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EX-31.2 - EXHIBIT 31.2 SECTION 302 CERTIFICATION - PARKS AMERICA, INCf10q123012_ex31z2.htm
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EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATION - PARKS AMERICA, INCf10q123012_ex31z1.htm


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-Q


(Mark One)


  X .

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended December 30, 2012


OR

 

      .

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from __________ to __________


COMMISSION FILE NUMBER 000-51254


Parks! America, Inc.

(Exact Name of small business issuer as specified in its charter)


Nevada

91-0626756

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)


1300 Oak Grove Road

Pine Mountain, GA 31822

(Address of principal executive offices) (Zip Code)


Issuer's telephone Number: (706) 663-8744



Indicate by check mark 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      .


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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  X .


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer

      .

Accelerated filer

      .

Non-accelerated filer

      . (Do not check if a smaller reporting company)

Smaller reporting company

  X .


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes      . No  X .

 

As of February 1, 2013, the issuer had 74,106,537 outstanding shares of Common Stock. 








PARKS! AMERICA, INC and SUBSIDIARIES






CONSOLIDATED FINANCIAL STATEMENTS



December 30, 2012









PARKS! AMERICA, INC and SUBSIDIARIES



TABLE OF CONTENTS




 

Page

 

 

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

 

 

Consolidated Balance Sheets

4

 

 

Consolidated Statements of Operations

5

 

 

Consolidated Statement of Changes in Stockholders’ Equity

6

 

 

Consolidated Statements of Cash Flows

7

 

 

Notes to Consolidated Financial Statements

8








PARKS! AMERICA, INC. and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of December 30, 2012 and September 30, 2012


ASSETS

 

December 30, 2012

 

September 30, 2012

Current Assets

 

 

 

 

Cash – unrestricted

$

111,974

$

147,962

Inventory

 

147,701

 

147,792

Prepaid expenses

 

44,859

 

44,808

Total Current Assets

 

304,534

 

340,562

 

 

 

 

 

Property and Equipment, net

 

6,164,319

 

6,196,845

Other Assets

 

 

 

 

Intangible assets, net

 

31,448

 

5,097

Deposits

 

8,500

 

8,500

Total Other Assets

 

39,948

 

13,597

TOTAL ASSETS

$

6,508,801

$

6,551,004

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current Liabilities

 

 

 

 

Accounts payable

$

104,811

$

134,758

Accrued expenses

 

62,616

 

113,854

Notes payable – lines of credit

 

319,397

 

0

Current maturities of long – term debt

 

1,738,793

 

1,773,935

Total Current Liabilities

 

2,225,617

 

2,022,547

Long-term Debt

 

 

 

 

Long – term obligations

 

1,711,165

 

1,745,503

TOTAL LIABILITIES

 

3,936,782

 

3,768,050

STOCKHOLDERS’ EQUITY

 

 

 

 

Common stock; 300,000,000 shares authorized, at $.001 par value;74,106,537 and 73,956,537  shares issued and outstanding, respectively

 

74,106

 

73,956

Capital in excess of par

 

4,794,006

 

4,792,656

Treasury stock

 

(3,250)

 

(3,250)

Accumulated deficit

 

(2,292,843)

 

(2,080,408)

TOTAL STOCKHOLDERS’ EQUITY

 

2,572,019

 

2,782,954

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

6,508,801

$

6,551,004



The accompanying notes are an integral part of these consolidated financial statements.





4




PARKS! AMERICA, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three Months Ended December 30, 2012 and January 1, 2012



 

 

For 3 Months Ended

 

 

Dec 30, 2012

 

Jan 1, 2012

NET SALES

$

577,425

$

514,725

Sale of animals

 

0

 

225

TOTAL NET SALES

 

577,425

 

514,950

OPERATING EXPENSES

 

 

 

 

Cost of sales

 

77,506

 

74,041

Selling, general and administrative

 

601,014

 

490,441

Depreciation & amortization

 

73,822

 

77,556

(Gain) loss on disposal of operating assets

 

(11,160)

 

0

Total Operating Expenses

 

741,182

 

642,038

LOSS FROM OPERATIONS

 

(163,757)

 

(127,088)

OTHER INCOME (EXPENSES)

 

 

 

 

Other income (expense)

 

6,169

 

4,548

Interest expense

 

(54,847)

 

(57,693)

Total Other Income (Expenses)

 

(48,678)

 

(53,145)

LOSS BEFORE INCOME TAXES

 

(212,435)

 

(180,233)

PROVISION FOR TAXES

 

0

 

0

NET LOSS

$

(212,435)

$

(180,233)


WEIGHTED OUTSTANDING SHARES (in 000's)

 

74,107

 

73,830

NET LOSS PER SHARE / FULLY DILUTED SHARE

$

(0.00)

$

(0.00)



The accompanying notes are an integral part of these consolidated financial statements.




5




PARKS! AMERICA, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

As of December 30, 2012



 

Common Stock

 

Additional Paid in

 

Treasury

 

Accumulated

 

 

 

Shares

 

Amount

 

Capital

 

Stock

 

Deficit

 

Total

Balance at October 2, 2011

73,781,537

$

73,781

$

4,791,081

$

(3,250)

$

(2,376,260)

$

2,485,352

Issuance of common stock to directors and officers

175,000

 

175

 

1,575

 

0

 

0

 

1,750

Net Income for the Year Ended September 30, 2012

0

 

0

 

0

 

0

 

295,852

 

295,852

Balance at September 30, 2012

73,956,537

 

73,956

 

4,792,656

 

(3,250)

 

(2,080,408)

 

2,782,954

Issuance of common stock to directors and officers

150,000

 

150

 

1,350

 

0

 

0

 

1,500

Net Loss for the Period Ended December 30, 2012

0

 

0

 

0

 

0

 

(212,435)

 

(212,435)

Balance at December 30, 2012

74,106,537

$

74,106

$

4,794,006

$

(3,250)

$

(2,292,843)

$

2,572,019



The accompanying notes are an integral part of these financial statements.




