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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: September 30, 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: 0-17672

TOWER PARK MARINA INVESTORS, L.P.,

a California Limited Partnership

(Exact name of registrant as specified in its charter)

 

California		95-4137996
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

16633 Ventura Boulevard, 6^th Floor Encino, California91436-1835

(Address of principal executive offices) (Zip Code)

(818) 907-0400

Registrant’s phone number, including area code

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 past 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 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ¨		Accelerated filer  ¨		Non-accelerated filer  ¨		Smaller reporting company:  x
(Do not check if a smaller reporting company)

Indicate by check mark whether 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 Sections 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  ¨

As of September 30, 2015, Tower Park Marina Investors, LP had 4,508 units of limited partnership interest outstanding.

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Table of Contents

TABLE OF CONTENTS

Report on Form 10-Q

For quarter ended September 30, 2015

 

PART I.   FINANCIAL INFORMATION					Page
ITEM 1.		FINANCIAL STATEMENTS
		Balance Sheets as of September 30, 2015 and December 31, 2014			1
		Statements of Operations for the three months ended September 30, 2015 and 2014			2
		Statements of Operations for the nine months ended September 30, 2015 and 2014			3
		Statements of Changes in Partners Equity(Deficit) for the nine months ended September 30, 2015 and year ended December 31, 2014			4
		Statements of Cash Flows for the nine months ended September 30, 2015 and 2014			5
		Notes to Financial Statements			6-17
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			18-20
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			21
ITEM 4.		CONTROLS AND PROCEDURES			21-22
PART II.  OTHER INFORMATION
ITEM 1.		LEGAL PROCEEDINGS			22
ITEM 1A.		RISK FACTORS			22
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			22
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES			22
ITEM 4.		SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS			22
ITEM 5.		OTHER INFORMATION			22
ITEM 6.		EXHIBITS AND REPORTS ON FORM 8-K			23
SIGNATURES					24
CERTIFICATIONS

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

BALANCE SHEETS

ITEM 1.  Financial Statements

 

ASSETS		September 30, 2015				December 31, 2014
		(Unaudited)
Cash and cash equivalents		$	126,000			$	152,000
Accounts receivable net of allowance for doubtful accounts of $29,000 and $31,000 in 2015 and 2014			33,000				25,000
Tower Park Marina, net (Note 2)			45,000				61,000
Other assets (Note 3)			45,000				49,000
TOTAL ASSETS		$	249,000			$	287,000
LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)
Accounts payable and accrued expenses		$	272,000			$	327,000
Deferred gain on sale of Tower Park Marina (Note 2)			323,000				484,000
Deferred rentals			26,000				29,000
Total liabilities			621,000				840,000
Commitments and contingencies (Note 5)			-				-
Partners’ equity (deficit):
Limited partners’ equity, $5,000 per unit, 4,508 units authorized, issued and outstanding			446,000				267,000
Deferred contributions			(27,000	)			(27,000	)
Limited partners’ equity			419,000				240,000
General partners’ deficit			(791,000	)			(793,000	)
Total partners’ deficit			(372,000	)			(553,000	)
TOTAL LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)		$	249,000			$	287,000

 

See accompanying notes to financial statements.

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

STATEMENTS OF OPERATIONS

For the three months ended September 30, 2015 and 2014

(Unaudited)

 

		2015				2014
Revenues:
Slip rental		$	192,000			$	196,000
Dry storage			36,000				35,000
Fuel service			101,000				125,000
Interest and other income			3,000				2,000
Revenues from operations			332,000				358,000
Expenses:
Slip rental			11,000				10,000
Dry storage			3,000				2,000
Fuel service			68,000				89,000
Cost of operations			151,000				146,000
Management fees (Note 4)			17,000				16,000
Depreciation			7,000				7,000
			257,000				270,000
Net income		$	75,000			$	88,000
Allocation of net income
Limited Partners		$	74,000			$	87,000
General Partners			1,000				1,000
		$	75,000			$	88,000
Limited Partners’ net income per unit:		$	16.42			$	19.30
Total units outstanding			4,508				4,508

 

See accompanying notes to financial statements.

