Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2009
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to ______
Commission File Number 0-8463
PISMO COAST VILLAGE, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-2990441
------------------------------- ---------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
165 South Dolliver Street, Pismo Beach, California 93449
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(Address of principal executive offices) (Zip Code)
(805) 773-5649
----------------------------------------------------
(Registrant's telephone number, including area code)
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(Former name, former address & former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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. [X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (Subsection
232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).
[ ] Yes [ ] No
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Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
[ ] Large accelerated filer [ ] Non-accelerated filer
[ ] Accelerated filer [X] Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 1,790
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements and related information are included in
this Form 10-Q, Quarterly Report.
1. Accountants' Review Report
2. Balance Sheets
3. Statement of Income and Retained Earnings
4. Statement of Cash Flows
5. Notes to Financial Statements (Unaudited)
The financial information included in Part I of this Form 10-Q has been
reviewed by Brown Armstrong Accountancy Corporation, the Company's Certified
Public Accountants, and all adjustments and disclosures proposed by said firm
have been reflected in the data presented. The information furnished reflects
all adjustments which, in the opinion of management, are necessary to a fair
statement of the results for the interim periods.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included herein contains statements that may be considered
forward-looking statements, such as statements relating to anticipated
expenses, 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
herein. These risks and uncertainties include, but are not limited to, those
relating to competitive industry conditions, California tourism and weather
conditions, dependence on existing management, leverage and debt service, the
regulation of the recreational vehicle industry, domestic or global economic
conditions and changes in federal or state tax laws or the administration of
such laws.
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Income from Resort Operations for the three-month period ended December 31,
2009, decreased $18,301, or 1.8%, from the same period in 2008. This decrease
is primarily due to a $21,766, or 9.4%, decrease in year-to-date storage
revenue. The decrease in storage revenue is a combination of loss of storage
customers due to personal finances and an income reporting adjustment based on
advanced deposits. Site rental income increased $17,456, or 2.6%, due to a
rate increase, even though paid site occupancy was down 9.4% compared to the
same period in 2008.
Income from retail operations decreased by $15,679 for the three-month period
ended December 31, 2009, 6.7% below the same period in 2008. The General Store
showed a $10,182, or 8.2%, decrease in revenue, while RV Service and Repair
decreased revenue 5.1%, or $5,497. Management feels the General Store's and RV
Service and Repair's decrease in revenue reflects resort guests' reduced
discretionary spending as a symptom of the overall economy.
The Company anticipates continued even-to-slight decline in both income from
resort operations and in retail operations.
Interest income increased $3,131 for the three-month period ended December 31,
2009, compared to the same period in 2008. This increase is a reflection of
the current savings balance and maturity of a Certificate of Deposit. The
Company continues to maintain cash reserves in anticipation of major capital
expenditures.
Operating expenses for the three-month period ending December 31, 2009,
increased $89,919, or 10.2%, above the same period ended December 31, 2008.
This reflects an increase in labor and labor associated expenses, tree
trimming, and property taxes. Other operating costs remain consistent with the
prior year and are considered well managed to create an effective operation.
Cost of Goods Sold expenses for the three-month period ended December 31,
2009, are 48.6% compared to 48.2% for the same period in 2008, which is within
the guidelines established by management for the individual category sales of
RV supplies and General Store merchandise.
Interest expense for the three-month period ended December 31, 2009, was
$65,590, compared to $66,649 for the same period ending 2008. The current
balance reflects the notes payable as a result of purchasing property in May
2008, as well as property purchased February and April of 2006 to increase RV
storage. The Company has also maintained a $500,000 line of credit which
currently has no outstanding balance as of December 31, 2009.
Income before provisions for income taxes for the three-month period ended
December 31, 2009, decreased by $119,230 below the same period in 2008. This
decrease is a result of decreased income from resort and retail operations and
increased operating expenses.
