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 September 30, 2012, minimum future lease payments under non-cancelable operating leases are as follows:


2012	$	132,460
2013		529,840
2014		529,840
2015		529,840
2016		529,840
Thereafter		3,311,503
	$	5,563,323

Total rent expense for this operating lease was $363,722 and $364,545 for the nine months ended September 30, 2012 and 2011, respectively.

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.

2012	$	8,121
2013		38,471
2014		6,767
Total payments		53,359
Less interest		(3,590)
Total principal		49,769
Less current portion		34,048
Long-term portion	$	15,721

Accumulated depreciation for the capital leases as of September 30, 2012 and December 31, 2011 was $23,179 and $49,154, respectively.

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, pursuant to the Customer Agreement AAGC expended amounts to improve both its range facility as well as the golfing center. These improvements included Callaway Golf® branding elements. Callaway provide funding and resources towards operating expenses of AAGC in 2009; 2) towards facility improvements for both AAGC and St. Andrews Golf Shop; 3) range landing area improvements of AAGC and 4) three payments each of $250,000 for annual advertising expenses paid by AAGC, paid in the form of golf merchandise to SAGS. AAGC is reimbursed by SAGS for AAGC’s expenditures in advertising as incurred. Due to the fact that SAGS is a related party, the Company is also considered a customer of Callaway as it relates to the Customer Agreement.

The annual payments for advertising began 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 are recorded as a reduction of the Company’s costs for the related advertising. Additionally, the contributions are paid to SAGS in the form of golf related products. SAGS then reimburses AAGC in monies as the related golf products are received. During the nine months ended September 30, 2012 and 2011, SAGS reimbursed AAGC $78,841and $70,921, respectively for advertising costs.