Attached files

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EX-31.3 - EXHIBIT 31.3 - PISMO COAST VILLAGE INCexhibit31_3.htm
EX-32.2 - EXHIBIT 32.2 - PISMO COAST VILLAGE INCexhibit32_2.htm
EX-32.3 - EXHIBIT 32.3 - PISMO COAST VILLAGE INCexhibit32_3.htm
EX-32.1 - EXHIBIT 32.1 - PISMO COAST VILLAGE INCexhibit32_1.htm
EX-31.2 - EXHIBIT 31.2 - PISMO COAST VILLAGE INCexhibit31_2.htm
EX-31.1 - EXHIBIT 31.1 - PISMO COAST VILLAGE INCexhibit31_1.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 December 31, 2015

 

 

 

OR

 

 

[  ]

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

For the transition period from __________ to ___________

Commission file number 0-8463

 

PISMO COAST VILLAGE, INC.

(Exact name of registrant as specified in its charter)

 

California 

95-2990441

(State or other jurisdiction of

(IRS Employer ID No.)

incorporation or organization)  


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 compnay

 

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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 Income 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. Fiscal year-to-date site occupancy is up 4.2%, or 1168 nights. Based on advanced reservation deposits, occupancy projections are down 3% compared to this time last year. However, prime time reservations are equal to last year. Revenues from ancillary operations such as the General Store, RV Service, arcade, laundromat, and bike rental are down 18.7% year-to-date, and management feels this trend will improve as business moves into the primary camping season. Industry projections anticipate positive business trends and reasonable fuel prices as the summer season approaches.


RV storage and towing continue to be a primary source of revenue for the Company. 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. Revenues for RV storage and towing are up 1.5% compared to the previous year due to a 5% increase in storage customers and greater site occupancy for storage customers.


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 Woodall’s, 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 33,000 surveys for customer satisfaction in 2015.


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 leading national directory, 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, restaurant, 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 December 31, 2015, increased $95,937, or 7.4%, from the same period in 2014. This increase is primarily due to an $83,640, or 9.7%, increase in year-to-date site revenue as a result of a rate increase, and a 6.0% increase in paid site occupancy.


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.


Income from retail operations increased by $46,963 for the three-month period ended December 31, 2015, 18.1% above the same period in 2014. The General Store showed a $6,655, or 5.0%, increase in revenue, while RV Service and Repair increased revenue 31.8%, or $40,308. Management feels the retail operation’s increase in revenue reflects last year’s temporary loss of an RV repair technician during a majority of the quarter and restructuring the shop’s staff this year.

 

 

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The Company anticipates slight to moderate increases in both income from resort operations and in retail operations as the fiscal year progresses.


Operating expenses for the three-month period ending December 31, 2015, increased $98,520, or 8.6%, above the same period ended December 31, 2014. This reflects an increase in labor and labor related expenses, credit card processing, electricity, and Wi-Fi. Other operating costs remain consistent with the prior year and are considered well managed to create an effective operation.


Cost of goods sold expenses for the three-month period ended December 31, 2015, are 43.5% compared to 42.0% for the same period in 2014, which is within the guidelines established by management for the individual category sales of RV supplies and General Store merchandise.


Interest expense for the three-month period ended December 31, 2015, was $26,001, compared to $33,078 for the same period ending 2014. The current balance reflects the notes payable as a result of purchasing property in May 2008, as well as property purchased February and April of 2006 to increase RV storage. The Company has also maintained a $500,000 line of credit that currently has no outstanding balance as of December 31, 2015.


Income before provisions for income taxes for the three-month period ended December 31, 2015, increased by $25,255 above the same period in 2013. This increase in income before provision for income taxes is a result of increased total income.


Due to the nature of business and economic cycles and trends, rates may be adjusted accordingly, if deemed necessary. Although the supply-demand balance generally remains favorable, future-operating results could be adversely impacted by weak demand. This condition could limit the Company's ability to pass through inflationary increases in operating costs as higher rates.


Increases in transportation and fuel costs or sustained recessionary periods could also unfavorably impact future results. However, the Company believes that its financial strength and market presence will enable it to remain extremely competitive. It is anticipated the published rates will continue to market site usage at its highest value and not negatively impact the Company's ability to capture an optimum market share.


LIQUIDITY

The Company's current cash position, as of December 31, 2015, is $2,075,173, which is 13.8% more than the same position in 2014. The cash balance decreased $160,634 from the fiscal year ended September 30, 2015 due to operations expenses and income tax payments. The Company has maintained cash balances in anticipation for large capital expenditures necessary to upgrade the resort. The Company has also maintained a line of credit of $500,000 to insure funds will be available, if required.


Accounts payable and accrued liabilities increased $12,847 above the same period last year and increased $34,646 since the 2015 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.


