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EX-31 - SECTION 906 CERTIFICATION FOR PERIOD ENDING 12/31/2009 - PISMO COAST VILLAGE INCex31-2jj12301009.txt
EX-31 - SECTION 906 CERTIFICATION FOR PERIOD ENDING 12/31/2009 - PISMO COAST VILLAGE INCex31-3jw12312010.txt
EX-31 - SECTION 906 CERTIFICATION FOR PERIOD ENDING 12/31/2009 - PISMO COAST VILLAGE INCex31-1jp12312009.txt
EX-32 - SECTION 302 CERTIFICATION FOR PERIOD ENDING 12/31/2009 - PISMO COAST VILLAGE INCex32-3jw12312009.txt
EX-32 - SECTION 302 CERTIFICATION FOR PERIOD ENDING 12/31/2009 - PISMO COAST VILLAGE INCex32-1jp12312009.txt
EX-32 - SECTION 302 CERTIFICATION FOR PERIOD ENDING 12/31/2009 - PISMO COAST VILLAGE INCex32-2jj12312009.txt

                                 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
          ------------------------------------------------------------
          (Address of principal executive offices)          (Zip Code)

                               (805) 773-5649
            ----------------------------------------------------
            (Registrant's telephone number, including area code)

             --------------------------------------------------
             (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


                                       1
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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. 2 ------------------------------------------------------------------------------ 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. 4 ------------------------------------------------------------------------------
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. 5 ------------------------------------------------------------------------------
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 6 ------------------------------------------------------------------------------
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). 7 ------------------------------------------------------------------------------
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) 8 ------------------------------------------------------------------------------
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 9 ------------------------------------------------------------------------------
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. 10 ------------------------------------------------------------------------------
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. 11 ------------------------------------------------------------------------------
PISMO COAST VILLAGE, INC. ------------------------- STATEMENTS OF INCOME AND RETAINED EARNINGS ---------------------------------------------- (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 ---------- ---------- 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. 12 ------------------------------------------------------------------------------
PISMO COAST VILLAGE, INC. ------------------------- 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. 13 ------------------------------------------------------------------------------
PISMO COAST VILLAGE, INC. ------------------------- 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. 14 ------------------------------------------------------------------------------
PISMO COAST VILLAGE, INC. ------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- AS OF DECEMBER 31, 2009 AND 2008 AND SEPTEMBER 30, 2009 ------------------------------------------------------- PAGE 2 ------ Note 1 - Summary of Significant Accounting Policies (Continued) --------------------------------------------------------------- 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. 15 ------------------------------------------------------------------------------
PISMO COAST VILLAGE, INC. ------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- AS OF DECEMBER 31, 2009 AND 2008 AND SEPTEMBER 30, 2009 ------------------------------------------------------- PAGE 3 ------ Note 2 - Pismo Coast Village Recreational Vehicle Resort and Related Assets --------------------------------------------------------------------------- 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. 16 ------------------------------------------------------------------------------
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. 17 ------------------------------------------------------------------------------
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 -----------------------------------------------------------------------------