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Related Party Transactions
 6 Months Ended
Jun. 30, 2014
Related Party Transactions [Abstract]  
Related Party Transactions

Note 5 – Related party transactions

 

Due to related parties

 

The Company’s employees provide administrative/accounting support for (a) three golf retail stores, named Saint Andrews Golf Shop ("SAGS"), Las Vegas Golf and Tennis ("Boca Store") and Las Vegas Golf and Tennis Superstore (“Westside 15 Store”), owned by Ronald Boreta, the Company's President, and his brother, John Boreta, a Director of the Company. The SAGS store is the retail tenant in the TMGE.

 

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 parties by the Company approximated $15,653 and $23,795 for the six months ended June 30, 2014 and 2013, 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 and his brother, and the former Chairman. These funds helped pay for office supplies, phone charges, postages, and salaries. The net amount due to these stores totaled $1,569,794 and $1,539,045 as of June 30, 2014 and December 31, 2013, 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 Ronald Boreta and John Boreta have continued to defer half of their monthly salaries until the Company is in a more positive financial state. The amounts deferred for the six months ending June 30, 2014 and 2013 were $48,750 and $48,750, respectively.

Notes and Interest Payable to Related Parties:

The Company has various notes and interest payable to the following entities as of June 30, 2014, and December 31, 2013, respectively:

    2014  

2013

 

Various notes payable to Vaso Boreta bearing 10% per annum and due on demand (1) $ 3,200,149 $ 3,200,149
         
Note payable to BE Holdings 1, LLC bearing 10% per annum and due on demand (2)   100,000   100,000
         
Various notes payable to SAGS, bearing 10% per annum and due on demand (3)   813,846   833,846
         
Notes payable to Ron and John Boreta personally (4)   -  

 

75,000

         
Note payable to BE, III bearing 10% per annum and due on demand (5)   200,500   200,500
         
Total $ 4,314,495 $ 4,409,495

 

(1)     

Vaso Boreta is the former Chairman of the Board of the Company who passed away in

October 2013.

(2)      BE Holdings 1, LLC is owned by Vaso Boreta.
(3)      Saint Andrews is owned by Ronald Boreta and John Boreta.
(4)      The Notes were in the principal amount of $37,500 each.
(5) BE III, LLC is owned by Ronald Boreta and John Boreta.

 

All maturities of related party notes payable and the related accrued interest payable as of June 30, 2014 are due and payable upon demand. At June 30, 2014, the Company has no loans or other obligations with restrictive debt or similar covenants.

 

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 and now a Director 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 June 30, 2014 and December 31, 2013, accrued interest payable - related parties related to the notes payable – related parties totaled $5,614,549 and $5,400,781 respectively.

Lease to SAGS

The Company subleases space in the clubhouse to SAGS. Base rent includes $13,104 per month through July 2013 with a 5% increase for each of two 5-year options to extend in July 2013 and July 2017. For the six months ending June 30, 2014 and 2013, the Company recognized rental income totaling $81,900 and $81,899, respectively.