Working capital increased to $746,196 at the end of the first quarter of fiscal year 2016, compared with $654,282 at the end of fiscal year 2015.


CAPITAL RESOURCES AND PLANNED EXPENDITURES

The Company plans capital expenditures of approximately $825,000 in fiscal year 2016 to further enhance the resort facilities and services. These projects include building a new RV Service and Repair facility, purchase a new RV storage tow vehicle, purchase a new fork lift, road paving, RV storage security, and repair the Overlook ramp.  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.


4


 


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 materials filed with the Securities and Exchange Commission, on official business days during the hours of 10:00 a.m. to 3:00 p.m., 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 electronically with the SEC.


ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.


ITEM 4T.    CONTROLS AND PROCEDURES


DISCLOSURE CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “1934 Act”), as of December 31, 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, 2015.


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 three-months ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II -- OTHER INFORMATION


ITEM 1.     LEGAL PROCEEDINGS

No pending legal proceedings against the Company other than routine litigation incidental to the business.


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

Not Applicable


ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

Not Applicable

 

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The annual meeting for the shareholders of Pismo Coast Village, Inc. was held Saturday, January 16, 2016, at 9:00 a.m. at the South County Regional Center, 800 West Branch Street, Arroyo Grande, California 93420. At that meeting, the following Directors were elected to serve until the annual meeting in January 2017 or until successors are elected and have qualified. Following each elected Director's name is the total number of votes cast for that Director:


Brittain, Kurt

684

Buchaklian, Harry

702

Enns, Rodney

702

Eudaly, Douglas

799

Fischer, William

703

Hardesty, Wayne

700

Harris, R. Elaine

837

Hearne, Dennis

690

Hickman, Glenn

683

Hughes, Terris

687

Nelson, Garry

687

Nunlist, Ronald

724

Pappi, Jr., George

733

Pettibone, Jerald

721

Plumley, Dwight

885

Roberts, Jerry

684

Willems, Gary

704

Williams, Jack

698


Further, the following additional matters were voted upon at the meeting, and the number of affirmative votes and negative votes cast with respect to each such matter is set forth below:


Proposal to approve the selection of Brown Armstrong Accountancy Corporation to serve as independent certified public accountants for the Company for Fiscal Year 2015 - 2016:  


Affirmative Votes

711

Negative Votes

3

Abstentions

22


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ITEM 5.     OTHER INFORMATION

The annual meeting of the shareholders of Pismo Coast Village, Inc. was held Saturday, January 16, 2016, at 9:00 a.m. at the South County Regional Center, 800 West Branch Street, Arroyo Grande, California 93420. Following that meeting, the newly elected Board held a reorganizational meeting at which the following officers were elected to serve until the next Annual Shareholders’ Meeting:


                                        

President

Terris Hughes

Executive Vice President

Garry Nelson

V. P. – Finance/Chief Financial Officer

Wayne Hardesty

V. P. – Operations

Dwight Plumley

V. P. – Secretary

George Pappi, Jr.

Assistant Corporate Secretary

Jay Jamison



ITEM 6.

EXHIBITS



Exhibit No.


Description of Exhibit

Sequential

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 (Terris Hughes, 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

(Terris Hughes, 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:

February 12, 2016



Signature:

/s/ TERRIS HUGHES

Terris Hughes, President and Chairman of the Board




Date:

February 12, 2016



Signature:

/s/ WAYNE HARDESTY

Wayne Hardesty, V.P. - Finance/Chief Financial Officer

(principal financial officer and principal accounting officer)



Date:

February 12, 2016



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 December 31, 2015 and 2014, and the related statements of income and retained earnings and cash flows for the three-month periods ended December 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, 2015, and the related statements of income and retained earnings, and cash flow for the year then ended, and in our report dated November 13, 2015, 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, 2015, is fairly stated, in all material respects.


 

BROWN ARMSTRONG ACCOUNTANCY CORPORATION



Bakersfield, California

February 12, 2016




9


 

 

PISMO COAST VILLAGE, INC.

BALANCE SHEETS

DECEMBER 31, 2015 AND 2014 AND SEPTEMBER 30, 2015

 

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2015

 

 

2014

 

 

  (Unaudited)  

 

 

     (Audited)    

 

 

 (Unaudited)  

ASSETS
Current Assets
Cash and cash equivalents $ 2,075,173 $ 2,235,807 $ 1,823,141
Accounts receivable 21,476 43,916 24,762
Inventory 192,571 190,442 193,658
Current deferred taxes 102,700 103,500 92,000
Prepaid expenses   134,010   29,034   146,471
Total current assets 2,525,930 2,602,699 2,280,032
Pismo Coast Village Recreational Vehicle Resort and Related Assets –
  
Net of accumulated depreciation 14,933,856 14,953,463 14,616,015
Other Assets 5,435   6,018   7,765
Total Assets $ 17,465,221 $ 17,562,180 $ 16,903,812


 


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


10


 


 

PISMO COAST VILLAGE, INC.

