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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(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of (IRS Employer ID No.) incorporation or organization) |
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(Address of Principal Executive Offices) (Zip Code) |
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Registrant’s telephone number, including area code. |
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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. [X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web Site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Subsection 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] NO [ ]
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
| [ ] Large accelerated filer | [ ] Accelerated filer | |
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1
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. Report of Independent Registered Public Accounting Firm
2. Balance Sheets
3. Statement of Operations
4. Statement of Changes in Stockholders’ Equity
5. Statements of Cash Flows
6. Notes to Financial Statements
The financial information included in Part I of this Form 10-Q has been reviewed by Brown Armstrong Accountancy Corporation, the Company's Certified Public Accountants, and all adjustments and disclosures proposed by said firm have been reflected in the data presented. The information furnished reflects all adjustments, which, in the opinion of management, are necessary to a fair statement of the results for the interim periods.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to anticipated expenses, capital spending and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include, but are not limited to, those relating to competitive industry conditions, California tourism and weather conditions, dependence on existing management, leverage and debt service, the regulation of the recreational vehicle industry, domestic or global economic conditions and changes in federal or state tax laws or the administration of such laws.
2
OVERVIEW
The Company continues to promote and depend upon recreational vehicle camping as the primary source of revenue. The rental of campsites to the general public provides income to cover expenses, complete capital improvements, and allow shareholders up to forty-five free nights camping annually. Additional revenues come from RV storage and spotting, RV service and repair, on-site convenience store, and other ancillary activities such as laundromat, arcade, and bike rental.
The 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. Based on advanced reservation deposits, occupancy projections are positive. Long term industry outlook remains strong. In 2023, the industry will continue to normalize and reflect pre-COVID numbers and patterns.
Outdoor recreation continued to be popular throughout 2022, and the Company enjoyed its second highest revenue year. With public school and work schedules returning to normal, interest in camping is expected to remain high.
RV storage and towing continue to be a primary source of revenue for the Company. RV storage provides numerous benefits to the customer including: no stress of towing, no need to own a tow vehicle, use of RV by multiple family members, and convenience. Revenues for RV storage and towing are up $14,782 over prior year due to a slight increase in towing fees to cover operational increases and strong demand for storage sites.
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 as the resort continues to maintain high standards and again, has been recognized with quality ratings by Good Sam in 2022.
The Company’s commitment to quality, value, and enjoyment is underscored by the business’s success due to word of mouth and referrals from guests. In addition, investment for online marketing, ads in the leading national directory, and trade magazine advertising formulates most of the business-marketing plan.
RESULTS OF OPERATIONS
The Company develops its income from two sources: (a) Resort Operations, consisting of revenues generated from RV site rentals, from RV storage space operations, and from lease revenues from laundry, restaurant, and arcade operations by third party lessees; and (b) Retail Operations, consisting of revenues from General Store operations and from RV parts and service operations.
Income from Resort Operations for the three-month period ended December 31, 2022, decreased $59,656, below the same period in 2021. This decrease is primarily due to a decrease in site revenue of $69,460 which relates to COVID and weather cancellations in December 2022. RV storage and towing activity increased by $14,782 over the same period in 2021 as many storage customers returned their RV’s that were removed for use elsewhere during the pandemic. Vending revenue, which includes income from the arcade, restaurant, and laundromat, decreased $5,971. This decrease in vending revenue was due to reduced occupancy due to cancellations.
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 decreased $7,193 for the three-month period ended December 31, 2022, compared to same period in 2021. The RV Service and Repair income increased $12,311, while the General Store income decreased $19,504, compared to the previous year. The decrease in General Store income is attributed to reduction in General Store operating hours due to staff challenges and December occupancy.
3
The Company anticipates slight to moderate increases in both income from resort operations, and in retail operations as the fiscal year progresses in a normalizing of the industry.
Operating expenses for the three-month period ending December 31, 2022, increased $440,809 above the same period ended December 31, 2021. This reflects an increase in labor, benefits, professional insurance, vehicle expense, and credit card processing expense. Other operating costs remain consistent with the prior year and are considered well managed to create an effective operation.
Cost of goods sold expenses for the three-month period ended December 31, 2022, are 49.8%, compared to 49.4% for the same period in 2021, which is within the guidelines established by management for the individual category sales of RV supplies and General Store merchandise.
