UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| (Mark One) | |
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the quarterly period ended | |
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| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from __________ to ___________ | |
Commission file number
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| (State or other jurisdiction of (IRS Employer ID No.) incorporation or organization) |
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| (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 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 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 | |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO
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.
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements and related information are included in this Form 10-Q, Quarterly Report.
1. Accountant’s Review Report
2. Balance Sheets
3. Statements of Income and Retained Earnings
4. Statements of Cash Flows
5. Notes to Financial Statements (Unaudited)
The financial information included in Part I of this Form 10-Q has been reviewed by Brown Armstrong Accountancy Corporation, the Company's Certified Public Accountants, and all adjustments and disclosures proposed by said firm have been reflected in the data presented. The information furnished reflects all adjustments, which, in the opinion of management, are necessary to a fair statement of the results for the interim periods.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to anticipated expenses, capital spending and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include, but are not limited to, those relating to competitive industry conditions, California tourism and weather conditions, dependence on existing management, leverage and debt service, the regulation of the recreational vehicle industry, domestic or global economic conditions and changes in federal or state tax laws or the administration of such laws.
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OVERVIEW
The Company continues to promote and depend upon recreational vehicle camping as the primary source of revenue. The rental of campsites to the general public provides income to cover expenses, complete capital improvements, and allow shareholders up to forty-five free nights camping annually. Additional revenues come from RV storage and spotting, RV service and repair, on-site convenience store, and other ancillary activities such as laundromat, arcade, and bike rental.
On March 11, 2020, the World Health Organization declared the outbreak of a coronavirus (COVID-19) a pandemic. In response, the County of San Luis Obispo followed by the Governor of California issued a Shelter at Home order effective March 19, 2020, requiring certain non-essential businesses to temporarily close to the public. The Company began canceling reservations on March 19, 2020 and closed the park on March 23, 2020. The resort remained closed until May 22, 2020, at which time the County of San Luis Obispo permitted occupancy to fifty percent. On June 12, 2020, the County of San Luis Obispo allowed lodging businesses to operate at full capacity with restrictions on amenities. The Company enjoyed four consecutive months of record site occupancy until the State mandated a Stay-at-Home order on December 3, 2020. This order limited non-essential travel and caused significant cancelations for December 2020 and January 2021. February, March, April, and May of 2021 resumed with record occupancy, followed with occupancy returning to pre-pandemic levels for the remainder of fiscal year 2021. Fiscal year 2022 occupancy through the first three quarters is below the previous year by 2.5%, however, it remains above pre-pandemic levels.
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.
RV storage continues to be a major source of revenue for the Company and is currently at full capacity. 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.
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 Woodalls, Pismo Coast Village was voted as one of the top ten favorite campgrounds for 2011. Also, Pismo Coast Village was one of thirty-four parks nationally to receive an industry rated “A” park from over 30,000 surveys for customer satisfaction in 2017.
The Company’s commitment to quality, value, and enjoyment is underscored by the business’ success due to word of mouth and referrals from guests. In addition, investment for online marketing, ads in the two leading national directories, 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 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 June 30, 2022, decreased $29,013, or 1.2%, below the same period in 2021. This decrease in income is primarily due to a 10.4% lower paid site occupancy reflecting a decrease in site revenue of $53,101, or 2.8% compared to the previous year. Resort Income for the nine months ended June 30, 2022, increased $434,802, or 7.3%, above the same period ended June 30, 2021. This increase is due to a $299,156 or 6.7% increase in site revenue, and a $92,452, or 6.6% increase in RV storage and towing activity.
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Seasonal fluctuations within this industry are expected, and management projects that income for the fourth quarter will be approximately 40% of its annual revenue. This approximation is based on historical information.