6




PARKS! AMERICA, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Three Months Ended December 30, 2012 and January 1, 2012



 

 

December 30, 2012

 

January 1, 2012

Cash Flows From Operating Activities:

 

 

 

 

Net loss for the period

$

(212,435)

$

(180,233)

Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities:

 

 

 

 

Depreciation expense and amortization

 

73,822

 

77,556

(Gain) loss on disposal of assets

 

(11,160)

 

0

Share-based compensation

 

 

 

1,750

Changes in Assets and Liabilities

 

 

 

 

Decrease in inventory

 

91

 

3,000

(Increase) decrease in prepaid expenses

 

(51)

 

7,527

Decrease in accounts receivable

 

0

 

18,143

(Decrease) in accrued expenses

 

(49,738)

 

(79,490)

(Decrease) in accounts payable

 

(29,947)

 

(65,756)

Net Cash Used In Operating Activities

 

(229,418)

 

(217,503)

  

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

Proceeds from disposal of assets

 

21,243

 

0

Capitalization of refinancing fees

 

(26,562)

 

0

Acquisition of property and equipment

 

(51,168)

 

(10,929)

Net Cash (Used In) Investing Activities

 

(56,487)

 

(10,929)

  

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

Proceeds (payments) on lines of credit

 

319,397

 

284,000

Payments on note payable

 

(69,480)

 

(55,473)

Net Cash Provided By Financing Activities

 

249,917

 

228,527

  

 

 

 

 

Net Increase (Decrease) in Cash

 

(35,988)

 

95

Cash at beginning of period

 

147,962

 

41,097

Cash at end of period

$

111,974

$

41,192

  

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

Cash paid for interest

$

59,445

$

68,635

Cash paid for income taxes

$

0

$

0

 

 

 

 

 

Non-Cash Investing and Financing Information:

 

 

 

 

Stock issued to satisfy accrued expenses

$

1,500

$

0



The accompanying notes are an integral part of these consolidated financial statements.




7




PARKS! AMERICA, INC. and SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 30, 2012


1. ORGANIZATION


Parks! America (“Parks!” or the “Company”) was originally incorporated on July 30, 1954 as Painted Desert Uranium & Oil Co., Inc. in Washington State. On October 1, 2002, Painted Desert Uranium & Oil Co., Inc. changed its name to Royal Pacific Resources, Inc. and its corporate domicile to the State of Nevada.


On December 19, 2003, Royal Pacific Resources, Inc. acquired the assets of Great Western Parks LLC, including the Crossroads Convenience Center LLC., pursuant to a Share Exchange Agreement that resulted in our assuming control and changing the corporate name to Great American Family Parks, Inc. The acquisition was accounted for as a reverse acquisition in which Great Western Parks was considered to be the acquirer of Royal Pacific Resources for reporting purposes. Our common stock outstanding increased from 2,533,000 to 29,600,000 as a result of the acquisition. On June 11, 2008 the Company changed its name from Great American Family Parks, Inc. to Parks! America, Inc.


The Company owns and operates through wholly-owned subsidiaries two regional theme parks and is in the business of acquiring, developing and operating local and regional theme parks and attractions in the United States. Our wholly-owned subsidiaries are Wild Animal, Inc., a Missouri corporation (“Wild Animal - Missouri”) and Wild Animal Safari, Inc. a Georgia corporation (“Wild Animal - Georgia”). Wild Animal - Georgia owns and operates the Wild Animal Safari theme park in Pine Mountain, Georgia (the “Georgia Park”). Wild Animal - Missouri owns and operates the Wild Animal Safari theme park located in Strafford, Missouri (the “Missouri Park”).


The Parks are open year round but experience increased seasonal attendance during the months of April through August.


Important factors that could cause actual results to differ materially from those in the forward-looking statements include  accidents occurring at our parks, competition from other parks, weather conditions during our primary tourist season, the price of animal feed, the price of gasoline, changes in consumer spending patterns and general economic conditions.  


On June 13, 2005, the Company acquired the Georgia Park and on March 5, 2008, the Company acquired the Missouri Park.


2. SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation: Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. We believe that the disclosures are adequate to make the financial information presented not misleading. These condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended September 30, 2012. All adjustments were of a normal recurring nature unless otherwise disclosed. In the opinion of management, all adjustments necessary for a fair statement of the results of operations for the interim period have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year.


Accounting Method: The Company recognizes income and expenses based on the accrual method of accounting.


Reclassifications: Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements.


Basic and Diluted Net Income (loss) Per Share: Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise any common share rights unless the exercise becomes anti-dilutive and then only the basic per share amounts are shown in the report.


Basic and diluted net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding in each period.


Dividend Policy: The Company has not yet adopted a policy regarding payment of dividends.



8




PARKS! AMERICA, INC. and SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 30, 2012


Trade Accounts Receivable: The theme parks are a cash business therefore there are typically no receivables on the books of the Company.  As of December 30, 2012 and September 30, 2012, respectively, the Company had no outstanding receivables.  


Revenue Recognition: The major source of income is received from theme park admissions. Theme park revenues from admission fees are recognized upon receipt of the cash at the time of our customers’ visit to the parks. No theme park ticket sales are made in advance. Short term seasonal passes are sold primarily during the summer seasons and are negligible to our results of operations and are not material. The Company is currently developing a new product line of selling surplus animals created from the natural breeding process that occurs within the parks. All sales will be reported as a separate line item.


Advertising and Market Development: The Company expenses advertising and marketing costs as incurred.


Income Taxes: The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of the assets and liabilities and are measured using the enacted tax rates and laws is recorded, when it is more likely than not, that such tax benefits will not be realized.


Financial and Concentrations Risk: The Company does not have any concentration or related financial credit risks except for. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits.


Principles of Consolidation: The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries (Wild Animal-Georgia and Wild Animal-Missouri). All material inter-company accounts and transactions have been eliminated in consolidation.


