increase in interest payable to shareholder and affiliated store 106,375 113,954 Increase (decrease) in deferred income (25,000) 75,010 ----------- ----------- Net cash provided by (used in) operating activities of continuing operations (21,670) 209,472 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of securities 76,306 - ----------- ----------- Net cash provided by investing activities of continuing operations 76,306 - ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in due to affiliated stores and other related entities 63,786 (49,874) Principal payments on notes payable to shareholder (76,306) - Cash paid to redeem preferred stock - (5,000) Principal payments on notes payable and capital leases (5,680) (5,682) ----------- ----------- Net cash used in financing activities of continuing operations (18,200) (60,556) ----------- ----------- NET CASH USED IN DISCONTINUED OPERATIONS - (91,997) ----------- ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS 36,436 56,919 CASH AND CASH EQUIVALENTS, beginning of period 27,322 150,556 ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ 63,758 $ 207,475 =========== =========== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 13,626 $ 16,822 =========== =========== NON-CASH INVESTING AND FINANCING ACTIVITIES: Available for sale securities transferred from related entity $ 75,245 $ - =========== =========== The accompanying notes are an integral part of these consolidated financial statements. 6 ALL-AMERICAN SPORTPARK, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. CONSOLIDATED FINANCIAL STATEMENTS The accompanying unaudited consolidated financial statements include the accounts of All-American Sportpark, Inc. ("AASP"), a Nevada corporation, and its subsidiary, All-American Golf Center, Inc. ("AAGC"). For year 2001 amounts, the financial statements also include the accounts of AASP's discontinued SportPark subsidiary, Sportpark Las Vegas, Inc. ("SPLV") that was dissolved as of February 14, 2002. AASP, AAGC, and SPLV are collectively referred to herein as the "Company". All significant inter-company accounts and transactions have been eliminated. The Company's continuing operations of the Callaway Golf Center ("CGC") are included in AAGC. The accompanying financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission relating to interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. In the opinion of management, all necessary adjustments have been made to present fairly, in all material respects, the financial position, results of operations and cash flows of the Company at March 31, 2002 and for all periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may require revision in future periods. Certain reclassifications have been made to amounts in the 2001 statements of operations and of cash flows to conform to the 2002 presentation. These consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-KSB for the year ended December 31, 2001 from which the December 31, 2001 audited balance sheet was derived. The Company's continuing operations consist of the Callaway Golf Center located on 42 acres of land on the south end of the Las Vegas "Strip". The Callaway Golf Center includes the Divine Nine par 3 golf course fully lighted for night golf, a 110-tee two-tiered driving range which has been ranked the Number 2 golf practice facility in the United States since it opened in October 1997, a 20,000 square foot clubhouse which includes the Callaway Golf fitting center and three tenants: the Saint Andrews Golf Shop retail store, Giant Golf teaching academy, and the Bistro 10 restaurant and bar. As of March 31, 2002, Sports Entertainment Enterprise, Inc. ("SPEN"), a publicly traded company, owns approximately 63.5% of the Company's outstanding common stock and 100% of the Company's outstanding preferred stock which, combined, represents approximately 66% ownership of the Company. (See Note 7). 7 2. RESTRUCTURING AND SETTLEMENT AGREEMENT In connection with the disposal of the SportPark, on June 1, 2001, the Company completed a transaction pursuant to a Restructuring and Settlement Agreement with Urban Land of Nevada, Inc. (the "Landlord") to terminate the land lease for the SportPark, and to transfer all of the SportPark's leasehold improvements and personal property located on the premises to the Landlord. As part of the agreement, the Landlord agreed to waive all liabilities of the Company to the Landlord with respect to the SportPark, and with the exception of a limited amount of unsecured trade payables, the Landlord agreed to assume responsibility of all other continuing and contingent liabilities related to the SportPark. The Landlord also agreed to cancel all of the Company's back rent obligations for the Callaway Golf Center for periods through April 30, 2001. The Callaway Golf Center remains an operating business of the Company. As part of the transaction, the Company issued the Landlord a 35-percent ownership interest in AAGC. In connection with the issuance of the 35-percent interest in AAGC to the Landlord, the Company, AAGC and the Landlord entered into a Stockholders Agreement that provides certain restrictions and rights on the AAGC shares issued to the Landlord. The Landlord is permitted to designate a non-voting observer of meetings of AAGC's board of directors. In the event of an uncured default of the lease for the CGC, so long as the Landlord holds a 25% interest in AAGC, the Landlord will have the right to select one director of AAGC. As to matters other than the election of Directors, the Landlord has agreed to vote its shares of AAGC as designated by the Company. 3. LOSS PER SHARE AND SHAREHOLDER'S EQUITY (DEFICIENCY) Basic and diluted loss per share is computed by dividing the reported net income or loss from continuing operations and discontinued operations by the weighted average number of common shares outstanding during the period. The weighted-average number of common and common equivalent shares used in the calculation of basic and diluted loss per share were 3,150,000 for the three-month periods ended March 31, 2002 and 2001, respectively. 