BALANCE SHEETS

DECEMBER 31, 2015 AND 2014 AND SEPTEMBER 30, 2015

December 31, 

 

September 30,

 

December 31,

 

2015

 

2015

 

2014

 

  (Unaudited)  

 

     (Audited)     

 

 (Unaudited)  

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 259,285 $ 224,639 $ 246,438
Accrued salaries and vacation 77,882 284,426 69,902
Rental deposits 1,230,518 1,261,191 1,135,891
Income taxes payable 86,800 50,700 76,800
Current portion of long-term debt   125,249   127,461   96,421
  Total current liabilities 1,779,734 1,948,417 1,625,452
Long-Term Liabilities
Long-term deferred taxes 921,800 928,400 912,500
N/P Donahue Trans 31,128 36,207 50,973
N/P RLC Funding 25,104 28,072 36,400
N/P Heritage Oaks Bank   1,761,417   1,781,034   2,311,126
  Total Liabilities   4,519,183   4,722,130   4,936,451
Stockholders’ Equity
Common stock – no par value, 1,800 shares issued 1,783 shares outstanding at December 31, 2015 and 2014, respectively 5,594,369 5,594,369 5,594,369
Retained earnings   7,351,669   7,245,681   6,372,992
  Total stockholders’ equity   12,946,038   12,840,050   11,967,361
Total Liabilities and Stockholders’ Equity $

17,465,221

$ 17,562,180 $ 16,903,812

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


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PISMO COAST VILLAGE, INC.

STATEMENTS OF INCOME AND RETAINED EARNINGS

(UNAUDITED)

THREE MONTHS ENDED DECEMBER 31, 2015 AND 2014

           Three Months        

    Ended December 31,   

2015

2014

Income

Resort operations

$

1,384,251

$

1,288,314

Retail operations

 

305,872

 

258,909

Total income

 

1,690,123

 

1,547,223

Costs and Expenses

Operating expenses

1,244,821

1,146,301

Cost of goods sold

133,090

108,702

Depreciation

 

100,282

 

99,513

Total costs and expenses

 

1,478,193

 

1,354,516

Income from operations

 

211,930

 

192,707

Other Income (Expense)

Interest/dividend income

1,010

504

Interest expense

(26,001)

(33,078)

Loss on disposal of fixed assets

 

(1,551)

 

-

Total other income (expense)

 

(26,542)

 

(32,574)

Income Before Provision for Income Taxes

 

185,388

 

160,133

Income Tax Expense

 

79,400

 

71,500

Net Income

 

105,988

 

88,633

Retained Earnings – Beginning of Period

 

7,245,681

 

6,284,359

Retained Earnings – End of Period

$

7,351,669

$

6,372,992

Net Income Per Share

$

59.44

$

49.71


 


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


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PISMO COAST VILLAGE, INC.

STATEMENTS OF CASH FLOWS (UNAUDITED)

THREE MONTHS ENDED DECEMBER 31, 2015 AND 2014

2015

2014

Cash Flows From Operating Activities

Net Income

$

105,988

$

88,633

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation

$

100,282

$

99,513

(Increase) Decrease in accounts receivable

22,440

(6,772)

(Increase) in inventory

(2,129)

(16,249)

(Decrease) in deferred tax asset

(5,800)

(5,300)

(Increase) in prepaid expenses

(104,974)

(93,450)

Increase in accounts payable and

accrued liabilities

34,646

42,523

(Decrease) in accrued salaries and vacation

(206,544)

(175,204)

Increase in rental deposits

(30,673)

2,876

(Decrease) in Income taxes payable

 

36,100

 

(62,300)

Total adjustments

 

(156,652)

 

(214,363)

Net cash used in operating activities

 

(50,664)

 

(125,730)

Cash Flows From Investing Activities

Disposal of fixed assets

1,551

Capital expenditures

 

(81,643)

 

(57,492)

Net cash used in investing activities

 

(80,092)

 

(57,492)

Cash Flows from Financing Activities

Principal repayments of note payable

 

(29,878)

 

(22,731)

Net cash used in financing activities

 

(29,878)

 

(22,731)

Net decrease in cash and cash equivalents

(160,634)

(205,953)

Cash and Cash Equivalents – Beginning of Period

 

2,235,807

 

2,029,094

 

Cash and Cash Equivalents – End of Period

$

2,075,173

$

1,823,141

Schedule of Payments of Interest and Taxes

Payments for income tax

$

49,070

$

137,423

Cash paid for interest

$

26,001

$

33,078



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



13


 

PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014 AND SEPTEMBER 30, 2015



NOTE 1 – 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.



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


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.


Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments including certificates of deposit with a maturity of three months or less when purchased to be cash equivalents.