Income from Retail Operations, for the three-month period ending June 30, 2022, decreased $8,442, or 2.4%, below the same period in 2021. This decrease reflects a $5,669, or 2.9%, decrease in the General store revenue, and $2,773, or 1.7% decrease in RV Service revenue. Income from Retail Operations for the nine-month period ending June 30, 2022, decreased by $9,490, or 1.0%, below the same period ended June 30, 2021. This year-to-date income reflects a $15,108, or 3.5%, increase in the RV Service income, and a $24,598, or 4.8%, decrease in General Store income.
Operating expenses for the quarter ended June 30, 2022, increased $217,276, or 15.6%, from the same period in 2021. This increase in expense is primarily a result of labor and payroll taxes, travel and training, pension match, liability insurance, credit card expense, and vehicle expense. Many of these expenses are occupancy related, and therefore reflective of being in full operation this year. Operating expenses for the nine-month period ended June 30, 2022, increased $583,806, or 14.7%, from the same period in 2021. This increase is primarily due to labor and labor related expenses, landscaping, credit card expense, accounting, liability insurance, land lease, water/sewer, gas, garbage, and electricity, computer expense, Wi-Fi, repairs and maintenance, vehicle expense, advertising, and contributions.
Cost of Goods Sold for 2022 are within projected levels at 46.7% of retail sales for the quarter and 48.6% year-to-date. Cost of Goods Sold for 2021 was 47.6% and 47.1%, respectively.
Interest Expense for the three-month and nine-month periods ended June 30, 2022, is $3,251 and $8,772, respectively, compared to $2,830 and $10,906 the previous year. This decrease in interest expense reflects the current capital lease obligations, which are primarily for trucks used in the company’s RV storage and towing operation.
Income Before Provision for Income Tax for the three-month period ended June 30, 2022, decreased by $553,418. This decrease is despite receiving an Employment Retention Credit of $245,280 in June of 2022, and also reflects the previous year’s Paycheck Protection Program loan forgiveness income of $557,635. For the nine months ended June 30, 2022, Income Before Provisions for Income Tax decreased by $500,488, reflecting the previous year’s Paycheck Protection Program loan forgiveness income.
Net Income for the quarter ending June 30, 2022, decreased by $488,118, compared with the same period ending June 30, 2021. This quarterly decrease in Net Income is primarily due to increased operating expenses and last year’s Paycheck Protection Program loan forgiveness income. Net Income for the nine months ending June 30, 2022, decreased by $364,188, compared with the same period ending June 30, 2021. This decrease in Net Income is a result of an increase in Operating expenses of $583,806 and reflects last year’s PPP loan forgiveness income. This decrease in Net Income is despite an increase in Total Income of $425,312 for the nine-month period of 2022. The last quarter of 2022 is expected to provide adequate resources for continuing business and provide for planned capital expenditures.
Management utilizes various marketing promotions along with social media to attract new customers and increase brand awareness. 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.
4
LIQUIDITY
The Company's current cash position, as of June 30, 2022, is $10,940,515, which is 22.1% more than the same position in 2021. This increase is primarily due to increased revenues, rental deposits, and timing of capital expenditures. The cash balance increased $1,714,059, or 18.6%, from fiscal year ended September 30, 2021, due to increased revenue, rental deposits, and timing of capital expenditures. The present level of cash is being maintained in anticipation of large capital expenditures in the current and upcoming fiscal year.
Accounts Payable and Accrued Liabilities increased $25,060, or 9.9% to an amount of $276,960 for June 30, 2022, compared to the same period ending 2021. This increase was primarily due to timing of payment of monthly liabilities. All undisputed payables have been paid in full according to the Company's policy.
Accounts Receivable for the period ending June 30, 2022, increased $1,364 above June 30, 2021, and reflects an increase of delinquent RV storage payments due to some customers personal financial hardship.
Working capital increased to $8,251,300 at the end of the third quarter of fiscal year 2022, compared with $6,377,259 at the end of fiscal year 2021, and $5,973,871 at quarter end June 30, 2021.