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

STATEMENTS OF OPERATIONS

For the nine months ended September 30, 2015 and 2014

(Unaudited)

 

		2015				2014
Revenues:
Slip rental		$	533,000			$	543,000
Dry storage			105,000				101,000
Fuel service			168,000				193,000
Interest and other income			8,000				11,000
Revenues from operations			814,000				848,000
Expenses:
Slip rental			27,000				22,000
Dry storage			6,000				5,000
Fuel service			114,000				143,000
Cost of operations			423,000				430,000
Management fees (Note 4)			43,000				43,000
Depreciation			20,000				23,000
			633,000				666,000
Net income		$	181,000			$	182,000
Allocation of net income
Limited Partners		$	179,000			$	180,000
General Partners			2,000				2,000
		$	181,000			$	182,000
Limited Partners’ net income per unit:		$	39.71			$	39.93
Total units outstanding			4,508				4,508

 

See accompanying notes to financial statements.

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

STATEMENTS OF CHANGES IN PARTNERS’ EQUITY (DEFICIT)

For the nine months ended September 30, 2015 and year ended December 31, 2014

(Unaudited)

 

		General Partners				Limited Partners				Total
Balance at December 31, 2013		$	(794,000	)		$	106,000			$	(688,000	)
Net income			1,000				134,000				135,000
Balance at December 31, 2014			(793,000	)			240,000				(553,000	)
Net income			2,000				179,000				181,000
Balance at September 30, 2015		$	(791,000	)		$	419,000			$	(372,000	)

 

See accompanying notes to financial statements.

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2015 and 2014

(Unaudited)

 

		2015				2014
Cash flows from operating activities:
Net income		$	181,000			$	182,000
Adjustments to reconcile net income to cash flows provided by (used for) operating activities:
Depreciation and amortization			20,000				23,000
Amortization of deferred gain			(161,000)				(161,000)
Provision for doubtful accounts			-				3,000
Changes in assets and liabilities:
Accounts receivable			(8,000)				2,000
Other assets			4,000				(2,000)
Accounts payable and accrued expenses			(55,000)				(21,000)
Deferred rentals			(3,000)				15,000
Cash flows (used for) provided by operating activities			(22,000)				41,000
Cash flows used in investing activities:
Acquisition of vehicles			(4,000)				(11,000)
Cash flows used for investing activities			(4,000)				(11,000)
Net (decrease) increase in cash and cash equivalents			(26,000)				30,000
Cash and cash equivalents at the beginning of period			152,000				142,000
Cash and cash equivalents at the end of period		$	126,000			$	172,000

 

See accompanying notes to financial statements.

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

 

1.	Summary of Significant Accounting Policies and Partnership Matters

Description of the Partnership

Tower Park Marina Investors, L.P. (formerly PS Marina Investors I), a California Limited Partnership (the “Partnership”), was organized under the California Revised Limited Partnership Act, pursuant to a Certificate of Limited Partnership filed on January 6, 1988 to acquire, own, and operate and to a lesser extent, develop marina facilities.

The General Partners in the Partnership are Westrec Investors, Inc. (formerly PS Marina Investors, Inc.), a wholly-owned subsidiary of Westrec Properties, Inc. (“Westrec”), and B. Wayne Hughes, a shareholder of Westrec until June 1990. Effective March 1, 1997, the limited partners approved the substitution of Tower Park Marina Operating Corporation, a wholly-owned subsidiary of Westrec Financial, Inc., for Mr. Hughes.

The Partnership was formed to sell a maximum of 12,000 units of limited partnership interest at $5,000 per unit ($60,000,000). The General Partners have contributed a total of $1,000. On November 27, 1989, the Partnership’s offering was terminated with 4,508 units issued, resulting in $22,540,000 of limited partner funds being raised (before commission discount of $3,000 granted to an investor). Half of each Limited Partner’s total capital contribution was deferred. The final installment was due on August 1, 1990, and $27,000 of such deferrals remain outstanding. At September 30, 2015, a subsidiary of the General Partner owned 45.63% of the outstanding limited partnership units.

The term of the Partnership Agreement is until its dissolution and, in any event, not later than December 31, 2038. The General Partners expect to dissolve the Partnership once it fulfills its obligations under the terms of its lease with Kampgrounds of America (“KOA”), which commitment expires on March 27, 2017.