Fiscal Year End:  During 2011, the Company changed its fiscal year-end from December 31 to September 30, and changed its quarterly close dates to the last Sunday that falls at the end of each reporting period. For the quarter ended December 31, 2012 the Sunday closest to the end of the reporting period was December 30, 2012. This decision was made to align the Company’s fiscal periods more closely with the seasonality of its business. The high season typically ends after the Labor Day holiday weekend. The period from October through early March is geared towards maintenance and preparation for the next busy season which typically begins at Spring Break and runs through Labor Day.


Property and Equipment: Property and equipment are stated at cost. Depreciation is computed on the straight line method over the estimated useful lives of the assets, which range from five to thirty nine years. A summary is included below.


 

 

December 30, 2012

 

September 30, 2012

 

Depreciable Lives

Land

$

2,507,180

$

2,507,180

 

none

Buildings

 

2,972,368

 

2,952,983

 

40 years

Facilities and Improvements & Equipment

 

767,644

 

754,312

 

5 - 15 years

Furniture & Fixtures

 

75,189

 

75,189

 

7 years

Ground Improvements

 

751,149

 

751,149

 

15 years

Park animals

 

594,258

 

589,234

 

5 - 10 years

Rides & entertainment

 

22,000

 

22,000

 

7 years

Vehicles

 

272,620

 

291,429

 

5 years

       Sub-total

 

7,962,408

 

7,943,476

 

 

Accumulated Depreciation

 

(1,798,089)

 

(1,746,631)

 

 

Total Net Assets

$

6,164,319

$

6,196,845

 

 


Inventory: Inventory consists of park supplies, and is stated at the lower of cost or market. Cost is determined on the first-in, first-out method. Inventories are reviewed and reconciled annually, because inventory levels turn over rapidly.


Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.



9




PARKS! AMERICA, INC. and SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 30, 2012


2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


Other Intangible assets: Other intangible assets include franchising fees, loan fees, payroll software, and they are reported at cost. Franchising and loan fees are amortized over a period of 60 months and payroll software over a period of 36 months. The Company made initial payments of $4,250 in September 2012 and additional payments of $26,562 during the three months ended December 30, 2012 towards its refinancing of all outstanding debt. See Footnote 10 - “SUBSEQUENT EVENTS” for more information.


Impairment of Long-Lived Assets: The Company reviews its major assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an asset is considered impaired, then impairment will be recognized in an amount determined by the excess of the carrying amount of the asset over its fair value.


Financial Instruments: The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short-term maturities. Securities that are publicly traded are valued at their fair market value based as of the balance sheet date presented.


Uncertainties: The accompanying financial statements have been prepared on a going concern basis. The ability of the Company to continue as a going concern during the next twelve months depends on the ability of the Company to generate revenues from operations, to maintain its existing sources of capital and to obtain refinancing on existing debt maturities or obtain new sources of financing sufficient to sustain operations. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


Stock Based Compensation: Prior to January 1, 2006 the company accounted for stock based compensation under recognition and measurement principles of ASC 718 and as permitted under APB Opinion No. 25, and related interpretations. Effective January 1, 2006 the company adopted ASC 718 using the modified prospective method which recognizes compensation costs on a straight-line basis over the requisite service period of the ASC 718 requires that cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized for options exercised be classified as cash inflows from financing activities and cash outflows from operating activities. The company also applies ASC 718 and EITF No. 96-18 stock based compensation to non-employees. No activity has occurred in relation to stock options during any period presented. The Company awards shares to its Board of Directors for service on the Board. The shares issued to the Board are “restricted” and are not to be re-sold unless an exemption is available, such as the exemption afforded by Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The Company recognizes the expense based on the fair market value at time of the grant. Directors are granted 25,000 shares a year for each year of service in December.


Recent Accounting Pronouncements: In May 2009, the FASB issued ASC 855-10 entitled “Subsequent Events”. Companies are now required to disclose the date through which subsequent events have been evaluated by management. Public entities (as defined) must conduct the evaluation as of the date the financial statements are issued, and provide disclosure that such date was used for this evaluation. ASC 855-10 provides that financial statements are considered “issued” when they are widely distributed for general use and reliance in a form and format that complies with GAAP. ASC 855-10 is effective for interim and annual periods ending after June 15, 2009 and must be applied prospectively. The adoption of ASC 855-10 during the quarter ended September 30, 2009 did not have a significant effect on the Company’s financial statements as of that date or for the quarter or year-to-date period then ended.


In June 2009, the FASB issued ASC 105-10, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. ASC 105-10 establishes the Codification as the sole source of authoritative accounting principles recognized by the FASB to be applied by all nongovernmental entities in the preparation of financial statements in conformity with GAAP. ASC 105-10 was prospectively effective for financial statements issued for fiscal years ending on or after September 15, 2009 and interim periods within those fiscal years. The Codification did not change GAAP, however, it did change the way GAAP is organized and presented.


As a result, these changes impact how companies reference GAAP in their financial statements and in their significant accounting policies. The Company implemented the Codification in this Report by providing references to the Codification topics alongside references to the corresponding standards. With the exception of the pronouncements noted above, no other accounting standards or interpretations issued or recently adopted are expected to have a material impact on the Company’s financial position, operations or cash flows.



10




PARKS! AMERICA, INC. and SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 30, 2012


3. LONG-TERM DEBT


On March 10, 2011, the Company refinanced its Georgia Park mortgage with Commercial Bank and Trust, a division of Synovus Bank (the “New Loan”). The New Loan was guaranteed by the Company, bears interest at a rate of 6.5% per annum, is payable in monthly payments of $18,049 based on a fourteen year amortization and has a maturity date of May 10, 2014. It required a loan fee of $2,500. The new loan is secured by the Georgia Park land, buildings and improvements and most of the Park’s assets.


Subsequent to the period covered by this report, on January 9, 2013 the Company completed a refinancing transaction (the “Refinancing Loan”) with Commercial Bank & Trust Co. as lender in the principal amount of $3,752,000. For more information regarding the Refinancing Loan see Note 10 - “SUBSEQUENT EVENTS” herein.


