Attached files
| file | filename |
|---|---|
| EX-31.2 - EXHIBIT 31.2 - PISMO COAST VILLAGE INC | exhibit31_2.htm |
| EX-31.1 - EXHIBIT 31.1 - PISMO COAST VILLAGE INC | exhibit31_1.htm |
| EXCEL - IDEA: XBRL DOCUMENT - PISMO COAST VILLAGE INC | Financial_Report.xls |
| EX-31.3 - EXHIBIT 31.3 - PISMO COAST VILLAGE INC | exhibit31_3.htm |
| EX-32.1 - EXHIBIT 32.1 - PISMO COAST VILLAGE INC | exhibit32_1.htm |
| EX-32.3 - EXHIBIT 32.3 - PISMO COAST VILLAGE INC | exhibit32_3.htm |
| EX-32.2 - EXHIBIT 32.2 - PISMO COAST VILLAGE INC | exhibit32_2.htm |
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 March 31, 2015 | |
| [ ] | 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 incorporation or organization) (IRS Employer ID No.)
165 South Dolliver Street, Pismo Beach, CA 93449
(Address of Principal Executive Offices) (Zip Code)
(805) 773-5649
Registrant’s telephone number, including area code
____________________________________________________________________________________
(Former name, former address and 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 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. YES [X] 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 [X] NO [ ]
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 [ ] Accelerated filer
[ ] Non-accelerated filer [X] Smaller reporting company
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
YES [ ] 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. 1,783
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 Accountant’s Review Report 2 Balance Sheets 3 Statements of Operations and Retained Earnings 4 Statements of Cash Flows 5 Notes to Financial Statements (Unaudited)
The financial information included in Part I of this Form 10-Q has been reviewed by Brown Armstrong Accountancy Corporation, the Company's Certified Public Accountants, and all adjustments and disclosures proposed by said firm have been reflected in the data presented. The information furnished reflects all adjustments, which, in the opinion of management, are necessary to a fair statement of the results for the interim periods.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to anticipated expenses, capital spending and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include, but are not limited to, those relating to competitive industry conditions, California tourism and weather conditions, dependence on existing management, leverage and debt service, the regulation of the recreational vehicle industry, domestic or global economic conditions and changes in federal or state tax laws or the administration of such laws.
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OVERVIEW
The Company continues to promote and depend upon recreational vehicle camping as the primary source of revenue. The rental of campsites to the general public provides income to cover expenses, complete capital improvements, and allow shareholders up to forty-five free nights camping annually. Additional revenues come from RV storage and spotting, RV service and repair, on-site convenience store, and other ancillary activities such as laundromat, arcade, and bike rental.
The Company has been fortunate not to have significant impact due to the recent economy. The RVing public actively seeks accommodations on the Central Coast despite volatile fuel prices and personal financial uncertainties. RVing offers an affordable outdoor recreational experience, and the Company provides quality facilities and services in a highly popular location. Total site occupancy is up 9.5% compared to this time last year due primarily to good weather. Occupancy projections look equal to last year throughout the remainder of the fiscal year. Revenues from ancillary operations such as the General Store, arcade, laundromat, and bike rental are slightly up, with growth expected during Spring Break. The RV Service Department is down 18.3% due to lack of service staff.
RV storage and towing continue to be a primary source of revenue for the Company, and has enjoyed growth of 11.9% for the quarter. RV storage provides numerous benefits to the customer including: no stress of towing, no need to own a tow vehicle, use of RV by multiple family members, and convenience.
Ongoing investment in resort improvements has assured resort guests and shareholders a top quality, up-to-date facility. This quality and pride of ownership was evident when the National Association of RV Parks and Campgrounds Park of the Year was awarded to the resort for 2007-08. In addition, in a national “My Favorite Campground” contest sponsored by Woodalls, Pismo Coast Village was voted as one of the top ten favorite campgrounds for 2011. Also, Pismo Coast Village was one of thirty-four parks nationally to receive an industry rated “A” park from over 30,000 surveys for customer satisfaction in 2014.
The Company’s commitment to quality, value, and enjoyment is underscored by the business’s success due to word of mouth and referrals from guests. In addition, investment for online marketing, ads in the two leading national directories, and trade magazine advertising formulates most of the business-marketing plan.
