Attached files

file filename
EX-31 - EXHIBIT 31.1 - PISMO COAST VILLAGE INCexhibit31_1.htm
EX-31 - EXHIBIT 31.2 - PISMO COAST VILLAGE INCexhibit31-2.htm
EX-32 - EXHIBIT 32.2 - PISMO COAST VILLAGE INCexhibit32-2.htm
EX-32 - EXHIBIT 32.3 - PISMO COAST VILLAGE INCexhibit32-3.htm
EXCEL - IDEA: XBRL DOCUMENT - PISMO COAST VILLAGE INCFinancial_Report.xls
EX-31 - EXHIBIT 31.3 - PISMO COAST VILLAGE INCexhibit31-3.htm
EX-32 - EXHIBIT 32.1 - PISMO COAST VILLAGE INCexhibit32-1.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, 2013

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 company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).       YES [  ]            NO [X]

 

1

 


 

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.            YES [  ]            NO [  ]

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.            1,783

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1.       FINANCIAL STATEMENTS

The following financial statements and related information are included in this Form 10-Q, Quarterly Report.

 

1.   Accountant’s Review Report

 

2.   Balance Sheets

 

3.   Statements of Operations and Retained Earnings

 

4.   Statements of Cash Flows

 

5.   Notes to Financial Statements (Unaudited)

 

The financial information included in Part I of this Form 10-Q has been reviewed by Brown Armstrong Accountancy Corporation, the Company's Certified Public Accountants, and all adjustments and disclosures proposed by said firm have been reflected in the data presented. The information furnished reflects all adjustments which, in the opinion of management, are necessary to a fair statement of the results for the interim periods.

 

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

 

STATEMENT ON FORWARD-LOOKING INFORMATION

Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to anticipated expenses, capital spending and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include, but are not limited to, those relating to competitive industry conditions, California tourism and weather conditions, dependence on existing management, leverage and debt service, the regulation of the recreational vehicle industry, domestic or global economic conditions and changes in federal or state tax laws or the administration of such laws.

 

2


 

 

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 current 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 7.8%, or 1919 nights. Based on advanced reservation deposits, occupancy projections are up 9% 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 up 21.6% year-to-date, and management feels this trend will continue throughout the remainder of the fiscal year unless there is a setback to the overall economy.

 

RV storage and towing continues 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 13.9% and 25.1%, compared to the previous year due to a 12.8% 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 twenty-seven parks nationally to receive an industry rated “A” park from over 33,000 surveys for customer satisfaction in 2013.

 

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, 2013, increased $85,078, or 7.9%, from the same period in 2012. This increase is primarily due to a $31,864, or 4.3%, increase in year-to-date site revenue as a result of a rate increase and a 9.9% increase in paid site occupancy. An increase of $49,083, or 16.0%, in storage and towing revenue is due to a 12.8% in storage occupancy, opening a self-access storage lot and efforts to increase storage following previous year’s loss of storage customers due to the economy and personal finances.

 

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.

 

 

3

 


 

 

Income from retail operations increased by $46,941 for the three-month period ended December 31, 2013, 21.6% above the same period in 2012. The General Store showed an $18,178, or 16.4%, increase in revenue, while RV Service and Repair increased revenue 26.8%, or $28,763. Management feels the retail operation’s increase in revenue reflects increased resort occupancy and resort guest’s becoming more confident in the overall economy.

 

The Company anticipates slight to moderate increase 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, 2013, increased $102,963, or 10.3%, above the same period ended December 31, 2012. This reflects an increase in labor and labor related expenses, workers’ compensation, tree trimming, water and sewer, electricity, stockholders’ expense, and property taxes. 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, 2013, are 44.9% compared to 47.9% for the same period in 2012, 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, 2013, was $40,295, compared to $48,763 for the same period ending 2012. 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, 2013.

 

Income before provisions for income taxes for the three-month period ended December 31, 2013, increased by $14,767 above the same period in 2012. This increase in income 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, 2013, is $1,825,511, which is 9.9% more than the same position in 2012. This increase is primarily due to the Company's increase in rental deposits and timing of capital expenditures. The cash balance decreased $280,328 from the fiscal year ended September 30, 2013 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.