Interest expense for the three-month period ended December 31, 2022, was $3,544, compared to $2,471 for the same period ending 2021.
Due to the nature of business and economic cycles and trends, rates may be adjusted accordingly, if deemed necessary. Although the supply-demand balance generally remains favorable, future-operating results could be adversely impacted by weak demand. This condition could limit the Company’s ability to pass through inflationary increases in operating costs as higher rates.
Increases in transportation and fuel costs or sustained recessionary periods could also unfavorably impact future results. However, the Company believes that its financial strength and market presence will enable it to remain extremely competitive. It is anticipated the published rates will continue to market site usage at its highest value and not negatively impact the Company’s ability to capture an optimum market share.
LIQUIDITY
The Company’s current cash position (cash & cash equivalent, Reserves & Investments), as of December 31, 2022, is $10,663,094, which is more than the same position in 2021 of $9,532,125. The cash balance increased $77,099 from the fiscal year ended September 30, 2022, primarily due to consistent GP Fall occupancy. The Company has maintained cash balances in anticipation for large capital expenditures necessary to upgrade the resort. Maintaining the principle of easily accessible reserves, the Company purchased US Treasury Bills in the following amounts in November 2022:
6-month Treasury at 4.55% for $488k and will mature on May 4, 2023;
12-month Treasury at 4.73% for $477k and will mature on November 2, 2023;
6-month Treasury at 4.55% for $34k and will mature on May 4, 2023.
The Company has also maintained a line of credit of $500,000 to ensure funds will be available, if required.
Account Payables and Accrued Liabilities totaled $357,803 which is $29,742 above the same period last year and increased $92,359 since the 2022 fiscal year end, which reflects a timing of capital projects and paid bonuses and accrued vacation. All undisputed payables have been paid in full according to the Company’s policy.
Total Current Assets increased to $11,607,737 at the end of the first quarter of fiscal year 2022, compared with $11,517,900 at the end of fiscal year 2022.
CAPITAL RESOURCES AND PLANNED EXPENDITURES
The Company plans capital expenditures up to $175,000 in fiscal year 2023 to further enhance the Resort facilities and services. This would include the purchase of a low-boy tilt trailer, surveillance cameras for storage lots, two golf carts for maintenance, one golf cart for security and a redesign for sports courts. 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.
4
Capital expenditures are consistent with prior years and operations and are expected to provide adequate resources to support the amounts committed to complete the authorized capital projects during the fiscal year. Second Quarter occupancy is expected to be down due to unusual weather patterns and Covid cancellations. Storage continues to be consistent with that of the past year. Capital projects are designed to enhance the marketability of the camping sites and enhance support facilities.
DISCLOSURE CONCERNING WEBSITE ACCESS TO COMPANY REPORTS
The Company makes available on its website, www.pismocoastvillage.com, access to its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC).
The public may read and copy any materials filed with the Securities and Exchange Commission, on official business days during the hours of 10:00 a.m. to 3:00 p.m., at the SEC's Public Reference Room located at 100 F Street, N. E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy statements, and other information that the Company files electronically with the SEC.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “1934 Act”), as of December 31, 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 General Manager/Assistant Corporate Secretary 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, 2022.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the 1934 Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the 1934 Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
INTERNAL CONTROL OVER FINANCIAL REPORTING
There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated by the SEC under the 1934 Act) during the three-months ended December 31, 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