Basis of Presentation

The unaudited financial statements of Tower Park Marina Investors, LP at September 30, 2015 and for the nine months ended September 30, 2015 are presented in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and have been prepared pursuant to Article 10 of the Securities and Exchange Commission’s Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been included. The results of operations for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015. These unaudited financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2014 included in our Annual Report on Form 10-K.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

 

1.	Summary of Significant Accounting Policies and Partnership Matters (continued)

Tower Park Marina

Tower Park Marina is stated at cost to the Partnership. Provision for depreciation and amortization is calculated using the straight-line method. Depreciable lives for the major asset categories are as follows:

 

Asset Category		Depreciable Life
Furniture, fixtures and equipment		7 years
Leasehold interest		life of lease

Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation. The resulting gains and losses are reflected in the statement of operations.

Maintenance, repairs, and investments in minor equipment are charged to operations. Expenditures that will materially increase the value of properties or extend useful lives are capitalized.

Impairment of Long-lived Assets

The Partnership reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The measurement of possible impairment is based primarily on the undiscounted future operating cash flows without interest charges generated through the use of these assets during their remaining estimated useful life. The assessed recoverability of long-lived assets will be impacted if estimated future operating cash flows are not achieved. The Partnership believes that no events occurred that would impair the carrying value of its long-lived assets during the nine months ended September 30, 2015.

Revenue Recognition

Revenue from slip rentals and dry storage are recognized over the length of the contract term. Fuel service revenues are recognized at point of sale.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.

Offering and Organization Costs

Costs incurred in preparing Partnership documents, prospectuses and any other sales literature, costs incurred in qualifying the units for sale under federal and state securities laws and costs incurred in marketing the units have been charged to the limited partners’ equity to the extent the total does not exceed 5% of the gross proceeds of the offering. The amount by which these organization and registration costs exceeded 5% of the gross proceeds of the offering was borne by Westrec Investors, Inc.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

 

1.	Summary of Significant Accounting Policies and Partnership Matters (continued)

Cash Distributions

The General Partners interest in Cash Flow from Operations (as defined) and Cash from Sales or Refinancing (as defined) is 1%.

Allocations of Net Income or Loss

As set forth in the Partnership Agreement, net income and net loss shall be allocated 99% to the Limited Partners and 1% to the General Partners.

Earnings Per Unit

Per unit data is based on the 4,508 weighted average number of the Limited Partnership units outstanding during the nine months ended September 30, 2015 and 2014.

Taxes Based on Income

Taxes based on income are the responsibility of the individual partners and, accordingly, are not reflected in the accompanying financial statements.

Cash and Cash Equivalents

Cash and cash equivalents consist of all amounts on deposit in interest bearing and non-interest bearing demand deposit accounts as well as highly liquid investments purchased with an original maturity of three months or less.

Accounts Receivable

Accounts receivable are stated at the amount the Partnership expects to collect. The Partnership maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. Past due balances over 60 days and other higher risk amounts are reviewed individually for collectability. If the financial condition of the Partnership’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management’s assessment, the Partnership provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Partnership has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

 

1.	Summary of Significant Accounting Policies and Partnership Matters (continued)

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

 

Level 1		Quoted prices in active markets for identical assets or liabilities.
Level 2		Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.

The Partnership has segregated all financial assets and liabilities that are measured at fair value into the most appropriate level within the fair value hierarchy. The Partnership has no non-financial assets and liabilities that are measured at fair value.

The Partnership believes that the carrying value of its cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities as of September 30, 2015 and December 31, 2014 approximate their fair values because of the short-term nature of those instruments.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

 

1.	Summary of Significant Accounting Policies and Partnership Matters (continued)

Concentration of Credit Risk.

Financial instruments that potentially subject the Partnership to concentration of credit risk are cash and cash equivalent deposits in excess of federally insured limits. From time to time the Partnership may have bank deposits in excess of federally insured limits. The Partnership evaluates these excess deposits, and transfers amounts to other banks if it considers such transfers necessary.

Recently Issued Accounting Standards

In August 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Currently, GAAP lacks guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern or to provide related footnote disclosures. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued.

In January 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-01, Income Statement —Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items The objective of this Update is to simplify the income statement presentation requirements in Subtopic 225-20 by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

 

1.	Summary of Significant Accounting Policies and Partnership Matters (continued)

Recently Issued Accounting Standards (continued)

In July 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory Database. Topic 330, Inventory, currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The amendments do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. An entity should measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method.

The amendments in this Update more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period.

In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 provides a robust framework for addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. The revenue recognition policies of almost all entities will be affected by the new guidance in the ASU. For public business entities, the ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.