 

4


 

 

Accounts payable and accrued liabilities decreased $21,273 below the same period last year and increased $38,106 since the 2013 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 decreased to $699,989 at the end of the first quarter of fiscal year 2014, compared with $766,552 at the end of fiscal year 2013.

 

CAPITAL RESOURCES AND PLANNED EXPENDITURES

The Company plans capital expenditures of approximately $550,000 in fiscal year 2014 to further enhance the resort facilities and services. These projects include replacement of a restroom, playground upgrade, road paving, and replacement of the security patrol vehicle.  Funding for these projects is expected to be from normal operating cash flows and, if necessary, supplemented with outside financing. These capital expenditures are expected to increase the resort’s value to its shareholders and the general public.

 

After years with no debt, the Board of Directors approved expansion of the RV storage program and understood this investment would require substantial financing. Management has made it a high priority to effect timely construction and successful marketing in order to maximize return on this investment.

 

Capital expenditures are consistent with prior years and operations and are expected to provide adequate resources to support the amounts committed to complete the authorized capital projects during the fiscal year. Second quarter site occupancy and storage fill are expected to be consistent with that of the past year. Capital projects are designed to enhance the marketability of the camping sites and enhance support facilities.

 

DISCLOSURE CONCERNING WEBSITE ACCESS TO COMPANY REPORTS

The Company makes available on its website, www.pismocoastvillage.com, access to its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC).

 

The public may read and copy any of the materials filed with the SEC at the SEC’s Public Reference room located at 100 F Street, N. E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy statements, and other information that the Company files with the SEC.

 

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, 2013, 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, 2013.

 

5


 

 

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, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II -- OTHER INFORMATION

 

ITEM 1.       LEGAL PROCEEDINGS

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

 

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

Not Applicable

 

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

Not Applicable

 

ITEM 5.       OTHER INFORMATION

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The annual meeting for the shareholders of Pismo Coast Village, Inc. was held Saturday, January 18, 2014 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 2015 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

703

Buchaklian, Harry

731

Enns, Rodney

672

Eudaly, Douglas

1,040

Fischer, William

677

Hardesty, Wayne

662

Harris, R. Elaine

842

Hearne, Dennis

702

Hickman, Glenn

672

Hughes, Terris

686

Nelson, Garry

669

Nunlist, Ronald

805

Pappi, Jr., George

696

Pettibone, Jerald

699

Plumley, Dwight

1,065

Roberts, Jerry

670

Willems, Gary

697

Williams, Jack

682

  

6

 


 

 

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 2013 - 2014:

 

 

Affirmative Votes

 

723

Negative Votes

 

5

Abstains

 

30


Proposal to approve a non-binding advisory vote to approve the compensation of the Company’s named executive officer:

 

Affirmative Votes

622

Negative Votes

43

Abstains

73

 

Proposal to approve a non-binding advisory vote to recommend whether the advisory shareholder vote on executive compensation should occur every one, two or three years :

 

One Year

 

167

Two Years

 

112

Three Years

 

358

Abstains

 

103

 

 

ITEM 5.       OTHER INFORMATION

The annual meeting of the shareholders of Pismo Coast Village, Inc. was held Saturday, January 18, 2014, 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

Ronald Nunlist

Executive Vice President

Terris Hughes

V. P. – Finance/Chief Financial Officer

Wayne Hardesty

V. P. – Operations

Dwight Plumley

V. P. – Secretary

George Pappi, Jr.

