Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

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

For the quarterly period ended: March 31, 2016

 

¨	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 March 31, 2016, Tower Park Marina Investors, LP had 4,508 units of limited partnership interest outstanding.

 

 

 

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Table of Contents

TABLE OF CONTENTS

Report on Form 10-Q

For quarter ended March 31, 2016

 

PART I.   FINANCIAL INFORMATION				Page
ITEM 1.		FINANCIAL STATEMENTS
		Balance Sheets as of March 31, 2016 and December 31, 2015		2
		Statements of Operations for the three months ended March 31, 2016 and 2015		3
		Statements of Changes in Partners Equity(Deficit) for the three months ended March 31, 2016 and year ended December 31, 2015		4
		Statements of Cash Flows for the three months ended March 31, 2016 and 2015		5
		Notes to Financial Statements		6-20
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		21-23
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		24
ITEM 4.		CONTROLS AND PROCEDURES		24
PART II.   OTHER INFORMATION
ITEM 1.		LEGAL PROCEEDINGS		25
ITEM 1A.		RISK FACTORS		25
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		25
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES		25
ITEM 4.		SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS		25
ITEM 5.		OTHER INFORMATION		25
ITEM 6.		EXHIBITS AND REPORTS ON FORM 8-K		26
SIGNATURES				27
CERTIFICATIONS

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Table of Contents

TOWER PARKMARINA INVESTORS, L.P

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

BALANCE SHEETS

 

ITEM 1.

Financial Statements

 

ASSETS		March 31, 2016				December 31, 2015
		(Unaudited)
Cash and cash equivalents		$	9,000			$	115,000
Accounts receivable net of allowance for doubtful accounts of $36,000 in 2016 and $35,000 in 2015			33,000				40,000
Tower Park Marina, net (Note 2)			64,000				64,000
Other assets (Note 3)			38,000				41,000
TOTAL ASSETS		$	144,000			$	260,000
LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)
Accounts payable and accrued expenses		$	274,000			$	399,000
Deferred gain on sale of Tower Park Marina (Note 2)			215,000				269,000
Payable to affiliate			16,000				—
Deferred rentals			32,000				25,000
Total liabilities			537,000				693,000
Commitments and contingencies (Note 5)			—				—
Partners’ equity (deficit):
Limited partners’ equity, $5,000 per unit, 4,508 units authorized, issued and outstanding			426,000				386,000
Deferred contributions			(27,000	)			(27,000	)
Limited partners’ equity			399,000				359,000
General partners’ deficit			(792,000	)			(792,000	)
Total partners’ deficit			(393,000	)			(433,000	)
TOTAL LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)		$	144,000			$	260,000

See accompanying notes to financial statements.

 

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Table of Contents

TOWERPARKMARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

STATEMENTS OF OPERATIONS

For the three months ended March 31, 2016 and 2015

(Unaudited)

 

		2016				2015
Revenues:
Slip rental		$	154,000			$	166,000
Dry storage			37,000				33,000
Fuel service			10,000				17,000
Interest and other income			2,000				3,000
Revenues from operations			203,000				219,000
Expenses:
Slip rental			4,000				6,000
Dry storage			1,000				1,000
Fuel service			8,000				15,000
Cost of operations			133,000				131,000
Management fees (Note 4)			12,000				12,000
Depreciation			5,000				6,000
			163,000				171,000
Net income		$	40,000			$	48,000
Allocation of net income
Limited Partners		$	40,000			$	48,000
General Partners			—				—
		$	40,000			$	48,000
Limited Partners’ net income per unit:		$	8.87			$	10.65
Total units outstanding			4,508				4,508

See accompanying notes to financial statements.

 

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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

STATEMENTS OF CHANGES IN PARTNERS’ EQUITY (DEFICIT)

For the three months ended March 31, 2016 and year ended December 31, 2015

(Unaudited)

 

		General Partners				Limited Partners				Total
Balances at December 31, 2014		$	(793,000	)		$	240,000			$	(553,000	)
Net income			1,000				119,000				120,000
Balances at December 31, 2015			(792,000	)			359,000				(433,000	)
Net income			—				40,000				40,000
Balances at March 31, 2016		$	(792,000	)		$	399,000			$	(393,000	)

See accompanying notes to financial statements.