The annual meeting of the shareholders of Pismo Coast Village, Inc. was held at the Clark Center for Performing Arts, 487 Fair Oaks Ave, Arroyo Grande, CA 93420 on January 21, 2023, at 9:00 a.m. with Board of Directors and Shareholders in attendance. At that meeting, the following Directors were elected to serve until the annual meeting in January 2024, or until successors are elected and have qualified. Following each elected Director's name is the total number of votes cast for that Director:
| Bessom, David | 579 |
| Blank, Sam | 557 |
| Buchaklian, Harry | 589 |
| Colvin, Suzanne | 560 |
| Enns, Rodney | 559 |
| Fischer, William | 555 |
| Hardesty, Wayne | 594 |
| Hughes, Terris | 558 |
| Johnson, Marcus | 558 |
| King, Karen | 614 |
| Nelson, Garry | 560 |
| Nunlist, Ronald | 558 |
| Pappi, Jr., George | 578 |
| Plumley, Dwight | 723 |
| Roberts, Jerry | 559 |
| Skaggs, Brian | 558 |
| Willems, Gary | 560 |
| Williams, Jack | 577 |
Further, the following additional matters were voted upon at the meeting, and the number of affirmative votes and negative votes cast with respect to each such matters is set forth below:
Proposal to approve the selection of Brown Armstrong Accountancy Corporation to serve as independent certified public accountants for the Company for Fiscal Year 2022 - 2023:
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Affirmative Votes |
563 |
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Negative Votes |
1 |
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Abstentions |
8 |
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ITEM 5. OTHER INFORMATION
The annual meeting of the shareholders of Pismo Coast Village, Inc. was held at the Clark Center for Performing Arts, 487 Fair Oaks Ave, Arroyo Grande, CA 93420 on January 21, 2023, at 9:00 a.m. with Board of Directors and Shareholders in attendance. Following that meeting, the newly elected Board held a reorganization meeting at which the following officers were elected to serve until the next Annual Shareholders’ Meeting:
| President | George Pappi, Jr. |
| Executive Vice President | Karen King |
| V. P. – Finance/Chief Financial Officer | Jack Williams |
| V. P. – Operations | Rodney Enns |
| V. P. – Secretary | Gary Willems |
| Assistant Corporate Secretary | Lesley Marr |
ITEM 6. EXHIBITS
| Exhibit No. | Description of Exhibit |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
PISMO COAST VILLAGE, INC.
(Registrant)
Date: February 8, 2023
Signature: /s/ GEORGE PAPPI, JR.
George Pappi, Jr., President and Chairman of the Board
(Chief Executive Officer/Principal executive officer)
Date: February 8, 2023
Signature: /s/ JACK WILLIAMS
Jack Williams, V.P. - Finance/Chief Financial Officer
(Principal financial officer and principal accounting 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 93449
Results of Review of Interim Financial Information
We have reviewed the balance sheets of Pismo Coast Village, Inc., (the Company) as of December 31, 2022 and 2021; the related statements of operations for the three-month periods ended December 31, 2022 and 2021; statement of changes in stockholders’ equity for the three-month periods ended December 31, 2022 and 2021; statements of cash flows for the three-month periods ended December 31, 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, 2022, 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 11, 2022, 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, 2022, 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
Auditor Firm ID: #237
Bakersfield, California
February 8, 2023
9
PISMO COAST VILLAGE, INC.
BALANCE SHEETS
DECEMBER 31, 2022 AND 2021, AND SEPTEMBER 30, 2022
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December 31, 2022 |
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December 31, 2021 |
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Total current assets |
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Property and equipment |
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Net of accumulated depreciation and amortization |
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Total assets |
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Liabilities and Stockholders’ Equity |
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Total liabilities |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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The accompanying notes are an integral part of these financial statements. |
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PISMO COAST VILLAGE, INC.