4. LEASES The land underlying the Callaway Golf Center is leased to AAGC at a base minimum rent of $33,173 per month. The lease commenced October 1, 1997 with a term of 15 years with two five-year renewal options. The lease provides for a ten percent increase in the minimum rent at the end of the fifth year of the term and every five years thereafter. Also, the lease has a provision for contingent rent to be paid by AAGC upon reaching certain levels of gross revenues. The lease has a corporate guarantee of AASP. 5. GOING CONCERN MATTERS The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements, for the three months ended March 31, 2002, the Company had a net loss of $87,108. For the year ended December 31, 2001, the Company had a net loss from continuing operations of $603,775. As of March 31, 2002, the Company had a working capital deficit of $608,798 and a shareholders' equity deficiency of $6,664,180. 8 As a result of the Restructuring and Settlement Agreement discussed in Note 2 above, the Company ceased funding cash shortfalls at the SportPark, the Company was released from all significant continuing and contingent liabilities related to the SportPark, and all back rent through April 30, 2001 for the CGC was cancelled. The Company recommenced paying its monthly rent for the CGC beginning May 2001. Management believes that its continuing operations may not be sufficient to fund operating cash needs and debt service requirements over at least the next 12 months. As a result, management attempted to negotiate a deferral of three scheduled debt payments with its primary lender on the CGC; however, the lender was only willing to defer one $25,000 payment (the March 2002 payment). This payment is to be repaid in equal amounts in addition to the regularly scheduled $25,000 payments due June 30, September 30, and December 31, 2002. As a result, management plans on seeking other sources of funding as needed, which may include Company officers or directors or other related parties. In addition, management has analyzed all operational and administrative costs of the Company and has identified areas where costs may be reduced. Plans are already in effect to attain the identified cost reductions. Among its alternative courses of action, management of the Company may seek out and pursue a business combination transaction with an existing private business enterprise that might have a desire to take advantage of the Company's status as a public corporation. There is no assurance that the Company will acquire a favorable business opportunity through a business combination. In addition, even if the Company becomes involved in such a business opportunity, there is no assurance that it would generate revenues or profits, or that the market price of the Company's common stock would be increased thereby. The Callaway Golf Center has generated positive cash flow since it was reacquired at the end of 1998. However, this positive cash flow is used to fund corporate overhead that is in place in support of the CGC. Management continues to seek out financing to help fund working capital needs of the Company. In this regard, management believes that additional borrowings against the CGC could be arranged although there can be no assurance that the Company would be successful in securing such financing or with terms acceptable to the Company. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and the classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 6. RELATED PARTY TRANSACTIONS The Company has transactions and relationships with (a) SPEN and subsidiaries ("Related Entities"), (b) SPEN's Chairman and his wholly owned golf retail store in Las Vegas, Nevada (the "Paradise Store") and, (c) two golf retail stores, both named Saint Andrews Golf Shop ("SAGS"), owned by the Company's President and his brother. One of the SAGS stores is the retail tenant in the Callaway Golf Center. The Paradise Store and SAGS are referred to herein as the "Affiliated Stores." The types of activities that are shared by these entities are advertising, payroll and employee benefits, warehouse rent, equipment leases, and miscellaneous office expenses. Costs are allocated to each entity based on relative benefits received. 9 The Company has issued notes payable to the Company's Chairman (the "Chairman's Notes") that bear interest at ten percent per annum with balances of $5,159,948 and $5,129,879, respectively, at March 31, 2002 and December 31, 2001. Included in the foregoing balances is accrued interest payable of $943,079 and $836,704, respectively. The Company has issued notes payable to the Paradise Store (the "Paradise Notes") that bear interest at ten percent per annum with balances of $359,914 and $353,289, respectively, at March 31, 2002 and December 31, 2001. Included in the foregoing balances is accrued interest payable of $94,947 and $88,322, respectively. These balances due are included under the caption "Due to Affiliated Stores" in the accompanying consolidated balance sheets. The Chairman's Notes and the Paradise Notes (collectively, the "Notes") were all past due as of December 31, 2001. In April 2002, the Company and the Chairman signed an agreement that provides for the extension of the maturity dates of the Notes to various dates through the year 2008; the assets of the Company secure the Notes. In February 2002, the Company repaid $76,306 in principal on the Notes. Interest payments on the Notes have been deferred since inception. The Chairman has agreed to continue deferring payment of the accrued interest until such time as the Company has adequate capital resources to service this obligation. 