RESULTS OF OPERATIONS
The Company develops its income from two sources: (a) Resort Operations, consisting of revenues generated from RV site rentals, from RV storage space operations, and from lease revenues from laundry and arcade operations by third party lessees; and (b) Retail Operations, consisting of revenues from General Store operations and from RV parts and service operations.
Income from resort operations for the three-month period ended March 31, 2015, increased $207,355, or 17.9%, above the same period in 2014. This increase in income reflects a $156,995, or 20.2%, increase in site revenue due to paid occupancy increasing 16.1%. Also reflected in this increase is a $42,836, or 11.9%, increase in RV storage activity. Resort Operations Income for the six-months ended March 31, 2015, increased $331,719, or 14.3%, from the same period ended March 31, 2015. This increase is due primarily to an increase of $240,025, or 15.4%, in site revenue as a result of a 10.9% increase in paid site occupancy and a rate increase effective January 1, 2015. RV storage activity contributed to this increase with an 11.9%, or $85,424, increase in revenue.
Seasonal fluctuations within this industry are expected, and management projects that income for the fourth quarter will be approximately 40% of its annual revenue. This approximation is based on historical information.
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Income from retail operations for the three-month period ended March 31, 2015, decreased $13,192, or 5.0%, below the same period in 2014. The General Store revenue was up $28,637, or 23.6%, and RV Service revenue decreased $41,828, or 29.3%, from the previous year. Income from Retail Operations for the six-month period ending March 31, 2015, decreased by $18,657, or 3.5%, below the same period ended March 31, 2014. The General Store was up $32,443, or 13.0%, and RV Service was down $51,100, or 18.3%. This increase in revenue in General Store reflects increased occupancy while the decrease in revenue in RV Service reflects the lack of service staff, which have now been replaced. The RV Service operation is marketed to off-resort customers, and, therefore, is not as impacted by resort occupancy. Management continues to place importance upon ongoing review of retail product mix, attention to service, and staff training. The Company anticipates positive performance in income from retail operations through the remainder of fiscal year 2015.
Operating expenses for the three-month period ending March 31, 2015, increased $89,006, or 8.8%, above the same period ended March 31, 2014. This increase in expenses primarily reflects labor and labor related expenses, landscaping, repairs and maintenance, electricity, and garbage. For the six-month period ending March 31, 2015, operating expenses increased by $130,084, or 6.2%, above the same period in 2014. This increase reflects labor and labor related expenses, travel and training, landscaping, credit card processing, electricity, garbage, television, advertising, and repairs and maintenance. Management continues to review and scrutinize expenses in order to maximize efficiency and profitability. Due to the age of the Resort, the Company is undertaking maintenance activity that is considered necessary in order to continue providing quality facilities and services. Some of these projects include road repair, utility improvements, landscaping, and building repair.
Cost of Goods Sold expenses, as a percentage of retail income for the three-months ended March 31, 2015, are 47.6% compared to 46.0% for the same period in 2014. For the six-months ended March 31, 2015, Cost of Goods Sold expenses were 44.7% compared to 45.5% the previous year. These levels are well within the guidelines established by management for the individual category sales of RV supplies and General Store merchandise.
Interest Expense for the three-months ended March 31, 2015, is $31,937, compared to $39,287 for the same period in 2014. For the six-month period ended March 31, 2015, compared to the same period in 2014, interest expense was $65,015 and $79,582, respectively. This expense reflects financing for the purchase of additional RV storage properties that closed escrow January 11, 2006, April 6, 2006, and March 5, 2008.
Income before provision for income tax for the three-month period ended March 31, 2015, increased by $106,826, reflecting increased income in resort operations compared to the previous year. For the six-months ended March 31, 2015, income before provisions for income tax increased by $192,335, reflecting increased income from resort operations and a decrease in interest expenses. Revenues during this period are directly attributed to and are consistent with seasonal occupancy of a tourist-oriented business.
Upon review of operational expenses, occupancy, and competition, the Board of Directors may approve adjustments to the nightly site rental rates or towing and storage rates. 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 at higher rates. Increases in transportation and fuel costs or sustained recessionary periods could also unfavorably impact future results. However, the Company believes that its financial strength and market presence will enable it to remain extremely competitive. It is anticipated the published rates will continue to market site usage at its highest value and not negatively impact the Company's ability to capture an optimum market share.