Inventory

Inventory has been valued at the lower of cost or market on a first-in, first-out basis. Inventory is comprised primarily of finished goods in the general store and in the RV shop.


Property and Equipment

All property and equipment are recorded at cost. Depreciation of property and equipment is computed using straight-line method based on the cost of the assets, less allowance for salvage value, where appropriate. Depreciation rates are based upon the following estimated useful lives:


Building and park improvements

5 to 40 years

Furniture, fixtures, equipment and leasehold improvements

3 to 31.5 years

Transportation equipment

5 to 10 years

 

 


Earnings (Loss) Per Share

The earnings (loss) per share are based on the 1,783 shares issued and outstanding. The financial statements report only basic earnings per share, as there are no potentially dilutive shares outstanding.


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.


Advertising

The Company follows the policy of charging the costs of non-direct response advertising as incurred. Advertising expense was $6,337 and $11,071 for the three months ended December 31, 2015 and 2014, respectively. There was no advertising expense capitalized in prepaid expense.




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PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2015 AND 2014 AND SEPTEMBER 30, 2015

PAGE 2



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Concentration of Credit Risk

At December 31, 2015, the Company had cash deposits in excess of the $250,000 federally insured limit with Heritage Oaks Bank of $223,015; however, in the past the Company the used an 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. Those member banks then issue CDs in amounts under $250,000, so that the entire investment is eligible for FDIC insurance.


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 December 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. The Company does not expect any material changes in the next year. 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, 2012 and by the California Franchise Tax Board for fiscal years ending on or after September 30, 2011.


Subsequent Events

Subsequent events have been evaluated through February 12, 2016, 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 DECEMBER 31, 2015 AND 2014 AND SEPTEMBER 30, 2015

PAGE 3



NOTE 3 - PISMO COAST VILLAGE RECREATIONAL VEHICLE RESORT AND RELATED ASSETS

At December 31, 2015, September 30, 2015 and December 31, 2014, property and equipment included the following:

 

 

December 31,

September 30,

December 31,

2015

 

2015

 

2014

Land

$

10,394,746

$

10,394,746

$

9,957,263

Building and resort improvements

11,227,437

11,227,437

11,073,714

Furniture, fixtures, equipment and leasehold improvements

641,554

599,355

600,764

Transportation equipment

544,513

479,592

484,607

Construction in progress

 

76,085

 

107,225

 

93,620

22,884,335

22,808,355

22,209,968

Less: accumulated depreciation

 

(7,950,479)

 

(7,854,892)

 

(7,593,953)

  Total

$

14,933,856

$

14,953,463

$

14,616,015

 



Depreciation expense for December 31, 2015 and 2014 were $100,282 and $99,513, respectively.


NOTE 4 - LINE OF CREDIT

The Company has a revolving line of credit with Heritage Oaks Bank for $500,000, expiring March 22, 2016. There were no outstanding amounts on the line of credit as of December 31, 2015 or 2014.


NOTE 5 - NOTES 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 $1,855,525 and was 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 $12,335 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 Services Corp on a 2013 Hino Truck. The lease originated on May 10, 2012. The total balance currently outstanding is $38,638 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 Nov. 8, 2013. The total balance currently outstanding is $36,400 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.



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PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2015 AND 2014 AND SEPTEMBER 30, 2015

PAGE 4



NOTE 5 - NOTE PAYABLE (continued)

At December 31, 2015, future minimum payments are as follows:


 

Period Ending December 31, 
2016 $

125,249

2017

127,041

2018

  1,686 462

2019  

4,146

Total $

1,942,898



NOTE 6 - COMMON STOCK

Each share of stock is intended to provide the shareholder with a maximum free use of the resort for 45 days per year. If the Company is unable to generate sufficient funds from the public, the Company may be required to charge shareholders for services.


A shareholder is entitled to a pro rata share of any dividends as well as a pro rata share of the assets of the Company in the event of its liquidation or sale. The shares are personal property and do not constitute an interest in real property. The ownership of a share does not entitle the owner to any interest in any particular site or camping period.



NOTE 7 - INCOME TAXES

The provision for income taxes is as follows:

 

December 31,

 

December 31,

 

2015

 

2014

Income tax provision $ 79,400 $ 71,500



 

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 non-deductible variable cost of shareholder usage.



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PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2015 AND 2014 AND SEPTEMBER 30, 2015

PAGE 5



NOTE 8 - 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 December 31, 2015, future minimum lease payments under the copier lease were as follows:



For the Year Ended December 31,
2016 $ 2,483
Total $ 2,483

Rent expense under these agreements was $9,139 and $9,139 for the three-month period ended December 31, 2015 and 2014, respectively.



NOTE 9 - 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 $19,196 and $18,500 for the three months ended December 31, 2015 and 2014, respectively.



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