 

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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2016 and 2015

(Unaudited)

 

		2016				2015
Cash flows from operating activities:
Net income		$	40,000			$	48,000
Adjustments to reconcile net income to cash flows provided by (used for) operating activities:
Depreciation and amortization			5,000				6,000
Amortization of deferred gain			(54,000	)			(54,000	)
Provision for doubtful accounts			1,000				1,000
Changes in assets and liabilities:
Accounts receivable			6,000				(11,000	)
Other assets			3,000				3,000
Accounts payable and accrued expenses			(125,000	)			(76,000	)
Deferred rentals			7,000				—
Cash flow used in operating activities			(117,000	)			(83,000	)
Cash flows used in investing activities:
Improvements to marina facilities			(5,000	)			—
Cash flow used in investing activities			(5,000	)			—
Cash flows provided by financing activities:
Advances from affiliate			16,000				—
Cash flow provided by financing activities			16,000				—
Net decrease in cash and cash equivalents			(106,000	)			(83,000	)
Cash and cash equivalents at the beginning of period			115,000				152,000
Cash and cash equivalents at the end of period		$	9,000			$	69,000

See accompanying notes to financial statements.

 

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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

March 31, 2016

(Unaudited)

 

1.	Summary of Significant Accounting Policies and Partnership Matters

Description of the Partnership

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

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

The Partnership was formed to sell a maximum of 12,000 units of limited partnership interest at $5,000 per unit ($60,000,000). The General Partners have contributed a total of $1,000. On November 27, 1989, the Partnership’s offering was terminated with 4,508 units issued, resulting in $22,540,000 of limited partner funds being raised (before commission discount of $3,000 granted to an investor). Half of each Limited Partner’s total capital contribution was deferred. The final installment was due on August 1, 1990, and $27,000 of such deferrals remain outstanding. At March 31, 2016, a subsidiary of the General Partner owned 46.83% of the outstanding limited partnership units.

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

Basis of Presentation

The financial statements of Tower Park Marina Investors, LP at March 31, 2016 and for the three months ended March 31, 2016 and 2015 are presented in accordance with accounting principles generally accepted in the United States of America for annual financial information and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and with the instruction to Form 10 and Article 8 of Regulation S-X.

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

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

March 31, 2016

(Unaudited)

 

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

 

Tower Park Marina (continued)

 

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

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

Impairment of Long-lived Assets

The Partnership reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The measurement of possible impairment is based primarily on the undiscounted future operating cash flows without interest charges generated through the use of these assets during their remaining estimated useful life. The assessed recoverability of long-lived assets will be impacted if estimated future operating cash flows are not achieved. The Partnership believes that no events occurred that would impair the carrying value of its long-lived assets during the three months ended March 31, 2016.

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.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

March 31, 2016

(Unaudited)

 

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

 

Accounts Receivable

 

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

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.

 

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TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

NOTES TO FINANCIAL STATEMENTS

March 31, 2016

(Unaudited)

 

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

 

Fair Value Measurements (continued)

 

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

The Partnership believes that the carrying value of its cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities as of March 31, 2016 and December 31, 2015 approximate their fair values because of the short-term nature of those instruments.

Earnings Per Unit

Per unit data is based on the weighted average number of the Limited Partnership units outstanding during the three months ended March 31, 2016 and 2015; 4,508.

Taxes Based on Income

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

Cash and Cash Equivalents

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

Concentration of Credit Risk.

Financial instruments that potentially subject the Company 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 May 2014 the FASB issued Accounting Standards Update (ASU) 2014-09 Revenue from Contracts with Customers (Topic 606). This ASU provides a robust framework for addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, including industry-specific guidance, in current U.S. GAAP. The revenue recognition policies of almost all entities will be affected by the new guidance in the ASU. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Partnership has yet to determine the impact this ASU will have on its financial statements.

In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).

 

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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

March 31, 2016

(Unaudited)

 

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

 

Recently Issued Accounting Standards (continued)

 

The amendments relate to when another party, along with the entity, is involved in providing a good or service to a customer. Topic 606, Revenue from Contracts with Customers, requires an entity to determine whether the nature of its promise is to provide that good or service to the customer (i.e., the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (i.e., the entity is an agent).