In August 2015, the FASB issued Accounting Standards (ASU) No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

 

1.	Summary of Significant Accounting Policies and Partnership Matters (continued)

Recently Issued Accounting Standards (continued)

All other entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in ASU 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in ASU 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in ASU 2014-09.

 

2.	Tower Park Marina

On March 27, 2007, the Partnership completed the sale of substantially all the assets of Tower Park Marina and RV Park to Kampgrounds of America (“KOA”) for $13,500,000 in cash. Net cash received was reduced to $13,459,000 due to property taxes and closing costs borne by the Partnership amounting to $41,000. The assets sold included the land and improvements known as Tower Park Marina, the Partnership’s 51% interest in the Little Potato Slough Mutual Water Company, the Partnership’s leasehold interest in the lease between the California State Land Commission (as landlord) and the Partnership (as tenant), dated as of January 14, 1999, approximately 100 acres of undeveloped land, and certain personal property associated with the foregoing. The gain was further reduced by $416,000 of deferred maintenance repairs identified by KOA. As of September 30, 2015, $307,000 has been spent towards this commitment, and the Partnership has made all identified deferred maintenance repairs. The Partnership recognized a gain of $8,117,000 and deferred gain of $2,152,000 from the sale. The proceeds from the sale were used primarily to repay the Partnership’s note payable and the payable to affiliates, and in April 2007, the Partnership made a distribution of $3,642,000 to its partners.

In connection with the sale, the existing lease agreement between KOA and the Partnership, under which the Partnership had leased the RV Park and retail store at Tower Park Marina to KOA, was terminated. Pursuant to a new lease, KOA leased back to the Partnership the marina facilities and dry storage buildings that make up a portion of the property that was sold. In accordance with ASC Topic 840, Leases, $2,152,000 of the gain from the sale was deferred and is amortized as a reduction in rent expense over the ten-year term of the lease agreement. The amount of the gain that was deferred was based on the Partnership’s ten year lease commitment, discounted at 10%. For the three and nine months ended September 30, 2015 and 2014, $54,000 and $161,000, respectively, of the deferred gain from the sale was amortized for each period, and is reflected as a reduction in cost of operations. The remaining unamortized gain balance at September 30, 2015 and December 31, 2014 is $323,000 and $484,000, respectively.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

 

2.	Tower Park Marina (continued)

At September 30, 2015 and December 31, 2014 the remaining assets related to Tower Park Marina that remain as part of the Partnership are composed of the following:

 

		2015				2014
Leasehold interest		$	27,000			$	27,000
Floating docks			94,000				94,000
Furniture, fixtures and equipment			247,000				243,000
Vehicles			46,000				46,000
			414,000				410,000
Less accumulated depreciation and amortization			(369,000	)			(349,000	)
		$	45,000			$	61,000

See Note 5 for a discussion of the Partnership’s continuing obligations with respect to the marina and adjacent property.

 

3.	Other Assets

Other assets at September 30, 2015 and December 31, 2014 are composed of the following:

 

		2015				2014
Fuel inventory		$	12,000			$	24,000
Other prepaid expenses			33,000				25,000
		$	45,000			$	49,000

Fuel inventory is stated at the lower of cost (average cost method) or market (replacement or net realizable value).

 

4.	Related Party Transactions

The Partnership has an agreement with Westrec Marina Management, Inc., an affiliate of Westrec, to manage the day-to-day operations of the marina for a fee equal to 6% of the marina’s monthly gross revenues (as defined in the agreement). Management fees were $43,000 for the nine months ended September 30, 2015 and 2014. Management fees for the three months ended September 30, 2015 and 2014 were $17,000 and $16,000, respectively.

In connection with their services in negotiating and obtaining permanent financing from an unaffiliated lender, the General Partners or their affiliates earn a fee equal to 1% of the principal amount of the financing or refinancing, less any fees paid to other loan brokers. No loan brokerage fees were earned by the General Partners or their affiliates for the nine months ended September 30, 2015 and 2014, or for the year ended December 31, 2014.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

 

5.	Commitments and Contingencies

The operations at Tower Park Marina are influenced by factors that affect the boating industry both locally and nationally, with activity at Tower Park Marina increasing seasonally during the period April through October of each year.