The Company has consistently demonstrated an ability to optimize revenues developed from the resort and retail operations during the summer season. Historically the Company, because of its seasonal market, has produced 60% to 65% of its revenue during the third and fourth quarters of the fiscal year, with more than 40% being produced during the fourth quarter. The fourth quarter occupancy is expected to be consistent with that of past years. The Company has a revolving line of credit for $500,000 to augment operating or capital expenditure cash needs during off-season periods. The Company considers its financial position sufficient to meet its anticipated future financial requirements. The foregoing information is forward-looking, based upon certain assumptions of future performance, which may not come to fruition.
CAPITAL RESOURCES AND PLANNED EXPENDITURES
The Company plans capital expenditures up to $223,000 in fiscal year 2022 to further enhance the Resort facilities and services. This would include the purchase of two vehicles, Wifi upgrade, surveillance cameras for the resort, and replacement backhoe. Funding for these projects is expected to come 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.
Capital projects are designed to enhance the marketability of the camping sites and enhance support facilities. Recognizing the age of the Resort and increased demands resulting from modern recreational vehicles, the Board has directed management to provide plans to update and improve accommodations of the Resort.
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 Securities and Exchange Commission on official business days during the hours of 10:00 a.m. to 3:00 p.m., at the SEC's Public Reference Room located at 100 F Street, N. E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy statements, and other information that the Company files with the SEC.
5
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE 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 June 30, 2022, 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, 2021.
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 nine-months ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No pending legal proceedings against the Company other than routine litigation incidental to the business.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
In January 2022 CEO/General Manager Jay Jamison announced his intention to resign his General Manager position by the end of the 2022 calendar year. The Pismo Coast Village Inc. Executive Committee hired a firm that conducted a nationwide search for a replacement. The Company hired Lesley Marr who began employment on July 15, 2022. Ms. Marr will work with Mr. Jamison and assume the General Manager position by January 1, 2023.
ITEM 6. EXHIBITS
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Description of Exhibit |
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27 |
Financial Data Schedule |
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99 |
Accountant’s Review Report |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PISMO COAST VILLAGE, INC.
(Registrant)
Date: August 10, 2022
Signature: /s/ GARRY NELSON
Garry Nelson, President and Chairman of the Board
Date: August 10, 2022
Signature: /s/ JACK WILLIAMS
Jack Williams, V.P. - Finance/Chief Financial Officer
(principal financial officer and principal accounting officer)
Date: August 10, 2022
Signature: /s/ JAY JAMISON
Jay Jamison, General Manager/Chief Executive Officer
(principal executive officer)
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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors
and Stockholders of Pismo Coast Village, Inc.
165 South Dolliver Street
Pismo Beach, California
Results of Review of Interim Financial Information
We have reviewed the balance sheets of Pismo Coast Village, Inc., (the Company) as of June 30, 2022 and 2021; the related statements of operations for the three and nine-month periods ended June 30, 2022 and 2021; statement of changes in stockholders’ equity for the three and nine-month periods ended June 30, 2022 and 2021; and statements of cash flows for the nine-month periods ended June 30, 2022 and 2021; and the related notes (collectively referred to as the interim financial statements). Based on our reviews, 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 the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the balance sheet of the Company as of September 30, 2021, and the related statements of income and comprehensive income, and cash flows for the year then ended (not presented herein); and in our report dated November 12, 2021, we expressed an unmodified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed balance sheet as of September 30, 2021, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.