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LIQUIDITY
The Company's current cash position as of March 31, 2015, is $2,623,043, which is 8.7% more than the same position in 2014. This increase is primarily due to the Company’s increase in rental deposits and timing of capital expenditures. The cash balance increased $593,949 from fiscal year ended September 30, 2014, due to net cash increase in operating activities and decreased cash used in investing activities. The present level of cash is being maintained in anticipation of large capital expenditures. Management is planning and implementing long-term renovations to the Resort property, which includes redesigning sites and utilities to accommodate the needs of modern recreational vehicles and replacing restroom buildings.
Accounts payable and accrued liabilities increased $53,647 above the same period last year and increased $45,570 since the 2014 fiscal year end, which reflects a timing of capital projects and accrued property taxes. All undisputed payables have been paid in full according to the Company's policy.
The Company has consistently demonstrated an ability to optimize revenues developed from the resort and retail operations during the summer season. Historically the Company, because of its seasonal market, has produced 60% to 65% of its revenue during the third and fourth quarters of the fiscal year, with more than 40% being produced during the fourth quarter. The third and fourth quarters' occupancies are expected to be consistent with that of past years.
CAPITAL RESOURCES AND PLANNED EXPENDITURES
The Company plans capital expenditures of approximately $525,000 in fiscal year 2015 to further enhance the resort facilities and services. These projects include fencing along the resort frontage, road paving, RV storage security, new website, and a new cooling unit for the General Store walk-in refrigerator. 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.
After years with no debt, the Board of Directors approved expansion of the RV storage program and understood this investment would require substantial financing. Management has made it a high priority to effect timely construction and successful marketing in order to maximize return on this investment.
Capital expenditures are consistent with prior years and operations and are expected to provide adequate resources to support the amounts committed to complete the authorized capital projects during the fiscal year. Second 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.
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 and Exchange Commission (SEC).
The public may read and copy any of the materials filed with the SEC 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 SEC.
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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURE 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 March 31, 2015, 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, 2014
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 1934 Act is recorded, processed, summarized, and reported within the time periods specified in the SEC'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 1934 Act 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 1934 Act) during the six-months ended March 31, 2015 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
Not Applicable
ITEM 5.OTHER INFORMATION
Not Applicable
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ITEM 6.EXHIBITS
| Sequential | ||
| Exhibit No. | Description of Exhibit | 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 (Ronald Nunlist, 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 | |
| (Wayne Hardesty, 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 | |
| (Ronald Nunlist, 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 | |
| (Wayne Hardesty, Chief Financial Officer, principal financial officer and principal accounting officer) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PISMO COAST VILLAGE, INC.
(Registrant)
Date: May 14, 2015 Signature: /s/ RONALD NUNLIST Ronald Nunlist, President and Chairman of the Board Date: May 14, 2015 Signature: /s/ WAYNE HARDESTY Wayne Hardesty, V.P. - Finance/Chief Financial Officer (principal financial officer and principal accounting officer) Date: May 14, 2015 Signature: /s/ JAY JAMISON Jay Jamison, General Manager/Chief Executive Officer (principal executive officer)
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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors
Pismo Coast Village, Inc.
165 South Dolliver Street
Pismo Beach, California 93449
We have reviewed the accompanying balance sheets of Pismo Coast Village, Inc. (Company) as of March 31, 2015 and 2014 and the related statements of operations and retained earnings and cash flows for the three and six-month periods ended March 31, 2015 and 2014. 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.
We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the balance sheet of the Company as of September 30, 2014, and the related statements of operations and retained earnings, and cash flow for the year then ended, and in our report dated November 7, 2014, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of September 30, 2014, is fairly stated, in all material respects.
BROWN ARMSTRONG ACCOUNTANCY CORPORATION
Bakersfield, California
May 14, 2015
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PISMO COAST VILLAGE, INC.