Due to the nature of business and economic cycles and trends, rates may be
adjusted accordingly, if deemed necessary. Although the supply-demand balance
generally remains favorable, future operating results could be adversely
impacted by weak demand. This condition could limit the Company's ability to
pass through inflationary increases in operating costs as higher rates.
Increases in transportation and fuel costs or sustained recessionary periods
could also unfavorably impact future results. However, the Company believes
that its financial strength and market presence will enable it to remain
extremely competitive. It is anticipated the published rates will continue to
market site usage at its highest value and not negatively impact the Company's
ability to capture an optimum market share.
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LIQUIDITY
The Company plans capital expenditures of approximately $767,000 in Fiscal
Year 2010 to further enhance the resort facilities and services. These
projects include: development of RV storage property for 900 units, road
paving, resort WiFi upgrade, and new trailer tow vehicle. Funding for these
projects is expected to be from normal operating cash flows and, if necessary,
supplemented with outside financing. These capital expenditures are expected
to increase the resort's value to its shareholders and the general public.
The Company's current cash position, including Certificates of Deposits, as of
December 31, 2009, is $1,104,156, which is 13.5% less than the same position
in 2008. This decrease is primarily due to the Company's capital expenditures
in the first quarter of fiscal year 2010. The Company has maintained cash
balances in anticipation for large capital expenditures necessary to upgrade
the resort. The Company has also maintained a line of credit of $500,000 to
insure funds will be available, if required.
Accounts payable and accrued liabilities decreased $38,724 from the same
period last year. All undisputed payables have been paid in full according to
the Company's policy.
Expenditures are consistent with prior years' operations and are expected to
provide adequate resources to support the amounts committed to complete the
authorized capital projects during the fiscal year. Fourth Quarter site
occupancy and storage fill are expected to be consistent with that of the past
year. Capital projects are designed to enhance the marketability of the
camping sites and enhance support facilities. Capital projects not completed
prior to our busy season will be completed after Labor Day.
DISCLOSURE CONCERNING WEBSITE ACCESS TO COMPANY REPORTS
The Company makes available on its website, www.pismocoastvillage.com, access
to its annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and all amendments to those reports as soon as reasonably
practicable after such material is electronically filed with or furnished to
the Securities & Exchange Commission.
The public may read and copy any of the materials filed with the Securities
and Exchange Commission at the SEC's Public Reference room located at 100 F
Street, N. E., Washington, D.C. 20549. Information on the operation of the
Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
The SEC maintains an Internet site (http://www.sec.gov) that contains reports,
proxy statements, and other information that the Company files with the
Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
ITEM 4T. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the
"1934 Act"), as of December 31, 2009, we carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures. This evaluation was carried out under the supervision and with the
participation of our Chief Executive Officer/General Manager (our principal
executive officer) and our Chief Financial Officer (our principal financial
officer). Based upon and as of the date of that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective as described in Item 8A(T) included
with our Annual Report on Form 10-K for the year ended September 30, 2009.
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Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed under
the Securities Exchange Act of 1934 is accumulated and communicated to our
management, including our principal executive officer and our principal
financial officer, as appropriate, to allow timely decisions regarding
required disclosure.