Assistant Corporate Secretary

Jay Jamison

 

7


 

 

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 (Ronald Nunlist, President and Chairman of the Board)

 

 

 

 

31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(Jay Jamison, Chief Executive Officer and principal executive officer)

 

 

 

 

31.3

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(Wayne Hardesty, Chief Financial Officer, principal financial officer and principal accounting officer)

 

 

 

 

32.1

Certification Pursuant to 18 U. S. C. Subsection 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Ronald Nunlist, President and Chairman of the Board)

 

 

 

 

32.2

Certification Pursuant to 18 U. S. C. Subsection 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Jay Jamison, Chief Executive Officer and principal executive officer)

 

 

 

 

32.3

Certification Pursuant to 18 U. S. C. Subsection 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Wayne Hardesty, Chief Financial Officer, principal financial officer and principal accounting officer)

 

 

 

8


 

 

 

 

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, 2013 and 2012 and the related statements of operations and retained earnings and cash flows for the three-month periods ended December 31, 2013 and 2012. 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, 2013, and the related statements of operations and retained earnings, and cash flow for the year then ended, and in our report dated November 12, 2013, 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, 2013, is fairly stated, in all material respects.

 

                                                                  BROWN ARMSTRONG ACCOUNTANCY CORPORATION

 

 

Bakersfield, California

February 10, 2014

 

 

10

 


 

 

 

 
 

PISMO COAST VILLAGE, INC.

BALANCE SHEETS

DECEMBER 31, 2013 AND 2012 AND SEPTEMBER 30, 2013

 

 

 

 

 

 

 

 

 

December 31,

2013

September 30,

2013

December 31,

2012

 

 

(Unaudited)

(Audited)

(Unaudited)

 

 

 

 

ASSETS

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

$

1,825,511

$

2,105,839

$

1,661,455

Accounts receivable

16,505

27,385

20,252

Inventory

165,722

161,853

157,709

Current deferred taxes

82,400

82,800

73,200

Prepaid income taxes

-

-

73,000

Prepaid expenses

159,808

48,136

123,728

Total current assets

2,249,946

2,426,013

2,109,344

 

 

 

 

Pismo Coast Village Recreational Vehicle Resort and Related Assets – Net of accumulated depreciation

14,308,689

14,369,564

14,277,579

Other Assets

17,176

18,274

21,569

Total Assets

$

16,575,811

$

16,813,851

$

16,408,492

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current Liabilities

 

 

 

Accounts payable and accrued liabilities

$

225,066

$

186,960

$

246,339

Accrued salaries and vacation

64,741

214,361

61,793

Rental deposits

1,012,425

934,229

850,670

Income taxes payable

42,400

121,100

-

Current portion of long-term debt

205,416

202,811

170,235

Total current liabilities

1,550,048

1,659,461

1,329,037

Long-Term Liabilities

 

 

 

Long-term deferred taxes

889,200

893,900

793,000

N/P Donahue Trans

69,600

74,080

87,086

N/P Mission Community Bank

2,900,797

2,948,768

3,600,461

Total Liabilities

5,409,645

5,576,209

5,809,584

 

 

 

 

Stockholders’ Equity

 

 

 

Common stock – no par value, 1,800 shares issued 1,783 and 1.787 shares outstanding at December 31, 2013 and 2012, respectively

5,594,369

5,606,919

5,606,919

Retained earnings

5,571,797

5,630,723

4,991,989

Total stockholders’ equity

11,166,166

11,237,642

10,598,908

 

 

 

 

Total Liabilities and Stockholders’ Equity

$

16,575,811

$

16,813,851

$

16,408,492

 

 

 

 

 

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

 

11

 


 

 

 

PISMO COAST VILLAGE, INC.

STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

(UNAUDITED)

THREE MONTHS ENDED DECEMBER 31, 2013 AND 2012

 

 

 

 

 

 

 

Three Months

Ended December 31,

 

 

2013

2012

Income

 

 

Resort operations

$

1,163,950

$

1,078,872

Retail operations

264,374

217,433

Total income

1,428,324

1,296,305

 

 

 

Costs and Expenses

 

 

Operating expenses

1,105,223

1,002,260

Cost of goods sold

118,874

104,297

Depreciation

90,346

82,091

Total costs and expenses

1,314,443

1,188,648

 

 

 

Income from operations

113,881

107,657

 

 

 

Other Income (Expense)