Basis for Review Results
These interim financial statements are the responsibility of the Company’s management. We conducted our review in accordance with the standards of the PCAOB. 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 standards of the PCAOB, 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. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
BROWN ARMSTRONG
ACCOUNTANCY CORPORATION
Bakersfield, California
August 10, 2022
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| PISMO COAST VILLAGE, INC. BALANCE SHEETS JUNE 30, 2022 AND 2021 AND SEPTEMBER 30, 2021 | ||||||||
| June 30, 2022 | September 30, 2021 | June 30, 2021 | ||||||
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| Cash and cash equivalents | $ | | $ | | $ | | ||
| Cash Reserved for Capital Improvements | | |||||||
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| Total assets | $ | | $ | | $ | | ||
| Liabilities and Stockholders’ Equity | ||||||||
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| Accounts payable and accrued liabilities | $ | | $ | | $ | | ||
| Accrued salaries and vacation | | | | |||||
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| Deferred taxes | $ | | $ | | $ | | ||
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| Common stock – par value, | $ | | $ | | $ | | ||
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| Total liabilities and stockholders’ equity | $ | | $ | | $ | | ||
| The accompanying notes are an integral part of these financial statements. | ||||||||
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PISMO COAST VILLAGE, INC. STATEMENTS OF OPERATIONS THREE AND NINE MONTHS ENDED JUNE 30, 2022 AND 2021 |
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PISMO COAST VILLAGE, INC. STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY THREE AND NINE MONTHS ENDED JUNE 30, 2022 AND 2021 |
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| PISMO COAST VILLAGE, INC. STATEMENTS OF CASH FLOWS NINE MONTHS ENDED JUNE 30, 2022 AND 2021 | |||||||||||
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| ( |
|
| ( |
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| Net cash used in financing activities |
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| ( |
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| ( | |||||
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| Net increase in cash and cash equivalents |
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| Cash and Cash Equivalents – Beginning of |
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| Cash and Cash Equivalents – End of Period |
| $ | |
| $ | | |||||
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| Reconciliation of Cash and Cash |
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| Cash and equivalents |
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| Cash reserved for capital improvements |
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| Cash and cash equivalents per statement of cash flows |
| $ | |
| $ | | |||||
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| Schedule of Payments of Interest and |
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| Cash paid for income tax |
| $ | |
| $ | | |||||
| Cash paid for interest |
| $ | |
| $ | | |||||
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| The accompanying notes are an integral part of these financial statements. | |||||||||||
13
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022 AND 2021 AND SEPTEMBER 30, 2021
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 from Contracts with Customers
The Financial Accounting Standards Board (FASB) issued new guidance that created Topic 606, Revenue from Contracts with Customers, in the Accounting Standards Codification (ASC). Topic 606 supersedes the revenue recognition requirements in FASB ASC 605, Revenue Recognition, and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The new guidance also added Subtopic 340-40, Other Assets and Deferred Costs-Contracts with Customers, to the ASC to require the deferral of incremental costs of obtaining a contract with a customer. The cumulative impact of adopting FASB ASC 606 was immaterial and did not require an adjustment to retained earnings.
Revenue primarily consists of recreational camping space rentals, revenue from recreational vehicle storage space and RV service and repairs, food and beverage sales and other ancillary goods and services. Revenue is recognized when spaces are occupied or goods and services have been delivered or rendered, respectively.
Sales taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Finally, the Company collects Transient Occupancy Taxes (TOT) and Tourism Business Improvement District (TBID) assessments from guests which are remitted to the City of Pismo Beach and County of San Luis Obispo and are excluded from revenues. At June 30, 2022, September 30, 2021, and June 30, 2021, the Company had $
Performance Obligations
For performance obligations related to the Company accommodations and other ancillary goods and services, control transfers to the customer at a point in time. The Company’s principal terms of sale occur simultaneously when control of the goods and services are transferred to the customer and payment is accepted. The Company does not have any significant financing components.
14
PISMO COAST VILLAGE, INC.
JUNE 30, 2022 AND 2021 AND SEPTEMBER 30, 2021
PAGE 2
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company does not disclose the value of unsatisfied performance obligations for contracts with an expected length of one year or less. Due to the nature of the business, the Company’s revenue is not significantly impacted by refunds. Cash payments received in advance of guests staying at the resort are refunded to guests if the guest cancels within the specified time period, before any services are rendered. Refunds related to services are generally recognized as an adjustment to the transaction price at the time the resort stay occurs or services are rendered.