The amendments are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations by clarifying the following:

 

•

An entity determines whether it is a principal or an agent for each specified good or service promised to a customer.

 

•

An entity determines the nature of each specified or service (e.g., whether it is a good, service, or a right to a good or service).

 

•

When another entity is involved in providing goods or services to a customer, an entity that is a principal obtains control of: (a) a good or another asset from the other party that it then transfers to the customer; (b) a right to a service that will be performed by another party, which gives the entity the ability to direct that party to provide the service to the customer on the entity’s behalf; or (c) a good or service from the other party that it combines with other goods or services to provide the specified good or service to the customer.

 

•

The purpose of the indicators in paragraph 606-10-55-39 is to support or assist in the assessment of control. The amendments in paragraph 606-10-55-39A clarify that the indicators may be more or less relevant to the control assessment and that one or more indicators may be more or less persuasive to the control assessment, depending on the facts and circumstances.

The amendments amend certain existing illustrative examples and add additional illustrative examples to assist in the application of the guidance. The effective date and transition of these amendments is the same as the effective date and transition of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Public entities should apply the amendments in ASU 2014-09 for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Private entities must apply the amendments one year later.

In April 2016, the FASB has issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606.

 

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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

March 31, 2016

(Unaudited)

 

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

 

Recently Issued Accounting Standards (continued)

 

The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The effective date for nonpublic entities is deferred by one year.

Identifying Performance Obligations

Before an entity can identify its performance obligations in a contract with a customer, the entity first identifies the promised goods or services in the contract. The amendments add the following guidance:

 

•

An entity is not required to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer.

 

•

An entity is permitted, as an accounting policy election, to account for shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the good rather than as an additional promised service.

To identify performance obligations in a contract, an entity evaluates whether promised goods and services are distinct. The amendments improve the guidance on assessing the promises are separately identifiable criterion by:

 

•

Better articulating the principle for determining whether promises to transfer goods or services to a customer are separately identifiable by emphasizing that an entity determines whether the nature of its promise in the contract is to transfer each of the goods or services or whether the promise is to transfer a combined item (or items) to which the promised goods and/or services are inputs.

 

•

Revising the related factors and examples to align with the improved articulation of the separately identifiable principle.

 

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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

March 31, 2016

(Unaudited)

 

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

 

Recently Issued Accounting Standards (continued)

 

Licensing Implementation Guidance

Topic 606 includes implementation guidance on determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments are intended to improve the operability and understandability of the licensing implementation guidance by clarifying the following:

 

1.

An entity’s promise to grant a customer a license to intellectual property that has significant standalone functionality (e.g., the ability to process a transaction, perform a function or task, or be played or aired) does not include supporting or maintaining that intellectual property during the license period.

 

2.

An entity’s promise to grant a customer a license to symbolic intellectual property (that is, intellectual property that does not have significant standalone functionality) includes supporting or maintaining that intellectual property during the license period.

 

3.

An entity considers the nature of its promise in granting a license, regardless of whether the license is distinct, in order to apply the other guidance in Topic 606 to a single performance obligation that includes a license and other goods or services (in particular, the guidance on determining whether a performance obligation is satisfied over time or at a point in time and the guidance on how best to measure progress toward the complete satisfaction of a performance obliation satisfied over time).

In May 2016, the FASB has issued Accounting Standards Update (ASU) 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting. This ASU rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force (EITF) meeting.

SEC Staff Announcement, “Rescission of Certain SEC Staff Observer Comments upon Adoption of Topic 606, Revenue from Contracts with Customers,” was announced at the March 3, 2016, EITF meeting. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The SEC Staff is rescinding the following SEC Staff Observer comments that are codified in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities—Oil and Gas, effective upon adoption of Topic 606, Revenue from Contracts with Customers.

 

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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

March 31, 2016

(Unaudited)

 

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

 

Recently Issued Accounting Standards (continued)

 

Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606:

 

•

Revenue and Expense Recognition for Freight Services in Process, which is codified in paragraph 605-20-S99-2;

 

•

Accounting for Shipping and Handling Fees and Costs, which is codified in paragraph 605-45-S99-1;

 

•

Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor’s Products), which is codified in paragraph 605-50-S99-1; and

 

•

Accounting for Gas-Balancing Arrangements (i.e., use of the “entitlements method”), which is codified in paragraph 932-10-S99-5.