 

 

December 30,

2012

 

September 30,

2012

The Commercial Bank and Trust of Troup County original loan was repaid in monthly installments of $19,250 based on a twenty year amortization schedule. The interest rate on the original loan was 7.75% for the first five years. The original loan matured on November 17, 2010, but terms continued on a month to month basis until March 2011. The new note requires monthly payments of $18,048.55 based on a 14 year amortization. The loan has a fixed interest rate of 6.5%, and a balloon payment due in June 2014. The loan is secured by a first priority security agreement and a first priority security deed on the assets of the Georgia Park.

$

1,808,940

$

1,843,278

 

 

 

 

 

In addition, Wild Animal Safari, Inc. maintains several lines of credit loans from Commercial Bank & Trust Company of Troup County (CB&T) for working capital purposes which total $600,000. These lines of credit (“LOCs”) are renewable annually, subject to the satisfactory performance by the Georgia Park assets. The LOCs were not used as of September 30, 2012 and were drawn down to $319,397 as of December 30, 2012, respectively. All advances are recorded as current liabilities. The LOC interest rates are tied to prime but have a minimum rate of 6% for $350,000 and 5.5% for the remaining balance of $250,000.

 

 

 

 

 

 

 

 

 

On March 5, 2008 the Company’s wholly owned subsidiary Wild Animal, Inc. issued a note payable to Oak Oak, Inc. in the amount of $1,750,000 for debt incurred in the purchase of the Wild Animal theme park. The note bears interest at 8% and is payable in 36 monthly installments of $12,841, and a final balloon payment at the end of the 3 rd year. In March, 2011Wild Animal, Inc. made an additional one-time lump sum payment of $50,000 that allowed it to extend the loan for an additional 2years on the same terms. The note was extended and has a final balloon payment due in full on the 60th payment in March 2013.

 

1,611,408

 

1,617,622

 

 

 

 

 

On March 5, 2008 the Company obtained a loan from Commercial Bank & Trust in the amount of $500,000 to improve and upgrade facilities of the Missouri Park. This loan bears interest at a rate of 7.25% and is payable in 60 monthly payments of $9,986.

 

29,610

 

58,538

 

 

 

 

 

Total Debt

 

3,449,958

 

3,519,438

Less current portion of long-term debt

 

(1,738,793)

 

(1,773,935)

Long-term Debt

$

1,711,165

$

1,745,503




11




PARKS! AMERICA, INC. and SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 30, 2012


3. LONG-TERM DEBT (continued)


At December 30, 2012 the scheduled future principal maturities for all notes are as follows:


Period Ending 12/30/2012

 

 

2012

$

1,738,793

2013

 

1,711,165

2014

 

0

2015

 

0

2016

 

0

thereafter

 

0

 

 

3,449,958

Less:  current portion

 

(1,738,793)

Long-term portion

$

1,711,165


4. LINES OF CREDIT


Wild Animal Safari, Inc. maintains several lines of credit loans from Commercial Bank & Trust Company of Troup County (“CB&T”) for working capital purposes which total $600,000. These lines of credit (“LOCs”) are renewable annually, subject to the satisfactory performance by the Georgia Park assets. The LOCs were not used as of September 30, 2012 and were drawn down to $319,397 as of December 30, 2012, respectively. All advances are recorded as current liabilities. The LOC interest rates are tied to prime but have a minimum rate of 6% for $350,000 and 5.5% for the remaining balance of $250,000.


Subsequent to the period covered by this report, on January 9, 2013 the Company completed a $3,752,000 loan transaction, the proceeds of which were used in part to refinance the Company’s outstanding debt. As a result, the Company’s lines of credits were reduced to a maximum available line of $350,000. For more information regarding the refinancing see Note 3-“LONG TERM DEBT” and Note 10 “-SUBSEQUENT EVENTS” herein.


5. STOCKHOLDERS’ EQUITY


As policy, capital stock shares issued for service to the Company are valued based on market price on the date of issuance. During October 2012, the Company awarded 150,000 shares to six directors for their service on the Board of Directors at a fair market value of $0.01 per share or $1,500. This amount was reported as an expense to operations in 2012.


Officer, directors and their controlled entities own approximately 43% of the outstanding common stock of the Company as of December 30, 2012.


6. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES


Employment Agreements: During the second quarter of 2009, the Board approved separate employment agreements with three officers which provided for annual salaries in the aggregate of $195,000, as compensation for the part-time employment of the officers retroactive to June 1, 2009 for a five-year term.




12




PARKS! AMERICA, INC. and SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 30, 2012


6. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (continued)


Employment Agreements:


Three of four previous employment agreements signed in April 2008 were terminated. The one remaining employment contract from April 2008 is for a full time officer and he receives $120,000 pursuant to his continuing employment agreement.


Some of the employment agreements provide for additional severance compensation for the term of the contract if: (i) the agreement is terminated by the Company without cause (as defined therein) or (ii) terminated by the executive following a change in control (as defined therein). These agreements also entitle the officers to participate in stock option plans to be set up. The additional severance compensation totals $615,000.


On December 16, 2010 the Board of Directors terminated Tristan Pico as Chief Executive Officer and Secretary of the Company. Mr. Pico subsequently resigned from the Company’s Board of Directors in July, 2012.


The salaries of all officers are reviewed annually and no changes were made in 2012. On January 27, 2011 the Company announced the following actions concerning the Company’s executive officers, effective immediately: Dale Van Voorhis was appointed Chief Executive Officer of the Company; James R. Meikle was appointed Chief Operating Officer of the Company and Jeff Lococo was appointed Secretary of the Company


7. INCOME TAXES


For the three month period ended December 30, 2012, the Company has reported a loss of $212,435.  The current loss will be added to the Company’s net operating loss carryforward. The Company has fully reserved for the net deferred tax asset generated by the cumulative net operating losses. The cumulative net operating loss carry-forward is approximately $4,409,000 at December 30, 2012 and will begin to expire in the year 2026.


The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is $1,499,000; however this entire potential asset is reserved as of December 30, 2012. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $4,409,000 for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.