 

 

Interest/dividend income

1,038

963

Interest expense

(40,295)

(48,763)

Total other income (expense)

(39,257)

(47,800)

 

 

 

Income Before Provision for Income Taxes

74,624

59,857

 

 

 

Income Tax Expense

38,100

27,400

 

 

 

Net Income

36,524

32,457

 

 

 

Retained Earnings – Beginning of Period

5,630,723

4,959,532

 

 

 

Redemption of Stock

(95,450)

-

 

 

 

Retained Earnings – End of Period

$

5,571,797

$

4,991,989

 

 

 

Net Income Per Share

$

20.48

$

18.16

 

 

 

 

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

 

12

 


 

 

 

PISMO COAST VILLAGE, INC.

STATEMENTS OF CASH FLOWS (UNAUDITED)

THREE MONTHS ENDED DECEMBER 31, 2013 AND 2012

 

 

 

 

 

 

 

2013

2012

Cash Flows From Operating Activities

 

 

Net Income

$

36,524

$

32,457

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

 

 

Depreciation

$

90,346

$

82,091

Decrease in accounts receivable

10,880

295

(Increase) Decrease in inventory

(3,869)

86

Decrease in deferred taxes

(4,300)

(3,400)

Decrease in prepaid income taxes

-

30,800

(Increase) in prepaid expenses

(111,672)

(83,552)

Increase in accounts payable and

 

 

Accrued liabilities

38,106

95,823

Decrease in accrued salaries and vacation

(149,620)

(121,529)

Increase (Decrease) in rental deposits

78,196

(31,900)

(Decrease) in Income taxes payable

(78,700)

-

Total adjustments

(130,633)

(31,286)

 

 

 

Net cash provided by (used in) operating activities

(94,109)

1,171

 

 

 

Cash Flows From Investing Activities

 

 

Capital expenditures

(28,373)

(131,272)

Net cash used in investing activities

(28,373)

(131,272)

 

 

 

Cash Flows from Financing Activities

 

 

Redemption of stock

(108,000)

-

Principal repayments of note payable

(49,846)

(41,379)

Net cash used in financing activities

(157,846)

(41,379)

 

 

 

Net decrease in cash and cash equivalents

(280,328)

(171,480)

 

 

 

Cash and Cash Equivalents – Beginning of Period

2,105,839

1,832,935

 

 

 

Cash and Cash Equivalents – End of Period

$

1,825,511

$

1,661,455

 

 

 

Schedule of Payments of Interest and Taxes

 

 

Payments for income tax

$

121,124

$

-

Cash paid for interest

$

40,295

$

48,763

 

 

 

 

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

 

13

 


 

 

PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012 AND SEPTEMBER 30, 2013

 

 

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 – Pismo Coast Village

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 for 2013 and 2012 are based on the 1,783 and 1,787 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 $5,557 and $8,670 for the three months ended December 31, 2013 and 2012, respectively. There was no advertising expense capitalized in prepaid expense.

 
14

 

 

PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2013 AND 2012 AND SEPTEMBER 30, 2013

PAGE 2
 
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
Concentration of Credit Risk

At December 31, 2013 and 2012, the Company had deposits of $0 and $1,356,538, respectively, in excess of the federally insured limit with Mission Community Bank. Mission Community Bank is a member of CDARS, the Certificate of Deposit Account Registry Service. Large deposits are divided into smaller amounts and placed with other FDIC insured banks which are also members of the CDARS network. Then, those member banks 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, 2013, 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 during the next quarter.  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, 2010 and by the California Franchise Tax Board for fiscal years ending on or after September 30, 2009.

 

Recent Accounting Pronouncements

The Company has reviewed all recently issued accounting pronouncements and does not believe the adoption of such pronouncements have an impact on the Company’s financial condition or results of their operations. Various accounting standards and interpretations were issued with effective dates subsequent to December 31, 2013. The Company has evaluated the recently issued accounting pronouncements that are effective in the current period and believes that none of them will have a material effect on the Company’s financial position, results of operations or cash flows when adopted.