The Partnership operates a portion of Tower Park Marina on approximately 14 acres of waterfront property under a lease with the California State Land Commission (the “CSLC Lease”). As mentioned in Note 2 above, the Partnership’s leasehold interest in the CSLC Lease was sold to KOA on March 27, 2007.

In 2013, KOA agreed to reduce the Partnership’s lease payments. Effective March 1, 2013, the monthly lease payment was reduced from $29,692 to $16,667. The Partnership will make an additional payment (“Percentage Rent”) to KOA calculated as follows: 30% of Gross Profit between $800,000 and $900,000, plus 40% of Gross Profit between $900,000 and $1,000,000, plus 50% of Gross Profit in excess of $1,000,000. The maximum Percentage Rent payable for any calendar year is $250,000. Included in lease expense in cost of operations is $ $100,000 paid to KOA for the nine months ended September 30, 2015 and 2014. Also included in lease expense in cost of operations is $10,000 and $30,000 related to the CSLC lease for the three and nine month periods ended September 30, 2015 and 2014.

These contractual obligations are summarized below:

Disclosure of Contractual Obligations

 

		Total				Less than 1 Year				1 – 3 Years				3-5 Years
Operating Leases:
KOA Lease		$	300,000			$	50,000			$	250,000			-
Deferred maintenance reserve			109,000				109,000				-			-
CSLC Lease Reimbursement			60,000				10,000				50,000			-
Capital Improvement Commitment			73,000				13,000				60,000			-
Total		$	542,000			$	182,000			$	360,000			-

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

 

6.	Segment Reporting

The Partnership has been aggregated into three reportable business segments (Slip rental, Dry storage and Fuel service): Slip rental reports the water-based boat slip rentals and Dry storage reports the land-based boat storage operations at the marina. The Fuel service segment reports the operations of the fuel dock at the marina.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. The Partnership evaluates the performance of its operating segments based on income from operations before depreciation and amortization.

Summarized financial information concerning the Partnership’s reportable segments is shown in the following table. The “other” line item includes results of insignificant operations and as it relates to segment profit (loss), income and expenses not allocated to reportable segments.

 

		(Amounts in 000’s)
		For the nine-months ended September 30,								For the three-months ended September 30,
Revenues		2015				2014				2015				2014
Slip Rental		$	533			$	543			$	192			$	196
Dry Storage			105				101				36				35
Fuel Service			168				193				101				125
Interest income			8				11				3				2
Total Revenue		$	814			$	848			$	332			$	358
Profit (Loss)
Slip Rental		$	506			$	521			$	181			$	186
Dry Storage			99				96				33				33
Fuel Service			54				50				33				36
Other (1)			(478	)			(485	)			(172	)			(167	)
Total Profit		$	181			$	182			$	75			$	88

 

(1)

These items are not provided to management on a segment basis and are not used by management to measure segment profit or loss. These costs include general and administrative, repairs and maintenance, taxes, utilities and other expenses.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

 

6.	Segment Reporting (continued)

 

		(Amounts in 000’s)
		September 30, 2015				December 31, 2014
Assets
Slip Rental		$	97			$	94
Unallocated amount (2)			152				193
Total Assets		$	249			$	287

 

(2)

Information about assets is not included in the measure of segment profit or loss that is reviewed by management. However, certain information is provided to management and is thus provided here.

 

7.	401(k) Plan

The Partnership sponsors a 401(k) Plan (the Plan) which is a qualified defined contribution plan under section 401(k) of the Internal Revenue Code. Full time employees who are at least 21 years of age and have completed one year of service, are eligible to participate in the Plan. Participants of the Plan may choose to contribute up to 50% of their compensation per year, as defined by the Plan, up to a maximum of $18,000 and $17,500 for the calendar years 2015 and 2014, respectively. The Partnership may match up to 50% of the employee’s quarterly contribution up to $1,500 per year. The Partnership’s matching contribution for each of the nine months ended September 30, 2015 and 2014 was $450.

“Rollover Contributions” from other qualified plans are accepted by the Plan. The Partnership does not match contributions of this type.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2015

(Unaudited)

 

8.	Going Concern

Despite the successful restructuring of the lease with KOA, the Partnership’s marina is not generating satisfactory levels of cash flows and cash flow projections do not indicate significant improvement in the near term. In addition, the Partnership’s liabilities exceed its assets. These circumstances raise substantial doubt about the Partnership’s ability to meet its financial obligations going forward and to continue as a going concern. The Partnership’s ability to continue to operate through 2015 and beyond is contingent on, among other factors, improvement in the economy and a resulting improvement in Tower Park Marina operations. Management is actively working to improve operating results at the property with staffing reductions and changes in operating procedures. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Partnership to continue as a going concern.