The Partnership has yet to determine the impact the ASUs on Revenue Recognition will have on its financial statements.

In February 2016, the FASB issued its new lease accounting guidance in Accounting Standards Update (ASU) No. 2016-02 — Leases (Topic 842).Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date:

 

•

A lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and

 

•

A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers.

The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing.

Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). Nonpublic business entities should apply the amendments for fiscal years beginning after December 15, 2019 (i.e., January 1, 2020, for a calendar year entity), and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted for all public business entities and all nonpublic business entities upon issuance.

 

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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

March 31, 2016

(Unaudited)

 

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

 

Recently Issued Accounting Standards (continued)

 

Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Partnership has yet to determine the impact this ASU will have on its financial statements.

In January 2016, the FASB issued Accounting Standards Updates No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance is intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. The new guidance makes targeted improvements to existing U.S. GAAP by:

 

•

Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income;

 

•

Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes;

 

•

Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements;

 

•

Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities;

 

•

Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and

 

•

Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.

 

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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

March 31, 2016

(Unaudited)

 

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

 

Recently Issued Accounting Standards (continued)

 

The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For private companies, not-for-profit organizations, and employee benefit plans, the new guidance becomes effective for fiscal years beginning after December 15, 2018, and for interim periods within fiscal years beginning after December 15, 2019.

The new guidance permits early adoption of the own credit provision. In addition, the new guidance permits early adoption of the provision that exempts private companies and not-for-profit organizations from having to disclose fair value information about financial instruments measured at amortized cost.

The Partnership has yet to determine the impact this ASU will have on its financial statements.

In November 2015, the FASB issued Accounting Standards Updates (ASU) No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. which changes how deferred taxes are classified on organizations’ balance sheets. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent.

The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For private companies, not-for-profit organizations, and employee benefit plans, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. The Partnership believes this ASU will have no impact on its financial statements.

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

 

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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

March 31, 2016

(Unaudited)

 

2.	Tower Park Marina

 

On March 27, 2007, the Partnership completed the sale of substantially all the assets of Tower Park Marina and RV Park to Kampgrounds of America (“KOA”) for $13,500,000 in cash. Net cash received was reduced to $13,459,000 due to property taxes and closing costs borne by the Partnership amounting to $41,000. The assets sold included the land and improvements known as Tower Park Marina, the Partnership’s 51% interest in the Little Potato Slough Mutual Water Company, the Partnership’s leasehold interest in the lease between the California State Land Commission (as landlord) and the Partnership (as tenant), dated as of January 14, 1999, approximately 100 acres of undeveloped land, and certain personal property associated with the foregoing. The gain was further reduced by $416,000 of deferred maintenance repairs identified by KOA. As of March 31, 2016, $307,000 has been spent towards this commitment, and the Partnership has made all identified deferred maintenance repairs. The Partnership recognized a gain of $8,117,000 and deferred gain of $2,152,000 from the sale. The proceeds from the sale were used primarily to repay the Partnership’s note payable and the payable to affiliates, and in April 2007, the Partnership made a distribution of $3,642,000 to its partners. In connection with the sale, the existing lease agreement between KOA and the Partnership, under which the Partnership had leased the RV Park and retail store at Tower Park Marina to KOA, was terminated. Pursuant to a new lease, KOA leased back to the Partnership the marina facilities and dry storage buildings that make up a portion of the property that was sold. In accordance with accounting principles generally accepted in the United States of America, $2,152,000 of the gain from the sale was deferred and is amortized as a reduction in rent expense over the ten-year term of the lease agreement. The amount of the gain that was deferred was based on the Partnership’s ten year lease commitment, discounted at 10%.

For each of the three month periods ended March 31, 2016 and 2015, $54,000 of the deferred gain from the sale was amortized, and is reflected as a reduction in cost of operations. The remaining unamortized gain balance at March 31, 2016 and December 31, 2015 is $215,000 and $269,000, respectively.