Disaggregation of Revenue
Revenue from performance obligations satisfied at a point in time consists of sales related to the Company accommodations and other ancillary goods and services at the location in Pismo Beach, California. The geographic nature of the revenue could affect the nature, timing, amount and uncertainty of revenue and cash flows. Revenue from site rentals, storage rental, spotting, and store and accessory sales accounts for approximately
Customer Deposits
The Company does not recognize revenue when a customer prepays for resort accommodations. Rather, the Company records a deferred revenue liability equal to the amount received. Revenue is then recognized when the customer stays at the resort. As of June 30, 2022, September 30, 2021, and June 30, 2021, the Company had Customer deposits related to prepaid village accommodations was $
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments including certificates of deposit with an original maturity of three months or less when purchased to be cash equivalents. As of June 30, 2022, September 30, 2021, and June 30, 2021, the Company had $
Allowance for Doubtful Accounts
It is the policy of management to review the outstanding accounts receivable at year-end, as well as historical bad debt write-offs, and establish an allowance for doubtful accounts for estimated uncollectible accounts. Management did not believe an allowance for doubtful accounts was necessary as of June 30, 2022, September 30, 2021, or June 30, 2021.
15
PISMO COAST VILLAGE, INC.
JUNE 30, 2022 AND 2021 AND SEPTEMBER 30, 2021
PAGE 3
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Inventories
Inventories have been valued at the lower of cost or market on a first-in, first-out basis. Inventories are comprised primarily of finished goods in the general store and in the RV repair shop.
Property and Equipment
All property and equipment are recorded at cost. Depreciation of property and equipment is computed using the 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 resort improvements | |
| Furniture, fixtures, equipment and | |
| Transportation equipment | |
Earnings Per Share
The earnings per share are based on the
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 advertising as incurred. Advertising expense was $
16
PISMO COAST VILLAGE, INC.
JUNE 30, 2022 AND 2021 AND SEPTEMBER 30, 2021
PAGE 4
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of Credit Risk
At June 30, 2022, September 30, 2021, and June 30, 2021, the Company had cash deposits of $
Risks and Uncertainties
Due to uncertainty surrounding the recent COVID-19 pandemic, the length and severity of the outbreak, and the volatility in the world investment markets, there is increasing uncertainty as to how these events will affect results of operations and financial position of the Company going forward. As required by executive order by the Governor of California in March 2020, all non-essential businesses were required to close services offered in person to the public. As such, the recreational vehicle camping resort operated by the Company was required to close and thereby effecting the occupancy rate. However, the Company did see an increase in occupancy rates from July through the report date.
Income Taxes
The Company uses the asset-liability method of computing deferred taxes in accordance with Accounting Standards Codification (ASC) Income Taxes topic. 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.
FASB 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 June 30, 2022, management has considered its tax positions and believes that 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, and accordingly no interest or penalties associated with income taxes have been included in this calculation, or separately in the Statement of Operations and Retained Earnings. The Company does not expect any material changes through June 30, 2023. 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, 2018, and by the California Franchise Tax Board for fiscal years ending on or after September 30, 2017.
17
PISMO COAST VILLAGE, INC.
JUNE 30, 2022 AND 2021 AND SEPTEMBER 30, 2021
PAGE 5
NOTE 3: PROPERTY AND EQUIPMENT
At June 30, 2022, September 30, 2021, and June 30, 2021, property and equipment included the following:
| June 30, | September30, | June 30, | ||||||
| Land | $ | | $ | | $ | | ||
| Building and resort improvements | $ | | $ | | $ | | ||
| Furniture, fixtures, equipment, and leasehold improvements | $ | | $ | | $ | | ||
| Transportation equipment | $ | | $ | | $ | | ||
| Construction in progress | $ | | $ | | $ | | ||
| $ | | $ | | $ | | |||
| Less accumulated depreciation |
| ( |
| ( |
| ( | ||
| $ | | $ | | $ | | |||
Depreciation and amortization expense was $
At June 30, 2022, September 30, 2021, and June 30, 2021, the cost of assets under capital lease was $
NOTE 4: LINE OF CREDIT
The Company has a revolving line of credit with Pacific Premier Bank (formerly Heritage Oaks Bank) for $
18
PISMO COAST VILLAGE, INC.
