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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, 2013

 

¨	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, California 91436-1835

(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		¨  (Do not check if a smaller reporting company)		Smaller reporting company:		x

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, 2013, Tower Park Marina Investors, LP had 4,508 units of limited partnership interest outstanding.

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TABLE OF CONTENTS

Report on Form 10-Q

For quarter ended September 30, 2013

 

PART I.    FINANCIAL INFORMATION				Page
ITEM 1.		FINANCIAL STATEMENTS
		Balance Sheets as of September 30, 2013 and December 31, 2012			2
		Statements of Operations for the three months ended September 30, 2013 and 2012			3
		Statements of Operations for the nine months ended September 30, 2013 and 2012			4
		Statements of Cash Flows for the nine months ended September 30, 2013 and 2012			5
		Notes to Financial Statements			6-15
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			16-18
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			19
ITEM 4.		CONTROLS AND PROCEDURES			19
PART II.    OTHER INFORMATION
ITEM 1.		LEGAL PROCEEDINGS			20
ITEM 1A.		RISK FACTORS			20
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			20
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES			20
ITEM 4.		SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS			20
ITEM 5.		OTHER INFORMATION			20
ITEM 6.		EXHIBITS AND REPORTS ON FORM 8-K			21
SIGNATURES					22

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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, 2013				December 31, 2012
		(Unaudited)
Cash and cash equivalents		$	148,000			$	179,000
Accounts receivable net of allowance for doubtful accounts of $21,000 in 2013 and $17,000 in 2012			40,000				27,000
Tower Park Marina, net (Note 2)			90,000				114,000
Other assets (Note 3)			68,000				55,000
TOTAL ASSETS		$	346,000			$	375,000

 

LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)
Accounts payable and accrued expenses		$	236,000			$	224,000
Deferred gain on sale of Tower Park Marina (Note 2)			753,000				915,000
Deferred rentals			26,000				23,000
Total liabilities			1,015,000				1,162,000
Commitments and contingencies (Note 5)			—				—
Partners’ deficit:
Limited partners’ deficit, $5,000 per unit, 4,508 units authorized, issued and outstanding			152,000				35,000
Deferred contributions			(27,000	)			(27,000	)
Limited partners’ equity			125,000				8,000
General partners’ deficit			(794,000	)			(795,000	)
Total partners’ deficit			(669,000	)			(787,000	)
TOTAL LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)		$	346,000			$	375,000

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, 2013 and 2012

(Unaudited)

 

		2013				2012
Revenues:
Slip rental		$	185,000			$	187,000
Dry storage			38,000				37,000
Fuel service			93,000				104,000
Interest and other income			3,000				3,000
Revenues from operations			319,000				331,000
Expenses:
Slip rental			11,000				8,000
Dry storage			4,000				5,000
Fuel service			69,000				78,000
Cost of operations			150,000				189,000
Management fees (Note 4)			16,000				15,000
Depreciation			8,000				10,000
			258,000				305,000
Net income		$	61,000			$	26,000
Allocation of net income
Limited Partners		$	60,000			$	26,000
General Partners			1,000				—
		$	61,000			$	26,000
Limited Partners’ net income per unit:		$	13.31			$	5.77
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, 2013 and 2012

(Unaudited)

 

		2013				2012
Revenues:
Slip rental		$	523,000			$	512,000
Dry storage			102,000				99,000
Fuel service			149,000				161,000
Interest and other income			8,000				9,000
Revenues from operations			782,000				781,000
Expenses:
Slip rental			24,000				14,000
Dry storage			8,000				9,000
Fuel service			126,000				130,000
Cost of operations			441,000				505,000
Management fees (Note 4)			41,000				40,000
Depreciation			24,000				29,000
			664,000				727,000
Net income		$	118,000			$	54,000
Allocation of net income
Limited Partners		$	117,000			$	53,000
General Partners			1,000				1,000
		$	118,000			$	54,000
Limited Partners’ net income per unit:		$	25.95			$	11.76
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 CASH FLOWS

For the nine months ended September 30, 2013 and 2012

(Unaudited)

 