BALANCE SHEETS
MARCH 31, 2015 AND 2014 AND SEPTEMBER 30, 2014
March 31, September 30, March 31, 2015 2014 2014 (Unaudited) (Audited) (Unaudited)
ASSETS Current Assets Cash and cash equivalents $ 2,623,043 $ 2,029,094 $ 2,412,441 Accounts receivable 21,800 17,990 15,202 Inventory 204,520 177,409 181,946 Current deferred taxes 90,100 92,600 81,400 Prepaid income taxes 34,500 - 126,100 Prepaid expenses 40,439 53,021 79,521 Total current assets 3,014,402 2,370,114 2,896,610 Pismo Coast Village Recreational Vehicle Resort and Related Assets – Net of accumulated depreciation 14,587,941 14,657,454 14,311,207 Other Assets 7,183 8,347 16,078 Total Assets $ 17,609,526 $ 17,035,915 $ 17,223,895 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable and accrued expenses $ 249,485 $ 203,915 $ 195,838 Accrued salaries and vacation 71,207 245,106 66,398 Rental deposits 1,903,863 1,133,015 1,693,041 Income taxes payable - 139,100 - Current portion of long-term debt 97,237 100,492 208,024 Total current liabilities 2,321,792 1,821,628 2,163,301 Long-Term Liabilities Long-term deferred taxes 893,800 918,400 877,700 N/P Donahue Trans 46,129 55,740 65,053 N/P RLC Funding 33,717 38,994 - N/P Heritage Oaks Bank 2,293,965 2,322,425 2,851,839 Total Liabilities 5,589,403 5,157,187 5,957,893 Stockholders’ Equity Common stock – no par value, 1,800 shares Issued, 1,783 shares outstanding at March 31, 2015 and 2014, respectively 5,594,369 5,594,369 5,594,369 Retained earnings 6,425,754 6,284,359 5,671,633 Total stockholders’ equity 12,020,123 11,878,728 11,266,002 Total Liabilities and Stockholders’ Equity $ 17,609,526 $ 17,035,915 $ 17,223,895
The accompanying notes are an integral party of these financial statements.
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PISMO COAST VILLAGE, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
THREE AND SIX MONTHS ENDED MARCH 31, 2015 AND 2014
Three Months Six Months Ended March 31, Ended March 31, 2015 2014 2015 2014
Income Resort operations $ 1,368,760 $ 1,161,405 $ 2,657,074 $ 2,325,355 Retail operations 250,758 263,950 509,667 528,324 Total income 1,619,518 1,425,355 3,166,741 2,853,679 Cost and Expenses Operating expenses 1,095,234 1,006,228 2,241,535 2,111,451 Cost of goods sold 119,334 121,486 228,036 240,360 Depreciation and amortization 99,490 91,506 199,003 181,852 Total cost and expenses 1,314,058 1,219,220 2,668,574 2,533,663 Income from Operations 305,460 206,135 498,167 320,016 Other Income (Expense) Interest and dividend income 1,139 988 1,643 2,026 Interest expense (31,937) (39,287) (65,015) (79,582) Total other income (expense) (30,798) (38,299) (63,372) (77,556) Income Before Provision for Income Tax 274,662 167,836 434,795 242,460 Income Tax Expense (benefit) 221,900 68,000 293,400 106,100 Net Income $ 52,762 $ 99,836 141,395 136,360 Retained Earnings – Beginning of Period 6,284,359 5,630,723 Redemption of Stock - (95,450) Retained Earnings – End of Period $ 6,425,754 $ 5,671,633 Net Income Per Share $ 29.59 $ 55.99 $ 79.30 $ 76.31
The accompanying notes are an integral part of these financial statements.
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PISMO COAST VILLAGE, INC.