The term of the Partnership Agreement is until its dissolution and, in any event, not later than December 31, 2038. The General Partners expect to dissolve the Partnership once it fulfills its obligations under the terms of its lease with Kampgrounds of America (“KOA”), which commitment expires on March 27, 2017.

 

9.	Subsequent Events

The Partnership has evaluated subsequent events for recognition or disclosure in the financial statements filed on Form 10-Q with the SEC and no events have occurred that require disclosure.

 

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TOWER PARK MARINA INVESTORS, L.P.

a California Limited Partnership

PARTI. FINANCIAL INFORMATION

September 30, 2015

(Unaudited)

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q includes certain “forward-looking statements”. These statements are usually identified by the use of words such as “believe”, “will”, “anticipate”, “estimate”, “expect”, “project”, “plan”, “intend”, “should”, “could”, or similar expressions. These statements are based on management’s current expectations and assumptions and are subject to uncertainty and changes in circumstances. Although we believe that the assumptions underlying the forward looking statements contained in this report are reasonable, actual results may differ materially from these expectations due to changes in global, economic, business, competitive, market and regulatory factors. We undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future.

As discussed in greater detail below, the Partnership’s sole remaining property, Tower Park Marina, was sold to KOA on March 27, 2007. In connection with that sale, the Partnership agreed to lease the marina components of the property for 10 years.

The operations of Tower Park Resort are influenced by factors affecting the marina and boating industries nationally, as well as by local market and weather conditions. As a result of poor economic conditions in California, the demand for both wet and dry storage continues to decline. Since the sale of the property in 2007, the Partnership has seen the occupancy of the permanent wet slips decline from 95% in March 2007 to 76.8% as of September 30, 2015. Dry storage has remained stable. In order to attract new customers, the marina has been forced to run promotions and discount its slip and dry storage rates significantly. The lower occupancy rates at Tower Park Resort are consistent with those experienced by other marinas in the area.

In an effort to partially offset the lower revenues that are being generated, operating hours have been reduced during the off-season, and the marina is only open 5 days a week. These reductions have resulted in decreasing payroll and other operating costs. As discussed in Note 5 to the financial statements, the Partnership renegotiated the lease payment in 2013 in an effort to improve cash flow from the property. Effective March 1, 2013, the monthly lease payment was reduced from $29,692 to $16,667, which has had a positive effect on the property’s operating results and cash flow.

Another drain on cash flow for the Partnership is the increasing audit costs and SEC filing requirements and costs associated with the administration of the Partnership.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

PART I. FINANCIAL INFORMATION

September 30, 2015

(Unaudited)

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Results of Operations for the nine months ended September 30, 2015 and 2014

The revenues and expenses of the Partnership for the nine months ended September 30, 2015 are generated from the marina and dry storage operations of TowerPark in the Sacramento – San Joaquin Delta near Sacramento. As of September 30, Tower Park Marina had the following occupancies:

 

		2015										2014
		Available				Occupied						Available				Occupied
Wet slips			220 (1)				76.8%						220 (1)				84.1%
Dry storage			149				75.2%						147				74.8%

(1) non-transient slips only

For the nine months ended September 30, 2015, operating revenues for Tower Park have decreased $34,000 to $814,000. Occupancies have slowly declined at the marina, with slip rental revenues decreasing $10,000 to $533,000, offset by a slight $4,000 upswing in dry storage revenues to $105,000. Gasoline and diesel sales remain extremely competitive in the area, however, fuel margins improved due to dropping fuel costs. Although fuel service revenues were down slightly from prior year, departmental profits improved due to favorable costs.

The Partnership’s net profit from operations was $40,000 for the nine months ended September 30, 2015. The Partnership continues to look for ways to improve operations, including promotions to reward long-term slip-lease contracts.

The Partnership’s cash balance decreased $26,000 to $126,000 for the nine months ended September 30, 2015.