		2013				2012
Cash flows from operating activities:
Net income		$	118,000			$	54,000
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation			24,000				29,000
Amortization of deferred gain			(162,000	)			(162,000	)
Provision for doubtful accounts			4,000				3,000
Changes in assets and liabilities:
Accounts receivable			(17,000	)			(1,000	)
Other assets			(13,000	)			(35,000	)
Accounts payable and accrued expenses			12,000				(37,000	)
Deferred rentals			3,000				(1,000	)
Net cash provided by (used for) operating activities			(31,000	)			(150,000	)
Cash flows from investing activities:
Receivable from Affiliates (Note 4)			—				290,000
Improvements to marina facilities			—				(17,000	)
Cash flows provided by investing activities			—				273,000
Net change in cash and cash equivalents			(31,000	)			123,000
Cash and cash equivalents at the beginning of period			179,000				97,000
Cash and cash equivalents at the end of period		$	148,000			$	220,000

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, 2013

(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.

Basis of Presentation

The unaudited financial statements of Tower Park Marina Investors, LP at September 30, 2013 and for the nine months ended September 30, 2013 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, 2013 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2013. These unaudited financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2012 included in our Annual Report on Form 10-K.

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.

 

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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, 2013

(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

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 were borne by Westrec Investors, Inc.

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 weighted average number of the Limited Partnership units outstanding during the nine months ended September 30, 2013 and 2012, totaling 4,508.

 

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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, 2013

(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 believes that the carrying value of its cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities as of September 30, 2013 and December 31, 2012 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, 2013

(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 February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in this ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The amendments are effective for reporting periods beginning after December 15, 2012, for public companies and are effective for reporting periods beginning after December 15, 2013, for private companies. Early adoption is permitted. This had no impact on the Partnership’s financial statements.

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. ASU 2013-01 clarifies that ordinary trade receivables and payables are not in the scope of ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. Specifically, ASU 2011-11 applies only to derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria contained in the FASB Accounting Standards Codification™ (Codification) or subject to a master netting arrangement or similar agreement. An entity is required to apply the amendments in ASU 2013-01 for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The effective date is the same as the effective date of ASU 2011-11. This had no impact on the Partnership’s 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, 2013

(Unaudited)

 

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

 

In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. Offsetting, otherwise known as netting, is the presentation of assets and liabilities as a single net amount in the statement of financial position (balance sheet). Unlike IFRS, U.S. GAAP allows companies the option to present net in their balance sheets derivatives that are subject to a legally enforceable netting arrangement with the same party where rights of set-off are only available in the event of default or bankruptcy.

To address these differences between IFRS and U.S. GAAP, in January 2011 the FASB and the IASB (the Boards) issued an exposure draft that proposed new criteria for netting that were narrower than the current conditions currently in U.S. GAAP. Nevertheless, in response to feedback from their respective stakeholders, the Boards decided to retain their existing offsetting models. Instead, the Boards have issued common disclosure requirements related to offsetting arrangements to allow investors to better compare financial statements prepared in accordance with IFRS or U.S. GAAP. ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. This had no impact on the Partnership financial statements.

There were no other new accounting pronouncements that are expected to have a material impact or have potential material significance to the Partnership.

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.

 

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. The Partnership agreed to make these repairs over the next several years. As of September 30, 2013, $329,000 has been spent towards this commitment.

 

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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, 2013

(Unaudited)

 

2.	Tower Park Marina (continued)

 

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 will be 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, 2013 and 2012, $54,000 and $162,000 respectively, of the deferred gain from the sale was amortized for each period, and is reflected in cost of operations. The remaining unamortized gain balance was $753,000 at September 30, 2013, and $915,000 at December 31, 2012.