STATEMENTS OF CASH FLOWS (Unaudited)
SIX MONTHS ENDED MARCH 31, 2015 AND 2014
| 2015 | 2014 | ||||||||||
| Cash Flows From Operating Activities | |||||||||||
| Net Income | $ | 141,395 | $ | 136,360 | |||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | $ | 199,003 | $ | 181,852 | |||||||
| (Increase) Decrease in accounts receivable | (3,810) | 12,183 | |||||||||
| (Increase) in inventory | (27,111) | (20,093) | |||||||||
| Decrease in current deferred taxes | 2,500 | 1,400 | |||||||||
| (Increase) in prepaid income taxes | (34,500) | (126,100) | |||||||||
| Increase (Decrease) in prepaid expenses | 12,582 | (31,385) | |||||||||
| Decrease in other assets | 1,164 | 2,196 | |||||||||
| Increase in accounts payable and accrued expenses | 45,571 | 8,879 | |||||||||
| (Decrease) in accrued salaries and vacation | (173,899) | (147,963) | |||||||||
| Increase in rental deposits | 770,848 | 758,812 | |||||||||
| Income taxes payable | (139,100) | (121,100) | |||||||||
| (Decrease) in deferred taxes | (24,600) | (16,200) | |||||||||
| Total adjustments | 628,648 | 502,481 | |||||||||
| Net cash provided by operating activities | 770,043 | 638,841 | |||||||||
| Cash Flows Used in Investing Activities | |||||||||||
| Capital expenditures | (129,490) | (123,495) | |||||||||
| Net cash used in investing activities | (129,490) | (123,495) | |||||||||
| Cash Flows from Financing Activities | |||||||||||
| Redemption of Stock | - | (108,000) | |||||||||
| Principal payments on notes payable | (46,604) | (100,744) | |||||||||
| Net cash (used in) financing activities | (46,604) | (208,744) | |||||||||
| Net increase in cash and cash equivalents | 593,949 | 306,602 | |||||||||
| Cash and Cash Equivalents – Beginning of Period | 2,029,094 | 2,105,839 | |||||||||
| Cash and Cash Equivalents – End of Period | $ | 2,623,043 | $ | 2,412,441 | |||||||
| Schedule of Payments of Interest and Taxes | |||||||||||
| Payments for interest | $ | 65,015 | $ | 79,582 | |||||||
| Payments for income tax | $ | 350,000 | $ | 247,000 | |||||||
The accompanying notes are an integral part of these financial statements.
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PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2015 AND 2014 (Unaudited) AND SEPTEMBER 30, 2014 (Audited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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 repair shop.
Depreciation and Amortization
Depreciation of property and equipment is computed using an accelerated 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 resort improvements | 5 to 40 years |
| Furniture, fixtures, equipment and leasehold improvements | 5 to 31.5 years |
| Transportation equipment | 5 to 10 years |
Earnings (Loss) Per Share
The earnings (loss) per share reported on the financial statements are based on the 1,783 shares outstanding.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments, including certificates of deposit with maturities of three months or less when purchased to be cash equivalents.
Concentration of Credit Risk
At March 31, 2015, the Company had cash deposits in excess of the $250,000 federally insured limit with Heritage Oaks Bank of $741,142; 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. Heritage Oaks Bank is a member of CDARS, the Certificate of Deposit Account Registry Service. Large deposits are divided into smaller amounts and placed with other FDIC insured banks, which are also members of the CDARS network. Then, those member banks issued CDs in amounts under $250,000, so that the entire investment is eligible for FDIC insurance.
13
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2015 AND 2014 (Unaudited) AND SEPTEMBER 30, 2014 (Audited)
PAGE 2
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
The Company uses the asset-liability method of computing deferred taxes in accordance with Accounting Standards Codification (ASC) Income Taxes topic 740. 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.
ASC 740 also requires, among other things, the recognition and measurement of uncertain tax positions based on a “more likely than not” (likelihood greater than 50%) approach. As of March 31, 2015, 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, 2011 and by the California Franchise Tax Board for fiscal years ending on or after September 30, 2010.
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.
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.
Advertising
The Company follows the policy of charging the costs of non-direct advertising as incurred. Advertising expense was $18,166 and $13,966 for the six months ended March 31, 2015 and 2014, respectively. There was no advertising expense capitalized in prepaid expense.
Subsequent Events
Subsequent events have been evaluated May 14, 2015, which is the date the financial statements were available to be issued.
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PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2015 AND 2014 (Unaudited) AND SEPTEMBER 30, 2014 (Audited)
PAGE 3
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements
The Company has reviewed all recently issued accounting pronouncements and does not believe the adoption of such pronouncements have an impact on the Company’s financial condition or results of their operations. Various accounting standards and interpretations were issued with effective dates subsequent to March 31, 2015. The Company has evaluated the recently issued accounting pronouncements that are effective in the current period and believes that none of them will have a material effect on the Company’s financial position, results of operations or cash flows when adopted.