Liquidity and capital resources

The Partnership’s net profit from operations (net income/loss before depreciation and amortization of deferred gain) was $40,000 for the nine months ended September 30, 2015, an decline of $4,000 over the prior year. Operations at the marina have remained largely flat due to the sluggish local economy. The marina continues to struggle to gain a competitive advantage.

On March 27, 2007, the Partnership completed the sale of substantially all the assets of Tower Park Marina and RV Park to Kampgrounds of America (“KOA”) for $13,500,000 in cash. The sale requires the Partnership to make approximately $416,000 in repairs to the property and resulted in a gain of approximately $8,117,000 and deferred gain of $2,152,000.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

September 30, 2015

(Unaudited)

 

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Liquidity and capital resources (continued)

The proceeds from the sale were used to repay the Partnership’s note payable and the payable to affiliates. In April 2007, the Partnership made a distribution of $3,642,000 to its partners. As part of the sale, the Partnership agreed to lease back the marina and dry storage facilities that comprise a portion of the property. The lease has an initial term of ten years and three five (5) year options to extend. The lease required minimum monthly payments of $25,000 for the first five years. The monthly lease payment to KOA was increased in March 2012 to $29,692 per month. The lease was restructured effective March 1, 2013 by reducing the minimum monthly rent payment to $16,667 and paying a percentage rent. (see Note 5). The Partnership is also required to reimburse KOA approximately $40,000 for its annual obligations with respect to the CSLC lease. In addition, the Partnership is required to spend a minimum of $50,000 per year on maintenance repairs and improvements. These contractual obligations are summarized below:

Tabular Disclosure of Contractual Obligations

 

		Total				Less than 1 Year				1 – 3 Years				3-5 Years
Operating Leases:
KOA Lease		$	300,000			$	50,000			$	250,000			-
Deferred maintenance reserve			109,000				109,000				-			-
CSLC Lease Reimbursement			60,000				10,000				50,000			-
Capital Improvement Commitment			73,000				13,000				60,000			-
Total		$	542,000			$	182,000			$	360,000			-

The Partnership had a remaining cash balance of $126,000 as of September 30, 2015. However, despite the reduction of rent due on the lease with KOA, and continued efforts to reduce costs, the Partnership’s liabilities exceed its current cash and accounts receivable balances. This trend, in conjunction with escalating audit and SEC filing costs and requirements raise substantial doubt about the Partnership’s ability to meet its financial obligations going forward, and to continue as a going concern.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

PART I. FINANCIAL INFORMATION

September 30, 2015

(Unaudited)

 

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange and interest rates. All Partnership transactions are payable in U.S. dollars. The Partnership holds most of its cash in a money market account. We do not consider the effects of interest rate movements to be a material risk to our financial condition. We do not hold any derivative instruments and do not engage in any hedging activities.

 

ITEM 4.

Controls and Procedures

Disclosure Controls and Procedures

As required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, the Partnership has evaluated, with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, the effectiveness of its disclosure controls and procedures (as defined in such rules) as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Partnership’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Partnership in reports prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

Our management, including the Partnership’s Chief Executive Officer and Chief Financial Officer, does not expect that the Partnership’s disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Partnership have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

September 30, 2015

(Unaudited)

 

ITEM 4.

Controls and Procedures (Continued)

Changes in Internal Control Over Financial Reporting.

No changes in the Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting. The Partnership continues to review its disclosure controls and procedures, including its internal controls over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that the Partnership’s systems evolve with its business.

 

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

Not Applicable

 

Item 1A.

Risk Factors

In addition to the other information contained in this Quarterly Report on Form 10-Q, the factors discussed in Item 1A of the Partnership’s Annual Report on Form 10K for the year ended December 31, 2014 should be considered when evaluating the Partnership’s business, financial position, future results, and prospects. Although there have been no material changes to the risk factors described in the Annual Report on Form 10-K, the risks described therein are not the only risks facing the Partnership. Additional risks that are not presently known or that management currently believes are not material could also materially adversely affect the Partnership’s business, financial position, future results and prospects.

 

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 Vote of Security Holders

Not Applicable

 

Item 5.

Other Information

Not Applicable

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

September 30, 2015

(Unaudited)

 

Item 6.

Exhibits and Reports on Form 8K

 

a.

Exhibits

 

31.1

Certification of Michael M. Sachs pursuant to Rules 13a-14 and 15d-14 under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

 

32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

 

b.

Reports on Form 8K

Not Applicable

 

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SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

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