At September 30, 2013 and December 31, 2012 the remaining assets related to Tower Park Marina that remain as part of the Partnership are composed of the following:

 

		2013				2012
Leasehold interest		$	27,000			$	27,000
Floating docks			94,000				94,000
Furniture, fixtures and equipment			243,000				243,000
Vehicles			36,000				36,000
			400,000				400,000
Less accumulated depreciation			(310,000	)			(286,000	)
		$	90,000			$	114,000

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

 

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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, 2013

(Unaudited)

 

3.	Other Assets

Other assets as of September 30, 2013 and December 31, 2012 are composed of the following:

 

		2013				2012
Fuel inventory		$	27,000			$	32,000
Other prepaid expenses			41,000				23,000
		$	68,000			$	55,000

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 for the three and nine months ended September 30, 2013 and 2012 were $16,000 and $41,000, $15,000 and $40,000, respectively.

In connection with their services in negotiating and obtaining permanent financing from an unaffiliated lender, the General Partners or their affiliates are entitled to receive an amount 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 paid to the General Partners or their affiliates for the three and nine months ended September 30, 2013 and 2012.

Transfers totaling $290,000 had been advanced to an affiliate of Westrec Investors, Inc., the General Partner of the Partnership at the end of 2011. These transfers were characterized as a receivable from affiliates on the balance sheet and accrued interest at prime rate plus one percent. The entire $290,000 of outstanding receivable was repaid on February 15, 2012.

 

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 months of April through October.

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.

 

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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, 2013

(Unaudited)

 

5.	Commitments and Contingencies ( continued)

 

In 2013, KOA agreed to reduce the Partnership’s current lease expense. Effective March 1, 2013, the monthly lease payment was reduced from $29,652 to $16,667. The Partnership will pay 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 for the three and nine months ended September 30, 2013 is $50,000 and $176,000, respectively, paid to KOA. For the three and nine months ended September 30, 2012, $89,000 and $254,000, respectively, was paid to KOA.

Also included in lease expense in cost of operations for the three and nine months ended September 30, 2013 was $10,000 and $30,000 respectively related to the CSLC lease ($10,000 and $30,000 for the three and nine months ended September 30, 2012). Approximately $317,000 has been spent on capital improvement projects. These contractual obligations are summarized below:

Disclosure of Contractual Obligations

 

		Total				Less than 1 Year				1 – 3 Years				3-5 Years				More than 5 Years
Operating Leases:
KOA Lease		$	700,000			$	50,000			$	400,000			$	250,000				—
Deferred maintenance reserve			109,000				109,000				—				—				—
CSLC Lease Reimbursement			140,000				10,000				80,000				50,000				—
Capital Improvement Commitment			171,000				13,000				100,000				58,000				—
Other Long-Term Liabilities			—				—				—				—				—
Total		$	1,120,000			$	182,000			$	580,000			$	358,000				—

 

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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, 2013

(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 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.

Segment Information (in 000’s)

 

		For the nine-months ended September  30,								For the three-months ended September  30,
Revenues		2013				2012				2013				2012
Slip Rental		$	523			$	512			$	185			$	187
Dry Storage			102				99				38				37
Fuel Service			149				161				93				104
Interest income			8				9				3				3
Total Revenue		$	782			$	781			$	319			$	331
Profit (Loss)
Slip Rental		$	499			$	498			$	174			$	179
Dry Storage			94				90				34				32
Fuel Service			23				31				24				26
Other (1)			(498	)			(565	)			(171	)			(211	)
Total Profit (Loss)		$	118			$	54			$	61			$	26

 

		September 30, 2013				December 31, 2012
Assets
Slip Rental		$	94			$	94
Unallocated amount (2)			252				281
Total Assets		$	346			$	375

 

(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 include general and administrative expenses.

(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.

 

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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

September 30, 2013

(Unaudited)

 

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 $17,500 and $17,000, respectively for the calendar years 2013 and 2012. The Partnership may match up to 50% of the employee’s quarterly contribution up to $1,250 per year. The Partnership’s matching contribution, which was included in cost of operations, was $150 and $450 for each of the three and nine month periods ended September 30, 2013 and 2012.

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

 

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. 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 2013 and beyond is contingent on, among other factors, the 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.

 

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, other than those described in these notes, have occurred that require disclosure.