At March 31, 2016 and December 31, 2015 the remaining assets related to Tower Park Marina that remain as part of the Partnership are composed of the following:

 

		2016				2015
Leasehold interest		$	27,000			$	27,000
Floating docks			115,000				115,000
Furniture, fixtures and equipment			258,000				253,000
Vehicles			47,000				47,000
			447,000				442,000
Less accumulated depreciation and amortization			(383,000	)			(378,000	)
		$	64,000			$	64,000

 

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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

March 31, 2016

(Unaudited)

 

3.	Other Assets

 

Other assets At March 31, 2016 and December 31, 2015 are composed of the following:

 

		2016				2015
Fuel inventory		$	16,000			$	13,000
Other prepaid expenses			22,000				28,000
		$	38,000			$	41,000

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 months ended March 31, 2016 and 2015 were $12,000 for each period.

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 months ended March 31, 2016 and 2015.

The Partnership received advances from an affiliate throughout the three months ended March 31, 2016, and had an outstanding liability at March 31, 2016 of $16,000. No interest was accrued on these advances.

 

5.	Commitments and Contingencies

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

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

In 2013, KOA agreed to reduce the Partnership’s current lease expense. Effective March 1, 2013, the monthly lease payment was reduced from $29,692 to $16,667. The Partnership will make an additional payment (“Percentage Rent”) to KOA calculated as follows: 30% of Gross Profit between $800,000 and $900,000, plus 40% of Gross Profit between $900,000 and $1,000,000, plus 50% of Gross Profit in excess of $1,000,000. The maximum Percentage Rent payable for any calendar year is $250,000. Included in lease expense in cost of operations is $50,000, paid to KOA for the three months ended March 31, 2016 and 2015.

 

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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

March 31, 2016

(Unaudited)

 

5.	Commitments and Contingencies (continued)

 

Also included in lease expense in cost of operations is $10,000 related to the CSLC lease for the three months ended March 31, 2016 and 2015.

Approximately $454,000 has been spent on capital improvement projects. Contractual obligations are summarized below:

Disclosure of Contractual Obligations

 

		Total				Less than 1 Year				1 – 3 Years
Operating Leases:
KOA Lease		$	200,000			$	200,000				—
Deferred maintenance reserve			109,000				109,000				—
CSLC Lease Reimbursement			40,000				40,000				—
Capital Improvement Commitment			50,000				50,000				—
Total		$	399,000			$	399,000				—

 

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.

 

		(Amounts in 000’s)
Revenues		March 31, 2016				March 31, 2015
Slip rental		$	154			$	166
Dry storage			37				33
Fuel service			10				17
Other income			2				3
Total Revenue		$	203			$	219

 

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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

March 31, 2016

(Unaudited)

 

6.	Segment Reporting (continued)

 

 

		(Amounts in 000’s)
		March 31, 2016				March 31, 2015
Profit (Loss)
Slip rental		$	150			$	160
Dry storage			36				32
Fuel service			2				2
Other (1)			(148	)			(146	)
Total Profit		$	40			$	48
		(Amounts in 000’s)
		March 31, 2016				December 31, 2015
Assets
Slip rental		$	115			$	115
Unallocated amount			29				145
Total Assets		$	144			$	260

 

(1)

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

 

(2)

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

 

7.	401(k) Plan

The Partnership sponsors a 401(k) Plan (the Plan) which is a qualified defined contribution plan under section 401(k) of the Internal Revenue Code. Full time employees who are at least 21 years of age and have completed one year of service, are eligible to participate in the Plan. Participants of the Plan may choose to contribute up to 50% of their compensation per year, as defined by the Plan, up to a maximum of $18,000 for the calendar years 2016 and 2015. The Partnership matches up to 50% of the employee’s quarterly contribution up to $1,250 per year. The Partnership’s matching contribution for the each of the three months ended March 31, 2016 and 2015 was $150.

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

 

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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

March 31, 2016

(Unaudited)

 

8.	Going Concern

 

Despite the successful restructuring of the lease with KOA, the Partnership’s marina is not generating satisfactory levels of cash flows and cash flow projections do not indicate significant improvement in the near-term. In addition, the Partnership’s liabilities exceed its assets by $393,000, and the Partnership required advances from an affiliate in the first quarter in order to meet its financial obligations.. 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 2016 and beyond is contingent on, among other factors, improvement in the economy and a resulting improvement in Tower Park Marina operations. Management is actively working to improve operating results at the property with staffing reductions and changes in operating procedures. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Partnership to continue as a going concern. . The General Partners expect to dissolve the Partnership once it fulfills its obligations under the terms of its lease with Kampgrounds of America (“KOA”), which commitment expires on March 27, 2017.