STATEMENT OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2022, AND 2021
| Three Months Ended December 31, | |||||
| 2022 | 2021 | ||||
| Income | |||||
| Resort operations | $ | | $ | | |
| Retail operations |
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| Income from operations | | | |||
| Other income (expense) | |||||
| Interest/dividend income | | | |||
| Interest expense |
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| Total other income (expense) |
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| Income before provision for income tax | | | |||
| Provision for income tax |
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| Net income | $ | | $ | | |
| Net income per share | $ | | $ | | |
| The accompanying notes are an integral part of these financial statements. | |||||
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PISMO COAST VILLAGE, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
MARCH 31, JUNE 30, SEPTEMBER 30, AND DECEMBER 31, 2022
| Accumulated Other Comprehensive Income | |||||||||||||
| Common Stock | Retained Earnings | ||||||||||||
| Shares | Amount | Total | |||||||||||
| Balance – December 31, 2021 | | $ | | $ | | $ | $ | | |||||
| Net Income | - | - | | - | | ||||||||
| Repurchase of common stock | ( |
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| Balance – March 31, 2022 | | | | | |||||||||
| Net Income | - |
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| Balance – June 30, 2022 | | | | | |||||||||
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| Balance – September 30, 2022 | | | | | |||||||||
| Net Income | - |
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| Balance – December 31, 2022 | | $ | | $ | | $ | $ | | |||||
| The accompanying notes are an integral part of these financial statements. | |||||||||||||
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PISMO COAST VILLAGE, INC. STATEMENTS OF CASH FLOWS THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021 |
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Net Income |
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Adjustments to reconcile net income to net |
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Depreciation and amortization |
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Changes in operating assets and liabilities: |
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Accounts payable and accrued liabilities |
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Total adjustments |
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Principal payments on finance lease obligations |
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Net cash used in financing activities |
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Net decrease/increase in cash and cash equivalents |
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Cash and cash equivalents – end of period |
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Reconciliation of Cash and Cash Equivalents Per Balance Sheets: |
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Cash and Cash Equivalents Per Statement of Cash Flows |
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Schedule of payments of interest and taxes |
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Cash paid for interest |
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The accompanying notes are an integral part of these financial statements. |
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13
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021 AND SEPTEMBER 30, 2022
NOTE 1 – NATURE OF BUSINESS
Pismo Coast Village, Inc. (the 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. As of December 31, 2022, September 30, 2022 and December 31, 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.
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PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022 AND 2021 AND SEPTEMBER 30, 2022
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 December 31, 2022, September 30, 2022 and December 31, 2021, the Company had customer deposits related to prepaid village accommodations of $
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 December 31, 2022, September 30, 2022 and December 31, 2021 the Company had $
Cash Reserved for Capital Improvements and Deferred Maintenance
The Company keeps separate funds reserved for capital improvements and deferred maintenance. Historically, the Company has not carried a high amount of debt; this separate reserve is kept order to self-finance major improvement and have cash ready upon project permit approval.
15
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022 AND 2021 AND SEPTEMBER 30, 2022
PAGE 3
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 December 31, 2022, September 30, 2022, or December 31, 2021.
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 parts in the RV 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 park improvements | |
| Furniture, fixtures, equipment and leasehold improvements | |
| 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 response advertising as incurred. Advertising expense was $
16
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022 AND 2021 AND SEPTEMBER 30, 2022
PAGE 4
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentration of Credit Risk
At December 31, 2022, September 30, 2022, and December 31, 2021 the Company had cash deposits of $
Reclassifications
Certain reclassifications have been made to prior year balances to conform to current year presentation. These reclassifications had no effect on the Company’s results of operations or financial position.
Income Taxes
The Company uses the asset-liability method of computing deferred taxes in accordance with FASB 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 December 31, 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 December 31, 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.
Investments
Investments in securities have been classified in the balance sheet, according to management’s intent, as securities available-for-sale under the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 320 Investments – Debt and Equity Securities.
17
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022 AND 2021 AND SEPTEMBER 30, 2022
PAGE 5
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Investments (continued)
Available-for-sale securities consist of investment securities not classified as trading securities nor as held to-maturity securities. Unrealized holding gains and losses, net of deferred taxes, on available-for-sale securities are reported as a net amount in a separate component of stockholders’ equity until realized. Gains and losses on the sale of available-for-sale securities are determined using the specification method.
Fair Value Measurements
The Company records its financial assets and liabilities at fair value in accordance with the Fair Value Measurements and Disclosures Topic of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) (the Topic). This Topic provides a framework for measuring fair value, clarifies the definition of fair value and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at that reporting date. The Topic also establishes a three-tier hierarchy, as follows, which prioritizes the inputs used in the valuation methodologies in measuring fair value.
Level 1: Inputs to the valuation methodology are unadjusted quoted prices for the identical assets or liabilities in active markets that the Company has the ability to access.
Level 2: Inputs to the valuation methodology include:
* Quoted prices for similar assets and liabilities in active markets;
* Quoted prices for identical or similar assets or liabilities in active markets;
* Inputs other than quoted prices that are observable for the asset or liability;
* Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3: Inputs to the valuation of methodology are unobservable and significant to the fair value measurement.
The following is a description of the valuation methodologies used for assets measured at fair value:
18
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022 AND 2021 AND SEPTEMBER 30, 2022
PAGE 6
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value Measurements (continued)
Investments: Investments in US treasury bills are recorded at fair value based upon quoted market prices using Level 1 inputs.
The hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.
As of September 30, 2022, the following sets forth by level, within the fair value hierarchy, the Company’s assets at fair value:
| Level 1 | Level 2 | Level 3 | ||||||
| Investment in US Treasury Bills | $ | | $ | $ | ||||
| Total assets at fair value | $ | | $ | $ | ||||
NOTE 3 – PROPERTY AND EQUIPMENT
At December 31, 2022, September 30, 2022, and December 31, 2021, property and equipment included the following:
|
December 31, 2022 |
September 30, 2022 |
December 31, 2021 |
||||||
|
Land |
$ |
|
$ |
|
$ |
|
||
|
Building and resort improvements |
|
|
|
|||||
|
Furniture, fixtures, equipment and leasehold |
|
|
|
|||||
|
Transportation equipment |
|
|
|
|||||
|
Construction in progress |
|
|
|
|
|
|
||
|
|
|
|
||||||
|
Less accumulated depreciation and amortization |
|
( |
|
( |
|
( |
||
|
|
$ |
|
$ |
|
$ |
|
||
Total depreciation and amortization expense for the three months ended December 31, 2022 and 2021 was $
At December 31, 2022, September 30, 2022, and December 31, 2021, the cost of assets under finance lease was $
19
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022 AND 2021 AND SEPTEMBER 30, 2022
PAGE 7
NOTE 4 – LINE OF CREDIT
The Company has a revolving line of credit with Pacific Premier Bank (formerly Heritage Oaks Bank) for $
NOTE 5 – FINANCE LEASE OBLIGATIONS
At December 31, 2022, September 30, 2022, and December 31, 2021, finance lease obligations consisted of the following:
|
December 31, 2022 |
September 30, 2022 |
December 31, 2021 |
|||||||
|
A 2016 Hino truck leased from Donahue Transportation Services Corp, |
$ |
|
$ |
|
$ |
|
|||
|
A 2018 Hino truck leased from Donahue Transportation Services Corp, |
|
|
|
||||||
|
A 2019 Hino truck leased from Donahue Transportation Services Corp, |
|
|
|
||||||
|
A 2019 Hino truck leased from Donahue Transportation Services Corp, |
|
|
|
||||||
|
A 2020 Hino truck leased from Donahue Transportation Services Corp, |
|
|
|
|
|
|
|||
|
|
|
|
|||||||
|
Less current portion |
|
( |
|
( |
|
( |
|||
|
Total finance lease obligations, net of current portion |
$ |
|
$ |
|
$ |
|
|||
20
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022 AND 2021 AND SEPTEMBER 30, 2022
PAGE 8
NOTE 5 – FINANCE LEASE OBLIGATIONS (continued)
At December 31, 2022, future minimum payments on finance lease obligations were as follows:
|
For the Twelve Months Ending December 31, |
|||
|
2023 |
$ |
|
|
|
2024 |
|
||
|
2025 |
|
||
|
2026 |
|
||
|
2027 |
|
||
|
Thereafter |
|
||
|
Present value of future minimum payments |
|
||
|
Less amount representing interest |
|
( |
|
|
|
|||
|
Less current portion of finance lease obligations |
|
( |
|
|
Total finance lease obligations, net of current portion |
$ |
|
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.
NOTE 7 – INCOME TAXES
The provision for income taxes for the three months ended December 31, 2022, and 2021 is as follows:
| Three Months Ended December 31, | |||||
| 2022 | 2021 | ||||
| Income tax expense | $ | ( | $ | | |
21
PISMO COAST VILLAGE, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022 AND 2021 AND SEPTEMBER 30, 2022
PAGE 9
NOTE 7 – INCOME TAXES (continued)
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 December 31, 2022, September 30, 2022, and December 31, 2021, the Company’s deferred tax liability was $
NOTE 8 – OPERATING LEASES
The Company leases a lot located in Oceano for $
The Company has a five-year lease obligation for a copier. Rental expense under this operating lease is $
Rent expense under these agreements was $
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 10 – SUBSEQUENT EVENTS
Events subsequent to December 31, 2022 have been evaluated through February 8, 2023, which is the date the financial statements were available to be issued. Management did not identify any subsequent events that required disclosure.
22