JUNE 30, 2022 AND 2021 AND SEPTEMBER 30, 2021
PAGE 6
NOTE 5: CAPITAL LEASE OBLIGATIONS
At June 30, 2022, September 30, 2021, and June 30, 2021, capital lease obligations consisted of the following:
|
June 30, 2022 |
September 30, 2021 |
June 30, 2021 |
||||||
|
A 2016 Hino truck leased from Donahue Transportation Services Corp, payable in Monthly installments of $ through December 2022. |
$ |
|
$ |
|
$ |
|
||
|
A 2018 Hino truck leased from Donahue Transportation Services Corp, payable in monthly installments of $ through August 2024. |
$ |
|
$ |
|
$ |
|
||
|
A 2019 Hino truck leased from Donahue Transportation Services Corp, payable in monthly installments of $ through March 2025. |
$ |
|
$ |
|
$ |
|
||
|
A 2019 Hino truck leased from Donahue Transportation Services Corp, payable in monthly installments of $ through December 2025. |
$ |
|
$ |
|
$ |
|
||
|
A 2020 Hino truck leased from Donahue Transportation Services Corp, payable in monthly installments of $ through May 2027. |
$ |
|
$ |
|
$ |
|
||
|
$ |
|
$ |
|
$ |
|
|||
|
Less current portion |
|
( |
|
( |
|
( |
||
|
Total capital lease obligations, net of current portion |
$ |
|
$ |
|
$ |
|
||
At June 30, 2022, future minimum payments on the capital lease obligations were as follows:
|
For the Twelve Months Ending June 30, |
|||
|
2022 |
$ |
|
|
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2023 |
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|
2024 |
|
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2025 |
|
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|
2026 |
|
||
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Thereafter |
|
||
|
Total minimum lease payments |
|
||
|
Less amount representing interest |
|
( |
|
|
Present value of lease payments |
|
||
|
Less current portion |
|
( |
|
|
Capital lease obligations, net of current portion |
$ |
|
19
PISMO COAST VILLAGE, INC.
JUNE 30, 2022 AND 2021 AND SEPTEMBER 30, 2021
PAGE 7
NOTE 6: COMMON STOCK
Each share of stock is intended to provide the shareholder with free use of the resort for a maximum of
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 provision for income taxes for the three months and nine months ending June 30, 2022 and 2021 is as follows:
|
Three Months Ended |
Nine Months Ended |
|||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||
|
Income tax expense |
$ |
|
|
$ |
|
$ |
|
$ |
|
|||
The Company uses the asset-liability method of computing deferred taxes in accordance with FASB ASC Topic 740. The difference between the effective tax rate and the statutory tax rates is due primarily to the effects of state taxes net of the federal tax benefit and nondeductible variable costs of shareholder usage.
As of June 30, 2022, September 30, 2021, and June 30, 2021, the Company’s deferred tax liability was $
NOTE 8: OPERATING LEASES
The Company leases a lot located in Oceano for $
The Company had a five-year lease obligation for a copier. Rental expense under this operating lease was $
Rent expense under these lease agreements was $
20
PISMO COAST VILLAGE, INC.
JUNE 30, 2022 AND 2021 AND SEPTEMBER 30, 2021
PAGE 8
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 $
NOTE 11: SUBSEQUENT EVENTS
Events subsequent to June 30, 2022 have been evaluated through August 10, 2022, which is the date the financial statements were available to be issued. Management did not identify any subsequent events that require disclosure.
21