7. SUBSEQUENT EVENTS In April 2002, SPEN converted its 250,000 shares of Preferred Stock ownership in the Company to Common Stock. This was done to facilitate the spin-off of the Company from SPEN that was completed on May 8, 2002 after approval of SPEN's Board of Directors. As a result of the spin-off, the Company is no longer a majority-owned subsidiary of SPEN. Even though this results in a change in ownership of the Company, there has been no change in management of the Company. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The following information should be read in conjunction with the Company's consolidated financial statements and related footnotes included in this report. OVERVIEW The Company's continuing operations consist of the management and operation of a golf course and driving range property called the Callaway Golf Center. The Callaway Golf Center commenced operations on October 1, 1997; the Company sold its 80% interest in the Callaway Golf Center on May 5, 1998, and then reacquired 100% of the Callaway Golf Center on December 31, 1998. In May 2001, the Company issued a 35% interest in the Callaway Golf Center to the property's landlord in exchange for forgiveness of back rent due the landlord. RESULTS OF CONTINUING OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 AS COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2001 REVENUES. Revenues of the Callaway Golf Center ("CGC") decreased 5.2% to $587,942 in 2002 compared to $620,464 in 2001. This decrease is due mainly to an approximate 4% decrease in golf course rounds played in 2002 compared to 2001. The decrease in rounds played is attributed to less favorable weather conditions in January and March 2002 compared to the same months in 2001. COST OF REVENUES. Cost of revenues decreased 10.2% to $70,653 in 2002 compared to $78,694 in 2001. Cost of revenues as a percentage of Revenues was 12.0 in 2002 compared to 12.7% in 2001. This decrease is due mainly to lower direct payroll costs in 2002 because of the revenue decrease described above. SELLING, GENERAL AND ADMINISTRATIVE (SG&A). These expenses consist principally of administrative payroll, rent, professional fees and other corporate costs. These expenses decreased 8.4% to $460,565 in 2002 compared to $502,981 in 2001 due to the following: (1) Corporate overhead decreased 14.1% or $11,241 due mainly to decreases in various office and administrative cost categories and, (2) SG&A for the Callaway Golf Center decreased 7.4% or $31,177 due to lower property taxes and utility costs. LOSS FROM CONTINUING OPERATIONS. Loss from continuing operations was $87,108 for 2002 compared to $113,180 in 2001. The lower net loss in 2002 is the result of lower SG&A and direct Costs of Revenue. The Company generated operating income in 2002 of $35,394, an increase of 118% over the 2001 amount of $16,214. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2002, the Company had a working capital deficit of $608,798. This deficit has decreased approximately $73,000 since December 31, 2001. This deficit has been created primarily because of the historical financial problems of the discontinued SportPark business segment. On June 1, 2001, the Company completed a transaction pursuant to a Restructuring and Settlement Agreement with Urban Land of Nevada, Inc. (the "Landlord") to terminate the lease relating to the SportPark, and to transfer all of the leasehold improvements and personal property located on the premises to the Landlord. 11 As part of the agreement, the Landlord agreed to waive all liabilities of the Company to the Landlord with respect to the SportPark, and with the exception of a limited amount of unsecured trade payables, the Landlord agreed to assume responsibility of all other continuing and contingent liabilities related to the SportPark. The Landlord agreed to cancel all of the Company's back rent obligations for the Callaway Golf Center for periods through April 30, 2001. The Company recommenced paying its monthly rent for the CGC beginning May 2001. As part of the transaction, the Company issued the Landlord a 35-percent ownership interest in AAGC. In connection with the issuance of the 35-percent interest in AAGC to the Landlord, the Company, AAGC and the Landlord entered into a Stockholders Agreement that provides certain restrictions and rights on the AAGC shares issued to the Landlord. The Landlord is permitted to designate a non-voting observer of meetings of AAGC's board of directors. In the event of an uncured default of the lease for the CGC, so long as the Landlord holds a 25% interest in AAGC, the Landlord will have the right to select one director of AAGC. As to matters other than the election of Directors, the Landlord has agreed to vote its shares of AAGC as designated by the Company. As a result of this Restructuring and Settlement Agreement, the Company ceased funding cash shortfalls at the SportPark, the Company was released from all significant continuing and contingent liability related to the Sportpark, and all back rent through April 30, 2001 for the CGC was cancelled. Management believes that its continuing operations may not be sufficient to fund operating cash needs and debt service requirements over at least the next 12 months. As a result, management attempted to negotiate a deferral of three scheduled debt payments with its primary lender on the CGC; however, the lender was only willing to defer one $25,000 payment (the March 2002 payment). This payment is to be repaid in equal amounts in addition to the regularly scheduled $25,000 payments due June 30, September 30, and December 31, 2002. As a result, management plans to seek other sources of funding as needed, which may include Company officers or directors or other related parties. In addition, management has analyzed all operational and administrative costs of the Company and has identified areas where costs may be reduced. Plans are already in effect to attain the identified cost reductions. The Company's current and expected sources of working capital are its cash balances that were $63,758 at March 31, 2002 and its operating cash flow of its CGC property. Working capital needs have been helped by deferring payments of interest and notes payable balances due to the Company's Chairman and Affiliated Store. Deferrals of payments to the Company's Chairman and Affiliated Store are expected to continue until the Company has sufficient cash flow to begin making payments. The Company does not currently have the financial resources available to make these payments. The Company has issued notes payable to the Company's Chairman (the "Chairman's Notes") that bear interest at ten percent per annum with balances of $5,159,948 and $5,129,879, respectively, at March 31, 2002 and December 31, 2001. Included in the foregoing balances is accrued interest payable of $943,079 and $836,704, respectively. The Company repaid $76,306 in principal on these notes in February 2002. 