8. COMMITMENTS AND CONTINGENCIES


On May 16, 2011 the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (“USDA APHIS”) issued a citation to the Company alleging violations of certain USDA APHIS regulations and assessed a penalty in the amount of $76,857. On July 8, 2011 the Company submitted a reply to the USDA APHIS citation which contained, among other things; mitigating factors which the Company believed should be considered in determining the amount of the fine. As of July 1, 2012, USDA APHIS responded to the Company with a reduced assessment of $11,170. The Company reduced its reserve by $65,687 to reflect this revised assessment during the second quarter of 2012. The Company also addressed the compliance issues raised in the citation and is implementing new operational controls to address these matters going forward.




13




PARKS! AMERICA, INC. and SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 30, 2012


9. CHANGE IN FISCAL YEAR END


During 2011, the Company changed its fiscal year-end from December 31 to September 30, and its quarterly close dates to the last Sunday that falls at the end of each reporting period. For the quarter ended December 31, 2012, the closest Sunday to the end of the reporting period was Sunday, December 30, 2012.  This decision was made to align the Company’s fiscal periods more closely with the seasonality of its business.  The high season typically ends after the Labor Day holiday weekend. The period from October through early March is geared towards maintenance and preparation for the next busy season which typically begins at Spring Break and runs through Labor Day.


10. SUBSEQUENT EVENTS


Subsequent to the period covered by this report, on January 9, 2013 the Company completed a refinancing transaction (the “Refinancing Loan”) with Commercial Bank & Trust Co. as lender. The Refinancing Loan was for a principal amount of $3,752,000 and has a twenty year term. The Refinancing Loan bears interest at the rate of Prime Rate plus 2.50% (currently 5.75%) during the first five years of the Loan term. Thereafter, the interest rate will be re-priced every five years based on the then-Prime Rate plus 2.50%. During the first four months following the closing of the Refinancing Loan the Company may make interest-only payments.  The estimated full monthly payment will be $26,112 during the first five years of the Loan term. During the past year, the Company’s mortgages required total monthly payments of $40,876 (annual payments totaling $490,512) as compared to the new estimated annual payments of $313,344. The Refinancing Loan will result in lower annual debt service payments of $177,168. The closing costs for the Refinancing Loan were approximately $150,000 and were funded from the Loan proceeds at closing. The Company used the proceeds from the Refinancing Loan to pay off all of its then outstanding debt (including the seller financing from the purchase of the Missouri Park) and will use proceeds to fund approximately $200,000 of new construction and renovations at the Parks.


During 2012, the Company’s mortgages required total monthly payments of $40,876 (annual payments totaling $490,512) as compared to the new estimated annual payments of $313,344, or $26,112 monthly. The Company anticipates that the Refinancing Loan will reduce the Company’s total debt service payments by $177,168 annually.


Subsequent to the period covered by this report. in January of 2013 the board of directors of the Company approved the offer of two members of the Company’s board of directors to loan the Company up to an additional $150,000 on the same terms and conditions as the Refinancing Loan. As of the date of this report, those loan offers have not closed.


In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 30, 2012 to the date these financial statements were issued, and have determined that it does not have any material subsequent events to disclose in these consolidated financial statements other than the events described above.




14



 

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS


Management’s discussion and analysis of results of operations and financial condition (“MD&A”) is a supplement to the accompanying consolidated financial statements and provides additional information on the Company’s businesses, current developments, financial condition, cash flows and results of operations. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this report and with our annual report on Form 10-K for the period ended September 30, 2012.


Forward-Looking Statements


Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, exploration strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. For example, assumptions that could cause actual results to vary materially from future results include, but are not limited to: competition from other parks, weather conditions during our primary tourist season, the price of animal feed and the price of gasoline. In addition, factors that might cause or contribute to our results differing materially from forward looking statements  include, but are not limited to, those discussed herein as well as in the “RISK FACTORS” section herein. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.


Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.


Overview


Through our wholly-owned subsidiaries, we own and operate two regional theme parks and are in the business of acquiring, developing and operating local and regional theme parks and attractions in the United States. Our wholly-owned subsidiaries are Wild Animal, Inc., a Missouri corporation (“Wild Animal - Missouri”) and Wild Animal Safari, Inc. a Georgia corporation (“Wild Animal – Georgia”). Wild Animal-Georgia owns and operates the Wild Animal Safari theme park in Pine Mountain, Georgia (the “Georgia Park”). Wild Animal - Missouri owns and operates the Wild Animal Safari theme park located in Strafford, Missouri (the “Missouri Park”).


Our goal is to build a family of theme parks primarily through acquisitions of small, local and regional, privately-owned existing parks and to develop a series of compatible, themed attractions. The Company also may pursue contract management opportunities for themed attractions owned by third parties.


Our philosophy is, if possible, to acquire existing amusement park properties with the following primary criteria in mind:


·

Properties that have an operating history;


·

Properties where our management team believes the potential exists to increase profits and operating efficiencies; and


·

Properties where there is additional, underutilized land upon which to expand operations.


We believe that acquisitions should not unnecessarily encumber the Company with debt that cannot be justified by current operations. By using a combination of equity, debt and other financing options, we intend to carefully monitor shareholder value in conjunction with our pursuit of growth.


As we look at our operations for the period ended December 30, 2012, our principal concern is the Missouri Park which continues to have improving, but unsatisfactory operating results. We increased net revenue at the Missouri Park by 4% to $102,021 for the three months ended December 30, 2012 versus the same period last year. The Missouri Park’s operating margin was a loss of $90,552 as compared to an operating loss of $41,333 for the same period last year.



15




Since the Company’s acquisition of the Missouri Park in March, 2008 we have worked to upgrade the Park’s physical facilities and dramatically improve its food service. However, we believe that years of operation under the prior owners resulted in negative preconceptions about the condition of the Park, and we continue to work bring the public’s perception of the Park in line with its current condition and level of service. We expected this effort would take time, but that it would yield favorable results. We will continue to focus our efforts to promote the Missouri Park and make such improvements as our capital budget allows.