 

9.	Subsequent Events

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

 

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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

PART I. FINANCIAL INFORMATION

March 31, 2016

(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 72.7% as of March 31, 2016. Dry storage has remained stable. In order to attract new customers, the marina has been forced to run promotions and discount its slip and dry storage rates significantly. The lower occupancy rates at Tower Park Resort are consistent with those experienced by other marinas in the area.

In an effort to partially offset the lower revenues that were being generated, operating hours are reduced during the off-season, and the marina is only open 5 days a week. These reductions have kept payroll and other operating costs at a minimum. 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

March 31, 2016

(Unaudited)

 

ITEM 2.

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

 

Results of Operations for the three months ended March 31, 2016 and 2015

The revenues and expenses of the Partnership for the three months ended March 31, 2016 are generated from the marina and dry storage operations of TowerPark in the Sacramento – San Joaquin Delta near Sacramento. As of March 31, Tower Park Marina had the following occupancies:

 

		2016								2015
		Available				Occupied				Available				Occupied
Wet slips			216	(1)			72.7	%			220	(1)			75.9	%
Dry storage			147				72.8	%			147				66.0	%

 

(1)

non-transient slips only

Revenues from operations for Tower Park decreased $16,000 to $203,000 in comparison to the same period for the prior year. Slip rental occupancies decreased slightly at the marina, and revenues declined $12,000 to $154,000. Dry storage revenues were up $4,000 to $37,000. Gasoline and diesel prices remain extremely competitive in the area, and the marina experienced an decrease in fuel revenues of $7,000 compared to the prior year.

The Partnership had a net loss from operations of $9,000 for the three months ended March 31, 2016 The Partnership’s cash balance decreased $106,000 to $9,000 for the three months ended March 31, 2016, and they received an advance from an affiliate of $16,000 to enable them to meet their financial obligations.

Liquidity and capital resources

The Partnership net income includes $54,000 of amortization of the deferred gain, a non-cash item. After considering non-cash items, the Partnership actually incurred a net loss from operations for the year ended December 31, 2015 of $9,000 (net income/loss before depreciation and amortization of deferred gain), which was covered from existing cash balances, and an advance from an affiliate.

On March 27, 2007, the Partnership completed the sale of substantially all the assets of Tower Park Marina and RV Park to 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.

 

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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

March 31, 2016

(Unaudited)

 

ITEM 2.

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

 

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. As noted previously, 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 plus an additional amount of percentage rent based on the Partnership’s annual revenue. 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:

These contractual obligations are summarized below:

Tabular Disclosure of Contractual Obligations

 

		Total				Less than 1 Year				1 – 3 Years
Operating Leases:
KOA Lease		$	200,000			$	200,000				—
Deferred maintenance reserve			109,000				109,000				—
CSLC Lease Reimbursement			40,000				40,000				—
Capital Improvement Commitment			50,000				50,000				—
Total		$	399,000			$	399,000				—

The Partnership had a remaining cash balance of $9,000 as of March 31, 2016. However, despite the reduction of rent due on the lease with KOA, and continued efforts to reduce costs, the Partnership continues to operate at a deficit, and its liabilities exceed its current cash and accounts receivable balances. These trends, in conjunction with escalating audit and SEC filing fees and requirements raise substantial doubt about the Partnership’s ability to meet its financial obligations going forward, and to continue as a going concern.

Off-Balance Sheet Arrangements

Partnership has no off-balance sheet arrangements and has not entered into any transactions involving unconsolidated, limited purpose entities.

 

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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

March 31, 2016

(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.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Partnership’s internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting. The Partnership continues to review its disclosure controls and procedures, including its internal controls over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that the Partnership’s systems evolve with its business.

 

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Table of Contents

TOWER PARK MARINA INVESTORS, L.P.

(formerly PS MARINA INVESTORS I)

a California Limited Partnership

March 31, 2016

(Unaudited)

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, 2015 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

March 31, 2016

(Unaudited)

 

Item 6.

Exhibits and Reports on Form 8K

 

a.

Exhibits

 

31.1

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

 

32.1

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

 

b.

Reports on Form 8K

Not Applicable

 

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SIGNATURES

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

 

 

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