INTERNAL CONTROL OVER FINANCIAL REPORTING
There have not been any changes in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated by the SEC
under the Exchange Act) during the three months ended December 31, 2009 that
have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No pending legal proceedings against the Company other than routine litigation
incidental to the business.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting for the shareholders of Pismo Coast Village, Inc. was held
Saturday, January 16, 2010, at 9:00 a.m. at the South County Regional Center,
800 West Branch Street, Arroyo Grande, California 93420. At that meeting, the
following Directors were elected to serve until the annual meeting in January
2011, or until successors are elected and have qualified. Following each
elected Director's name is the total number of votes cast for that Director:
Benedict, Louis 599
Brittain, Kurt 618
Buchaklian, Harry 623
Enns, Rodney 617
Eudaly, Douglas 902
Fischer, William 611
Hardesty, Wayne 599
Harris, R. Elaine 690
Hearne, Dennis 605
Hickman, Glenn 600
Hughes, Terris 601
Nelson, Garry 601
Nunlist, Ronald 604
Pappi, Jr., George 618
Pettibone, Jerald 628
Plumley, Dwight 644
Willems, Gary 635
Williams, Jack 600
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Further, the following additional matters were voted upon at the meeting, and
the number of affirmative votes and negative votes last with respect to each
such matter is set forth below:
Proposal to approve the selection of Brown Armstrong Accountancy Corporation
to serve as independent certified public accountants for the Company for
Fiscal Year 2009-2010:
Affirmative Votes Negative Votes Abstains
729 0 12
ITEM 5. OTHER INFORMATION
The annual meeting of the shareholders of Pismo Coast Village, Inc. was held
Saturday, January 16, 2010, at 9:00 a.m. at the South County Regional Center,
800 West Branch Street, Arroyo Grande, California 93420. Following that
meeting, the newly elected Board held a reorganizational meeting at which the
following officers were elected to serve until the next Annual Shareholders'
Meeting:
President Jerald Pettibone
Executive Vice President Glenn Hickman
V.P. - Finance/Chief Financial Officer Jack Williams
V.P. - Operations Ronald Nunlist
V.P. - Secretary Kurt Brittain
Assistant Corporate Secretary Jay Jamison
ITEM 6. EXHIBITS
Exhibit Sequential
Number Item Description Page Number
------- ------------------------------------------------------ -----------
27 Financial Data Schedule
99 Accountant's Review Report
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 (Jerald Pettibone, President and Chairman of the Board).
31.2 Certification Pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 (Jay Jamison, Chief Executive Officer
and principal executive officer).
31.3 Certification Pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 (Jack Williams, Chief Financial Officer,
principal financial officer and principal accounting officer).
32.1 Certification Pursuant to 18 U. S. C. Subsection 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (Jerald Pettibone, President and Chairman of the Board).
32.2 Certification Pursuant to 18 U. S. C. Subsection 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (Jay Jamison, Chief Executive Officer and principal
executive officer).
32.3 Certification Pursuant to 18 U. S. C. Subsection 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (Jack Williams, Chief Financial Officer, principal
financial officer and principal accounting officer).
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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.
PISMO COAST VILLAGE, INC.
Date: February 12, 2010
Signature: /S/ JERALD PETTIBONE
Jerald Pettibone, President and Chairman of the Board
Date: February 12, 2010
Signature: /S/ JACK WILLIAMS
Jack Williams, V.P. Finance/Chief Financial Officer
(principal financial officer and principal accounting officer)
Date: February 12, 2010
Signature: /S/ JAY JAMISON
Jay Jamison, General Manager/Chief Executive Officer
(principal executive officer)
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REPORT OF INDEPENDENT REGISTERED
--------------------------------
PUBLIC ACCOUNTING FIRM
----------------------
To the Board of Directors
Pismo Coast Village, Inc.
Pismo Beach, California
We have reviewed the accompanying balance sheet of Pismo Coast Village, Inc.
as of December 31, 2009 and 2008, and the related statements of income and
retained earnings and cash flows for the three month period ended December 31,
2009 and 2008. These interim financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying interim financial statements for them to be
in conformity with accounting principles generally accepted in the United
States of America.
BROWN ARMSTRONG ACCOUNTANCY CORPORATION
Bakersfield, California
February 12, 2010
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PISMO COAST VILLAGE, INC.