Our current size and operating model leaves us little room for mistakes. Our highest priority is to continue to improve the Missouri Park’s operating profit. Any future capital raised by the Company is likely to result in dilution to existing stockholders. It is possible that cash generated by, or available to, the Company may not be sufficient to fund our capital and liquidity needs for the near-term.


In March of 2011, the Company signed a loan agreement with its primary lending institution which replaced our then-maturing mortgage on the Georgia Park. This loan had a term of three years (based on a 14-year amortization) at an interest rate of 6.5% per annum (down from previous mortgage interest rate of 7.75%).


Subsequent to the period covered by this report, on January 9, 2013, the Company completed a $3,752,000 loan transaction, the proceeds of which were used, in part, to refinance the Company’s outstanding debt. For more information regarding this refinancing see “Subsequent Events” herein.


Results of Operations For the Three Month Period Ended December 30, 2012 as Compared to Three Month Period Ended January 1, 2012


Change in Fiscal Year End: In 2011, the Company changed its fiscal year-end from December 31 to September 30, and its quarterly close dates to the last Sunday falling at the end of each reporting period. For the quarter ending December 31, 2012, the closest Sunday to this date was December 30, 2012 and for the quarter ending December 31, 2011, the closest Sunday to the end of the reporting period was January 1, 2012. This decision was made to align the Company’s fiscal periods more closely with the seasonality of its business. The high season typically ends after the Labor Day holiday weekend. The period from October through early March is geared towards maintenance and preparation for the next busy season which typically begins at Spring Break and runs through Labor Day.


Total Net Revenues


The Company’s total net revenues for the three month period ended December 30, 2012 increased by $62,475, or 12%, to $577,425 versus the three month period ended January 1, 2012. The Georgia Park’s revenue increased by $58,161 as a result of higher park attendance during the three month period ended December 30, 2012 versus the three months ended January 1, 2012. The Missouri Park’s attendance was slightly higher during the three month period ended December 30, 2012 and revenue at Missouri Park increased by $4,314, or 4%, versus the three month period ended January 1, 2012.


The following table breaks down our operations by subsidiary for the three months ended December 30, 2012 and January 1, 2012:


1st Quarter MD&A Table

Georgia Park

Missouri Park

Total

Three Months

12/30/2012

1/1/2012

12/30/2012

1/1/2012

12/30/2012

1/1/2012

Total Net Sales

$475,404

417,243

102,021

97,707

577,425

514,950

Operating Expenses

417,552

351,756

228,366

169,127

645,918

520,883

Operating Income (Loss)

57,852

65,487

(126,345)

(71,420)

(68,493)

(5,933)

Margin %

12%

16%

-124%

-73%

-12%

-1%

Corporate operating expenses

 

 

 

95,264

121,155

Loss from operations

 

 

 

 

(163,757)

(127,088)


Operating Expenses


The first quarter operating margin at the Georgia Park decreased by $7,635 to $57,852 versus the three month period ended January 1, 2012 margin due to higher operating costs. Operating costs at the Georgia Park increased by $65,796 to $417,552, primarily as a result of higher advertising, labor and park maintenance spending this year.  Operating costs at the Missouri Park increased by $59,239 to $228,366 as a result of higher advertising, labor and animal food spending during the most recent quarter.


The operating margin for both Parks decreased by $62,560 to an operating loss of $68,493 during the three month period ended December 30, 2012 versus a loss of $5,933 during the three month period ended January 1, 2012, primarily due to increased spending as discussed herein. The Company’s goal for the Missouri Park is to break even this fiscal year.



16




Corporate Expenses and Other


Corporate spending declined by $25,891 to $95,264 during the three month period ended December 30, 2012, primarily as a result of lower legal and accounting fees and lower insurance costs.


Interest Cost and Other Income


Interest expense during the three month period ended December 30, 2012 was $54,847, a decline of $2,846 as compared with the three month period ended January 1, 2012. This reduction was a result of the Company having lower total outstanding debt.


Net Loss and Loss Per Share


The Company’s net loss increased by $32,202 to a loss of $212,435, or $0.00 per share and fully diluted per share, for the three months ended December 30, 2012 as compared with a loss of $180,233, or $0.00 per share and fully diluted per share, for the three months ended January 1, 2012. The operating margin at both Parks declined as a result of higher total spending of $125,035, which was partially offset by lower Corporate spending of $25,891 during this quarter.


Liquidity and Capital Resources


The Company’s management believes that it has improved its operations to the point that it can now generate enough cash to fund its operations, make its mortgage payments and spend modestly on capital improvements in the near-term. Any slowdown in revenue or unusual capital outlays would require us to seek additional capital.


The Company’s working capital is negative $1.9 million at December 30, 2012 as compared to a negative $1.7 million working capital at September 30, 2012. This decline in working capital reflects the negative cash flow generated during the first three months of the slow season causing the Company to draw on its line of credit to fund its operations. Due to the seasonal nature of our business, we project similar results for the next quarter.


Total debt related to property mortgages and lines of credit (“LOC”), including current maturities, at December 30, 2012 was $3.8 million as compared to $3.5 million at September 30, 2012. The increase in debt was a result of our negative cash flow and our drawing from our LOCs then outstanding during the three month period ended December 30, 2012. The LOC balance at December 30, 2012 and September 30, 2012 was $319,397 and $0 respectively.


At December 30, 2012, the Company had equity of $2.6 million and total debt of $3.9 million (including LOCs) and a debt to equity ratio of 1.53 to 1. The Company’s debt to equity ratio was 1.35 to 1 as of September 30, 2012.


Our principal source of income is from cash sales, which is projected to provide sufficient cash flow to fund operations and service our current debt. During the next twelve months, management will focus on improving the financial condition of the Company.