 

Subsequent Events

Subsequent events have been evaluated through February 10, 2014, which is the date the financial statements were available to be issued.

 

 

15


 

 

PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2013 AND 2012 AND SEPTEMBER 30, 2013

PAGE 3

 

 

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

 

At December 31, 2013, September 30, 2013 and December 31, 2012, property and equipment included the following:

 

 

December 31,

2013

September 30,

2013

December 31,

2012

Land

$

9,957,263

$

 9,957,263

$

 9,957,263

Building and resort improvements

10,691,168

10,691,168

10,275,009

Furniture, fixtures, equipment and leasehold improvements

476,623

476,623

459,976

Transportation equipment

480,881

459,718

457,989

Construction in progress

 

76,450

 

69,240

 

179,889

 

21,682,385

21,654,012

21,330,126

Less: accumulated depreciation

 

(7,373,696)

 

(7,284,448)

 

(7,052,547)

Total

$

14,308,689

$

14,369,564 

$

14,277,579

 

Depreciation expense for December 31, 2013 and 2012 were $90,346 and $82,091 respectively.

 

NOTE 4 - LINE OF CREDIT

 

The Company has a revolving line of credit for $500,000 with Mission Community Bank which expires March 2014 The interest rate is variable, at one percent over West Coast Prime with an initial rate of 4.25 percent at December 31, 2013.  The purpose of the line of credit is to augment operating cash needs in off-season months. There were no outstanding amounts on the line of credit as of December 31, 2013 and 2012 and September 30, 2013.

 

NOTE 5 - NOTE PAYABLE
 

The Company secured permanent financing on the purchase of storage lot land in Arroyo Grande, California, with Mission Community Bank. The loan was refinanced on April 6, 2006 and consolidated with a note for the purchase of another storage lot in Oceano, California. The total loan currently outstanding is $347,633 and was financed over a period of ten years at a variable interest rate currently at 5.00%. The lot in Oceano was formerly leased for $4,800 per month and was purchased for $925,000. The payments are currently $12,760 per month interest and principal. The Company also secured permanent financing on the purchase of another storage lot in Arroyo Grande, California with Mission Community Bank. The loan originated on May 8, 2008. The total loan currently outstanding is $2,741,093 and financed over a period of ten years at a variable interest rate currently at 5.0%. The payments are currently $15,416 per month interest and principal. The Company secured a vehicle lease with Donahue Transportation Services Corp on a 2008 Tow Truck. The loan originated on December 9, 2009. The total loan currently outstanding is $28,033 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 $59,054 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.

 

16

 

 

 

PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2013 AND 2012 AND SEPTEMBER 30, 2013

PAGE 4

 

NOTE 5 - NOTE PAYABLE (continued)

At December 31, 2013, future minimum payments are as follows:

 

Period Ending December 31,

 

 

2014

$

205,416

2015

 

216,185

2016

 

136,459

2017

 

71,899

2018

 

2,541,705

Thereafter

 

4,149

Total

$

3,175,813

 

 

 

 

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.

 

The Company redeemed four shares of Common stock from two shareholders in the current quarter for $108,000. At this time the stock has not been retired.

 

NOTE 7 - INCOME TAXES

The provision for income taxes is as follows:

 

 

December 31,

2013

 

December 31,

2012

 

 

 

 

 

 

 

 

Income tax provision

$

38,100

 

$

27,400


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.

 

 

17

 


 

 

PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2013 AND 2012 AND SEPTEMBER 30, 2013

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, 2013, future minimum lease payments under the copier lease were as follows:

 

 

For the Year Ended December 31,

 

 

2014

$

4,965

2015

 

4,965

2016

 

4,965

2017

 

1,241

2018

 

-

Thereafter

 

-

Total

$

16,136

 

Rent expense under these agreements was $8,995 and $23,319 for the three-month period ended December 31, 2013 and 2012, 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 $15,890 and $14,979 for the three months ended December 31, 2013 and 2012, respectively.

 

 

18