-------------------------
BALANCE SHEETS
--------------
DECEMBER 31, 2009 AND 2008 AND SEPTEMBER 30, 2009
-------------------------------------------------
December 31, September 30, December 31,
2009 2009 2008
(Unaudited) (Audited) (Unaudited)
----------- ----------- -----------
ASSETS
------
Current Assets
--------------
Cash and cash equivalents $ 1,104,156 $ 1,672,045 $ 1,183,154
Investment in certificate of deposit - - 93,797
Accounts receivable 38,024 21,908 27,366
Inventory 133,110 132,154 115,045
Current deferred tax assets 74,200 74,100 63,000
Prepaid income taxes 23,600 178,400
Prepaid expenses 37,943 61,491 49,118
----------- ----------- -----------
Total current assets 1,411,033 1,961,698 1,709,880
Pismo Coast Village Recreational
--------------------------------
Vehicle Resort and Related Assets -
-----------------------------------
Net of accumulated depreciation 14,138,441 13,816,035 13,210,677
Other Assets 34,746 35,844 39,139
------------ ----------- ----------- -----------
Total Assets $15,584,220 $15,813,577 $14,959,696
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
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December 31, September 30, December 31,
2009 2009 2008
(Unaudited) (Audited) (Unaudited)
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
-------------------
Accounts payable and
accrued liabilities $ 104,178 $ 180,921 $ 142,902
Accrued salaries and vacation 56,520 185,246 52,446
Rental deposits 776,420 767,488 769,158
Income taxes payable - 51,000 -
Current portion of long-term debt 101,715 112,042 459,985
----------- ----------- -----------
Total current liabilities 1,038,833 1,296,697 1,424,491
Long-Term Liabilities
---------------------
Long-term deferred taxes 491,800 491,100 334,000
Notes Payable 4,906,486 4,862,046 4,550,959
----------- ----------- -----------
Total liabilities 6,437,119 6,649,843 6,309,450
----------- ----------- -----------
Stockholders' Equity
--------------------
Common stock - no par value,
1,800 shares issued
1,790 shares outstanding 5,616,332 5,616,332 5,616,332
Retained earnings 3,530,769 3,547,402 3,033,914
----------- ----------- -----------
Total stockholders' equity 9,147,101 9,163,734 8,650,246
----------- ----------- -----------
Total Liabilities and
Stockholders' Equity $15,584,220 $15,813,577 $14,959,696
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
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PISMO COAST VILLAGE, INC.
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STATEMENTS OF INCOME AND RETAINED EARNINGS
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(UNAUDITED)
-----------
THREE MONTHS ENDED DECEMBER 31, 2009 AND 2008
---------------------------------------------
2009 2008
---------- ----------
Income
------
Resort operations $ 969,946 $ 988,247
Retail operations 217,024 232,703
---------- ----------
Total income 1,186,970 1,220,950
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Cost and Expenses
-----------------
Operating expenses 973,353 883,434
Cost of goods sold 105,583 112,296
Depreciation 79,000 72,766
---------- ----------
Total cost and expenses 1,157,936 1,068,496
---------- ----------
Income from operations 29,034 152,454
Other Income (Expense)
----------------------
Interest income 5,923 2,792
Interest expense (65,590) (66,649)
---------- ----------
Total other income (expense) (59,667) (63,857)
---------- ----------
Income (Loss) Before Provision for Income Taxes (30,633) 88,597
-----------------------------------------------
Income Tax Expense (Benefit) (14,000) 9,600
---------------------------- ---------- ----------
Net Income (16,633) 78,997
----------
Retained Earnings - Beginning of Period 3,547,402 2,954,917
--------------------------------------- ---------- ----------
Retained Earnings -End of period $3,530,769 $3,033,914
-------------------------------- ========== ==========
Net Income Per Share $ (9.29) $ 44.13
-------------------- ========== ==========
The accompanying notes are an integral part of these financial statements.
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PISMO COAST VILLAGE, INC.