Subsequent Events


Subsequent to the period covered the period covered by this report, on January 9, 2013 the Company completed a refinancing transaction (the “Refinancing Loan”) with Commercial Bank & Trust Co. as lender. The Refinancing Loan was for a principal amount of $3,752,000 and has a twenty year term. The Refinancing Loan bears interest at a rate of Prime Rate plus 2.50% (currently 5.75%) during the first five years of the Loan term. Thereafter, the interest rate will be re-priced every five years based on the then Prime Rate plus 2.50%. During the first four months following the closing of the Refinancing Loan the Company may make interest-only payments.  The estimated full monthly payment will be $26,112 during the first five years of the Loan term. During the past year, the Company’s mortgages required total monthly payments of $40,876 (annual payments totaling $490,512) as compared to the new estimated annual payments of $313,344. The Refinancing Loan will reduce annual debt service payments by $177,168. The closing costs for the Refinancing Loan were approximately $150,000 and were funded from the Loan proceeds at closing. The Company used the proceeds from the Refinancing Loan to pay off all of its then outstanding debt (including the seller financing from the purchase of the Missouri Park) and will also use proceeds to fund approximately $200,000 of new construction and renovations at the Parks.


Subsequent to the period covered by this report, in January of 2013 the board of directors of the Company approved the offer of two members of the Company’s board of directors to loan the Company up to an additional $150,000 on the same terms and conditions as the Refinancing Loan. As of the date of this report, these loan offers have not closed.




17




Off Balance Sheet Arrangements


We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.


Critical Accounting Policies


Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of any contingent assets and liabilities. On an on-going basis, we evaluate our estimates. We base our estimates on various assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.


An infinite number of variables can be posted that could have an effect on valuation of assets and liabilities. For example, it is assumed that:


·

Revenue and profit growth at our Parks will continue;

·

The existing Park infrastructure will accommodate the additional customers;

·

Cost of improvements and operations will remain a relatively stable budgeted allocation; and

·

Per capita spending by the customers will continue to rise in relation to the rise in capital expenditures;


If any one of these assumptions, or combination of assumptions, proves incorrect, then the values assigned to real estate, per capita revenues, attendance and other variables that have remained consistent over the past two years may not be realized. The same would be true if higher than expected revenue streams occurred.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


N/A


ITEM 4. CONTROLS AND PROCEDURES.


Based on an evaluation conducted by management, of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15(e) they concluded that our disclosure controls and procedures were effective as of December 30, 2012, to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are:


1.

recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms, and


2.

accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.


Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States and includes those policies and procedures that:


(a)

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;


(b)

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the company; and


(c)

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.



18




Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce this risk.


Based on its assessment, management has concluded that the Company's disclosure controls and procedures and internal control over financial reporting are effective.



PART II

ITEM 1. LEGAL PROCEEDINGS


On May 16, 2011, the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (“USDA APHIS”) issued a citation to the Company alleging violations of certain USDA APHIS regulations and assessed a penalty in the amount of $76,857. On July 8, 2011 the Company submitted a reply to the USDA APHIS citation which contained, among other things, mitigating factors which the Company believed should be considered in determining the amount of the fine. As of April 1, 2012, USDA APHIS responded to the Company with a reduced assessment of $11,170. The Company reduced its reserve by $65,687 to reflect this revised assessment. The Company also addressed the compliance issues raised in the citation and is implementing new operational controls to address these matters going forward.


The Company commenced a lawsuit in September, 2009 against a group led by Larry Eastland, a former officer and director of the Company. The litigation was inactive until June 11, 2012 at which time the Company amended its complaint against the Eastland group to, among other things, join as defendants Stanley Harper, LEA Capital Advisors, LLC (an entity controlled by Mr. Eastland) and Computer Contact Service, Inc. (an entity controlled by Mr. Harper) for breaches of contract and fiduciary duty with regards to the Company’s purchase of TempSERV on September 30, 2007 and its subsequent re-conveyance of TempSERV to Computer Contact Service, Inc. as of January 1, 2009. The Company is seeking an indefinite amount of damages. For more information regarding the original litigation, see our annual report on Form 10-K for the year ended December 26, 2010.


ITEM 1A. RISK FACTORS


Risk Factors Relating to Our Business:


Significant Amounts of Additional Financing May Be Necessary For the Implementation of Our Business Plan.


The Company may require additional debt and equity financing to pursue its acquisition strategy. Given its limited operating history, there can be no assurance that we will be successful in obtaining additional financing. Lack of additional funding could force us to curtail substantially our expansion plans. Furthermore, the issuance by us of any additional securities and the exercise of Warrants which might arise under any future fundraising activities undertaken by us would dilute the ownership of existing shareholders and may reduce the price of our common stock.


The Theme Park Industry is Highly Competitive and We May Be Unable to Compete Effectively.


The theme park industry is highly competitive, highly fragmented, rapidly evolving, and subject to technological change and intense marketing by providers with similar products. One of our competitors for attracting general recreation dollars, Callaway Gardens, is located within five miles of our Georgia Park.  Branson, Missouri is located just 45 minutes from our Missouri Park.


Many of our current competitors are significantly larger and have substantially greater market presence as well as greater financial, technical, operational, marketing and other resources and experience than we have. In the event that such a competitor expends significant sales and marketing resources in one or several markets we may not be able to compete successfully in such markets. The Company believes that competition will continue to increase, placing downward pressure on prices. Such pressure could adversely affect our gross margins if we are not able to reduce costs commensurate with such price reductions. In addition, the pace of technological change makes it impossible for us to predict whether we will face new competitors using different technologies to provide the same or similar products offered or proposed to be offered by us. If our competitors were to provide better and more cost effective products, our business could be materially and adversely affected.




19




We Face Strong Competition from Numerous Entertainment Alternatives.


In addition to competing with other themed and amusement parks, our venues compete with other types of recreational venues and entertainment alternatives, including but not limited to movies, sports attractions, vacation travel and video games. There can be no assurance that we will successfully differentiate ourselves from these entertainment alternatives or that consumers will consider our entertainment offerings to be more appealing than those of our competitors. The development of technology-based entertainment has provided families with a wider selection of entertainment alternatives close to or in their homes, including home entertainment units, online gaming, and video game parlors. In addition, traditional theme parks have been able to reduce the cost and increase the variety of their attractions by implementing technologies that cannot be readily incorporated by a wild animal park such as the Georgia Park or Missouri Park.