12 The Company has issued notes payable to the Paradise Store (the "Paradise Notes") that bear interest at ten percent per annum with balances of $359,914 and $353,289, respectively, at March 31, 2002 and December 31, 2001. Included in the foregoing balances is accrued interest payable of $94,947 and $88,322, respectively. The Chairman's Notes and the Paradise Notes (collectively, the "Notes") were all past due as of December 31, 2001. In April 2002, the Company and the Chairman signed an agreement that provides for the extension of the maturity dates of the Notes to various dates through the year 2008; the assets of the Company secure the Notes. Interest payments on the Notes have been deferred since inception. The Chairman has agreed to continue deferring payment of the accrued interest until such time as the Company has adequate capital resources to service this obligation. The Callaway Golf Center has generated positive cash flow since it was reacquired at the end of 1998. However, this positive cash flow is used to fund corporate overhead that is in place in support of the CGC. Management continues to seek out financing to help fund working capital needs of the Company. In this regard, management believes that additional borrowings against the CGC could be arranged although there can be no assurance that the Company would be successful in securing such financing or with terms acceptable to the Company. There are no planned material capital expenditures in 2002. OPERATING ACTIVITIES. Net cash used in operating activities was $21,670 in 2002 compared to net cash provided by operating activities of $209,472 in 2001. The primary reasons for the change are (1) a larger net loss in 2001 of about $26,000 offset by (2) a decrease in accounts payable and accrued expenses of approximately $52,000 in 2002 compared to an increase in payables in 2001 of about $98,000 that accounts for $151,000 of the difference, and (3) an increase in deferred income in 2001 of $75,000 compared to a $25,000 decrease in 2002. INVESTING ACTIVITIES. Net cash provided by investing activities was $76,306 in 2002; there was no investing activity in 2001. The activity in 2002 results from the disposition of equity securities held by the Company that had been transferred from SPEN. FINANCING ACTIVITIES. Net cash used in financing activities was $18,200 in 2002 compared to $60,556 in 2001. The primary reasons for the difference are: (1) an increase in due to affiliated stores and other related entities in 2002 of $63,786 compared to a corresponding decrease in such accounts of $49,874 in 2001, and (2) payment of $76,306 in 2002 to reduce notes payable to shareholder. Among its alternative courses of action, management of the Company may seek out and pursue a business combination transaction with an existing private business enterprise that might have a desire to take advantage of the Company's status as a public corporation. At this time, management does not intend to target any particular industry but, rather, intends to judge any opportunity on its individual merits. Any such transaction would likely have a dilutive effect on the interests of the Company's stockholders that would, in turn, reduce each shareholders proportionate ownership and voting power in the Company. 13 There is no assurance that the Company will acquire a favorable business opportunity through a business combination. In addition, even if the Company becomes involved in such a business opportunity, there is no assurance that it will generate revenues or profits, or that the market price of the Company's common stock will be increased thereby. The Company has no commitments to enter into or acquire a specific business opportunity and therefore can disclose the risks of a business or opportunity that it may enter into in only a general manner, and cannot disclose the risks of any specific business or opportunity that it may enter into. An investor can expect a potential business opportunity to be quite risky. The Company's acquisition of or participation in a business opportunity could result in a total loss to the Company and its shareholders if the business or opportunity is unsuccessful. Any business opportunity acquired may be currently unprofitable or present other negative factors. SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this Quarterly Report contains statements that are forward-looking such as statements relating to plans for future expansion and other business development activities, as well as other capital spending and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, those relating to dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, changes in federal or state tax laws or the administration of such laws, changes in regulations and application for licenses and approvals under applicable jurisdictional laws and regulations. 14 PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities. None. Item 3. Defaults Upon Senior Securities. None Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. None. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALL-AMERICAN SPORTPARK, INC. Date: May 10, 2002 By:/s/ Ronald Boreta Ronald Boreta, President and Chief Executive Officer Date: May 10, 2002 By:/s/ Kirk Hartle Kirk Hartle, Chief Financial Officer 16