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STATEMENTS OF CASH FLOWS (UNAUDITED)
------------------------------------
THREE MONTHS ENDED DECEMBER 31, 2009 AND 2008
---------------------------------------------
2009 2008
-------------------- ----------------------
Cash Flows From Operating Activities
------------------------------------
Net Income $ (16,633) $ 78,997
Adjustments to reconcile net
income to net cash used in
operating activities:
Depreciation $ 79,000 $ 72,766
Decrease in certificates
of deposit - 22
Decrease/(increase) in
accounts receivable (16,116) 15,932
Decrease/(increase) in
inventory (956) 1,922
Decrease/(increase) in
deferred tax asset 600 (1,800)
Decrease/(Increase) in
prepaid income taxes (23,600) 11,400
Decrease/(Increase)
in prepaid expenses 23,548 (29,677)
Decrease in accounts
payable and
accrued liabilities (76,743) (35,368)
Decrease in accrued
salaries and vacation (128,726) (102,595)
Decrease/(increase) in
rental deposits 8,932 (14,994)
Decrease in income
taxes payable (51,000) -
Total adjustments (185,061) (82,392)
---------- ----------
Net cash used in
operating activities (201,694) (3,395)
Cash Flows From Investing Activities
------------------------------------
Capital expenditures (400,308) (55,179)
-------- ---------
Net cash used in investing
activities (400,308) (55,179)
Cash Flows From Financing Activities
------------------------------------
Borrowings on long-term debt 50,981
Principal repayments of
note payable (16,868) (11,812)
-------- ---------
Net cash used in financing
activities 34,113 (11,812)
---------- ----------
Net increase (decrease) in
cash and cash equivalents (567,889) (70,386)
Cash and Cash Equivalents - Beginning
-------------------------------------
of Period 1,672,045 1,253,540
--------- ---------- ----------
Cash and Cash Equivalents - End of Period $1,104,156 $1,183,154
----------------------------------------- ========== ==========
Schedule of Payments of Interest and Taxes
------------------------------------------
Payments for income tax $ 60,000 $ -
Cash paid for interest $ 65,590 $ 66,649
The accompanying notes are an integral part of these financial statements.
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PISMO COAST VILLAGE, INC.
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NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 2009 AND 2008 AND SEPTEMBER 30, 2009
-------------------------------------------------
Note 1 - Summary of Significant Accounting Policies
---------------------------------------------------
A. Nature of Business
------------------
Pismo Coast Village, Inc. (Company) is a recreational vehicle camping resort.
Its business is seasonal in nature with the fourth quarter, the summer, being
its busiest and most profitable.
B. Inventory
---------
Inventory has been valued at the lower of cost or market on a first-in,
first-out basis. Inventory is comprised primarily of finished goods in the
general store and in the RV shop.
C. Depreciation and Amortization
-----------------------------
Depreciation of property and equipment is computed using the straight line
method based on the cost of the assets, less allowance for salvage value,
where appropriate. Depreciation rates are based upon the following estimated
useful lives:
Building and park improvements 5 to 40 years
Furniture, fixtures, equipment and
leasehold improvements 3 to 31.5 years
Transportation equipment 5 to 10 years
D. Earnings (Loss) Per Share
-------------------------
The earnings (loss) per share are based on the 1,790 shares issued and
outstanding.
E. Cash and Cash Equivalents
-------------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid investments including certificates of deposit with a maturity of three
months or less when purchased to be cash equivalents.
F. Concentration of Credit Risk
----------------------------
At December 31, 2009, the Company had cash deposits in excess of the $250,000
federally insured limit with Santa Lucia Bank of $838,693; however, in the
past the Company has used Excess Deposit Insurance Bond which secures deposits
up to $1,500,000. It has recently been stated by bank regulators that this
insurance bond is not enforceable. The FDIC's Temporary Transaction Account
Guarantee Program provides unlimited coverage for non-interest bearing
accounts until December 31, 2009. Santa Lucia Bank is participating in the
Temporary Liquidity Guarantee Program which is a requirement to obtain the
non-interest bearing coverage.
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PISMO COAST VILLAGE, INC.
-------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
AS OF DECEMBER 31, 2009 AND 2008 AND SEPTEMBER 30, 2009
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PAGE 2
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Note 1 - Summary of Significant Accounting Policies (Continued)
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G. Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
Company to make estimates and assumptions that affect certain reported amounts
and disclosures. Accordingly, actual results could differ from those
estimates.