NOTE 2 - PISMO COAST VILLAGE RECREATIONAL VEHICLE RESORT AND RELATED ASSETS
At March 31, 2015, September 30, 2014, and March 31, 2014, property and equipment included the following:
| March 31, |
| September 30, |
| March 31, | ||||
|
| 2015 |
| 2014 |
| 2014 | |||
| Land | $ | 9,957,263 | $ | 9,957,263 | $ | 9,957,263 | ||
| Building and resort improvements | 11,073,714 | 11,073,714 | 10,691,168 | |||||
| Furniture, fixtures, equipment and leasehold improvements | 600,764 | 534,546 | 500,931 | |||||
| Transportation equipment | 484,607 | 484,607 | 480,881 | |||||
| Construction in progress | 164,454 | 102,346 | 145,068 | |||||
| 22,280,802 | 22,152,476 | 21,775,311 | ||||||
| Less: accumulated depreciation | (7,692,861) | (7,495,022) | (7,464,104) | |||||
| $ | 14,587,941 | $ | 14,657,454 | $ | 14,311,207 | |||
NOTE 3 - LINE OF CREDIT
The Company has a revolving line of credit with Heritage Oaks Bank for $500,000, which expires March 22, 2016. There were no outstanding amounts on the line of credit as of March 31, 2015 and 2014 and September 30, 2014.
15
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2015 AND 2014 (Unaudited) AND SEPTEMBER 30, 2014 (Audited)
PAGE 4
NOTE 4 - NOTE PAYABLE
The Company secured permanent financing on the purchase of storage lot land in Arroyo Grande, California, with Heritage Oaks Bank. The loan originated on May 8, 2008. The total loan currently outstanding is $2,362,069 and financed over a period of ten years at a variable interest rate currently at 5.0%. The payments are currently $15,416 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 $18,531 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. The Company secured a lease, which has been classified as a capital lease and included with notes payable. The capital lease is with Donahue Transportation Service Corp on a 2013 Hino Truck. The lease originated on May 10, 2012. The total balance currently outstanding is $46,522 and is financed over a period of seven years at an interest rate of 4.751%. The payments are currently $1,046 per month interest and principal. The Company secured a lease, which has been classified as a capital lease and included with notes payable. The capital lease is with RLC Funding on a security system for Lot-K. The lease originated on November 8, 2013. The total balance currently outstanding is $43,928 and is financed over a period of five years at an interest rate of 13.537%. The payments are currently $1,295 per month interest and principal.
At March 31, 2015, future minimum payments are as follows:
| For the Periods Ending March 31, | ||
| 2015 | $ | 97,237 |
| 2016 | 104,857 | |
| 2017 | 2,247,053 | |
| 2018 | 20,860 | |
| 2019 | 1,041 | |
| Thereafter | - | |
| Total | $ | 2,471,048 |
NOTE 5 - COMMON STOCK
Each share of stock is intended to provide the shareholder with free use of the resort for a maximum of 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.
16
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2015 AND 2014 (Unaudited) AND SEPTEMBER 30, 2014 (Audited)
PAGE 5
NOTE 6 - INCOME TAXES
The provision for income taxes is as follows:
| March 31, |
| March 31, | |||
|
| 2015 |
| 2014 | ||
| Income tax expense | $ | 293,400 | $ | 106,100 | |
The Company uses the asset-liability method of computing deferred taxes in accordance with FASB Accounting Standards Codification (ASC) Topic 740. 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 federal tax benefit, and nondeductible variable costs of shareholder usage.
NOTE 7 - OPERATING LEASES
The Company leases a lot in Oceano, California, to use as storage lot 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 $414 per month.
At March 31, 2015, future minimum lease payments to lease equipment are as follows:
| For the Period Ended March 31, | ||
| 2016 | $ | 4,965 |
| 2017 | 2,483 | |
| 2018 | - | |
| 2019 | - | |
| 2020 | - | |
| Thereafter | - | |
| Total | $ | 7,448 |
Rent expense under these agreements was $18,277 and $17,990 for the six-month period ended March 31, 2015 and 2014, 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 Company’s matching portion of the 401(k) safe harbor plan was $30,919 for the six months ended March 31, 2015. The contribution to the pension plan for the six months ended March 31, 2014 was $27,282.
17