 

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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

a California Limited Partnership

PART I. FINANCIAL INFORMATION

September 30, 2013

(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 79% as of September 30, 2013. Dry storage has suffered similarly. 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 were 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. The Partnership’s monthly lease payment to KOA increased in March of 2012; from $25,000 per month to $29,692 which translated to $56,304 of additional lease expense annually. As discussed in Note 5 to the financial statements, the Partnership has renegotiated the lease payment in an effort to improve cash flow from the property. Effective March 1, 2013, the monthly lease payment was reduced from $29,652 to $16,667, which will have 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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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

PART I. FINANCIAL INFORMATION

September 30, 2013

(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, 2013 and 2012

The revenues and expenses of the Partnership for the nine months ended September 30, 2013 are generated from the marina and dry storage operations of Tower Park in the Sacramento – San Joaquin Delta near Sacramento. As of September 30, Tower Park Marina had the following occupancies:

 

		2013								2012
		Available				Occupied				Available				Occupied
Wet slips			232	(1)			79.7	%			232	(1)			81.5	%
Dry storage			149				79.8	%			149				67.1	%

(1) non-transient slips only

For the nine months ended September 30, 2013, revenues from operations for Tower Park remained stable, increasing $1,000 to $782,000. Despite inclement weather in Northern California in the first quarter of 2013, occupancies improved at the marina. Slip rental and dry storage revenues increased $11,000 and $3,000, respectively, due to increased marketing efforts by marina staff and improvements in the economy. The marina raised its gasoline and diesel prices in response to increasing fuel costs in the area, which resulted in a $12,000 decline in revenues. Fuel margins declined as well. As prices remain high throughout the area, customers have become more price sensitive, and some boaters are using their vessel less. The marina is finding it increasingly difficult to compete with higher volume retailers in the area.

The Partnership’s net profit from operations of $118,000 for the nine months ended September 30, 2013 is a $64,000 improvement over the same period a year ago. The Partnership successfully renegotiated its lease with KOA effective March 1, 2013, which accounts for $91,000 of savings for the nine months ended September 30, 2013. In addition, the property continues to look for ways to improve operations, including promotions to reward long-term slip-lease contracts.

The Partnership’s cash balance decreased $31,000 to $148,000 for the nine months ended September 30, 2013.

Liquidity and capital resources

The Partnership had a net loss from operations for the nine months ended September 30, 2013 of $20,000 (net income/loss before depreciation and amortization of deferred gain), which was covered from existing cash balances. The Partnership successfully renegotiated the lease with KOA, reducing its monthly lease commitment from $29,692 to $16,667. Despite the reduction in rent, the Partnership continues to operate at a deficit, and its liabilities exceed its current cash and accounts receivable balances. The issue raises 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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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

September 30, 2013

(Unaudited)

 

Liquidity and capital resources ( continued)

 

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 $400,000 in repairs to the property and resulted in a gain of approximately $8,117,000 and deferred gain of $2,152,000. 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 requires minimum monthly payments of $25,000 for the first five years. This 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				More than 5 Years
Operating Leases:
KOA Lease		$	700,000			$	50,000			$	400,000			$	250,000				—
Deferred maintenance reserve			109,000				109,000				—				—				—
CSLC Lease Reimbursement			140,000				10,000				80,000				50,000				—
Capital Improvement Commitment			171,000				13,000				100,000				58,000				—
Other Long-Term Liabilities			—				—				—				—				—
Total		$	1,120,000			$	182,000			$	580,000			$	358,000				—

The Partnership had a remaining cash balance of $148,000 as of September 30, 2013. Despite the successful restructuring of the lease with KOA, the Partnership continues to operate at a deficit, and its liabilities exceed its current cash and accounts receivable balances. The issue raises 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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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

PART I. FINANCIAL INFORMATION

September 30, 2013

(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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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

September 30, 2013

(Unaudited)

 

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, 2013. that has materially affected, or is 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, 2012 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.

No legal actions have been brought against the Partnership as a result of the loans that were made to, and repaid by, the General Partner. In the event of such action, all legal and other costs incurred by the Partnership would be reimbursed by the General Partner, and would not result in any cost to the Partnership.

 

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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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

September 30, 2013

(Unaudited)

 

Item 6.

Exhibits and Report 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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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

September 30, 2013

(Unaudited)

 

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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