H. Revenue and Cost Recognition
----------------------------
The Company's revenue is recognized on the accrual basis as earned based on
the date of stay. Expenditures are recorded on the accrual basis whereby
expenses are recorded when incurred, rather than when paid.
I. Advertising
-----------
The Company follows the policy of charging the costs of non-direct response
advertising as incurred. Advertising expense was $10,370 and $9,330 for the
three months ended December 31, 2009 and 2008, respectively. There was no
advertising expense capitalized in prepaid expense.
J. Recent Accounting Pronouncements
--------------------------------
On April 1, 2009, the FASB issued guidance related to business combinations,
which addresses application issues associated with initial recognition and
measurement, subsequent measurement and accounting, and disclosure of assets
and liabilities arising from contingencies in a business combination,
including the treatment of contingent consideration, acquisition costs,
research and development assets and restructuring costs. In addition, changes
in deferred tax asset valuation allowances and acquired income tax
uncertainties in a business combination after the measurement period will
impact income taxes. The new guidance is effective for business combinations
for which the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after December 15, 2008. We do not
expect any business combination in the near-term; however, we will apply the
new provisions on a prospective basis in the event of any future business
combinations.
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PISMO COAST VILLAGE, INC.
-------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
AS OF DECEMBER 31, 2009 AND 2008 AND SEPTEMBER 30, 2009
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PAGE 3
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Note 2 - Pismo Coast Village Recreational Vehicle Resort and Related Assets
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At December 31, 2009, September 30, 2009 and December 31, 2008, property and
equipment included the following:
December 31, September 30 December 31,
2009 2009 2008
----------- ------------ -----------
Land $10,085,915 $10,085,915 $ 9,994,935
Building and resort improvements 9,344,007 9,344,007 8,631,552
Furniture, fixtures, equipment
and leasehold improvements 803,373 803,373 814,483
Transportation equipment 473,919 422,938 422,938
Construction in progress 493,384 144,057 133,659
----------- ----------- -----------
21,200,598 20,800,290 19,997,567
Less: accumulated depreciation (7,062,157) (6,984,255) (6,786,890)
----------- ----------- -----------
$14,138,441 $13,816,035 $13,210,677
=========== =========== ===========
Note 3 - Line of Credit
-----------------------
The Company has a revolving line of credit for $500,000 with Santa Lucia Bank
which expires March 2010. The interest rate is variable, at one percent over
West Coast Prime with an initial rate of 6.25 percent at December 31, 2009.
The purpose of the line of credit is to augment operating cash needs in
off-season months. There were no outstanding amounts as of December 31, 2009
and 2008 and September 30, 2009.
Note 4 - Note Payable
---------------------
The Company secured permanent financing on the purchase of storage lot land in
Arroyo Grande with Santa Lucia Bank. The loan was refinanced on April 6, 2006
and consolidated with a note for the purchase of another storage lot in
Oceano. The total loan currently outstanding is $2,044,607 and was financed
over a period of ten years at a variable interest rate currently at 5.00%. The
lot in Oceano was formerly leased for $4,800 per month and was purchased for
$925,000. The payments are currently $12,760 per month interest and principal.
The Company also secured permanent financing on the purchase of another
storage lot in Arroyo Grande with Santa Lucia Bank. The loan originated on May
8, 2008. The total loan currently outstanding is $2,913,414 and financed over
a period of ten years at a variable interest rate currently at 5.5%. The
payments are currently $16,566 per month interest and principal. The Company
secured a vehicle lease with Donahue Transportation Services Corp. on a 2008
Tow Truck. The loan originated on December 9, 2009. The total loan currently
outstanding is $50,182 and financed over a period of seven years at an
interest rate of 8.39%. The payments are currently $799 per month interest and
principal.
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PISMO COAST VILLAGE, INC.