Our Insurance Coverage May Not Be Adequate To Cover All Possible Losses That We Could Suffer, and Our Insurance Costs May Increase.


Companies engaged in the theme park business may be sued for substantial damages in the event of an actual or alleged accident. An accident occurring at our parks or at competing parks may reduce attendance, increase insurance premiums, and negatively impact our operating results. the Georgia Park contains a drive-through, safari style animal park, and there are inherent risks associated with allowing the public to interact with animals. Although we carry liability insurance to cover this risk, there can be no assurance that our coverage will be adequate to cover liabilities, or that we will be able to afford or obtain adequate coverage should a catastrophic incident occur.


We currently have $6,000,000 of liability insurance.   We will continue to use reasonable commercial efforts to maintain policies of liability, fire and casualty insurance sufficient to provide reasonable coverage for risks arising from accidents, fire, weather, other acts of God, and other potential casualties. There can be no assurance that we will be able to obtain adequate levels of insurance to protect against suits and judgments in connection with accidents or other disasters that may occur in our theme parks.


Our Ownership of Real Property Subjects Us to Environmental Regulation, Which Creates Uncertainty Regarding Future Environmental Expenditures and Liabilities.


We may be required to incur costs to comply with environmental requirements, such as those relating to discharges to air, water and land; the handling and disposal of solid and hazardous waste; and the cleanup of properties affected by hazardous substances. Under these and other environmental requirements we may be required to investigate and clean up hazardous or toxic substances or chemical releases at one of our properties. As an owner or operator, we could also be held responsible to a governmental entity or third party for property damage, personal injury and investigation and cleanup costs incurred by them in connection with any contamination. Environmental laws typically impose cleanup responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the contaminants. The liability under those laws has been interpreted to be joint and several unless the harm is divisible and there is a reasonable basis for allocation of the responsibility. The costs of investigation, remediation or removal of those substances may be substantial, and the presence of those substances, or the failure to remediate a property properly, may impair our ability to use our property. We are not currently aware of any material environmental risks regarding our properties. However, we may be required to incur costs to remediate potential environmental hazards or to mitigate environmental risks in the future.


The Suspension or Termination of Any of our Business Licenses May Have a Negative Impact On Our Business


We maintain a variety of standard business licenses issued by federal, state and city government agencies that are renewable on a periodic basis. We cannot guarantee that we will be successful in renewing all of our licenses on a periodic basis. The suspension, termination or expiration of one or more of these licenses could have a significant adverse affect on our revenues and profits. In addition, any changes to the licensing requirements for any of our licenses could affect our ability to maintain the licenses.


We Are Dependent Upon the Services of Our Executive Officers and Consultants.


Our success is heavily dependent on the continued active participation of our executive officers.  Loss of the services of one or more of these officers could have a material adverse effect upon our business, financial condition or results of operations. In particular, we place substantial reliance upon the efforts and abilities of Dale Van Voorhis, Chairman of the Board of Directors and the Company’s Chief Executive Officer and Jim Meikle, the Company’s Chief Operating Office, President of Wild Animal-Georgia and Wild Animal-Missouri, and a member of the Company’s Board of Directors. The loss of Mr. Van Voorhis or Mr. Meikle's services could have a serious adverse effect on our business, operations, revenues or prospects.



20




Further, our success and achievement of our growth plans depend on our ability to recruit, hire, train and retain other highly qualified technical and managerial personnel. Competition for qualified employees among companies in the theme park industry is intense, and the loss of any such persons, or an inability to attract, retain and motivate any additional highly skilled employees required for the expansion of the Company’s activities, could have a materially adverse effect on the Company. The inability of the Company to attract and retain the necessary personnel and consultants and advisors could have a material adverse effect on the Company’s business, financial condition or results of operations.


Our Common Stock is Subject to the “Penny Stock” Rules of the SEC and the Trading Market in Our Securities is Limited, Which Makes Transactions In Our Stock Cumbersome and May Reduce the Value of an Investment in Our Stock.


The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:


that a broker or dealer approve a person's account for transactions in penny stocks; and


the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock  to be purchased.


In order to approve a person's account for transactions in penny stocks, the broker or dealer must:


obtain financial information and investment experience objectives of the person; and


make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.


The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:


sets forth the basis on which the broker or dealer made the suitability determination; and


that the broker or dealer received a signed, written agreement from the investor prior to the transaction.


Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.


Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.


We Do Not Expect to Pay Dividends for Some Time, if At All.


No cash dividends have been paid on our common stock. We expect that any income received from operations will be devoted to our future operations and growth. We do not expect to pay cash dividends in the near future. Payment of dividends would depend upon our profitability at the time, cash available for those dividends, and other factors.


Future Capital Needs Could Result in Dilution to Investors; Additional Financing Could be Unavailable or Have Unfavorable Terms.


Our future capital requirements will depend on many factors, including cash flow from operations, progress in our present operations, competing market developments, and our ability to market our products successfully. It may be necessary to raise additional funds through equity or debt financings. Any equity financings could result in dilution to our then-existing stockholders. Sources of debt financing may result in higher interest expense. Any financing, if available, may be on terms unfavorable to us.



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ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


N/A


ITEM 3. DEFAULTS UPON SENIOR SECURITIES.


None.


ITEM 4. MINE SAFETY DISCLOSURES


Not applicable


ITEM 5. OTHER INFORMATION.


None


ITEM 6. EXHIBITS.


Exhibit

Number 

Description of Exhibit 

 

 

31.1

Certification by Chief Executive Officer as required by Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification by Chief Financial Officer as required by Rule 13a-14 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C.§ 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





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.



 

PARKS! AMERICA, INC.

 

 

February 1, 2013

By: /s/ Dale Van Voorhis

Dale Van Voorhis

Chief Executive Officer





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