-------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
AS OF DECEMBER 31, 2009 AND 2008 AND SEPTEMBER 30, 2009
-------------------------------------------------------
PAGE 4
------
Note 4 - Note Payable (continued)
---------------------------------
Principal payments of the note payable are as follows:
Period Ending December 31,
--------------------------
2010 $ 101,715
2011 102,629
2012 107,605
2013 114,302
2014 120,658
Thereafter 4,461,292
----------
$5,008,201
==========
Note 5 - Common Stock
---------------------
Each share of stock is intended to provide the shareholder with a maximum free
use of the resort for 45 days per year. If the Company is unable to generate
sufficient funds from the public, the Company may be required to charge
shareholders for services.
A shareholder is entitled to a pro rata share of any dividends as well as a
pro rata share of the assets of the Company in the event of its liquidation or
sale. The shares are personal property and do not constitute an interest in
real property. The ownership of a share does not entitle the owner to any
interest in any particular site or camping period.
Note 6 - Income Taxes
---------------------
The provision for income taxes is as follows:
December 31, 2009 December 31, 2008
----------------- -----------------
Income tax provision (benefit) $(14,000) $ 9,600
========= ========
The Company uses the asset-liability method of computing deferred taxes in
accordance with FASB Accounting Standards Codification (ASC) 740 (formerly
SFAS 109). ASC 740 requires, among other things, that if income is expected
for the entire year, but there is a net loss to date, a tax benefit is
recognized based on the annual effective tax rate. The Company has not
recorded a valuation allowance for deferred tax assets since the benefit is
expected to be realized within the following year.
The difference between the effective tax rate and the statutory tax rates is
due primarily to the effects of the graduated tax rates, state taxes net of
the federal tax benefit, nondeductible variable costs of shareholder usage and
other adjustments.
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PISMO COAST VILLAGE, INC.
-------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
AS OF DECEMBER 31, 2009 AND 2008 AND SEPTEMBER 30, 2009
-------------------------------------------------------
PAGE 5
------
Note 6 - Income Taxes (continued)
---------------------------------
ASC 740 also requires, among other things, the recognition and measurement of
tax positions based on a "more likely than not" (likelihood greater than 50%)
approach. As of September 30, 2009, the Company did not maintain any uncertain
tax positions under this approach and, accordingly, all tax positions have
been fully recorded in the provision for income taxes. It is the policy of the
Company to consistently classify interest and penalties associated with income
tax expense separately from the provision for income taxes. No interest or
penalties associated with income taxes have been included in this calculation,
or separately in the Statement of Operations and Retained Earnings, and no
significant increases or decreases are expected within the following twelve-
month period. Although the Company does not maintain any uncertain tax
positions, tax returns remain subject to examination by the Internal Revenue
Service for fiscal years ending on or after September 30, 2006 and by the
California Franchise Tax Board for fiscal years ending on or after September
30, 2005.
Note 7 - Operating Leases
-------------------------
The Company leases two pieces of property to use as storage lots. One is under
a seven-year agreement beginning March 1, 2006 for $4,802 based on the
Consumer Price Index.
The second lot is located in Oceano and is leased at $2,933 per month. The
lease has converted to a month-to-month lease, however the lessor is
considering a long-term renewal at this time.
The Company has a five-year lease obligation for a copier. Rental expense
under this operating lease is $432 per month.
Future minimum lease payments under the two property leases and the obligation
to lease equipment are as follows:
Period Ended December 31,
-------------------------
2010 $ 62,808
2011 62,808
2012 60,216
2013 57,624
2014 9,604
Thereafter -0-
--------
Total $253,060
========
Rent expense under these agreements was $23,206 and $23,206 for the
three-month period ended December 31, 2009 and 2008, respectively.
Note 8 - Employee Retirement Plans
----------------------------------
The Company is the sponsor of a 401(k) profit sharing pension plan, which
covers substantially all full-time employees. Employer contributions are
discretionary and are determined on an annual basis. The contribution to the
pension plan was $17,239 and $11,481 for the three months ended December 31,
2009 and 2008, respectively.
18
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